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Inhaled Insulin and Diabetes Costs: An Interview With Pharma CEO Michael Castagna

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Living with diabetes can be difficult but is always a balancing act between nutrition and medication. In this today’s episode, Darshan interviews Michael Castagna, CEO of MannKind Corporation. They discuss the evolution of diabetes treatment and how the prescription use of inhaled insulin can significantly improve quality of life.

Darshan: Hey everyone. Welcome to another episode of DarshanTalks. We have a very special guest. We have, Mike is Tanya. Mike is, um, the CEO of mankind, uh, not, not, not humanity of mankind, the corporation. And, uh, he is, um, he's gonna be talking to us about some really interesting things because we had a little bit of a conversation right before we jumped on. And what we're going to talk about is how do you, how do you approach, um, the standard of care and how do you sort of approach engaging patients in a way that's meaningful

Narrator: This is the DarshanTalks podcast, regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @DarshanTalks or the show's website at

Darshan: We're using the term engaging rather broadly where we're thinking about cost. We're thinking about actually talking to patients, we're talking about, um, what role clinical research clinical plays in this process. So, so Mike, you wanna introduce yourself before I jump in, do many of these questions?

Mike: Sure. Uh, thank you for having me today. I appreciate it. And that's been a busy week cause we get ready for holidays. But, uh, so my is Mike Astonia. I, uh, been at mankind almost four years now. It's been a turnaround company where the makers of inhaled insulin were the only inhaled insulin on the market. And the only one that'll be available for the next, probably 10, 20 years that we can see. Um, and my background is pharmacy. I've been at the pharmaceutical industry 23 years. I've done a lot of turnarounds, less, 15 years and worked for great places like Novartis and Bristol-Myers and Amgen. And I've had a fantastic career. I was actually a part-time pharmacist and pharmacy tech for 15 years. So for me, healthcare, I live, breathe, eat, and sleep. I love healthcare. I love what we do for changing people's lives. And a great thanks. Thank you. Looking forward to the dialogue today.

Darshan: So, so let's let's and thank you for being on, um, let's, let's start talking first of all, with this concept of you will be the only inhaled insulin for as far as you can tell 15 to 20 years, inhaled insulin has sort of been, I remember going to pharmacy school around the same time you did actually. And, uh, full disclosure, Mike and I went to university of the sciences then called the Philadelphia college of pharmacy around the same time. Uh, I was 2002 and I think you were in 2001, is it right?

Mike: Is that right?

Darshan: So, um, I remember hearing about inhaled insulin then, and I remember it being the panacea. Um, and now what I'm hearing you say is as a turnaround company and you're hearing about how there's no one gonna cut, come on. What happened? Why is the panacea not, not as great as we all thought it would be? Or why is it as great and people aren't jumping on so

Mike: Well, when you, when you used to get inhalants and you would get this box called Exubera. Okay. And so when you think about where we were back in mid two thousands, right? This, this was the first thing that everyone was so excited about, which is even more amazing. You look at it 20 years later, 15 years later, this thing was a bomb. That was your inhaled insulin. Oh, wow. Okay. Right. And so Al man, our founder was, it was a very successful businessman. He built the insulin pumps. And at that time, you know, he, you know, he looked at this thing saying, well, God, if that's what Pfizer spending 3 billion on, I can make that better. And that's what Al Mann spent. Our founders spent a billion dollars of his own money to build mankind. And he wound up taking the product from what I just showed you to the small little inhaler.

Mike: And you know, this is a Fresno, it's the only inhaled insulin, the market it's, it's available here in the U S and Brazil. And we're going to India and Australia next year. So exciting expansion there. And, um, you just put a cartridge in and you change your dose depending on what you're gonna eat. And two seconds later, you've got your dose of insulin. You go enjoy your day and move on. Um, so it's indicated for adults, we're actually going to be starting a pediatric trial next year. But when you think about disruption, right, injectable insulin has been around a hundred years next year. Uh, we've been using the same insulin. I remember, you know, there's a book called on breakthrough and I read it recently and it's very sad. But basically if you've got type one diabetes back in 1918, you died in three to six months and your only treatment was being institutionalized and starved and carb restricted.

Mike: And that's how you lived six months or nine months. They don't teach you this in pharmacy school. Right? And so you starve. And so you fast forward a hundred years later. And I talked to these patients and I say, what are you doing to grow? I want to look cute with diet. I want a car-free diet. We still starved people today in order for them to live their life. And so they can't go out and enjoy a glass of wine or two, they can't go out to dinner and take their insulin 15, 20 minutes in advance and know that it's going to show up on time, their food and they don't go low an hour later. So they're constantly when you live with diabetes and I never really appreciated this until the last few years, you're doing a hundred calculations a minute in your head around that.

