Why does US healthcare still need opioids? | John Hsu | iPill Dispenser

calendar
September 2, 2022
time
1:06:49

This episode of the Digital Health Community podcast by Persimmon features John Hsu, a practicing physician turned serial entrepreneur.

As the CEO/Founder of iPill–a digital health hardware innovation that works in improving prescription adherence and safety by reducing opioid diversion and abuse–John talks about opioids and how they can be used to control the drug epidemic we are currently facing in the US.

John dives deep into the effects of  government policies on opioid usage and how the usage of telehealth and connected care can save thousands of lives of OUD (opioid use disorder) patients. He also talks about how drug abuse in inmates, which is a common prevalence, can be drastically reduced to not only save countless lives, but reduce crime rate and make a healthier society in the long run.

In this episode of the Digital Health Community by Persimmon, Tim Cooley, Start-up Chief of Staff, Executive Director of Park City Angels, and author of  “The Pitch Deck Book” talks to Chris Sprague, CEO of Persimmon, about raising angel investments from angel investors. Tim explains what it takes to raise angel investment in the context of a digital health startup. There is a nuanced difference between consumer startups and digital health startups. Tim goes through the nuance differences and shares solid advice for entrepreneurs and Angel Investors. Watch and listen to gain actionable insights about raising investment.

Key findings from John’s 30 years of experience

Chris:

Hello, everyone. On today's podcast, our guest is John Hsu, a physician entrepreneur that's tackling one of the biggest epidemics of our time. and I'm not talking about COVID, but rather opioid addiction and treatment. John is the CEO and co-founder of iPill dispenser, which features his invention of a device that secures monitors and dispenses access to a patient's prescribed pills with an easy to use device that is like an ATM for your prescriptions. John practiced as an anesthesiologist for three decades and has turned his learnings, faith and passion into multiple startups. Today, we'll be learning about John's journey, including his frustrations as a physician, opioid treatments and addiction and how to talk around those issues, and how iPill came to be and where it's going. John, welcome to the pod. Please introduce yourself to our audience.

John:

Hi Chris, thank you for having me. I'm really glad to be here. As you said, I am a physician, I practice anesthesia and chronic pain management for 29 years. The biggest problem in my practice, by far, was the inability to determine medication adherence to the opioids that I prescribed. I began to think of solutions, and thought about the psychosocial issues and the physical issues of prescribing opioids. And it led me to develop a couple, a few different solutions, one medical device and two drug development companies. I have 10 granted patents, believe it or not, I was so surprised when I got the first

Chris:

That's a lot. Gosh, we could unpack what it's like to apply for a grant. But maybe as we hop into talking about iPill, and your research work and such, I'm wondering, can you define just one term for us? So we hear about when it comes to care plans, there's compliance, and then when you hear about treatment plans, there's adherence, What is adherence?

John:

So when I examine a patient, and figure out what potentially the problem could be, I prescribe either medications or things that the patient can do. So that means that, the ability of the patient to do what I prescribed to them for medical treatment is called compliance, adherence is how often they comply and do what is prescribed to them.

Chris:

Got it, Got it. So there is a compliance with a plan as in, are you going through all of the activities to treat yourself but then adherence is, are you doing it with the frequency and consistency that you have been prescribed? Great, great. Now, you are a physician turned entrepreneur? Can you tell our audience as physician entrepreneurs a big part of our audience about your journey from physician to entrepreneur?

John:

Well, it really first started after I was in practice, and there were always problems. You know, in my practice, and as physicians, we try to improve the situation, we always try to make things better. And we're problem solvers by nature. So, but the problems in my practice, I tried to figure out solutions and with, as I grew and matured, in my practice, there were always bigger problems that were plaguing my practice. You know, with the opioid crisis getting worse and worse. We started figuring out how to improve my practice and improve the big picture of the opioid epidemic as well.

Chris:

Right. And let's see in route, I know from our previous conversation, you did some things that some physicians don't do, like, for example, invest in real estate, and in part that's allowed you this flexibility to work on things that you're passionate about, and that you know, are going to impact the lives of patients, such as you treat. Can you tell us a little bit about that, you know, waypoint in your journey.

John:

Well, I actually became a physician first and, you know, being in practice, there's a lot of stress, you know, there's, I can't tell you how much stress we're under when we practice and people think physicians are just interested in making money. But as we get older, we're more interested in the balance of life. And we're interested in reducing the stress for our medical practice. It just so happens that, you know, what gives me release and relief from the stress is doing something that requires something totally different, more physical labor for me. And, you know, my wife and I, we moved into our first house, and there was a lot of things to fix. So I started fixing them. And then as we moved to different cities, we just, you know,  moved into a different house and started fixing them, and we just kept those houses. And then, you know, with a passive income, we it really helped make my practice better, because I really wasn't concerned about money, I would my main concern was, and it meant that I could do what I felt was right and not have to do and not have to depend on the income from my practice at all.

