What it means
Before we get into our initial analysis of what this election means for our wacky world a huge shout out to everyone who voted. No matter which side of the aisle you sit on you have to be proud of America. In the midst of a pandemic people voted in record numbers. Let’s extend that shout out to pole workers, election officials and anyone else who help keep democracy alive. While it took a while to get the results, the voters have spoken so congrats to President-Elect Biden and Vice President Elect Harris.
Just what will a Biden/Harris administration mean for the wacky world of diabetes depends greatly on the final results for the Senate and let’s not forget the Supreme Court. This is still a divided country although we do see some common ground on issues such as drug prices and pre-existing conditions two areas critical to patients with diabetes.
Now at first glance some would say this is going to be bad news for Lilly, Novo Nordisk and Sanofi the three major insulin companies. We don’t see it that way as insulin has already become a commodity. For years now net prices for insulin have been declining. Add in the fact we will soon have multiple biosimilar short-acting insulin’s which will dampen prices further. The simple fact is for Lilly and Novo anyway is they are now GLP-1 companies first and insulin companies second.
Anyone who didn’t believe this should be convinced as Novo just spent almost $2 Billion to acquire Emisphere Technologies, the company behind Novo’s orally delivered GLP-1 Rybelsus. The reality here is that the GLP-1 market continues to expand, remains profitable and is years away from any biosimilar competition.
In terms of medical devices the outlook is less clear. With the House belonging to the Democrats and Senate likely remaining with the Republicans we don’t see any drastic changes. Like it or not the American healthcare system as broken as its is cannot be fixed overnight. Drastic changes such as Medicare for all might be appealing to some but is very difficult to implement. Our best guess is that President Elect Biden will try and fix Obamacare rather than start all over.
The biggest unknown given that President Elect Biden will take office in the midst of a pandemic is what this means for digital health. Here as well we see market forces having a greater impact than possible legislative efforts. Thanks to COVID digital health is here to stay no one disputes this fact. The question as we have been saying all along is to what extent digital health is used AFTER COVID.
As we written before early indications are that when COVID is over people will still use digital health occasionally. It will NOT however replace visits to the doctor’s office as so many seem to believe. The biggest positive impact has already been seen with companies like Tandem and Insulet who in the midst of the pandemic have successfully transitioned to a virtual on-boarding experience. The next step will be converting patient support functions to a fully virtual experience. Like it or not the days of a patient actually talking with a human are coming to end.
Another area where market forces will play a larger role than who’s in the White House is for companies like Teladoc/Livongo. As we’ve been writing digital diabetes management is becoming an increasingly competitive environment. This increased competition will change the very nature of how these services are paid for. This conversion has already begun with several companies already offering programs for FREE only getting paid for verifiable improvements in outcomes rather than the monthly per patient fees. This reoccurring revenue model which vaulted Livongo to being valued at $18.5 Billion is already on its way out.
There is no question a Biden/Harris administration will be vastly different however given all the forces at play we don’t see any major drastic changes. Market forces combined with the how companies have adapted to COVID will likely have a greater impact on the future.
