CES 2020

January 7-10, 2020; Las Vegas, NV; Days #1-2 Highlights - Draft

Executive Highlights

  • CES 2020 has officially kicked off across eleven convention centers and hotels in Las Vegas, NV. See below for our top six highlights!

  • Now in its eleventh year, CES’ Digital Health Summit was standing room only (with several rows of standing attendees). For those attendees, CDRH Director Dr. Jeff Shuren gave a 15-minute presentation on the FDA’s bold and progressive “Grand Vision” for the future of device regulation. The forward-thinking approach includes reforming the regulation framework for software as a medical device (SaMD) from a product-based approach to an organizational-approach with its PreCert program. The FDA has also been working to enable utilization of real-world data. Version 1.0 of the National Evaluation System for Health Technology (NEST) should be launched “early in 2020.” Ultimately, the goal of NEST is to gather and generate data from across a product’s total life cycle, using data from clinical registries, EHRs, claims, and more. Dr. Shuren also shared some thoughts on a more flexible ‘Regulatory Legos’ approach and investments the FDA has been making in its own digital infrastructure.

  • Dubbing 2019 “The Year of the Digital Health IPO,” Cooley’s Geoff Starr provided an update on digital health funding in 2019: $7.4 billion across 374 deals. While those numbers are a slight slowdown from 2018’s record-breaking year, as had already been implied by Rock Health, as we wrote in our Rock Health digital health report last October, 2019 saw an impressive nine digital health IPOs, most notably Livongo (names of the others are below). The field also saw a whopping 100+ digital health mergers and acquisitions in 2019, highlighted by Alphabet’s $2.1 billion acquisition of Fitbit in October. Diabetes-related digital health fund raises in 2019 included Beta Bionics’ $126 million Series B, Omada’s $73 million Series D, One Drop’s $40 million Series B, and more.

  • Throughout the meeting, we heard about the expanding role of digital health as part of employer-sponsored benefits. At Metlife, healthcare spending on employees with diabetes was reduced by a whopping 12% by providing cellular-connected BGMs and remote monitoring. On a related front, pressure continues on digital health and technology-based intervention providers to demonstrate return on investment if employer and payer interest is to continue. It’s our impression that this pressure is intensifying after many years of various pilots.

Our first conference of 2020 is underway as more than 170,000 people and 4,400 exhibiting companies have descended on “America’s Playground,” Las Vegas, NV, for CES 2020. The conference spans across eleven convention centers and hotels and 2.9 million square feet, but we focused on the Digital Health Summit in The Venetian during days #1-2. See below for our top six highlights!

Top Six Highlights

1. CDRH Director Dr. Jeff Shuren on the Future of Device Regulation: “If We Don’t Allow for Iterations to Occur Quickly, We Put Patients at Risk”

In a brief, but dynamic, presentation, the FDA’s Center for Devices and Radiological Health (CDRH) Director Dr. Jeff Shuren shared the Agency’s bold and progressive “Grand Vision” for the future of device regulation. Throughout his presentation, Dr. Shuren came out against the idea that advancing device innovation comes at the expense of patient safety. Instead, Dr. Shuren said, “If [the FDA] can advance innovation to have safer and more effective technologies, technologies that address a patient’s unmet needs and mitigate harm from their disease, that’s about safety. In the case of [software as a medical device (SaMD)], if we don’t allow for certain iterations to occur quickly, we put patients at risk, such as cybersecurity.” We have seen the effect of CDRH’s forward-thinking approach to device regulation close-up in diabetes, with creation of brand new, interoperable iCGM, ACE pump, and iController designations all created during a ~20-month period. Not only do these make interoperability of automated insulin delivery components much easier, they also created lower-risk class II pathways for CGM and controllers (insulin pumps were already class II devices). Altogether, the changes are a huge win for both patients and manufacturers, enabling faster innovation, less regulatory burden, and more patient choice. Throughout days #1-2 of CES 2020, we heard multiple panelists express the view that healthcare was risk-averse and conservative in its approach to technology. While this can be true, especially in comparison to the incredibly fast-moving world of consumer technology, it’s incredibly encouraging to see ambitious, modern thinking and action from CDRH, starting with its leadership.