Physician-entrepreneurs as a community and the problems they face

Chris:

Right, yeah, we hear that a lot from physician entrepreneurs, that they suffer from issues of burnout or stress, or they're making less money than they used to or like for you they’re, and they feel disempowered to really affect the big picture of that thing that they were trained to treat. What do you think about physician entrepreneurs, as a community and as a potential in the health system?

John:

Well, I find it, I find great camaraderie in the physician entrepreneurs, because for the most part, to be an entrepreneur, you have to be optimistic. And if you're optimistic, you're pretty much happy. And the numerous stresses that have made a position emotionally and physically in disrepair and burnt out, those physicians complain about everything. And they're not fun to be around. They're always complaining about being a doctor. And when I leave the hospital, I want to be thinking about other things, my wife, my family, other things to do, what I have to repair in different places, I actually love working with my hands on different parts of a house, putting in a toilet, laying tile, doing outside, work in the garden, escape laying concrete, it's all the things that I can do. And I find it very fun. It's so different from being a physician, it takes away the stress of being a physician. 60% of providers are burnt out and they're retiring. And I don't want to be one of those physicians yet.

Chris:

Right. And last time we spoke, you had a interesting take on physicians and private practice versus employment. And really you being a part of this last generation that had maybe at the beginning, a little bit more work life balance, and then also the ability to make money. And I know your children are becoming physicians, and gosh with all of these issues swirling around in your head from physician burnout to being a doctor, might not be enough to have the impact that you go into it with or lack of teamwork in medicine. I just wonder if we can unpack that a bit, because half of our audiences are actually not from a medical background, but they're building things for people in medicine. So it helps them to understand, but you're just talking about physicians? Why would you say your generation has been the last to make money in private practice?

John:

That's a good question. You know, I think it's because of the employment issue. Most doctors now are employed. And that means that they come out of medical school with an average of four to 500,000 in debt. And then they begin to work hard, and their marriage suffers and they end up in divorce. So a lot of physicians just aren't happy. And so they try to, they give personal sacrifices for a career in medicine to contend with disruptions in their lifestyle. So most doctors now just want to be employed. The older doctors, their parents were doctors, and they were able to pay for their kids education, so the kids weren't in debt. And there was a less financial pressure to make money. Because you know, sometimes, you know, when I first came out of residency, I was making $11,000 a year. And I had probably a $1,400 loan payment to make. So I had about $30 for the week to eat. So I remember this, this is kind of funny, but there was a place near me that had a small hamburger, a french fry, and a small coke for 99 cents. And that was my meal for most days.

Chris:

That's about $9.95 today

John:

You look at physicians, now, Medicare is going to cut physician reimbursement by 4.3%. And then you add in inflation, and it's 9.5%. That means doctors are behind the ball 13.8%. That's a reduction of their reimbursement. You ask anyone, if they're gonna take 13.8% Cut, year after year, and no one's gonna want to be a doctor anymore.

Chris:

No, this has to be frustrating to physicians. And we all know the US has a health care spending problem to the tune of $4 trillion, I believe, last year, growing at 10%. And yet, the net take home pay for doctors is only 10% of all of that spend in health care. And it just seems like something has to give because now most of the money is being siphoned out in different parts of the healthcare system, some necessarily administrative but some clearly overhead and people in the middle. And then you have to deal with burnout, and you have less pay. But let's unpack burnout just a little bit. What is causing physician burnout, that 60% of healthcare providers?

John:

Well, the biggest issue right now is government regulation, and probably investment in the healthcare field. People who are investing in the healthcare field, what they're doing is they want to make more money. So the first thing they do is they're going to cut reimbursement for physicians, and cut staff. So now you cut nurses, there's a big huge nursing shortage. So doctors don't have enough help. They don't have enough nurses, they get less reimbursement. Government regulations are telling them what to do and what they can prescribe. And you have less autonomy. So you're basically being told what to do, and not being paid for it, you can't do what we're trained to do, which is do no harm to patients and treat patients to the best of your ability. You're being told to give patients second rate care, which to me, very, very difficult to find. Because malpractice is always looming, you don't give the best care. And you say it's because the insurance company told me that I couldn't do the best care. Or the government says you can't do the best care that's no defending for a lawsuit. You're on the hook. You can make 10 $100 taking care of a patient, but being on the hook for $10 million.

Chris:

And something you said strikes a chord with me about within the provider space being all leaders and not players, and there being this lack of teamwork with everyone being on the same team on behalf of the patient in medicine. Can you elaborate a little bit about those kind of teamwork challenges are really just that feeling that there's a lack of teamwork.