Mike: I take the right dose. How long before my sugar drops, is it going to drop it? Now I got a sensor on my body. It tells me live every five minutes. Am I doing well or not? So now remind that I'm sick 24 seven, but before I'm just checking my sugars. When I want it to now I've got an alarm, tell me I'm going high. I'm going low. And people are stressed. We're stressed out where they got all this technology and diabetes. We're one of the most advanced, I'll say healthcare technology diseases. When I think about what do you do with data and sensors and what do you do as a result of that, that information diabetes is way ahead of any other disease I finished. Uh, and so it's exciting from that perspective, but when you take a step back and say, you know, have we changed outcomes in the last 20 years, uh, from when we've got human insulin and Humalog and nobody live in the NovoLog and we've had 40 drugs approved by the FDA in a timeframe as well. And you sit there and look at the broad outcomes. We now spend $6 billion a month on drugs for categories from 1,000,000,005 years ago. So we've increased our expense a lot. And the outcomes into databases are still the same. And you sit there and scratch your head, say, how are we spending?

Darshan: But before you continue outcomes in the U S or globally U S okay. Right.

Mike: But the rest of the world will be worse probably right? Because they don't have access to half the drugs. Um, but outcomes are the same or worse. In fact, there's a database called the T one D exchange, which is 23,000 type one patients. Um, it's showing you that their outcomes are on the insulin pumps. They're on the CGMs. Their A1C is, have gone up in the last 10 years, but the previous tenure, and that's crazy. These are the people that are costing the most money they're on the most advanced technology they're seeing the most advanced and their A1C is I've actually increased the last really 2013, 18, wherever they looked at the data. And, um, so you got to take a step back and say why, despite the advancements in technology, despite the advancements in newer injectable, insulins and insulin pumps and all the other oral drugs, we've had diabetes, why are outcomes still the same?

Mike: And for me, you know, I'm studying this as a pharmacist for the last four years nonstop. What people fail to realize is we have a mealtime control problem in this country. And meaning if you don't, you know, we eat three to five times a day, many of us craze, and you know, if you're live with diabetes, you gotta be able to check your sugars and take something every time you eat. Uh, cause you're just going up. Instead of we just keep throwing more and more drugs on, but we don't fix the actual mealtime problem. Right. Which is that's when your sugars are spiking for two, three, four hours. And you're high all night. If you have a big dinner and then your sugars are running high and you wake up high and you're just in a cycle and the insulins that we use an injectable just take a long time to work and they're not perfect.

Mike: So that's part of the problem. And then you say why isn't things changed? Um, our insulin really is pretty close to mimic and your physiologic insulin. And, um, you take it and be just thinking you think about when you inhale oxygen, right? You don't feel that you'd held oxygen. It's just naturally happening. When you inhale or insulin, it's going right into your bloodstream right away. It's in your blood and seconds. Um, when you inject insulin, you got to wait about 45 minutes for the breakdown in the body and then get to the liver and then start working within about two hours. So that's the biggest mismatch when you eat your food and your check, you're waiting two hours for something to happen. We've done. Head-to-head studies showing it's about two hours for your institution sugars start dropping with injectable insulin with our drug 15 minutes.

Darshan: Is that with regular insulin or, uh, one of the longer acts,

Mike: The ones I'm talking about, the mealtime insulin. So NovoLog, Humalog, and the, for everyone you want, they're all about the same. Um, no, I don't want to pick on any one company. So I just kind of all mealtime insulin says one category, not pick on anybody. Okay.

Darshan: Um, but here's a question for you. Uh, one of the things, um, working as a pharmacist for 20 years, one of the things I remember was, you know what, this patient's on 31 units of insulin that one's on 47 units of insulin. How do you deal with that? With the freezer?

Mike: Yeah, no, it's a great question. Because one of the things is when you think about inhaled insulin as a category, right, we are disrupting a hundred years of to your point. I'm doing carb, counting insulin, sensitivity, insulin on board, and I'm going to do all these calculations. And by the way, my insulin batch to batch is about 10% variability. My card counting is off by 50%. My blood glucose meter is off by 10 to 15%. And I'm going to pretend that 31.2 units is going to get me exactly where I need to beat three hours later. I'm off of my calculation on top of my stress levels, where my ankle, my angle of injection changes my absorption by 25%. And so I argue people all the time about the accuracy of insulin dose and their perception is we, I only give six units and I'm like, yeah, but you could be getting eight.

Mike: You could be getting forward. Like, you know, you really don't know your calculation and what you really need and your timing is all off. And that's been one of the biggest misperceptions. We, we unfortunately are the Tesla diabetes, right? I like to say that because, you know, Elon Musk had to go against the car industry, the gas stations to get electrical stations, the distribution network, the unions, all the body shops, right. He had to go out and really think about how he builds a network to solve his own problems because nobody was doing a festival. And that's part of the problem. We go to the dieticians and talk to the dieticians and they don't even know about our drug. They don't even know about the efficacy and safety data. Um, we go to the physicians and they go exactly what you just said. Well, wait a minute, I need to calculate.

Mike: And I go component four, eight, 12, and you can do this all the 48 units. The math is not that complicated. You know, are you having a big meal, a small meal or a large, like an extra large meal. And the good thing we've proven that you can take it though, straight up from when you eat, you don't have to time your meal. When it's going to show up, you can tell right away, as soon as your food shows up, you know, in an hour, if you're not where you need to be in your sugar control, we'd demonstrate you can dose again, as soon as one hour, you know, so you're not stacking your insulin. You're not going to go low three hours later. Um, and I can't say never anyone can overdose insulin, try it. Um, but you, your probability is dramatically reduced. We've shown this 30 to 50% reductions in severe hypoglycemia, which is a risk of life and death.