  • Naturally at the Digital Health Summit, Dr. Shuren once again reiterated the FDA’s vision for an organization-based approach to software as a medical device (SaMD) regulation and its “Pre-Certification” program. The FDA’s Precertification program (“PreCert”) was developed in 2017 as a new organization-based approach to regulating software as a medical device, sort of like “TSA Pre-Check” – once pre-certified, companies will get a streamlined digital health software review, with a regulatory decision in 30 days. A working model for PreCert was created in 2018 (see our coverage of the meeting) and the feasibility of the model has been tested, applying the model in parallel and retrospectively with submissions that have gone through the traditional regulatory process. At DTM 2019, the FDA’s Mr. Bakul Patel shared that feasibility testing for PreCert will continue through “this year and a little next year” with alpha-testing of the program starting “soon,” to test the PreCert approach with submissions from the program’s nine pilot participants. Seven of the nine pilot participants have some connection to diabetes, including Tidepool.

    • “The goal is to move from episodic oversight to continuous oversight that enables trust in the organization and pragmatic checking with real-world product performance data – continual evaluation of the organization and the product, but in real-time with the product out on the marketplace … We are not changing the standards to come to market – still reasonable assurance of safety and effectiveness. But, we think we can do this in a way that will improve the time for patients to get access to safe and effective technology, that will improve the experience for developers and for the FDA, and assure that a least-burdensome approach is applied.” – Dr. Jeff Shuren

  • As part of its more innovation-friendly approach to regulation, the FDA has been making investments to better collect and utilize real-world data generated post-market. The post-market data collection is especially relevant for PreCert, as Dr. Shuren highlighted the ability for real-world key performance indicators as a “window on organizational excellence.” To help improve the infrastructure around real-world data collection, The FDA has been working on building the National Evaluation System for Health Technology (NEST) in collaboration with medical device stakeholders. According to Dr. Shuren, version 1.0 of NEST should be launched “early in 2020.” Ultimately, the goal of NEST is to gather and generate data from across a product’s total life cycle, using data from clinical registries, EHRs, claims, and more.

  • Providing an additional challenge, changing CDRH’s regulatory model will require Congress to pass new legislation. To address this challenge, the FDA is already thinking about a more flexible approach, it’s calling ‘Regulatory Legos.’

    • “If we’re going to change our model, the framework for oversight, this will require Congress. You can imagine how long it’s taken to work this through, then go back to Congress and request a change … What we’re thinking about is something we’re calling ‘Regulatory Legos.’ Could we, instead, have the building blocks to create new pathways based upon the needs of the technology? … We have to have the ability to make new pathways in near-real-time, but that will also require a change in the law.” – Dr. Jeff Shuren

  • To enable FDA’s “Grand Vision” for device regulation, the Agency has also been investing in updates to its own, internal infrastructure. Dr. Shuren summarized this by saying, “We need AI to keep an eye on AI.” The vision Dr. Shuren has for FDA reviewers in the future is like “Jarvis” (the AI-system built by Tony Stark, a.k.a. Iron Man). The reviewers will be able to access huge amounts of data, but with the aid of AI helping to curate and analyze the data and make recommendations.

2. Digital Health in 2019: “Almost 1/3” of All Healthcare Deals, $7.4 Billion in Total Digital Health Funding, Nine (!) IPOs

Cooley LP’s Geoffrey Starr provided an update on digital health funding in 2019, characterizing it as “the year of the digital health IPO.” Last year saw a total of nine (!) digital health companies go public, kickstarted by Livongo’s ~$350+ million IPO in July. Before those nine IPOs (Change Healthcare, Phreesia, Livongo, 10X Genomics, Freenome, Peloton, HealthCatalyst, Progyny, and Smile Direct Club), no digital health companies had gone public since 2016. This IPO momentum may continue into 2020, with One Medical filing its S-1 earlier this week. Impressively, digital health made up “almost one in three” of all healthcare deals in 2019, including more than 100 mergers and acquisitions, including Alphabet’s $2.1 billion acquisition of Fitbit. Mr. Starr made a few predictions for digital health in 2020:

  • health and care delivery will become more consumer-centric;

  • interoperability, regulatory, and workflow barriers will decline;

  • increased focus on data-driven, personalized diagnostics, prevention tools, and virtual assistance; and

  • the field will see growing alliances between big tech and care delivery organizations.

