From smartwatches to heart implants, digital health tools provide real-time information that help patients, doctors and firms to learn about medication effectiveness and target better outcomes. PhD student Léa Bignon’s job market paper explores this data revolution in the context of diabetes treatment in France. Her research reveals that monitoring devices can have impacts that ripple out through pharmaceutical markets, shifting profits and the path of future innovation.
Why is wearable tech such a big story in the pharmaceutical sector?
Traditionally, doctors relied on limited information from periodic lab tests and patient reports to evaluate drug performance. Today, devices that generate high-frequency health data – such as blood pressure trackers, connected insertable cardiac monitors, and sleep trackers – are becoming widely available.
Digital monitoring can influence decisions by doctors and patients by providing detailed feedback on how a given drug performs in daily life. These data are compelling for the pharmaceutical industry because prescription drugs are “experience goods”, meaning their effectiveness can only truly be understood through real-world use. My research suggests that this information can also affect pricing and innovation strategies for other healthcare products.
Why does diabetes treatment in France offer a revealing case study?
The provision of insulin to treat diabetes is highly sensitive to individual variation: different drugs work better for different patients depending on many factors. It's also an area which has seen rapid adoption of digital monitoring. My research focuses on Continuous Glucose Monitors (CGMs) that provide blood glucose readings every 5 to 15 min. By contrast, traditional measures may conceal critical variations in sugar levels and require patients to regularly place a drop of blood on a disposable test strip.
France provides a unique institutional setting for my research: universal health coverage, centralized data on prescriptions and device use, and a national rollout of CGM reimbursement from 2017. This allowed me to combine comprehensive medical claims data with economic modeling to isolate the effects of CGM adoption on patients’ treatment choices and physicians’ prescribing patterns.
What do your findings tell us about the impact of CGMs?
I show that digital devices can significantly shift pharmaceutical demand. The French claims data suggests that patients using CGMs are 5 to 7.7 percentage points more likely to switch to newer insulin products shortly after adoption. Thanks to CGM data, physicians learn more quickly about how less familiar drugs perform in real life, leading to better patient-drug matches.
On the supply side, manufacturers of drugs that perform well on the new observable attributes — such as better overnight glucose control — can negotiate higher prices with regulators. I estimate that, in 2021, the perceived quality boost translated into a price premium of up to 4.4%. Combined with the demand-side effect, profit shifts from +23% to -13% depending on the product.
One of the most striking results comes from a counterfactual simulation of the impact of CGMs on the profitability of pharmaceutical innovations. When CGMs are in widespread use, a potential new drug that scores well on previously unobservable features becomes more profitable than the existing option, and increases consumer welfare.
In other words, digital tools not only change demand for current drugs — they can shape what kinds of drugs are developed in the first place.
What are the broader implications for healthcare policy?
My research suggests that digital health technologies can enhance both clinical and economic efficiency. However, the welfare gains I find are heavily concentrated among those who use CGMs, with benefits for non-users being 10 times smaller. This highlights the importance of equitable access and careful targeting in coverage decisions.
Another key takeaway is the deep complementarity between medical devices and pharmaceutical products. Innovation in one domain can dramatically shift market outcomes in another, meaning siloed policy thinking can miss key dynamics.
What’s next for research in this area?
It would be valuable to explore how these dynamics vary across different healthcare systems. France has a centralized regulator with strong pricing power. In countries with more fragmented markets like the US, we might expect even stronger pricing effects and different innovation responses.
There's much more to uncover about how data, behavior, and market forces intersect in this evolving landscape. CGMs are more expensive than traditional devices so widespread adoption will significantly increase healthcare expenses. It will also be interesting to study how other digital health tools — such as AI diagnostics or patient self-tracking apps — are influencing demand and innovation.
FURTHER READING ‘Pharmaceuticals and Digital Health: How Data-Driven Insights May Reshape the Insulin Market’ is available to read on Léa’s website.
Article published in TSE Reflect, May 2025
