Look Out Pharma. The Tech Industry is After You
Remember bookstores? Drug companies could be next.
In early March, a clinical trial reported results of an experimental treatment for migraine, which in two hours provides noticeable reductions in pain. And, most importantly, the treatments don't use opioids. In fact, the treatments don't even use drugs. Pain relief is provided by an electronic patch worn on the arm and controlled by a smartphone that sends mild electrical impulses through the nervous system to block pain signals to the brain.
The system is made by Israeli health technology company Theranica Bio-Electronics, which reported the results in the journal Neurology (paid subscription required). Theranica develops smartphone-controlled pain relief systems using neuromodulation, electronic stimulation of nerve circuits, which according to the company, migraine is just the first application. It is also an example of the growing presence of information technology in health care, including delivery of therapies directly to the patient.
The IT industry is hardly a stranger to health care, but the harnessing of electronic technology to deliver real therapies to real people is relatively new. In addition, evidence is mounting that the tech industry is getting ready to make a larger presence in the business of diagnosing and treating disease.
CNBC reported earlier in April that Alphabet, parent company of Google, is hiring health technology specialists, such as computational biologists and robotic experts, but also life science researchers. Alphabet's subsidiaries, including Verily Life Sciences and Sidewalk Labs are also staffing up with health care professionals, including a chief health officer and director of community health. Last year, Verily announced joint ventures with drug maker Sanofi on diabetes and GlaxoSmithKline on miniaturized therapeutic electronic devices.
Apple is another tech giant making its presence felt in health care, particularly diagnostics. The company offers its HealthKit application program interfaces or APIs for software developers to build health and wellness apps. But Apple also has APIs for life science research it calls ResearchKit that moves the company closer to the work of biotechnology and drug companies. ResearchKit helps build surveys for data collection and provides forms for informed consent, as well as integrating with HealthKit's health data APIs. The personal genetics company 23andMe uses ResearchKit, for example, to write software that enables iPhone health apps to add genetics data.
Other key factors are advancements in computing power, cloud computing, and artificial intelligence for the analytics generating insights for physicians. The smartphone offers a way for individuals to upload their data to these cloud databases for rich analytics, as well as monitor their health-related experiences and symptoms.
Missing until recently is the reverse flow -- providing care to patients through the phone -- but Theranica's neuromodulation app for pain relief shows that situation is changing. And Theranica isn't alone. Another company, NeuroSigma in Los Angeles, now offers or is testing mobile neuromodulation patch devices for ADHD, epilepsy, depression, and PTSD.
The pharmaceutical industry so far is showing no signs of worry about the tech industry's growing presence, with more concern being expressed about government actions that could force reductions in prescription drug prices. Drug company pricing strategies in the U.S., however, are winning few friends, and the build-up of expertise and experience in life sciences by Alphabet and other tech companies could create a disruptive force the pharma industry is not expecting.
The tech and pharma industries have different product development and pricing strategies, which as long as they operate in different worlds, cause no problems for either group of companies. But as their worlds overlap, it will be difficult avoiding conflicts.
Here's an example: A bioengineering lab at University of Virginia is testing in a clinical trial an artificial pancreas for patients with type 1 diabetes, the form of diabetes that results from an immune system malfunction destroying cells in the pancreas that make insulin. The artificial pancreas combines a blood glucose monitor with insulin pump, driven by algorithms that dispense insulin as needed by the individual. The whole system is run from a smartphone, also connected to the cloud if clinicians or parents -- many type 1 diabetes patients are children -- need to be alerted.
Once on the market, the artificial pancreas will likely sell for a simple one-time cost like other medical devices. For patients, however, the unknown continuing cost factor is the price of synthetic insulin. According to the New York Times, the price of insulin has tripled since 2002, with many diabetes patients now struggling to afford this much-needed medicine, and some insulin makers facing legal action for price fixing.
Now imagine a scenario where Apple or Alphabet offered a smartphone-based artificial pancreas like the one in Virginia, and prices for insulin spiked. What would Apple or Alphabet do? Would they simply pass along the higher insulin prices? Or would they buy out a maker of insulin, and start competing with other insulin producers?
You can now also imagine tech companies doing the same thing to pharma as they did to department stores, books, music, and newspapers.
Disclosure: The author owns shares in Pfizer, Johnson & Johnson, and IBM.