Citing the freshly released Rock Health 2019 Digital Health funding report, Mr. Starr shared that digital health funding totaled $7.4 billion in 2019 across 374 deals (average deal size ~$19.8 million). Both numbers are slightly short of the records set in 2018 ($8.1 billion across 380 deals) and while they are larger than the $7.3 billion across 349 deals that were forecast by Rock Health in October, the average deal size forecast was lower than the $20.9 million forecast last fall. Diabetes-related digital health fund raises in 2019 included Beta Bionics’ $126 million Series B, Omada’s $73 million Series D, One Drop’s $40 million Series B, and more.

3. Health Technology in the Elderly – Quotable Quotes from AARP CEO JoAnn Jenkins and Samsung VP of Digital Health Natalie Schneider

Day #1 of CES included a valuable panel, “C:Space Storyteller: AARP,” which featured AARP CEO JoAnn Jenkins and Samsung VP of Digital Health Natalie Schneider, with Forbes’ Marty Swant as moderator. (Check out the 32-minute conversation here.) Ms. Jenkins kicked off the panel by urging the audience to reconsider stereotypes about technology and the aging population, emphasizing that “global aging is the greatest opportunity of our lifetime.” The entire 30-minute panel was full of captivating discussion that touched on current tech opportunities ripe for business, effective marketing, and emerging trends with implications for diabetes, chronic conditions, and healthcare innovation among the 50+ age demographic. This discussion reminds of Consumer Electronics Show Unveils the Newest in Aging Tech from CES 2019.

Technology and Chronic Disease Care for the 50+ Population

  • “We’re starting to see advances in voice technology and how we can use voice whether it’s on a phone or a tablet or some other kind of device in the house. It’s making it easier for them to learn, use, and adapt to that kind of technology, but I also think it’s helping to address the issue of isolation. Isolation, regardless of age, is one of the biggest issues we will have to face worldwide. Being isolated and alone is equivalent to smoking fifteen cigarettes per day. It brings the same kind of health crises as if you had high blood pressure, diabetes, or some other kind of major disease. The use of voice technology and the ability to communicate, whether it’s with a loved one or someone you don’t know, perhaps even a bot. I think some of the research we’re seeing and the activity related to voice, music, and sound is very promising in a number of areas.” – Ms. Natalie Schneider, Samsung VP of Digital Health

  • Samsung is trying to figure out how we can use consumer grade technology in ways that allow people to age in place or allow care to be moved from the hospital to home. I’ll give you one of my favorite examples around cardiac rehabilitation. In the US, about one million people have a heart attack every year, and about 1/5 of those will die subsequently from another heart attack. The ironic thing is that cardiac rehabilitation is incredibly effective at lowering your risk of dying from a subsequent attack, but hardly anyone does it because it’s a pain to get to the hospital or the clinic. We put our heads together with Kaiser Permanente and asked what can we do with this population that is primarily older. After many whiteboarding sessions, [we decided] to take a Samsung smartwatch and build a Samsung app that can be used on any phone. This moves cardiac rehabilitation into the home, so overcoming a major barrier or hurdle.” – Ms. Schneider

    • “It’s been incredibly successful. We’ve improved readmission rates from 15% to below 2%, and it’s now the largest program of its kind. Those are the types of innovations and technologies that I’m excited about. Finding one particular problem and getting to the root of why it exists. In this case, it’s primarily around behaviors and convenience. How can we use some of the technology people have at home or on them that they wear and repurpose it for different needs.” – Ms. Schneider

  • “Seniors don’t want geriatric tech that screams that they’re old. They want inclusive tech which makes accommodations for inevitable declines in hearing and vision. The services with the most promise are the ones that enable seniors to age in place. Research shows that 9/10 Medicare members would prefer to stay in their homes… Health and wellness, medication adherence, detecting and managing chronic conditions, and lastly rehabilitation in the home are the areas of focus. [Ms. Jenkins] also mentioned safety and security, so whether that’s fall detection or even technology that allows for facial recognition to tell who is visiting, those are all areas that offer rich opportunities” – Ms. Schneider