Mike: One out of 20 people type one, patients will actually die from hypoglycemia. So think about that. You got a 5% chance of death, like just from hypo, that, that that's not a good feeling. And we reduced that side effect dramatically and had studies. Um, and so that's, that's, to me like the problem with diabetes fundamentally is we have 60 year old endocrinologist who aren't training anything new. They wait a long time. Remember we used to think that form and cause cancer. Now we actually think it prevents cancer. Um, and so it didn't get approved in the U S originally. Uh, and so we just take a long time to adopt new technology and the Byetta by Doria with AstraZeneca and amylin years ago, they've been around a decade. And all of a sudden, the last six years, that classes it's going to have to billions of dollars.

Mike: It's just skyrocketed. These drugs have been here for a decade working fine. But now that once weekly Trulicity and whatever is Epic, and all of a sudden the whole category is off the charts. And that's where TV advertising comes in, right? Every wants to lose weight. Everyone thinks they're going to get better control. It's important, but what we fundamentally believe across the country, uh, that mealtime insulin is important. That there's a gap in people's education and knowledge about how it works and that if you really want to get more people to go, um, you gotta begin better effects at mealtime control. You can add all these other drugs, they're gonna help you on your fasting. But you know, you got to fix that mealtime bolus when you eat. And our drug works so quickly allows you to have that real.

Darshan: So you talk about this mealtime control and you talk about how most other drugs, um, have so much variability in them. I guess my big question is, again, I, I'm going to date myself with my pharmacy knowledge because I'm a little rusty, but my recollection is they dropped the HB A1C requirements. I remember it used to be seven, but I think it's like at six or 6.5, last time I checked. And so how do they, even if you've got so much variability and patients just aren't controlling themselves and were sort of business high chance of, uh, of, uh, morbidity and mortality, that's tightening your insulin, uh, is being able to see basically, is that helpful or are we sort of it's? Is that a disservice to patients?

Mike: Yeah. Great question. There's been all kinds of debate on this one. So the goal is around seven for the average elderly, we'll say eight. Uh, and the reason we don't push down the normal, person's like a 5.5 or six. Um, but the reason people don't push their agencies consistently below seven is because of hypoglycemia and that risk of life and death. So you see a lot of people ride high and in fact, 80% of the people on insulin this country are not a cool, so four or five people are now in gold. Something's not working. I got news for you, right? Well, I have goals of 80% of people can't get there. So, so that's the way to your point. You gotta be able to push your dose of insulin to feel comfortable. You're not going to cause an adverse reaction, right. And that's where these patients are just stuck between, you know, do I push my dose of insulin is, and is my dose accurate?

Mike: I want to call it variability. Cause I think, you know, insulin is pretty tightly controlled and regulated, right. But, but I think that the variability is really in the era of calculation of human beings, right? Number one. And then the second part is we know 20% of injectable doses are missed and mostly at lunch because people on the social stigma don't want to take out the injection right. In 600 body at the table, they'll just skip it a little later. And then they forget and they're hot. And so how do you get in control of you're missing 20% of your doses kind of hard, right? And, and, uh, cause then you're high up dinner and then you're chasing yourself all night and it just becomes a self-fulfilling cycle. And so we look at Pfizer and Santa Fe, you know, between mankind and Pfizer, we spent $5 billion to bring in Hilton's onto market over the last 25 years.

Mike: And you know, unfortunately those two large companies failed and we got the product back and we've done. We don't, we wish we could have done better. I mean, we're doing well, but there's just, there's so many patients to help. There's so many people not in control. And what's sad to me is 96% of people with insulin diabetes do not know and Hilton sins on the market. So think about that. I live with this disease every day and I did not even know there's an alternative to what I've been doing every day for 20 years. So that's part of our goal, right? We don't have a hundred million dollars to go blow on TV. And so we have worked through podcasts and nonprofits and raise awareness through social media. And that's what we hope. We hope doctors offer this as an alternative to what they're doing.

Mike: And I'll be the first one to tell you, man, there's a pharmacist and economic value. If somebody can do well on Walmart, $20 violence line or cheaper injectable insulin, go for it, right. If you can tolerate it and you're managing your sugars and you're in control, that's what we all want for society. But when you're not there, don't just sit there and wait for your doctor to tell you here's another drug. Here's another copay here, you know, strive for it for an alternative. And that's what I ask patients, right? It's just, what do you have to lose? If you've been struggling for five years on the same drug, I can do this for you. Maybe you wanna try something. Right. Um,

Darshan: So, so here's my question. How do you be, I mean, you said, what is it? 96% of patients don't even know that you guys exist as a category, as an option. How do you reach them? You mentioned podcasts and you said, non-profits talk to us a little bit about what, what have you discovered there are appropriate ways to engage because you're basically using growth marketing at that point.

