The Death Spiral Continues

The Death Spiral Continues

In a move that should shock no one UnitedHealth has dropped Lantus from their 2017 formulary and replaced it with Basaglar. United now becomes the second of the big three payors to drop Lantus.

So where does this leave our wine drinking friends in France? To say that Sanofi (NYSE: SNY) is in a world of hurt is like saying the Titanic had a small leak. This is just one more nail in the Sanofi diabetes coffin and likely will result in even more beheadings.

Now it is not necessary to list the issues that face Sanofi, they are well documented. Nor is it necessary to say this move reinforces what we have been saying all along – diabetes drugs have become a commodity and price not performance is what matters. United also moved Levemir from Novo Nordisk (NYSE: NVO) from Tier 1 to Tier 2. Novo may not have the multitude of issues that Sanofi has but they better get with the program in a hurry and Novo sales reps should be updating their resumes. The big winner here of course is Lilly (NYSE: LLY).

Just in case anyone is wondering if this a sign of things to come IT IS. Just wait until there is a biosimilar short-acting insulin an event which will basically push all the insulin companies into full blown panic mode. But why stop with insulin’s, aren’t GLP-1’s, DPP4’s and SGLT2’s facing the exact same issue.

Is this not a crystal clear sign that all the diabetes drug companies MUST get a grip and hunker down? That they can no longer afford expensive field sales forces, that they cannot keep following up successful drugs with drugs that are only incrementally better, that the more studies they do it only reinforces the fact that many of these drugs are interchangeable. Is it not time for them to run to the Valley and align themselves with the companies that are building the future of diabetes management.

Although we are not optimistic Sanofi at least was smart enough to align themselves with Google. Let’s hope for Google’s sake that Sanofi doesn’t screw up this partnership like all the others they have made in diabetes. Let’s hope they have learned their lesson. As we said we’re not optimistic, leopards rarely change their spots and pigs don’t fly. Still maybe just maybe Olivier and Serge will realize that if they screw up this partnership they will be the next stops on the guillotine tour.