John:

I started a few years ago, there was something that people were pushing through patients first. And it became such that many and caring for patients who were not physicians were telling us that we're protecting patients from physicians who are not doing what they should be doing. A case in point is something that the Joint Commission on Accreditation of Healthcare organizations did. They said that pain is the fifth vital sign. We saw as physicians that opioids are addictive, but they you know, there was some paper abstract, not a complete paper that said doctors should treat every single pain no patient should be in pain. So everyone said, If you don't treat pain, you're a bad doctor. People were sued. But doctors, we know we have history. We have evidence based medicine we practice. And we remember the opioid wars in the 1830s 1850s clear evidence that opioids are addictive. And it's how doctors are scrutinized when they're doing the right thing and told they're not doing the right thing. And that really causes burnout. Because there's a conflict. You're trained, you know how to treat patients, but you're told that you're not doing the right treatment. And the teamwork issue has become very adversarial. The government regulations, EMR employment issues, patient satisfaction scores, that whole ball eats, eats away at a physician's autonomy. For instance, for patient satisfaction scores. If a patient comes to me as a pain for a pain physician and says, Doctor, I want more opioids. And I say, Well, you don't have pain, I think you can do other things instead of getting opioids first. And they would have had more patients say to me, Well, if you don't give me opioids, I'm going to give you a very bad satisfaction score. I'm going to complain to the administration. Well, that affects my reimbursement. So it's not just blackmail, that becomes adversarial. Where sometimes I say, hey, you know, I got a family to feed to, I'm human, I'm not God. I'm gonna give you those opioids, and then I'm gonna stop. It's, shake my head.

Opioid access restriction and its cons

Chris:

Yeah, Yeah, no, shake your head. And it's complicated. And I think that's what people recognize is that there are so many competing, you know, incentives that are not aligned within our health system. And I think anytime you have a different user, the patient that's different than the customer. And that's different than the person paying for it. So for example, the pay there, you're going to have these competing incentives in, I think what you're saying is that now there's these policies and regulations that kind of set that to play out to be adversarial. Yeah. And so when we're talking about now that it's like this four legged stool, almost of, okay, there's patients, there's providers, there's insurance companies, and then there's the government, and how these policies facilitate misaligned incentives. Now, recently, there's been Roe versus Wade, that is also now a, I guess, a government policy. But, you know, we're neither constitutional law experts or medical experts, but as a doctor, I'm wondering how you weigh in on things like Roe versus Wade, and, you know, what, what should be on, you know, really the domain of a patient and their provider versus a government in a society?

John:

You know, it's a difficult question, and I'm not on one side or the other. What I do feel is that doctors are bound to do no harm. And I believe that, that decision should be a medical decision between a doctor and a patient. You know, we're not lawyers, we're not politicians. The policies that are put forth by the government are for the population, and they ignore the needs of the individual, which I think really has made the distance between the doctor and the patient very wide, so that the doctor patient relationship essentially no longer exists. Right,

Chris:

Right. Yeah, yeah and for the individual and your startup, iPill is an intervention that allows you to still treat the individual, but while acknowledging that there are these problems of access to opiates, and then also the reality of addiction, for some. I'd love for you to walk us through iPill. But as we're doing that, just to understand the basics, so our audience has the context. So what is addiction in the context of opiates? Or really what is the right way to talk about addiction?

John:

Well, I think we should probably first start by using opioid use disorder rather than addiction because there's a stigma and stigma is a problem because providers, healthcare providers in the Caribbean can sometimes reduce care because of the stigma because of expectations because of patient expectations. It can actually prevent patients from getting care. We use the acronym OUD for opioid use disorder. It's a treatable chronic medical condition involving a complex interaction between the brain, genetics, the environment, and really a lot of individual life experiences. You have two patients sitting next to each other having the same surgery. One patient could be calm, One patient could be screaming. And it's because of their life experiences, people interpret pain differently.

Chris:

Right. And okay, so OUD and everyone interprets things differently. Now, why are we talking about stigma? Why do we have an opioid or an OUD epidemic? What's your perspective from someone on the front line? 

John:

Honestly it started with the pain is a fifth vital sign. So there is some manufacturers that said that opioids have limited addictive properties, but we know that's not. And there was a growing number of deaths and hospitalizations from OUD. And right now there's a big change and how we've dealt with it. We first said that all patients should get as many opioids as they want to reduce pain. So doctors wrote opioids, government mandates said, patients should not be in pain, you are allowed to give opioids. And then as more people died, these patients could not get opioids anymore. There was a big opioid access restriction in 2015, 2016. And people were still in pain. They're opioid dependent. We'll have OUD. Then they went to fentanyl, and then they started illicit drugs. So we still have a continued increase in opioid deaths. And that's an epidemic. Last year 108,000 people died of an opioid epidemic, that's like five deaths per sorry, one death every five minutes. It's this whole thing, in my opinion, was started 20 years ago, when you know, the relationship between the doctor and the patient was widened by government interference by mandates for the population. You know, you have to treat pain, or else patients will go to other things. No, do they some patients commit suicide? In the last three years from 2017 to 20, the life expectancy of people in the United States actually dropped because of the opioid crisis. Suicides.

Chris:

Yeah, that's incredible. And so for someone who is experiencing OUD, what are the resources today that they have to treat that? What systemic support conductors? 