Mike: Yeah. No. And I think, well, what happened is we were a turnaround company. So as you turn a company around and you get more money, as you get more money, you can put more education out there. Right? So I think that's the good news. We're now in a position where, you know, we can go out next year and we've got a big, big effort to educate more doctors. We have today about 3000 prescribers and growing, uh, we probably about thousand patients. So, so we're doing okay. Uh, but you know, when you get 10,000 patients and they got 10,000 friends that are, they're going to tell them, and then you got a thousand patients with tell 20,000 more that they're doing great. And then the doctors see them and say, wow, that patients don't really well. Why don't I use this to more people? That's what happens.

Mike: I never had a drug in my entire career. I've worked on 20 some drugs where I talked to the doctors and I did them all specialties. And they go, you need more sales reps and do direct to consumer. And I'm thinking in my head, why, why do you not just offer a patient a solution? And they basically, I'm too busy. I don't have time. And if somebody comes in to ask for it, it's much easier for me to prescribe it, then explain to them a whole new mechanism and training. And so it's kinda one of those things as our system of healthcare, no one is paid for outcomes. Everyone is paid for volume. And that's a fundamental problem. Even when you think about the accountable care organizations, they don't, they don't control the drug. They control hospital protocols, you know, all the sensitive care, but the form they're still controlled by a PBM and the old system I've seen too.

Mike: The only system I've truly seen in this country worked really, really well is Kaiser. You're in California. They're the only ones who care about hospitalization. They care about the medical costs. They care about the dialysis. They care about the transplant. And, and you know, when I look as an employer, right, we have 500 lives in our employee book. Kaiser is half the price as a blue cross blue shield or United healthcare half. How can it help if they were national, they would put all these unite hookers out of business. They are half the cost. I mean, that is absolutely crazy to me, but that's how efficient they are. And no offense, they benchmark the benchmark, they published the data. Um, and then not use them on the drugs. Right. I'll be the first one to tell you that they use older generics, 95% of the time, if they can, but I give them credit. They test the drugs, they test the generics. They make sure they're comfortable. They'll do their own PK studies. I've never seen any like, um, but they're, they're all data-driven outcomes. And Kaiser is me and amazing just right. And they get a bad name. They're like, Oh, I got cancer. I don't want to go there. And I'm like, the cancer success is pretty good elsewhere. So I don't know. I don't judge people, but you know, we'll say from a neutral objective viewpoint, there are cheaper and they have the same outcomes.

Darshan: So let's sort of explore that. You talked about cheaper and same outcomes, and you mentioned that you're expanding into India and you're expanding. And I think you said a failure, et cetera. The one that sticks out to me is India because well, I'm Indian. And because I've had some history there, but the question I have is India is known for having a making cheaper version of insulin. Are you worried about that as you start entering that market?

Mike: No. I think, you know, unfortunately, or fortunately upon how you think about the world, not, everyone's always gonna have access to everything that's available. Right? I mean, that's just unfortunate, especially in the developing markets, but as these markets evolve, right. And you say, take China, you've got 300 middle-class people. Can they afford a hundred dollars a month probably. Right, right. And so India, is there a hundred million people who could afford a hundred dollars a month? Yes. You know, what can you get to the billion? You got to get volume and volume problems. So you can't get there day one. But if you can start helping the 81 million people in India, what's, what's one, the largest, fastest growing segments, their dialysis centers. It's horrible. You have, you know, 81 million people's in average A1C a 10 and the goals of seven. So when I look about Afrezza is as a population, they don't want to inject themselves.

Mike: They don't want to show school and they don't eat heavier meals late at night. We're like the perfect drug for this right. In my mind. And what I think about is not, how do I lower the cost of a president, right? But I'm thinking about as, how do I get diabetes insulin to be twice a day, again, like it was 30 years ago. Because if I, if I could lower the cost by giving you less drug and control your morning and dinner, that's probably going to get enough people closer to golden we're doing today and reduce your consumption. Let me reduce the complexity. One of my big ideas is actually getting rid of blood sugar testing for type two patients, right? That costs you money. The test does it anyway, but everyone's saying, I'm not gonna give you this until you do it. So I want to run a study where we actually show that it doesn't make a difference.

Mike: We don't have severe hypoglycemia in type two. Again, I won't say never, but on average, driving more people to control and making their life easier is going to drive better outcomes. That's what I think about for India's. How do we, so we're doing a trial on India to your point on dosing of insulin, it's going to be mental dose pack. Z-Pak right. You're familiar. Those how easy did to give a patient a mental Dosepak sample and by day seven, they're all 12 units. And so we treat everybody the same. We titrate them up the same. They're all on the same dose by day seven. And then we just titrate every, every month, two they're effectively controlled. So they may need one to two puffs of, of our products. Um, but everybody should get there within three months and then, then it can maintain them and bring them and seat down. And I think if you can show that dramatic impact in a country like India, I think there will be room for innovation. And then you gotta bring the cost down. I mean, they're not going to pay the prices you pay in the us for these things. I get that. That's so cool.

Darshan: Well, talk to me about that though. If one of the big questions you always get from the patient community is why are gross, cheaper in India compared to in the U S how do you address that?

