Wednesday, November 15, 2017

Digital Meds Are Here: And They Could Even Change The Way You Buy Life Insurance

Rich Wood, Vice President, Microsoft Alliances
Innovation / Technology

Digital Disruption is the concept of applying new technology in innovative ways that not only drive business value for your own organization, but shake up the competition and the markets themselves.  Earlier this fall, I covered the topic from a general perspective. This month, we get to take a hard look at how the recent announcement of the first “digital pill” has the potential to disrupt a whole lot more than just the Life Sciences industry that spawned it.

Taking Your Digital Medicine… Literally

A “Digital Pill”?  Seriously?  Sure enough, as reported by The New York Times, a version of the antipsychotic drug, Abilify, has been successfully enhanced with embedded sensors that allow medical staff to know “if, and when, patients take their medicine”.

Yep. The technology now exists to tell Big Brother whether or not you’re taking your meds. More on that later—but the bottom line is simple: This just got real, folks.

The initial disruptive implications for Big Pharma are fairly obvious—if this catches on, everybody will be working to replicate it. Similarly for Healthcare, the disruptions range from straightforward to byzantine, fostering questions like:

  • How will Healthcare professionals adapt to their ability to prescribe and track these medications?  (This one can be easy and, one assumes, benevolent.)
  • Then there’s the tougher ones, including: What manner of complex regulations and compliance restrictions will need to be developed to govern the ethical use of these medications? 

There’s little doubt that the federal government will be called upon to regulate the What, When, Why and How of an activity like tracking drug consumption, and probably sooner than later. We can think of the Public Sector alongside Life Sciences and Healthcare as the “inner ring” of industries disrupted by this launch. But what about the next ring out, the broader, second concentric circle?

Next-Level Disruption: The Impact on Life Insurance

In my previous post on Digital Disruption, I briefly touched on the example of how self-driving cars will shake up the Property & Casualty side of the Insurance industry. The entire business of calculating and underwriting risk, determining premiums, and competing for your driver-mandatory auto insurance dollar could conceivably be thrown out of whack when your car no longer requires a fallible, emotional, distractible human to drive it. 

That said, you can bet that the savvier automotive insurers are already finding ways to make insuring driverless cars at least as profitable as insuring their person-powered ancestors has been. I’m willing to predict a similar approach from the other side of the industry—Life Insurance—when it comes to trackable digital meds. 

If you own even a single life insurance policy, you’re already moderately familiar with the process of calculating and underwriting risk. It’s the rationale behind the battery of medical tests and background checks you’re required to go through when applying for a policy, and the sorting of applicants into “classes” that pay more or less for that policy based on calculated risk. 

Insurance is a win-win proposition when done right. At its core, the business is essentially playing data-driven probabilities. The company profits from the bets they place on those probabilities; the insured, meanwhile, receives the peace of mind that in a catastrophe his losses will be covered. Insurance companies do everything they can to get those probabilities as razor-sharp as possible—so it’s elementary that once these traceable digital meds become commonplace, insurers will incorporate their use into their intake process. The only question is how, and how much power will they wield over whether you’re taking the pills to begin with?

Ultimate Disruption: Impact to the Consumer

There’s no shortage of ethical quandaries created by traceable digital medication. I could go far deeper into any number of them, including (and especially) the role of government regulations, but for the purposes of this post, I’ll stick with how it could impact how you buy—and qualify for—life insurance. 

Today, the best insurance companies lock you in at your initial classification (and thus, your initial premiums) and keep you there for the duration of your policy. That’s a benefit that will mean even more to the largest and best-endowed insurers as a competitive edge—because it means they won’t be kicking you down a class or worse, disqualifying you as you age. It also means they’ll work even harder to get new customers locked in at younger ages. The smart consumer will buy life insurance at the earliest date possible in order to avoid the potential pitfalls of waiting. This is true today, but will become even moreso in a world of digital meds.

Why? Let’s say that you’re one of the many Americans who doesn’t even think about life insurance until you’ve turned thirty (or older). Your risk—and thus, your premium—has already gone up, regardless of digital meds. There’s a thriving market of insurers who pursue this population—somewhat less-healthy adults who suddenly realize they need or want some measure of financial protection for their families in the event of catastrophe, but did not lock their premiums in at a young age. They tend to have a number of in-built risk factors from the word “Go”.

Start with heart disease, which is a major risk factor in the lives of modern Americans. A great many of the questions and medical tests you undergo in applying for life insurance help to quantify an individual’s risk of heart disease. Given this, it’s perfectly conceivable that going forward, medications presumed to treat or help prevent heart disease—let’s use Lipitor, a popular cholesterol inhibitor, as an example—could be made digitally traceable. 

Whether or not you take your Lipitor, in what dosage, and how often now has the potential to become more than a one-time question and blood test. When you apply for life insurance and you’re already on Lipitor, insurers could very well insist that a regular prescription of the drug (or its generic equivalent) is a necessary qualification to maintain insurability at your current level. Deviate from your prescription for more than a set grace period? Your class goes down, your rates go up, or you could even be dropped from the policy. 

Can that happen today? No. Could it happen in a digital future? It has to be at least a possibility.

And higher insurance rates—or even a lack of insurability—are probably two of the less-malign outcomes that people can imagine with digital meds.

No doubt it all sounds a bit dystopian, and it probably is—but as the Times itself implies in its headline, “worries about Biomedical ‘Big Brother’” go hand-in-hand with this sort of disruptive potential. Like Artificial Intelligence, Virtual Reality, and IoT, the technology itself is neutral. It’s on us to determine how we’ll use it. I’m on board with helping those who want to use it safely, thoughtfully, with benevolence.

Rich Wood is the Senior Director of Cloud & Enterprise Apps at Rightpoint. Follow Rich on Twitter and LinkedIn