John:

Well,the most important factor is the patient, they want to, they have to want to get better. And if they want to get better, they will figure things out. I'm not saying that you have to leave everything up to the patient. But there are some resources out there. You know, getting access to care is one of the most difficult parts that a patient has to do. Medicaid, believe it or not, is a primary payer of OUD treatment in the United States. And the second thing that a patient has to do is get to a clinic that subscribes to medication adherence therapy or mat. Studies show that medications for OUD or MOUD that are used to treat OUD, opioid use disorder can reduce opioid overdoses by greater than 50%. But only a third of all OUD clinics, and incredibly 1.5% of jails use it. A person who wants to get better needs to get connected to an OUD clinic, that can provide care and they need to apply for Medicaid and get into the Medicaid system for coordinated care.

Investment climate and decriminalization of drugs

Chris:

And so you had the opportunity, as we've talked around to kind of work on what you want, what you're passionate about and what you think will impact people's lives, for example, for OUD, and I'm wondering as you're building the startups, what is the investment  climate in general, for startups that working on opioids.

John:

The climate, I would say is very frigid there. The opioid litigation against manufacturers, against distributors, against pharmacies against physicians. If I write for opioids, and there is not a valid reason, I can actually lose my license. What business and we are all a business, doctors are a business, all the manufacturers, distributors, we're all a business with the multimillion dollar opioid litigation. Who wants to take the risk of investing in a company that brings on billions of dollars of future liability. And no one's doing research on pain medicines anymore. That I mean, everyone talks about litigation and the money for patients that aren't opioid dependent or who have OUD. I think there's a lot of people in between there are a lot of money.

Chris:

Right, as far as people seeking treatment, and then being able to actually give and monitor that treatment. I know some people hypothesize that roadblock is the criminalization of drugs like opioids. What do you think about decriminalization of drugs in particular, related to OUD? And, you know, how do you see it playing a part or not in properly treating addiction?

John:

That's a tough, tough question, involves lots of parts, decriminalization of illicit drugs. I know that Portugal has done it. But decriminalization of prescription opioids, that's already here. The issue is, and my problem is that even though opioids are triple locked in the hospital, dispensed by nurses, who are actually supervised by pharmacists, the same prescription opioids are sent home with patients that have no security, or no dispensing impulse. I think a simple solution would be to use technology to give patients the ability to use opioids safely at home. I mean, if we're able to securely store actively controlled dispensing at home, and remotely monitor this very air, remotely monitored medication adherence at home, and we were able to destroy tablets. Once a prescription had expired, we would have fewer , misuse and diversion of prescription opioids, people would get their pain. You know, it's like, you have lots of cars on the road. And they kill many, many people. But we have traffic laws, we have traffic signs to reduce deaths from car accidents. We don't have anything like that for opioids at home.

Remote Therapeutic Monitoring

Chris:

Yes and I think we should hop into iPill in just a second because I think you directly answer a lot of this problems that you're talking about. But one of the solutions you mentioned is remotely monitoring. And just for the context for our audience, what is remote therapeutic monitoring? And how does it work?

John:

So for iPill, what it means is that when a patient takes the pill, we know it's the prescription holder. So we use a face print to make sure it's the person who we prescribe the medication to. And we can only allow them to take the medication as prescribed only at the prescribed dose and time. So that means that the medication that's being given to them is only for that patient. And if they don't take it, a message is sent to the care team so the care team can know and can text call or bring in the patient for an in person visit or actually, you know now with COVID One of the good things that came out of COVID was telehealth. We can ask for a patient to go on telehealth and we can see the patient, talk to the patient. Many patients now, they want care on demand. They don't want episodic care. I mean, when I had a pain clinic, my wait time was four weeks, five weeks. And if you want your opioids now and you have to wait four or five weeks the chance of relapse,  of overdose is very hot today. With hair on demand, that's what we're providing with.

Chris:

Right, So there's RTM and then Care on Demand telehealth. So telehealth was blessed in two CPT codes that can be reimbursed in particular during the pandemic. That's following CCM and 2015 or so. And then RPM has been similarly blessed. And now we have RTM CPT codes that, I guess were this year, fully standardized. Was that kind of like one of the missing components to really getting people to uptake the solution or when we're talking about therapeutic monitoring, incentivizing the right things to do when you're providing care, which is monitoring whether someone is adhering to that plan?

Inspiration behind iPill

John:

Absolutely. I mean, remote therapy monitoring codes RTM, that started July January 1 2022. And, you know, the thought process is that lack of medication adherence costs the country $105 billion a year, one in five prescription overdoses is not filled. 50% of patients don't take their prescriptions as prescribed. They either take it too often as in the case of developing OUD, or they don't take it at all, or they take it at the wrong times. And really, when you when, when a doctor asks a patient, how are you doing? How are you taking your medications? Most patients will say just as you prescribed, even though they know they haven't been taking it as prescribed.

Chris:

Right. Okay, and let's launch into iPill because as you set up this problem of hate people do need to manage pain, or people under OUD do need other treatments to help them through that phase. What is iPill as that solution to help make this possible for providers.

