Stifle Innovation PLEASE

Stifle Innovation PLEASE

Yes, it seems that the diabetes community is in a lather over the recent deal announced between insulin pump market leader Medtronic (NYSE: MDT) and UnitedHealthCare. Yep the community seems to believe that this one deal will limit patient choice and stifle innovation. Listening to the comments being made one just might get the impression that Medtronic is the evil empire and that United is their partner in crime. Now never mind that none of this is true the fact is these folk just love to complain without having a full grasp of the facts.

Let’s start with limiting patient choice. The last time we looked Tandem (NASDAQ: TNDM), Insulet (NASDAQ: PODD) and Animas, a unit of Johnson and Johnson (NYSE: JNJ) have not closed up shop and are still in business. It’s not like a patient cannot chose one of these pumps, not even those covered by United. It’s not like patients currently using one of these systems will all of sudden without warning be told they will no longer be able to get supplies for their pumps.

The reality is if a patient wants one of these systems, even those covered by United, they can still get one. While it’s true for those covered by United these systems will require a higher out of pocket investment the fact is they have not been told they cannot get a non-Medtronic pump. If as Tandem, Insulet and Animas claim their systems are better than a Medtronic system then this additional cost is worth the investment. This also ignores the very real possibility that these companies will follow the path of diabetes drug companies and offer co-pay equalization programs.

This argument that patient choice will be limited is just ludicrous.

Equally ludicrous is this notion that somehow innovation will come to a screeching halt. That Animas, Insulet and Tandem will stop funding the development of newer systems. That the new systems in their respective pipelines will be abandoned. And what about companies like BigFoot or CellNovo, we doubt they will simply throw in the towel and stop development of their respective systems.

We hate to be redundant but we’ve said it a million times the insulin pump market is not large enough nor is it growing fast enough to support not just the existing players but the many who want to be players. Equally true is the fact that insulin pumps have become a commodity and that it really doesn’t matter which system is used by the patient. Diabetic Investor has yet to see any study that proves that patients achieve better control using an Animas system over a Medtronic system.

Yes, there are differences between systems but these differences are cosmetic. Diabetic Investor has never bought the argument that a patient will achieve better outcomes using a Tandem t: slim, which has the best patient interface, than a Medtronic pump. The fact, yes those pesky facts, clearly indicate that when it comes to outcomes it comes down to how well the patient is trained. Ask any Certified Diabetes Educator (CDE) who has trained a patient in pump therapy. Yes, some systems are easier to learn than others but all pumps do basically the same thing the same way.

One area where there is a major difference is with sensor augmented pumps. While Medtronic has improved sensor performance they still lag behind Dexcom (NASDAQ: DXCM).  Given that Tandem and Animas have systems that work with the Dexcom sensor they just might consider exploiting this advantage. That they just might develop programs which ease the patients out of pocket cost for these systems. That they will actually compete rather than complain.

We find it somewhat laughable that many who see the Medtronic United deal as the end of the world forget we live in America. And unless something has changed there is something called competition. There is also another nice concept called capitalism.

These people have also forgotten that Tandem, Insulet and Animas could have done exactly what Medtronic is doing. Would we be hearing these same complaints had Animas done this deal or is it the fact that Medtronic had the stones to do this that pisses these people off.

We know it just drives these people crazy but there is a reason we call this the business of diabetes. We’ve said it before and we’ll say it again, this is about money who makes it and who doesn’t.  By the way it’s not exactly like Tandem, Insulet or Animas were giving away their systems for free, that they too are trying to make money.  They too have a responsibility to their stakeholders, stakeholders who invested in the company to make money.

And just where were these people when Tandem, Insulet and Animas we’re doing a lousy job of running their respective franchises. Did they take them to task, did they hold them accountable for their stupidity? Or did they do what they always do gush over all the way cool whiz bang technology and forget that this is a business? Seriously we honestly believe that we would not be hearing all this chirping if anyone other than Medtronic had done this deal.

Just to set the record straight Medtronic too was guilty of trying to screw up a very good thing. Yet new leadership has taken steps to correct the mistakes made by pervious management. Unlike everyone else rather than complain they took action. Action that Tandem, Insulet and Animas would have taken had they been in Medtronic’s position. Medtronic took a look at the market, crunched the numbers and made a business decision.

The fact, yes those pesky facts again, just don’t support these outlandish claims that this deal has hurt patient choice or stifled innovation. Looked at realistically this deal is actually good for the patient as it will force, if they decide to actually compete, everyone to do more than just build a mouse trap. Perhaps they will stop coming up with me too copycat systems and actually give patients something better. Perhaps it will force these companies to consider alternate pricing models, models which will make pump therapy more accessible.

As Momma Kliff used to say it’s much easier to complain then to actually do something. We think it’s time these people get their facts straight, stop complaining and actually do something constrictive. Right now they sound like a bunch of spoiled brats who’ve been sent to bed without their desert. Grow up already.