Novo Nordisk eyes stepped-up diabetes care in 'beyond the pill' deal with IBM Watson

Novo Nordisk ($NVO) is taking the diabetes wars a step further. The Danish drugmaker teamed up with IBM Watson Health in a Big Data partnership that could keep closer tabs on diabetes patients and strengthen Novo's case with payers.

The company sees Watson becoming an artificial intelligence sidekick. The duo could take Novo to that "beyond the pill" destination where pharma companies offer patients services and expertise in addition to pills and injections.

The new partnership follows a similar team-up between one of Novo's head-to-head rivals, Sanofi ($SNY), and Google ($GOOG), which is moving aggressively into healthcare.

For instance, pooling Novo's diabetes resources with Watson's database access and machine-learning tools could create a "virtual doctor" capable of giving treatment advice to patients between visits with a human physician. Watson would read data from a patient's devices--such as a connected glucose monitor or a dose-tracking pen injector--and medical records, and take into account lifestyle factors like diet and exercise to tweak dosing, deliver advice and alert doctors if they're needed.

Novo EVP Jakob Riis

There are "a lot of routine issues around judgments of dosing and the whole interplay between food intake, exercise and insulin that could be better handled by AI [artificial intelligence] that can draw on a much broader source of data," Novo EVP Jakob Riis told the Wall Street Journal. "That is what computers typically do well."

That sort of ongoing monitoring and individualized care could help Novo woo payers. Insurers and PBMs are increasingly looking for outcomes, and are eyeing pay-for-performance pricing as a way to keep overall costs down. The Watson deal would help Novo "document what payers are really getting," Riis said.

And with a slate of new diabetes treatments on the market--several in existing drug classes--the competition for formulary placement is heating up. Payers see the diabetes market as a place where they can pit drugmakers against one another to score better pricing. Sanofi and Novo have already felt the effects of this, either from discounting heavily to win placement or losing spots on key formularies, or both.

Novo could also get drug development help from Watson's database of 50 million anonymized medical records and access to libraries full of journal publications.

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