John:

So what I like to do first in describing IPL is to set up a picture. So for those out there who use a mobile banking app, on their phone, that's the iPill app. And if you're out and about and you need a few dollars to get a meal or buy a souvenir, you go to a bank ATM. That's the iPill dispenser, instead of money we're controlling pills at home. So it's the combination of the iPill is a combination of a mobile app that uses biometric authentication, the face print, make sure only the prescription holder has access to drugs at only the prescribed dose and time. And then that remote therapeutic monitoring is where we're able to tell when the patient is taking , getting access to the pills and to actually taking the pill. Then we can actually destroy the pills. So it's tamper resistant. And if it's at the end of the prescription, we actually destroy the tablets. So this is exactly what happens in the hospital. We're just moving what happens in the hospital, to the home. In the hospital, you don't miss a dose of opioids, a nurse gives it to you. You don't take the wrong drug, because a nurse gives it to you and they're supervised by a pharmacist, you get exactly the drug that you're prescribed at the exact dose and time. And with technology. We can make sure that happens in the home. We are using the same technology. As 200 million insulin pumps sold in the last 10 years.

Chris:

Wow. And okay, so you've described iPill and how it works and what's unique about it. How did you think of it? A lot of times the this podcast we like to talk about the journey not just in what happened in milestones, but how things came to be, because that's the journey that our audience is about to go through. What is the origin story of iPill?

John:

Well, I had a particularly tough day in the clinic and didn't get to eat anything all day because I was behind,  too many patients for me to see. I actually went home at about nine o'clock and went to the ATM to get money to go to a fast food restaurant to get something quick to eat before I went to sleep. And the ATM wasn't working for some reason. So I had to go to my banking app and figure out why. And then I put two and two together, in the hospital we have on the cell and Pyxis devices. And I thought, what cant we do this at home. So I was really excited at that point, I thought, oh, we should do this for the home, I'm gonna go home and get on my computer and use AutoCAD and design one. And, lo and behold, I went and went to my garage. Like, I think it was two nights later and I started putting one together. I used a raspberry board and a PI chipset, and put one together and kind of worked , was ugly but it worked. And then I decided to make it real, and put my own money in and hire a mechatronic engineer who 3D printed a sample and actually had a focus group of my patients. And we, they really liked it actually, these are chronic pain patients, and they said, you know, doctor, everyone's trying to take away our opioids, you're wanting to give us opioids back. But, you know, we don't like the control you're trying to get but we like the fact that you're trying to give opioids back to us.

Chris:

Right? So ironically, yeah, your idea started when fast food was $ 9:95, not 99 cents to go to the

John:

My whole life is, you know, I'm all about being a doctor, I'm all about what I like to do. And I really care about my patients, I really do. I think what I'm trying to do is, you know, it's not about money. I, my, I have made money in other things. Not by paying. This I'm trying to do to give back. I've been blessed. I need to bless others.

The need to validate startup ideas

Chris:

Got it, got it. And you talked about an interesting phase of launching a business which some entrepreneurs completely skip, which is kind of this show proof phase of trying to validate as quickly and cheaply as possible, whether this big idea that you have actually has value to one to the stakeholders. So let's say the patient or the providers, and you built that from scratch in your garage. So you could say your garage startup. Can you talk about, You know what you were thinking around when you were prototyping this? I don't know if you came out of medical school, knowing how to program a Raspberry Pi. But yeah, I'm just wondering, what were you thinking around? What what do I need to validate with people before I go ahead and make this a company?

John:

You know, having a good idea is fine. Everyone has good ideas. The real key to building a business is making your business an investable vehicle. You have to be able to make money. Okay? You know, people say it's a social impact project. But that doesn't pay for the nurses that we have hired, it doesn't pay for the electronic medical records, it doesn't pay for my malpractice premiums. It has to be a business and that's what physicians built a business. So when I built the prototype, I thought, Okay, I have to have a customer, I have to have a investment, financial model. I started reading, you know, in my off time, I love to learn. So I started reading about what's the best way to build a business. And so I found a customer. And they actually, they found me. I didn't really advertise the FDA. I applied to get funding. I applied for an FDA innovation challenge for the prevention and treatment of OUD. And there were eight companies. I was the only company that was small, every other company was a billion dollars. okay, Then we just started moving forward. That was the first validation that we had an idea.

Chris:

Got it? Yes. And then okay. So the need to validate that something is value. That's something that a lot of people underestimate. And then the next thing people in general underestimate, myself included when I ran a startup is even if you have the best idea, how do you get to market how do you go from zero to one In terms of customers, who were your first customers, and then how did you come into them?

