The Hypocrisy

The Hypocrisy

This morning yet another story, this one in the Wall Street Journal, was written on the “rising” cost of insulin. Thankfully unlike other pieces written on this subject this piece did not lay the blame for the rising out of pocket cost on the shoulders of insulin manufacturers. It noted that many factors influence the out of pocket cost of insulin. Still we just don’t see this subject going away anytime soon, nor do we see much in the way of substantive solutions either. As we have stated before there will lots of finger pointing but not much in the way of real ideas to solve the problem.

What we find so interesting here is the hypocrisy of the diabetes blogging community. Given the way many of these blogs have written on the subject one would think that Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO) and Sanofi (NYSE: SNY), the three major insulin companies, were conspiring together to keep the out of pocket cost high so they can fatten their profits. That the executives of the companies care only about creating shareholder value, which is their job by the way, and fattening their already fat paychecks.

Yet these same bloggers are widely praising the latest piece of way cool whiz bang technology, the 670G from Medtronic (NYSE: MDT). A way cool whiz band piece of technology which is being billed as an artificial pancreas, which it is not. A patient does not just slap on the 670G hit the on button and the system does the rest. Yes, the 670G is a step towards a true artificial pancreas but it is not a real artificial pancreas.

But let’s step away from what the 670G is and is not and look at how much this way cool whiz bang device is going to cost a patient. Now we have no idea what the list price of the 670G is but we do know it won’t come cheap to the patient. In addition to traditional pump supplies, tubing, reservoirs, infusion sets, etc. patients on the 670G also need replacement sensors.  Before the advent of sensor augmented pumping patients on average spent between $2,500 to $3,000 per year on pump supplies. Add in the cost of sensors and that cost is likely to double.

What’s one of the biggest complaints about insulin pumps, why aren’t more patients using a pump, out of pocket cost. Think of patients with the high deductible plans that everyone also complains about, any patient with a plan like this and on the 670G will spend thousands of dollars per year to manage their diabetes. Even patients with traditional 80/20 plans will pay a hefty price to manage their diabetes. This is not to say that the 670G is a bad system, it isn’t. Rather it’s by no means cheap.

Yes, we know that no one likes to look at those pesky facts but there is no disputing the fact that advanced diabetes technology won’t come cheaply. To Diabetic Investor this praise of the 670G, this fascination with way cool whiz bang technology overshadows the harsh realities of the market. It also points to the hypocrisy in the diabetes blogging community, people who complain long and loud about the rising out of pocket of insulin on the one hand yet seem to think people will pay an equally hefty price for this way cool whiz bang technology.

But let’s not stop there. Weren’t these same bloggers who are just fawning over the 670G the same people who were condemning Medtronic for their exclusive deal with United Health. Wasn’t not Medtronic the evil empire. A deal which they said would limit patient choice and stifle innovation.

Listen we know these people are very passionate about diabetes and we admire and certainly understand that passion. However, and we know they just hate it when we say this but diabetes is also a business. Just as Medtronic made the deal with United for business reasons so too did they spend millions to develop the 670G. That they would not have this piece of way cool whiz bang technology if Medtronic did not believe they could make money by selling the device. Medtronic did not develop the 670G for any other reason.

This hypocrisy extends to this uproar over the rising out of pocket cost of insulin. These bloggers complain about the cost of insulin on the one hand and then complain that the insulin’s we have today aren’t good enough. The same companies they condemn as evil money grubbers are the same companies they expect to spend millions to develop new and better insulin’s. Well we have some news for these people Lilly, Novo and Sanofi will develop new and better insulin’s only if they believe they can make money selling these insulin’s. That they will only spend millions in development costs if they can recoup these costs and make a profit.

Listen we have no idea how to help patients who for whatever reason must pay a hefty price for their insulin, the very drug that keeps them alive. The rising out of pocket cost is a problem. However, we also know that if the profit motive is taken away, if the government intervenes and issues price controls as some have advocated this will kill limit patient choice and stifle innovation. The surest way to stop the development of new and better insulin’s or even more way cool whiz bang diabetes devices is to make it so the companies doing the heavy lifting, spending millions in development costs cannot make a profit.

Now if these people were coming up with solutions or ideas on how to lower the out of pocket cost of insulin that would be great. If they engaged the insulin companies and bothered to understand their side of the story that would help as well. But mostly they complain, ignore the facts and believe that it’s up to the government to solve the problem. Like that worked out really well when competitive bidding went into effect.

It would also be helpful if they stopped talking out of both sides of their mouths. That they cannot on the one hand complain about the rising out of pocket cost of insulin and then expect patients to spend a hefty sum for way cool whiz bang technology. It’s time for this hypocrisy to end.