A Healthcare Economics Solution that has Asthma Patients Breathing More Easily

While solutions to this country’s healthcare economic woes remain the subject of fierce public policy debate, private companies are coming forward with their own innovative solutions for bringing down the cost of healthcare. On this episode of Mastering Innovation on Sirius XM Channel 111, Business Radio Powered by The Wharton School, guest Arik Anderson, CEO of Adherium, discusses the importance of knowing how to remain focused while also maintaining a broad future vision, an important balancing act in both healthcare and any other industry.

This mindset is particularly relevant to Adherium, as they currently aim to address the estimated $30 billion annual waste attributed to respiratory patient non-adherence within the U.S. As current medical technologies continue to progress, Anderson’s team is looking to expand into general non-adherence waste, estimated at over $300 billion per year. Anderson emphasized, however, that any organization must first focus on best serving its current customers before scaling, adding that the key in innovation is ultimately delivering an excellent user experience.

An excerpt of the interview is transcribed below. Listen to more episodes here.


Guest Arik Anderson (CEO, Adherium)

Arik Anderson: A trip to the emergency room as you walk in the door begins at about $1,500. As a parent, if I go in with my child, my out of pocket expense is going to be $100-150 at a minimum, and the cost go up from there. The cost to the parent directly is significant. The cost to the healthcare system is significant. If you’re admitted to the hospital, an inpatient hospital stay begins at about $4,600 per day. So, you talk about being able to go and reduce those.

Our clinical data has shown that we reduce pediatric trips to the emergency room by 80%. You can begin to see how the economics unfold. There’s a dramatic improvement to the cost of care for a chronic disease by not having to go to the emergency room and by staying out of the hospital completely – again, with a better overall quality of life, better healthcare economics, and a much closer relationship between the patient and their doctor. Now, the doctor understands what the patient has been doing and how they’ve been doing it when they walked out of the office.

Harbir Singh: I think that’s wonderful. What an exciting innovation. What did it take to actually create something like this which has value creation to multiple people – to patients, to the payers, and so on? What were some of the big steps and obstacles?

“The market has evolved. The technology has evolved. Today, we recognized that what we have created is an overall adherence platform.” – Arik Anderson

Anderson: Well, Harbir, it’s been a journey. Adherium has been at this for 17 years. It began as a vision by our founder, who was diagnosed with asthma at six months of age and grew up with a passion to go make lives for future generations of children with asthma better than what he experienced. When the company began 17 years ago, we were in a very different era technologically. There have been advancements made in multiple industries that have led to our ability to do what we’re doing today – things like low-energy Bluetooth communication technology, the internet, the fact that we have smartphones in our pockets that represent so much computing power. This, together, now gives us the ability to provide a sensor that really is unobtrusive when incorporated with the inhaler: communication that not only goes to a phone that’s in everybody’s pocket, but that’s ultimately sent out to the cloud that gives the physician access to it as well.

Singh: I would imagine that as you do this, there are many technology partners that are providing some of the intermediate solutions needed. How does that work? Also, as the concept starts hitting the market, are there players who want to provide similar solutions? I love the story about the long-term commitment and what it took. That’s really exciting. So, what were you looking at when these things came about, the complementary technologies?

Anderson: That’s really the point, that the market has evolved. The technology has evolved. Today, we recognized that what we have created is an overall adherence platform. While our current focus is chronic diseases of asthma and COPD, it applies equally to other chronic diseases or patients that are self-administering medication.

Singh: Interesting. There’s a gigantic market when you get to that platform. Do you see others rushing in with solutions that might, for different ailments, use the platforms such as these? How does one capitalize and choose the best place with this great opportunity?

“Part of the road to being successful is making sure we do an outstanding job where we are at the moment.” – Arik Anderson

Anderson: Well, there is a huge opportunity, but part of the road to being successful is making sure we do an outstanding job where we are at the moment. Where we are today – working with asthma patients, working with COPD patients – is incredibly important work. With healthcare economics in the U.S. alone, there’s over $30 billion a year that’s wasted as a result of respiratory patient nonadherence. That’s what we’re working on right now. As we look at where it goes in the future, the overall adherence waste is tremendous. It’s been quoted at over $300 billion per year. If you look at what Warren Buffett, Amazon, and JPMorgan Chase are talking about with the healthcare economic crisis, nonadherence is a critical piece of that. The sensors we have that fit with inhalers easily expand to injectable medication, oral medication, or potentially even transdermal medication.

Nicolaj Siggelkow: Interesting. As you’ve learned more and more about your customers, as they’ve been using it for a couple of years, how have you changed and improved your product?

Anderson: Really, what we’ve seen is a bit like peeling the layers of an onion. Initially, what we were looking to best understand was helping to modify the behavior of patients using their medication when they were supposed to. Beyond that, we’ve recognized that being able to see how the patients are using the inhaler is a critical part of the overall behavior that we need to be able to help quantify for the physician as well as improve for the patient.

As I was talking about before, today, our sensors are on our sixth generation, and they are very sensor rich. Everything from accelerometers to make sure that the inhaler has been primed properly to being able to sense the orientation of the device; microphones to pick up the sounds of the inhalation of the patient when the medication is being dispensed to make sure that it’s not being dispensed into free air or that they’re not hiding the actuation of the device together with the breath. That’s really what we’ve seen as a continuing advance: seeing the different types of misuse that occur, not just forgetting to use the device or not using it at all, but trying to use the device you’re using in a wrong way, then re-educating the patient on what the proper use is.

About Our Guest

Arik Anderson is the CEO of Adherium, a digital health company that focuses on improving medication adherence and patient outcomes. He has 25 years of experience in the medical technology and medical device manufacturing industries and has led significant growth for emerging technology companies. Anderson was previously President, Perfusion and Surgical Devices Division for Terumo Cardiovascular since 2011. Prior to this, he was Senior Vice President, R&D and Operations and General Manager for Somanetics from 2007 until the completion of the integration with Covidien in 2011.

Anderson has also served as Director of Product Development at Delphi Medical Systems, a provider of technology and products to the infusion, respiratory care, vital signs monitoring and power mobility medical device markets. In addition, he was President and Chief Executive Officer of Tasso Solutions, a product development and manufacturing consulting firm. Anderson retains Board positions on the University of Michigan Medical School MTRAC Board, which oversees investment in medical technology, and the University of Michigan Ross School of Business Zell Lurie Healthcare Board which oversees student investment in emerging technology via the Zell Lurie Commercialization Fund. You can follow him on Twitter: @Arik_Anderson

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.