Mike: So, fortunately, unfortunately we had to do 70 trials and $2.2 billion in 20 years of investment to bring in Hiltons into the U S market. So that investment's done. Right. But that's what it costs to bring an innovative drug. Whereas the first country in Hilda insulin pumps the U S so we get innovation faster. India is getting at five to eight years later, right? So, so that's the differences is that upfront cost to build out the manufacturing plant, to get innovation to patients faster is already been born in, in this market because of the freedom that we do have, uh, you, you know, you don't have any incentive to go to China and Japan and Europe. I mean, you have not. Um, you have every incentive to get the us first because the rest of the world looks to the U S for to follow. And so that's number one, number two, you don't have as many middlemen.

Mike: The government is the parent allowed these countries. So when you look at us 22 cents of every dollar, we, we, we, we made $8 million in the company, 22 cents or 16 million goes to the middlemen, the wholesalers and the pharmacies. Yeah, that's one I'm not picking on pharmacists. Believe me, they're not, they're not making money, but wholesalers charge us as a small company in times where they charge Amgen. Why, why do I get gouges, a small employer? And then I got to charge a higher price as a consumer because I'm a small company and I was much revenue. I got to charge more for it for a product that, you know, my competition makes 10 times more than me, or a hundred thousand times, right. They pay a lot less. And so when you go to other countries, you just don't have all these middlemen taking money. And you think about PBMs, right?

Mike: Pharmacy benefit managers, you know, they probably take 50 cents on the dollar of a drug. The patient's paying 20, 30 cents, 80 cents is being paid for by the drug company and the patient themselves at about 20%, 30% is being passed through to the employer. And that's, if we even know what that we're paying for as an employer, right? So, so, so much of the cost is chewed up by middlemen in this country. That if you cut all that out, and then a great example is we charge $99 on $199 a month with words right here, you can go buy it in Florida to pharmacy. And we cut out all the middlemen, we cut up everything. You just go down there and pick Ash. And so we've done it already. You know, we make our employees go there. And, um, and so, you know, we've shown that you can bring down the cost by removing infrastructure.

Mike: There, you got to think about PBS put up prior authorizations, they put up copays, you know, they just put up an enormous amount of friction, ultimately for a doctor and a patient. Can we just say, you know, when you take Medicare populations park date, now Medicare patients can't afford 20, 30% call share, you know, their, their cost share on our products through 300 bucks. And the pairs will say, well, if you were lower, your whack, then they won't have that. And I said, no, you, you still wouldn't cover me because I don't give you a 50% rebate. So my lower my way. Um, and so they need the rebate dollars. The entire reimbursement system is built off rebate dollars, and you will hear that, Oh, we pass it all through to the consumer. It's an employer. Well, that's partially true. They don't tell you about the 5% admin fee they charge.

Mike: They don't tell you about the 3% admin fee. They charge the employer. They don't, they charge all these fees in their system. And, and you know, you're doing a hundred billion dollars in drug revenue by percent, $3 billion. Yeah. If you avoid taxes on that, that's a lot of money. Cause you do it overseas. Um, they, the GPO, they charge you another fee for formulary compliance. Um, you know, all these little fees that up a hundred billion is five, 10, 20 billion. That's a lot of money. And so that's part of the power of drug pricing. We don't have those same challenges outside the U S as you do in the U S so notice there are no PDFs in the rest of the world. Right? Right. Well, some would argue, isn't that? What nice as functioning as in the UK. Yes. Yes. But they're not there.

Mike: The prices are low because there's not a bunch of people making money and they're restrictive. Right. So I'd say, but guess what? Nice buys a present from the U S and imports. It is that right? Yes. We have about 10, 20 patients in Europe and UK on, on a Fresno. So here is a country who actually were not even filed for Europe. And patients are demanding the drug to get better outcomes. And they're paying cash for our drug and important for their, for the population. So as much as we argue about this, I'd say license, buying the drug. And I got a PBM here in the us. It gives me a hard time on every single patient. Yeah. I got another country paying full price and importing because the outcomes we deliver for patients. And so, you know, we, we do have a drug pricing problem in the U S I'll never, I'm the guy who tried to build biosimilars 10 years ago.

Mike: Yeah. The price. And, you know, all I heard was rebates, and I'm just gonna use your low price to negotiate against the brand guy. Well, why should I spend a billion dollars to bring a biosimilar to market? And I think you'll see that market will not make it. I mean, they won't make money in the short term. I agree, but it's not going to help the market because you're going after very niche populations that are 5,000, 20,000 patients a year, right. Made money in volume. So if you're driving down price 80, 90%, and you do it on volume, you got a biologic and you already seen a Neupogen. The prices have plummeted, um, make money. So, you know, eventually you'll make your money if your first will make money, but for third or fourth, good luck.

Darshan: So, so, so are you worried about biosimilars when you end bear markets like India? Because I know for example, Biocon is big on biosimilars.

Mike: I think, as I said earlier, you either have to have a better product that you can compete on. That gives better outcomes. Yeah. Price. Right. And so if I was, if my inhaled insulin had the same profile and did the same thing as injectable insulin, we had that in the water. Right. But so, but if you think you can provide less hypoglycemia, less hospitalization, better A1C, less blindness. You know, these are all the things that we want to show over time. And people actually take your drug because they around administration, you don't need needles. You don't need to worry about carrying around. You know, it's just so much easier. I mean, literally this is, this is not going to carry for a day, right. This is three pods. In my hand, I can put in my pocket, I have no excuse not to take my insulin. Right. If I'm going to other patients, I got to carry a needle in a pen. I got to carry a, a vial. I need a refrigerator. Right. I mean, it's just, people always worry, especially you need the heat. Sometimes you gotta worry about those things. I mean, I'll tell you that to India, you have no perspective, but when I went there, it was amazing, amazing country.