  • “There’s a terrific article in the WSJ that claimed senior housing may be the largest miscalculation in recent history. That’s because there’s all this senior housing that’s been built, but people are wanting to stay in their homes for longer and longer because of technologies that are coming out. If that’s the trend, what are the problems that are going to arise? One-third of the Medicare population lives alone, so there are issues on combating social isolation, communication, transportation. The second issue is around elder orphans, so one in five probably don’t have a spouse or kids to take care of them. Lastly, there is the issue around multiple around chronic conditions as half of them have three or more chronic conditions with very complex care regimens. As you start to look at the confluence of all those things, an undeniable trend with the tech business opportunities become much clearer around communication, social isolation, medication adherence.” – Ms. Schneider

Economic Contributions of the 50 + Age Group

  •  “[People aged 50+] are challenging outdated stereotypes and myths about how aging changes the economy. According to AARP’s Longevity Economic Outlook, people 50 and older contribute $8.3 trillion to the US economy and create an additional $745 billion in value through unpaid activities such as volunteering and family caregiving, resulting in an overall contribution on an annual basis of over $9 trillion in 2018 alone. The economic activity of people 50+ supports 88.6 million jobs in the US, generates $5.7 trillion in wages and salaries, and accounts for $2.1 trillion in federal, state, and local taxes…. They support 44% of jobs, mainly in trade, transportation, and health services fields. If they were a country, they would be the third largest economy in the world.” – Ms. JoAnn Jenkins, AARP CEO

  • There is another major contribution older people make through unpaid activities such as caregiving for aging parents, raising or helping to support grandchildren, and in volunteering. They are seeking technology solutions to help them carry out those responsibilities. In 2018, people ages 50 and older spent $140 billion in technology. Tech demand among this age group is expected to surge in the coming decades, reaching $645 billion by 2030.” – Ms. Jenkins

  • Older Americans have growing economic strength and a commitment to caregiving and volunteering that benefits everyone. Technology and innovation can improve health and wellness for aging adults and empowering people to choose how they live as they age.” – Ms. Jenkins

4. Omron’s HeartGuide Wearable Blood Pressure Tracker + HeartAdvisor App See Strong Reception in Year 1; Striking Diabetes Parallels

At last year’s CES, Omron revealed the first-ever wrist-worn blood pressure monitor, HeartGuide, and its companion HeartAdvisor app (App Store; Google Play). The $500, class II, 510(k) wearable made a splash in 2019, winning multiple awards (e.g., the prestigious Red Dot award, Time’s Best Inventions 2019) with uptake beyond CEO Ranndy Kellogg’s “biggest expectations.” According to Mr. Kellogg, users have used the device to drive behavior change, as they can see the effects of certain behaviors on their blood pressure. Importantly, as Mr. Kellogg noted, these insights don’t need to be surprising to be compelling: for example, users who can see their blood pressure rise after they drink coffee are likely to reduce their coffee consumption, even though that effect is intuitive. Of course, we couldn’t help but think of the countless stories we’ve heard about CGM. Seeing one’s CGM trace spike after eating a certain meal or dip when walking, many people have been able to identify positive (“Bright Spot”) and negative (“Landmine”) behaviors and create remarkable changes. Omron also launched its HeartAdvisor app alongside HeartGuide, which records blood pressure, activity, and sleep data for users, allowing them to make connections that may not be intuitive. The data can also be uploaded to the cloud and shared with physicians. Looking at the HeartAdvisor app display (picture below), the blood pressure readings look strikingly similar to CGM traces. Of course, many diabetes digital health companies have been moving beyond glucose monitoring, adding in blood pressure monitoring, activity trackers, and more (e.g., Dario, Livongo, One Drop, Omada). Given the high comorbidity of hypertension and type 2 diabetes, these sorts of horizontal expansions seem natural. Could insights from HeartAdvisor and HeartGuide be combined with CGM apps, e.g., Dexcom Clarity, and vice versa? 

