It’s a CGM World

Today comes word that Medtronic desperate to save their struggling CGM unit has asked the FDA for an non-adjunctive label for the Guardian™ Sensor 3. Per a company issued press release;

“ Medtronic plc (MDT), the global leader in medical technology, services and solutions, today announced its Premarket Approval (PMA) submission to the U.S. Food and Drug Administration (FDA) requesting approval for non-adjunctive labeling for its Guardian™ Sensor 3, as part of the MiniMed™ 670G system. If the FDA approves a sensor with non-adjunctive labeling, it means that a sensor is accurate enough to be used to calculate an insulin dose for meals and to correct high glucose levels. Since Medicare requires a non-adjunctive label for sensor reimbursement, if approved, this labeling could broaden patient access by allowing for Medicare coverage of the world’s first and still the only commercially available hybrid closed loop system.”

Now it’s possible the FDA will grant this request even though this sensor has well documented reliability issues. This is one reason we wish the agency would take a closer look not just at MARD data but expand their criteria to include reliability. As we have said a million times accuracy is just one issue with a sensor, manufacturing sensors that are accurate and reliable on a massive scale is completely different story. The issue with the Medtronic sensor has never been does it work, the issue has always been and continues to be how often it works.

Now one company which isn’t having a problem with either accuracy or reliability is Dexcom. The company got a nice boost today when Walgreens announced per a press release;

“Walgreens today announced that it has expanded the Walgreens Find Care™ platform to now include chronic care management, featuring connected devices and digital therapeutic solutions for patients with diabetes, asthma and chronic obstructive pulmonary disease (COPD). In addition, one year since launch, several new health care offerings from existing and new partners have been added to the platform.

To further meet the needs of the 30 million adults living with type I or type II diabetes1, the 25 million U.S. adults and children living with asthma2 and the more than 15 million adults with COPD3, Walgreens Find Care has added leading diabetes, asthma and COPD device manufacturers, Dexcom and Propeller Health, to its digital platform. Through these new collaborations, Walgreens Find Care users with diabetes, asthma or COPD can learn how to simplify and centralize critical health information with state-of-the-art health monitoring devices.”

This announcements comes right before Livongo is expected to go public Thursday. As we have noted before Livongo isn’t the only digital diabetes (DD) company they just happen to be the first to hit the capital markets. We have also noted that this is a crowded space and the battle for patients will be fierce. Right now Livongo is losing money by the truckload and needs to achieve major scale if they are to have any chance at making money.

It should also be noted that what Livongo does is hardly unique nor innovative. Worse for Livongo and largely overlooked is their diabetes platform is based on old outdated BGM technology. While the world is transitioning to CGM Livongo remains stuck in the mud with BGM. This Walgreens announcement isn’t just bad news for Livongo because they will now work with Dexcom it’s bad news as it shows that Walgreens wants the diabetes patient as badly as Livongo does and will fight to get them.

Walgreens isn’t the only brick and mortar retailer who wants to play in this sandbox as their main competitor CVS is also aggressively seeking the patient with diabetes. Even with the extra capital Livongo will raise from their IPO there is no way they can match the resources; brand name recognition or scale Walgreens and CVS have. To paraphrase Mark Twain the death of the retail pharmacy with a store on every corner has been greatly exaggerated. Yes Amazon is coming too and forcing these retailers to rethink how they do business but in no way are they are on deaths doorstep.

In this very crowded space most people underestimate the value of the CVS or Walgreens brand. Simply put most patients have never heard of Livongo yet they feel very comfortable with CVS or Walgreens. Walgreens and CVS can easily replicate the Livongo model with the added benefit of providing medications. Medications which can be sent to the patient in the mail or picked up at the store. CVS and Walgreens also offers something Livongo doesn’t have a pharmacist who can answer questions.

To think that CVS or Walgreens will just surrender and let Livongo go unchallenged while seeking more employer contracts is just foolish. Employers who will also be preyed upon by OnDuo, WellDoc and a host of DD companies.

Now none of this will matter all that much Thursday as we anticipate the Livongo IPO going off without a hitch. Nor will matter much that Livongo does not have a long-term sustainable business model. Given the hype surrounding DD we suspect it won’t be long before a greater fool comes along throws money at Livongo and then finds out that all the glitter isn’t gold.