Darshan: So, so I have a question though. You mentioned the, um, caring of the device and then the pause that you take with them, what just stuck out at me is the idea that it's, it's very similar to what I think a vape might look like. And do you find any kind of problem with, um, people who vape I'm back interacting, for example, with a freezer? Well, we don't know.

Mike: So we don't recommend that drug in smokers or people have slung disease, like UBD and asthma. So from our perspective, you know, if they want to, it's already hard enough to live with diabetes. If you want to smoke and what's yourself in that sentence, like, that's even worse than like my mom's smokes. It bothers the hell out of me. Um, but, but, um, no, we don't recommend the drug in patient populations like that, and we're going to the kids. And actually, we also have a CBD program with a partner. So, you know, we will, our technology will be applied to much more orphan lung diseases and those areas. So you'll see some stuff coming up very shortly on that. Um, but, but yeah, but I think honestly, it's a two-second inhalation. Literally it comes like this, you just pop out this little cartridge and people will just, uh, you know, put it in.

Darshan: Unfortunately I was alive. I just realized. So,

Mike: But please take some glucose or something. It's four units. I'll be fine. I'm not too worried. Okay. I had a sip of soda assumption my sugars a little bit. Okay. But no, but that's the beauty right. Is, is, you know, you're not, our drug has a pretty good safety profile, right. So I'm not too worried about taking four units. It's not going to kill me. Um, you know, I think that's, that's one time I was on duty station. I took a 12 unit cartridge. That was a little bit scary. I was like, Whoa, that's a lot.

Darshan: But like you said, it's like oxygen, you barely feel it.

Mike: Right. So what would happen? So my point is, if you're vaping, could I put it back in my pocket? Nobody even knows I did that. Right. I walked down the hallway, I go in the bathroom, you know, I stopped my meeting. Um, it's kind of in conspicuous, right? I think that's, what's nice for patients is they, they can be compliant and live their life and not hiding something.

Darshan: So let me ask you another question that sort of popped out at me when you mentioned the, the program you have with the pharmacies, you talked about the $99 or the one 99 per month, which I think is like the golden again, I'm not speaking, I don't work for a, for, for your company. I just remember that that being a goal for a lot of patients going in seems expensive. I, how do I afford this? And this sounds like it could be that magic number, but again, each patient needs to make their own decision with their own doctors. But anyway, going back without, by disclaimers, um, the, the, one of the things I remember seeing, and I'm curious why you didn't go down this path, uh, is a lot of larger pharma companies who are trying to cut their own costs. I think this was a Bidell a few years ago, but they basically started on pharmacy and then they started actually making and shipping their own drug. Is there a reason you didn't go down that path?

Mike: Uh, w w there's more to come from mankind. So I don't want to go to a telehealth with a telehealth provider partner, so people can spend 45 bucks and go online and get a visit and get access to the drug. And part of that program is, Hey, if you have underinsured or high copay, you all may have to go to our pharmacy for cash pay. Right? So, so we're, we're doing this automatically. We build a whole new reimbursement process and, um, you know, and then if it's a commercial insured and it's covered, we get the patient shipped out the next day. So you'll be seeing more and more in that space. I mean, the sad part, there's no margin pharmacy, right? I mean, it's so hard for these independents to survive. And so you got to owning a pharmacy is not that interesting to most companies. And, but can you, can you make volume and simplicity and standardized serve procedures? And that's where I like our partner down in Florida. They do a good job. We're doing a really cost-effective way to get the drug out the door.

Darshan: So you talk about pharmacy, not being interesting. Most people I can think of one single, truly not a company that's sorta kind of interested in it right now, Amazon. So, um, what is your take, why, why do you think Amazon got into the business? And do you think it's a game changer?

Mike: I, I don't, um, I think, look, if you're on birth control or my ag or something like that, great, it's going to make your life easier. It's going to show up like the rest of your stuff. If you're an elderly person, when you, I don't know, I just spent drugs. I got my grandma's showing up at 17 to 14 drugs. It doesn't know what pill goes, where that is not on Amazon. They're not looking to get all their meds. They've got to build a pillbox. They need their kids to help them. Right. I mean, that's where a lot of volume of prescriptions come from is pretty sick people. And, you know, but I think Amazon will do a good job. Are they going to disrupt? And I think people like going out still, despite COVID, I mean, they'd like to the pharmacy and talking to the pharmacist.

Mike: And so I think if you're just on a simple maintenance med Labrador, fine, you know, I'll fill, it, hit the refill button done, but, but, you know, I think Amazon's gonna be a real threat. I don't think they're gonna just take over the world. Like everybody thought when that was announced. Um, but you know, the other part of Amazon is they, they're probably gonna carry more generic sending our brands in terms of what their model is gonna look like. And, um, you know, Amazon, um, trying to get, I don't wanna say too much, but they have certain margins. And so Fernando, that, that margin to healthcare where the brand companies keep most of the revenue where the generic companies love that revenues made up. A lot of people make money on generics, right? The wholesalers PBMs. Again, everybody makes money on generics. So there's a lot of margin in generics where Amazon can control, which generic, the volume of generic and standardize that.