John:

Well, I was doing a podcast like this. And a jail administrator in Washington State happened to be watching the podcast and reached out to us. They said, you know, 25% of our detainees doll overdose and die within two weeks of release 75% Relapse on opioids. And within three months 80% are re incarcerated within a year. And then there was a study that came out that said that jails in California reduced opioid overdoses by 58% and hospitalizations by 48%. And they saved 750 million, so that they're starting opioid treatment in jail. But then after they're released reentering society, that's a second problem that is not being addressed. And this administrator found that this device could be used to actually enhance the reentry into society and actually save lives. So they're our first customer. They actually, we're working with them to get detainees in jail training with OUD, MOUD medications for . And then we're working with them to actually give them the iPill dispenser and drive them from release point to the induction point of an OUD clinic. So there's no loss, there's no loss of the patient, a detainee, two loopholes, that detainee is put right into the system right away. So there's no, there's no loss of the detainee into the system. Because 1 thing at the jail, there is a bar across the street from the jail. In that bar, you can buy drugs and alcohol. 85% of jail detainees have some sort of substance use disorder, or opioid use disorder. It's a marginalized population that's totally ignored. Because people throw them in jail, and they don't realize anything. That's the treatment of OUD, a chronic medical condition. They're treating it with jail, not drugs, we know that the evidence is there drugs actually work, reduction of overdose deaths by 50% absence, it doesn't work, you have an 80 to 90% fail rate with absence. You have to use drugs, but you can't just use drugs, you have to use drugs, and you have to have psychosocial support, you may have to get them housing, you may have to give them an address a cell phone, you may have to get them a job, you may have to get them food, you have to treat these patients holistically with psychosocial support, and the physical support of reducing cravings and reducing withdrawal symptoms so that you reduce relapse and OUD and overdose can.

Chris:

When we last spoke you talked a little bit about the holistic support. I mean, it would be easy for IPL to stay in its kind of swim lane as the device that remotely monitors access. But you've expanded a bit beyond that and such with, for example, the dashboard. Can you talk a little bit about that, like what holistic support you provide to young

John:

So I like to use analogies and I like to paint pictures. So our phones today allow us to gain knowledge from the internet, pay bills, make reservations, and buy theater tickets. More importantly, it allows us to enter our home. It allows us to start our car, and it's going to be a more and more important part of our lives. No one loses their phone 95% of the population, according to Pew Research has a cell phone, 90% has a smartphone nowadays. So that means that it's an integral part of our life. So what we're trying to do is if you have to take your opioids once every four hours or once every six hours in between those times, if you have a craving, we can distract your attention to something else. A very addictive thing. You know some people like oh, I forget the addictive games because I don't play them but you're angry birds. If all of a sudden you're playing Angry Birds, you forget about your cravings. That's cognitive behavioral therapy. And then we can add other apps for acceptance, confirmation therapy, or even contingency management. If we know you're playing on the game and taking your drugs on time, we can give you $10. Or we can give you a ticket, there was a paper that discussed contingency management success in Nicaragua, where they have a lot of drug usage. They gave $10 to people, 50% of the people who were given $10 stayed off of drugs in an environment, in a climate where drugs are, illicit drugs are prevailing.

Chris:

And okay, so in administration at a jail identify the need for the social good of their population. However, we also talked about the need to align incentives within the health system in order for something to really be adopted. So for example, pushed by providers or in this case, the next step, which may be an OUD clinic, can you just illuminate a little bit about the business model of iPill and how it helps align those so 

John:

So when a jail detainee is released, they're given a couple iPill devices they're provided. And we drive that detainee from the jail to the OUD clinic. Recent studies have shown that the longer a patient is on Suboxone, the for let's say, a year, the chance of relapse and the chances of overdose deaths are greatly reduced. So no one's going to do anything for free. So we're providing the iPill dispenser to the OUD clinic. Then we bill Medicaid for the remote therapeutic monitoring codes, and then rebate back $20 or so to the OUD clinic. So they have no upfront costs. And then they are able to make $20 per patient per month. So that's an financial incentive to keep people alive. And as I spoke earlier, it's a great idea. But you have to make it financially sound so that people can stay in business.

Chris:

Got it. And these RTM codes have allowed for these incentives to be combined. As in, got it. got it. Yeah, that's great. And looking forward, what are the success metrics that you have in mind for iPill in terms of impact in terms of business? 

John:

We want to look at for metrics is really rates of medication adherence, we just want to make sure that detainees are taking their drugs, they don't take their drugs, cravings, withdrawal symptoms relapse, it just goes down the same path. But if we keep them on the Suboxone, and we make sure medication adherence is there. And we look at the length of time in treatment for these people. And then we look at the effects of that which would be reduction of relapse reduction in reoccur incarceration, and an increase in revenue for OUD clinic. Plus, believe it or not, we would probably study a reduction in crime in an area around where many detainees live. And that's because we believe that because 50% of detainees, commit a crime, or commit a crime for drugs or not commit a crime under the influence of drugs within the first year, we can reduce that. And we would look at the benefits to society. So again, benefits to the patient, benefits to the OUD clinic, and then benefits to society is what we're really looking for success metrics for the outcome.

