Insulet-Omnipod

Business Week has an interesting story about recent advances in glucose meters and insulin delivery systems for diabetics. Many of the devices in the story aim to improve usability in various ways to improve patient compliance and outcomes. Proper control of blood glucose levels has a tremendous impact on a diabetic's health, quality of life and susceptibility to complications.

The market for glucose management has not escaped medical device vendors or entrepreneurs:

The audience for diabetes-management tools is large–and growing. The Centers for Disease Control & Prevention estimates that there are 20.8 million American diabetics, about 7% of
the U.S. population. According to the International Diabetes
Federation's latest statistics, nearly 194 million adults around the
world are diabetic; by 2025, according to estimates, this figure will
reach 333 million. Palo Alto (Calif.) research and consulting firm Frost & Sullivan estimates that the U.S. market for traditional diabetes monitoring
(blood testing equipment and strips that diabetics use to measure their
glucose levels) tallied $3.53 billion last year, up 12% from 2005.

“In the last several years, we've seen low double-digit growth,”
says Mona Patel, director of Frost & Sullivan's medical research
department. “Yes, there will be a saturation factor, but the number of
diabetics keeps increasing–even among children.” So, Patel says, the
market for pediatric devices will grow, too.

The market is slowly growing, but the real opportunity is the poor design of conventional products made for diabetics. They are hard to use, make funny noises, inconvenient, have a medical device look that makes patients look and feel “sick”, have poor battery life, and can be big and clunky.

Blogger Amy Tendrich posted an open letter to Steve Jobs on her blog Diabetes Mine, challenging Apple to bring the same design excellence they bring to consumer electronics to devices for diabetics. The Business Week story describes a design created in response to Tendrich's plea, and touches on a number of other products. (Surprisingly, no mention of DexCom's continuous glucose monitoring system.)

The (glacial) transformation taking place in diabetic devices highlights a structural problem in the medical device industry. Due to barriers to market entry, established vendors feel little pressure to create the equivalent of an iPod for diabetics. Some vendors like Medtronic have created innovative systems like the MiniMed insulin pump with real time glucose monitoring. But in order not to cannibalize sales from their conventional products line, they price the new solution at a significant premium. (Medtronic has taken a similar approach to their relatively new wireless ICDs, charging a $6,000 premium for the wireless models over products that still use induction wands that must be placed over the pacemaker. I know cardiologists that refuse to implant the wireless models because they feel it is unfair to burden the patient/payor for such a high premium.)

Payors only reimburse for technology that has a clear return on investment. They won't reimburse for a fancy (read “expensive”) MiniMed pump for a patient whose condition does not require continuous monitoring and administration of insulin. Sure payors will pay more for a product with better outcomes (i.e., lower costs to the payor resulting from a healthier patient). But proving those improved outcomes – and lower costs of care – is an expensive and time consuming proposition.

It appears that Medtronic – and vendors who pursue a similar strategy – are stuck with a small subsection of the diabetic market, unless they're willing to reduce the price of the MiniMed where patients are willing to pay the difference over what their payor will reimburse for a conventional glucose management system.

The poor comparison between conventional glucose management products and consumer electronics has not been lost on medical device entrepreneurs. Vendors like Medicom, DexCom, Health Pia, and Insulet (pictured right) are bringing better designs and technology to market. These new players will need more of a consumer electronics product strategy, rather than Medtronic's strategy for the MiniMed, if they are to succeed.

More here in a iHealthBeat story about a recent FDA continuous glucose monitoring approval for children that highlights cost and potential savings in reduced health care costs.

Some short-term studies have found that users can improve the control
of their blood sugar through the devices, although other studies have
found minimal impact. Irl Hirsch of the University of Washington said
the discrepancy can be attributed to a lack of effort from diabetics,
not the sensor technology.

The glucose sensors can cost up to
$1,000, with at least $350 in monthly fees for supplies. Although some
insurers pay for them, many refuse to reimburse patients for the
devices until there is more proof that they improve health, the AP/Star reports.

UPDATE: Reader Bernard Farrell has an excellent point in the comments:

Your story illustrates one of the big issues with insurance companies at
present. They don't adequately cover treatments for chronic diseases, and then
later they pay for the outcomes of poor management. There is an argument that
better designed devices will lead to better medical outcomes AND lower support
costs for the device makers. As far as I'm concerned good device design is a
win-win-win situation for patients, device makers, AND insurance companies.
Unfortunately it feels mostly like I'm shouting into the wind about this.

There are two problems I think. The first is demonstrating the hard dollar savings from well designed devices. This naturally falls on the device vendor, and is neither a quick or inexpensive task. The other problem is the tendency of device vendors to want to get a significant premium for their better designed product. A major price increase requires justification before payors will reimburse for a new “class” of device. If a vendor introduced a better designed device (with some additional features) at a slight premium, patients might be willing to pay the difference themselves – think the iPod.

Perhaps what's needed is more of a consumer electronics mindset applied to these kinds of products, rather than the conventional medical device paradigm.