Mike: And I think they can make a lot of money and treat 90% of prescriptions that way. Um, but the brands, I think they're going to struggle with margin. Um, but they'll get there. I mean, they can, they have access to those. It's not like they can't buy them. Um, but, but I want to disrupt right. For me, you know, I wanna make sure Fred's is available at Amazon. We want to partner with them and other partners like them. So, so for us, you know, it's really about how do you change the business model to focus on outcomes? And how do you think about going to employer groups differently? Because right now, you know, I was talking to an employer, they told me what they're paying for injectable insulin. And I'm like, wait a minute. The PBM is pocketing hundreds of dollars a month per patient.

Mike: Like, I didn't know, they were billing to self-insured employers as much as they are, but yet they say, pass it all through it. They pass it through a guaranteed rebate. You don't know which drug is being stolen, but you look at your cost of insulin. It's not, not what the net cost is. I can tell you that. Um, so I think there's a way to disrupt the market and, and, uh, and that's that's, to me, I always think about how do we not know if you're gonna win it's it's how do you win? You know, it's just like Elon Musk, Tesla struggled a long time, a company like Dexcom struggle a long time, you know, remember the blood glucose test strips. Yeah. There were two, three sets of the test strip. Right? Right. And the PBMs are making billions of dollars on rebates. They still are on test strips because you go to the pharmacy, they're marked up one, a hundred bucks, 125 bucks.

Mike: Yeah. Right there. They're like net 3 cents, a strip 5 cents a strip. Why, why are they a hundred dollars at the pharmacy shelf that PBM is collecting major discounts. And now the next comp comes out at $500 a month for a sensor. What, what evidence showed you? We should be paying for pennies a day to do 10, 20 hours a day, but there's no economic analysis, but yet we pay for Libra. We pay for Dexcom as society. Right. And then we talk about clothes and you know, that, that's what we're paying for is employers. It's, what's driving up. Healthcare cost is, you know, are we truly getting better outcomes? And, and, and, and just to back on India, I give avid credit. They launched this thing called Libra. I don't know if you've seen it on TV. It's a little circle sensor. You put it on your arm and then launch it around the world for roughly $99 around the entire world.

Mike: So whether you're in Africa, you're in India, you're in China, it's $99. They did over a billion dollars the first 18 months out. Wow. There is a way that you can fix the price, whether it's us or the rest of the world and make a viable business. And that was their strategy was to make this mainstream and transformed the market where we're Dexcom, who's a $40 billion company doing great. You know, they went after a bird niche type one high-end patient. And they're doing great too. I mean, so you got two companies. Who've looked at the same exact market and segmented differently. One charge was three to $500 and one charges a hundred. And they're both financially successful making billions of dollars.

Darshan: But here's the question of, if I was a shareholder in Abbott, my first question would be, well, could you have done that better? Could you have charged more so that, uh, I would have gotten a better dividend coming out, coming out of it. And, and what's your sort of response as a CEO of,

Mike: Yeah, I would say they want after volume and they've made the practice very efficient. They went from three times a month sensor, like every 10 days to twice a month, every 14 days. Here's your margin by a third right there. Um, they had to disrupt and think about anything about blue ocean strategy. You've ever read that book. They built another market, right? Just like bringing bows out a circus. And then you got the yet Cirque de Solei built a new market for adults. That's only, they didn't want to compete head to head against this comp. They just built a new market and expanded the pie. And they're doing great in that Mark stretch. That would be others coming in. Right. Then I think it's gonna be interesting to see how player number three, four, five local sky stay low cost. And how has the high cost one?

Mike: I mean, this is a good marketing problem, right. But yeah, but that's us. I mean, so we, we look into that. There's low cost insulins. It's great, but there's injectable as much as $500 plus a month for patients or price points. It's like premium to that. And so that, that's where we are. So we, we, we, that's where we are on our pricing from wholesale price, before a cash price, we set a price of a Starbucks a day. You know, if you got to buy your insulin, we felt that's a fair price and people can follow me for that. But when you ask people who are debating about the price of insulin, I said, what's a fair price for a drug. Everybody says free. Okay, well, not everything's free in society. What's a fair price. And we decided that three to $5 a day was fair. So that's kind of where we landed as a company. And some people say it's not affordable and I don't disagree, but I look at how many, I see homeless guys with homes, right? I'm like, how do they have an iPhone? Um, so let me, let's just California.

Darshan: You have some, you have some high quality homeless people around here.

Mike: All guy they're playing the sax. I got to do a Mercedes. Like you can't make it up.