Class 1 vs Class 2 medical device in regard to FDA clearance

Chris:

Got it. And as you mentioned before, the lifeblood of a startup is traction or growth or becoming an investable vehicle. And so, when we talk around startups at Persimmon, we generally think at a few stages one is showing proof that your idea has value. You did that with a prototype. The other is establishing that you have a viable product by getting it into the hands of customers and users and establishing that they use it and then they like it. And then the third is scaling, once you know that you have something that people like, what is the future of iPill? And how are you thinking about your growth and expansion to being viable and scaling?

John:

Well, growth of iPill is going to come in three forms: really, growth by greater use, growth by extended use. By using other medications in the IPL and growth from additional product lines. Greater use will come from increasing sales to 3200 jails In the US and 14,500 Odd clinics, we just simply haven't marketed to.We have one value based odd clinic they're just going to outright buy the iPill dispenser and give it to their patients because it's the value proposition. We have a fee for service or you decline it and we're probably going to end up selling and just with these three contracts alone 4300 units a month. After that, we've been talking to the VA system. The VA the Veterans Administration has 208 clinics that treat 6500 veterans, but there are 418 veterans who can't get access to OUD treatment. We've been talking to them about giving 418,000  iPill dispensers to those veterans a month. You can only use the eye pill once a month because of the drug supply chain Securities Act. Anything that touches an opioid needs to be destroyed after use. Growth from extended use which comes from iPill when it's used for other drugs like stimulants, tranquilizers, sedatives effects, and you know, recently true pill and Cerebro were cited by the FDA for the inability to control patient authentication. And patients could put multiple addresses down and get multiple prescriptions that's abusing, sorry, misuse and diversion potential. And finally, the iPill is a class one FDA registered medical device. And we have a class two device that is actually an FDA designated breakthrough device, we add a respiratory sensor that actually detects tidal volume. And with that tidal volume with that respiratory sensor, we connect that to our app. So if the patient is not breathing, well, we can actually call 911. Bring Narcan, bring other things to that area to save that patient. Because most people who use drugs do it alone.

Chris:

Right and, can we double click on the FDA clearance a bit? What is the difference between a class one medical device but then something that would be designated as a breakthrough device?

John:

So we're a class one registered medical device, which means that the risks of death from our device is infinitesimally small. They're so risk. Like, if you picture a brown vial with a white cap, that's a child resistant cap. We're an upgraded version from 19. I think 1950s to or Dr. Henry Breel actually made the child resistant cap. There's been no upgrade for the last 52 years, and we're the technology upgrade to that child's account. A class two device is actually something that could potentially cause harm. So we're detecting respiration. But what happens if our device fails? And the person dies? That could be product liability. So we have three ways to detect respiration as a backup to a backup to a backup. And so that's the difference. And a designated breakthrough product is , we are the first of its kind.

Chris:

Got it, got it. If you're designated as a breakthrough device, does that put you on any kind of different track for clearance? Or

John:

It gives you a faster device path to approval? You know, class one doesn't mean approval, Class Two is designated as approval. So that means that the faster it gets to market, the more lives it can save.

Chris:

Right,it makes sense. And yeah, and then talking about the future. What does your product roadmap look like or anything that you want to share? You've talked around, you know, adding things like digital therapeutics or additional resources and more holistic services to your dashboards and your partners. Can you give us a preview,

John:

Well,we would just like to grow, we just need to get this product out there. So people start using it. And we can really address the opioid epidemic. You know, most people say that the opiate epidemic now is all about illicit drugs, heroin and fentanyl. But you realize that  a dentist, not to pick on dentists but they're the second highest prescriber of opioids. That means that they give young people the greatest first exposure to opioids 86% of fentanyl, and heroin users first report, sorry, report, first abusing prescription opioids. There's a controversy as far as whether prescription opioids lead to illicit opioids. But, you know, we've actually changed. We went from a lot of old prescription opioids out there causing a lot of deaths. And then access was cut. And then people had no other way to treat their pain. So they went to illicit opioids. You know, believe it or not, there's a study that came out of Massachusetts, 1.8% of the people who, who actually overdosed and died in this study had an opioid prescription, opioid prescription. And we want to get this device out, but we just want it to get out there. We're gonna have, you know, realistically, we're going to have some pushback. But I think that once people get used to it, they're gonna get treated for pain, which is very, very important. And I want to highlight that. When  you don't get treated for pain, you do some things that you shouldn't do. It's like an animal cornered, that they reach out, and they will do things that they shouldn't do. I'm not comparing I'm not comparing an OUD patient to an animal. I'm just saying. That's my analogy.

How to deal with negativity along the way?