5. Excitement for Digital Health as Employer-Sponsored Benefit: Metlife-Sponsored Cellular-BGM Reduces Overall Healthcare Cost in Employees with Diabetes by 12%

In a panel hosted by Emmy-winning television host Katie Couric, employer-sponsored wellness benefits were a recurring theme. Of course, this comes as no surprise, given that self-insured employers are a natural place for digital health companies to find clients. Metlife Vice President HR Global Health Tom Ferraro noted that nearly every single company has employee health insurance as a “major budget item” and employees with chronic conditions are a significant part of that. At Metlife, employees with diabetes cost “two times more” than those without diabetes. According to Mr. Ferraro, traditional approaches (e.g., “lunch and learn” about wellness) were labor-intensive and costly, and did not provide personalized care. With digital programs, the interventions can be personal and flexible. Mr. Ferraro shared a few promising statistics on some of its digital health programs. Metlife now offers cellular-enabled BGMs to its employees with diabetes with data push to nurses who can alert employees should about any concerns. With this simple program, Metlife observed a 23% (relative) reduction in hospital admissions due to diabetes and a 12% reduction in related total healthcare costs. Last year, Metlife implemented a virtual weight loss program, which included a WiFi-connected scale, a virtual nutritionist, and exercise specialists. Fifteen hundred employees took part in the program, losing a collective 5,500 pounds (~3.7 pounds/person).

  • As the digital health field matures, companies have shifted towards B2B business models,  and models focusing on self-insured employers. According to Rock Health, 90% of digital health companies that funded through 1H19 have B2B models. Some companies such as Virta Health adopted value-based care models some time ago – as a reminder, Virta places 100% of its fees at-risk.  

  • Rally Health COO Brenda Yang also spoke on the panel and discussed three of the biggest problems in healthcare: i) high cost; ii) high complexity; and iii) low utilization of benefits. With a “digital navigation” tool, patients can better traverse the complex the healthcare system and understand their benefits. According to Ms. Yang, “almost 40%” of users who first search an out-of-network provider on Rally now end up being guided back to an in-network provider, reducing their costs. In addition to guidance on how to receive care, users are also encouraged to stay healthy by integrated fitness trackers and associated rewards.

  • Following the panel, HealthTechInsider’s Alfred Poor provided evidence rebutting the New York Times’ 2019 article, “Employee Wellness Programs Yield Little Benefit, Study Shows.” He began with the example of The Regional Transit Authority in Dayton, Ohio, which rolled out a fitness tracker based activity program for its 650 bus drivers and saw a $2.3 million reduction in healthcare costs over two years (~$3,500/employee). Mr. Poor also pointed at a 2016 Sprinbuk study that showed $1,292/employee reduction in healthcare spending over two years at an employer who implemented a similar fitness tracking program. Perhaps more impressively, employees who were less active at baseline saw a $3,543/employee reduction in costs over the same time span. Finally, Mr. Poor pointed at a study by Optum which showed employees with access to wellness programs were 1.5x more likely to continue working for their employer and nearly 3x more likely to recommend their employer as a place to work.

6. CES 2020 Potpourri: Top Tweets and Facts Shared Throughout the Day

Top Tweets

Top Facts

  • In 2018, 1,218 exabytes (one exabyte is one million terabytes or one billion gigabytes) of health data was generated. That will grow to 10,481 exabytes by 2025. – Ms. Pamela Spence

  • Nicotine use within 4 hours of bedtime reduces average sleep duration by ~13 minutes; alcohol reduces sleep duration by ~4 minutes and caffeine by ~1 minute. – Dr. Mehmet Oz

  • The average American actually has ~5 hours of free time per day – Ms. Megan Smyth (see Bureau of Labor statistics here)

  • GlaxoSmithKline and The Weather Company have partnered since 2015 to produce the Allergy Tracker, which is available on The Weather Channel, weather.com, and other apps and sites. The tracker is sponsored by GSK’s Flonase allergy relief spray. – Ms. Pamela Spence

 

--by Albert Cai and Kelly Close