Darshan: That's awesome. Um, one last question. Cause I'm curious, cause you talk about disruption and I'm fascinated by disruption myself. But one of the big things that I think COVID has done is forced us into rethinking our models. And, um, we talked about Amazon and what I project, but Amazon, and I don't think I'm really, even this projection. I think people are going to have, are all gonna say this, but, uh, Alexa, Alexa is going to, I'm afraid of saying that word cause is going to happen. Exactly. Uh, but I think that it's gonna, they're gonna use that as part of the tele-health platform. And the question is, does that, um, is that an opportunity for a CEO like yourself to go, you know what I want to partner with these people because they're changing the world or do you think that that changes too incremental and there are better ways to be more progressive? I think by default disruptive

Mike: Just minded people like to partner with other business throughout the, you know, that's how it changed the world. Right. And, and, and so, you know, I think

Darshan: It would just everyone off and do it yourself yeah.

Mike: To yourself and that that's helpful, but you know, sometimes it's better to partner up with people making it happen faster. And it comes down to, do you have part of the solution to part of the problem, right. You know, what is Uber solving, right. What was Lyft, stalling? What is Airbnb solving? You get efficiencies of a market of an empty house or a car or someone to make a living or a taxi, you know, or quality customer service. Right. I mean, you know, but you know, you gotta be solving a problem. And I think that's always what I look at and say, what are we solving as our product and our company and we solve was really fundamentally the number one problem, mismatch of your food and that's it. And so we were the only company that will have that insulin as far as I can see for the next 10, 20 years.

Mike: Uh, and so yeah, well someone one day maybe come up, I don't think so to your point, a vial of insulin is so cheap to make that, why would I spend another $2 billion that someone's not going to want to actually pay innovation? Um, and you know, and, and I think that's where we are with diabetes. I think you're seeing we've had a lot of new drugs. I'm not sure how many companies are gonna stay in diabetes over the next decade. Yes, it's a huge disease, but we've had 40 drugs approved and you've launched a drug and day one, your discounts, 50%. I just, I just spent billions of dollars 20 years and they want us discount of 50% ready. That's just crazy. Right. And, and, uh, people are getting crushed, uh, and you know, not, I'm never going to say the pharmaceuticals. You're starving. Look, they make good margins.

Mike: They've been around a long time. But what I can say is, from my perspective, the pharmaceutical industry is on the outside. Looking in, all we do is provide a product that we hope fits into an ecosystem that we charge a fortune for, and that is not sustainable. Right? So, so for me, I don't think dentistry is sustainable in the current economics, 10% of all drugs are brand. And that, that is how we see keep all these us pharmaceutical, these employed. It's just not feasible. That one out of 10 prescriptions is going to keep an entire industry afloat. So there's going to have to be consolidation in my mind is going to be margin compression. And there's going to be people that innovate their business model. They just can't. I just don't think you keep putting out a million dollar drug or a half million dollar specialty drug.

Mike: I mean, we're going have to 300 patients. I just don't see how that's going to be sustained. I think about my uncle just got a lung transplant. His doctor saved his life by transplanting a lot. Was that surgery a hundred grand? Yeah. Did he survive? Yeah, but I think about a drug we're charging a million dollars for these car T therapies as well. Why are they not a hundred grand? And when we decided to lung transplant or a pacemaker, or these are 30,000, $50,000 procedures and they saved somebody's life. So why would we put a million dollar price tag on someone else's life? Right? And then I struggle with how we think about drug pricing in the world. Um, and, and, you know, versus a doctor who does a surgery or a hospital who captures an adverse event or something handled. Um, but, but we have a, we have an imbalance.

Mike: And when you think about to me, like the PBMs express scripts sold at the right time, they knew the model was going to end. Now they're part of Cigna. They need to find a pharmacy. They'll probably do that. CVS partnered up with Aetna and now they got the health plan. They got the pharmacy, the building care clinics, they're integrated. They control what drugs on formulary. They buy that drug directly. They set that university break. They make the independent star so they can survive it, squeeze out the competition. They put more money in their own pockets. And you know, it's a monopoly and United healthcare is the same thing. They're buying the hospitals. They're buying the doctor's offices. They're buying the house, the centers they're becoming vertically integrated health systems. These, these, these big players and the pharmaceutical industry, just as a supplier in one part of that system, it's not going to survive.

Mike: It's got to innovate, right? I don't know what that looks like. It might be as I'm not gonna share yet, but will be over the next three to five. So I have so many questions I can go off. I mean, the, the obvious ones being anti-trust type type of questions, but I'd love to have you back again, if you'd love to talk about more, some more of these issues, we'll find out what time in the new year, but just to close on antitrust one, right? So they can take these holsters. I was talking about earlier, which are just double digits, 22 cents of every dollar of our drug. You know, they ain't going to be Mike, if you want access at CVS, we are the only supplier. So they say they only have 20 30% market share, but they have a hundred percent access to CVS. ABC has a hundred percent access to Walgreens. I can't go anywhere else right now, my drug and the Walgreens outside of maybe school, the price, it's a monopoly and it's illegal monopoly, which is even worse, you know? So I remember having a similar problem, which is why I asked that question. Yeah. So that's going to be, because they're on other fully immigrated system as well, but we're not going to go down that path. That was great. Thank you so much. Again,

Narrator: This is the DarshanTalks podcast, regulatory guy, irregular podcast with host Darshan Kulkarni. You can find the show on Twitter @DarshanTalks or the show's website at


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