Chris:

Definitely yeah, no, I think I've been there, this kind of instinctual reaction or inability to control my actions because of pain. So I think you're right, and that, you know, chronic pain is a root cause to a lot of problems besides just OUD, absolutely. Okay, yeah, John, I think you're absolutely on the right track. And I hope you don't get much pushback. And in particular, the evidence that you're gathering from your initial customers, I think it's, it's a great idea. And I think you do have a future as a startup. Now, what would your advice be to physician entrepreneurs and digital health startups in general, as they're getting off the ground, just kind of learning from things that you had to learn the hard way,

John:

I made a lot of mistakes. Buckle your seatbelts, you're in for a bumpy ride with highs and lows that will shock you and be rocky to the core. You know, doctors, we think we're smart. I think we can do everything. We don't know business. We had to learn. You know, you have to have a good support system. I have an awesome, really swipe ever. You have to believe in yourself, that you are improving healthcare, and don't do it for the money. It's like that baseball story, you know, you play the game. And when you play the game, well, the money will follow. There are other easier ways to make money. You know, my kids are fortunate because I'm, I don't have loans. So they're doing they're, they're being physicians for the right reason. They're being physicians to help patients. You know, I gotta hand it to my kids though. They know what I went through. And they still want to be physicians, because they feel it's a very noble calling. And we'll have the financial pressure you're doing medicine for the right reason.

Chris:

Yep, yep. Yeah, yeah. In spite of your experiences, and you've been able to persevere and become an entrepreneur, despite what different naysayers in your life may have said. While you were a physician or while you were thinking about becoming an entrepreneur, even while you were investing in real estate. How do you handle naysayers in life?

John:

I used to handle it poorly. I used to be obnoxious and not very humble. And sometimes I still create, those old things creep in. But one of the things that I've really, that's really come true, is the fact that I look, I listen to naysayers, that have more money than me, you know, or are more successful or who have funding. For fun, and they told me, my deck was my pitch deck was wrong here, wrong they're too much not enough. Didn't, wasn't right. They also told me that I could not run more than one company. And I have three, all to do with the opioid crisis, all to address the opioid epidemic. And I worked tirelessly. For each one of them. It's like having three kids. Not everyone, not every family has one kid, and you don't own that one kid completely. Most of us have two or three kids. I have worked tirelessly to make sure my three kids have food on the table, have everything they need. And that's what I do for my companies. In real estate, when other doctors laughed at me for putting in toilets, getting my hands dirty like tile, they said I was taking too much risk. And I didn't know what I was doing. But you know, I thought about longevity? In 30 years, where do I want to be? I don't want to be working and trying to make every single dollar to pay for loans or to pay for things that I bought, because I just wanted instead of I needed it. I just think I always planned for 20-30 years down the road. And I always did things that I liked. And if you're doing things for yourself, it's not harming anyone. It's, it's, it helps people, you know, I think the money's going to come later. As long as you're happy as long as you're doing things you want to do. Everything will work out. I mean

Chris:

Yeah, as long as you wake up every day inspired.

John:

Yeah, absolutely. Definitely.

What John would change in the US healthcare system

Chris:

Okay, and John, speaking of inspiration, my final question is, we've talked around misaligned incentives and other parts of the health system that don't quite work together on behalf of the best care for patients, but you know, it or the best lifestyles for physicians, if you have a magic wand or crystal ball in where to improve healthcare in the US, what would you change and why?

John:

Oh my god? We would have to have another podcast on this. That's a huge topic, okay. Let me think for a second. Well, first, I think I broach on everything already. So first, I think government policies should focus on the individual. And because when I'm thinking, and I work with opioids, not everyone needs opioids, but everyone in pain needs opioids. You know, to me current government policy focus on our population that restricts opioids to everyone, ignoring the individual, so we need to start thinking about the individual. Right. I would repair the distance and average serial relationship between doctors and patients, you know, the doctor patient relationship isn't there anymore. We talked about document regulations and insurance dictating care, physicians employing and compliance to policy for financial reasons, all those things, do it and physicians can't make the correct treatment choices for patients anymore. And, you know, I think, third, I would probably limit class action lawsuits against opioid manufacturers when I'm working in the opioid spin. I would like to see a drop in the billion dollar opioid litigation against opioid manufacturers, distributors and pharmacies. And because the standard was research to find alternatives to opioids, you know, 80% of the opioids, sorry, 80% of the visits to the ER are for pain. We can't restrict opioids. We have to make sure patients can get it. Right, we have to treat pain. I said earlier five, every five minutes someone dies. You know. And I think the last thing I would say is that you know, we need people. We need good human resources. Hospitals are reducing nursing resources, they're making nurses take care of more and more patients. If you were in the hospital and you're sick. And you have to call 911 because you can't get a nurse. That's a problem. And that occurs. I really hope that with inflation, governments and hospitals don't reduce doctors, pay reduce doctors numbers, reduce nurses pay reduced nurses numbers. Were I think, after the government, health care is probably one of the biggest employers in the country.

Chris:

Right , well, John, I am inspired by your ideas and then also your passion. I think you're clearly doing what you do because you believe it's right and will help people or less ironically, you might be doing more real estate toilets on the weekends, instead of building the companies you know will impact lives. John, thank you for being on the podcast. 

John:

Thank you very much. 

Chris:

It's been a pleasure.

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