Eating Microchips is Good For You!

Edible microchips enable real-time tracking of patient health.

Bringing Moore’s Law to Healthcare

Proteus Digital Health is an “intelligent medicine” company based out of Redwood City, California.  It is part medical device company, part tech company, part semiconductor company.  Proteus is trying to revolutionize the way people take their medicines by allowing real-time tracking of medicine ingestion patterns as well as real-time monitoring of vitals (temperature, heart-rate, activity levels). Andy Thompson, CEO of Proteus, argues that thus far, as a society we have been unable to capitalize on the advancements in availability of processing power to lower the costs of our healthcare.  Proteus seeks to marry technological breakthroughs with health trends to improve healthcare while lowering its cost. 1

Did you forget to take your pills again?

Proteus’s business model is based around “compliance” data which suggests that about 50% of medicines in developed countries are not taken correctly by patients.2 Non-adherence can lead to incorrect dosing adjustments when patients return to the doctor’s office, or in preventable emergency room visits or complications, the cost of which far exceed the cost of the medicine.  By allowing patients, doctors, and secondary caretakers such as family members to better track and improve compliance, Proteus seeks to improve patient health and lower emergency room visits, while at the same time reducing the burden on healthcare systems worldwide.

A tough pill to swallow?ipad-pill-hand-1

To deliver on this value proposition, Proteus has had to develop both wearable and edible technology. The Proteus system is comprised of an ingestible microchip, a sensory patch, and a mobile app. First the patient puts on a blue-tooth enabled dermal patch which gathers vitals, then, whenever the patient swallows one of their medicines, the microchip inside the medicine (it’s the size of a grain of sand) activates in the stomach fluid and sends an electrical signal through the patient’s body which is registered by the patch.  The information is then sent out to the patient’s phone via blue tooth, and from the phone to the cloud, where data can be processed and analyzed.3

 

Is Big Brother watching?

This technology could have a broader societal impact as well. In order to further monetize this idea, and bring even more value to patients, Proteus Digital Health could leverage the value of its data to disrupt other industries. One could easily imagine insurance companies offering better rates to patients who agree to use the Proteus system. Automotive insurance companies like Progressive and State Farm are already experimenting with driver-tracking technology to offer performance based rates, the same could be applied to healthcare.4  The problem of “freeloading”, where a small percentage of the population generates the majority of costs is incredibly pronounced in healthcare, and programs like these could help make health insurance rates more fair. Of course, some patients may be reluctant to embrace this use of their private data, but I strongly believe that on aggregate, we would be better off if more people embraced the idea that in our day and age, privacy is a myth.

Valuation: $1 Billion / # of Products Sold: ZERO

One of the most fascinating aspects of Proteus, and the digital health industry in general, is the amount of money coming in from investors, before products have even been proven to have the desired effect.  Sure, they work technically, but that does not ensure broad adoption and widespread use by consumers. Over the course of its existence, Proteus has raised about $400 million in equity funding, at a valuation of $1.1 Billion, $50 million of which was raised as recently as April of this year.5 Investors are placing large, double-down bets on these companies, hoping to cash in once they take off, but will they?

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SOURCES

[1] MedCityNews. Healthcare Epitomizes the reverse of Moore’s law. Website [link]. Accessed November 2016

[2] Sabate E. Adherence to long-term therapies: evidence for action. World Health Organization. 2003 [link]

[3] Proteus Digital Health Website. [link] Accessed November 2016

[4] Fortune. Why Car Owners Are Rejecting Insurance Discounts. [link] Accessed November 2016

[5] Wall Street Journal. Billion Dollar Health Startups. Website. [link] Accessed November 2016

MEDIA

Youtube Video – Proteus Youtube Channel

Image – Proteus Website. Accessed November 2016.

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3 thoughts on “Eating Microchips is Good For You!

  1. Wow Javier – Thanks for the introduction to Proteus Digital Health!

    While many people are familiar with Apple Watches and FitBits, I don’t think the general public has imagined the full potential of organic bioelectronic devices. For example, why have an iPhone in your pocket when it can be embedded in your wrist? Why go to the doctor when you can inject microchips or nanomachines into your bloodstream or neural system?

    While I agree that there are a lot of salivating investors and sky-high valuations for organic bioelectronic companies, I do believe that they will play a critical role in the future healthcare industry. But this idea isn’t new. In fact, the concept of “swallowing the doctor” can be traced as far back as 1959, in a famous lecture by physicist Richard Feynman: https://en.wikipedia.org/wiki/There's_Plenty_of_Room_at_the_Bottom

    It’ll be interesting to see if Proteus succeeds!

  2. Great post, Javier. The digitization of the pharma/med devices industry is fascinating and has lots of implications for the future, especially considering our increasing aging population, and longer life spans, which increase overall healthcare costs. Digital health has the potential to bring some of these costs down, but one of the biggest changes that has to happen is to the regulatory process that governs whether these products can be marketed and sold to consumers.

    One way in which med device companies are typically able to get “new” devices approved by the FDA in a fast streamlined way is through “substantial equivalence” claims compared to existing devices on the market. [1] Because, in this new world, there are no existing digital health devices being marketed, the path to regulatory approval is much less certain and more time consuming/arduous. In fact, Proteus itself recently failed to get FDA approval for their first device. [2] The FDA, however, is cognizant of this, and appears to be developing more process and support for digital health products. Hopefully they are able to help remove that barrier to market and create a process for approval that doesn’t stymie growth in an industry that has the potential to have such a positive impact on healthcare.

    [1] http://www.fda.gov/downloads/MedicalDevices/…/UCM284443.pdf
    [2] http://www.mobihealthnews.com/content/fda-declines-approve-proteus-otsuka-sensor-equipped-pill-asks-more-tests

  3. This. Is. So. Cool. Thank you for sharing, Javi. I see a lot of benefits with this edible and wearable health monitoring device. This also opens up a whole new world of things that ingestible devices can do, from batteries that can power internal medical devices (http://www.popsci.com/biodegradable-battery-can-be-swallowed-to-power-medical-devices) to an ingestible robot that can do surgery (http://news.mit.edu/2016/ingestible-origami-robot-0512).

    One thing I do want to heavily challenge is the idea to allow health insurance companies to use this data. While car insurance companies have already implemented monitoring programs to track driving habits and reward safer drivers, the industry is not analogous to health insurance. Driving habits are something that a person can easily change while health conditions are inherent. While I do agree that patients that use the Proteus device may be better at following the doctor’s orders and incur fewer costs, what if they have a disease where treatments are not effective? Insurance companies can factor this into their premium calculation (whether it’s legal or not) and punish those who are already suffering from a serious illness. Furthermore, will people who are healthy be required to have this device as well? If the device finds patterns of illness that may occur later in life, could insurance companies charge higher premiums preemptively? For me, allowing insurance companies to track this feels like opening pandora’s box and will have so many more negative implications than saving a few dollars our monthly insurance premium.

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