Six companies dominate the worldwide market for traditional hearing aids, with their collective share of the U.S. market over 95 percent. At the AAA 2018 conference earlier this year, senior executives from three of these market leaders — Starkey Hearing Technologies, Sonova Holding AG, and Widex A/S— discussed their planned response to forthcoming OTC deregulation in interviews at the event.
Disclosure: My company has consulted for Sonova on comorbidities with hearing loss.
Healthcare categories transforming to OTC generally benefit when companies with deep pockets and direct-to-consumer marketing expertise invest in market development. These investments create awareness of the new OTC category among both medical and consumer communities and catalyze adoption of the category.
Although the FDA has until early 2021 to publish final guidelines for OTC hearing aids, the regulator may do this as early as the middle of 2019, according to Brian Taylor, editor of Audiology Practices.
Once the FDA finalizes guidelines, the six global hearing aid companies will face a trajectory familiar to other sectors that have shifted to OTC in the past. They will likely confront dramatically lower prices but also the opportunity to develop the larger market—the 85 percent of consumers who would benefit from amplification but currently don’t wear aids.
Hearables as precursor
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Two of the top six hearing aid companies offer hearables, which may prove to be OTC hearing aids’ precursor with regard to their fitting technology, distribution channels, and price points. Hearables are personal sound amplification products (PSAPs) that, while not FDA-registered hearing aids, provide hearing assistance in challenging situations. Self-fitting hearables, available in pharmacy chains, big box stores and online, generally retail for less than $500 for a quality pair of earbuds. In contrast, audiologists and hearing aid dispensers fit traditional hearing aids with technology proprietary to each hearing aid manufacturer. The average price tag on these devices is over $5,000 a pair.
Based in Copenhagen, Denmark, GN Group owns both ReSound, a line of premium hearing aids, and Jabra, maker of headsets and the Jabra Elite Sport earbuds, positioning the company, as noted in their 2017 annual report, as “the second-largest player in the global market for true wireless earbuds.”
Starkey Hearing Technologies, whose Eden Prairie, Minnesota headquarters makes it the only global hearing aid company based in the U.S., has a partnership with Bragi, another hearables company. For consumers who want a pair of custom-made Dash Pro wireless earphones—it’s true that like fingerprints, no two ears are alike—hearing care professionals in the Starkey network will take ear impressions, transform them to 3-D printed shells, and merge with Bragi’s interface, as described on Bragi’s website.
Launching an OTC hearing aid
When asked at AAA 2018 about the Bragi collaboration creating the groundwork for an OTC device, however, Starkey President Brandon Sawalich shook his head in disagreement.
“When people talk about an OTC hearing aid, what is it? A big mold that’s going to be sticking out of your ear, or a thing around your neck?”
He said that what intrigued him most about the Bragi partnership was the technology collaboration.
“We’re working on other technologies together that we can bring into hearing aids. The technology will require professional fitting, collaboration about AI machine learning. The ear is going to be the new wrist,” he concluded, alluding to the ear’s ability to measure vital signs like heart rate, temperature, blood pressure, and oxygen saturation more accurately than the wrist.
Artificial intelligence (AI) and machine learning were also prominent themes from Widex USA at AAA 2018. In a presentation to audiologists and other attendees, Widex researchers heralded the ability of AI in the future to improve hearing aid fittings in the clinic and to personalize settings for users in complex listening situations. Although currently the sixth largest global hearing aid manufacturer, Lynge, Denmark-based Widex announced in May its planned merger with Sivantos, owned by EQT Partners. The combined entity would make it the third-largest hearing aid manufacturer in the world.
“I don’t see introducing any products,” concluded Jeff Geigel, CEO of Widex USA, during an interview on the likelihood of introducing an OTC device. “It’s not where we want to invest in for the moment.”
Of the three companies whose executives were interviewed for this article, only Sonova, based in Stafa, Switzerland, seemed to leave open the possibility of introducing an OTC device.
“We have been looking at OTC solutions for many years but up until today we have not found a viable OTC solution,” said Jan Metzdorff, President of Sonova USA.
Metzdorff’s colleague and Group Vice President of Sonova’s Hearing Instruments Marketing, Martin Grieder held up a pair of Apple airpods.
“You see more and more people walking around with hearables. Could [OTC hearing devices] potentially reduce some of that stigma because you don’t know whether that person is wearing a hearing aid or a hearable?” he asked, referencing how societal stigma against hearing aids often discourages consumers from seeking treatment for hearing loss. “We believe that there will need to be some innovation, but in conjunction with the hearing care professional.”
OTC devices in the professional channel
Hearing care professionals—audiologists and hearing aid dispensers—are the primary channel for hearing aids sold and fitted in the U.S. The top six hearing aid companies maintain ties to independent hearing care professionals through purchasing agreements.
While none of the executives from the three companies interviewed revealed specific plans to launch an OTC device, they all maintained that hearing care professionals ought to sell and fit OTC hearing aids.
“We get better penetration rates when a hearing healthcare practitioner is involved,” explained Metzdorff.
“We believe an OTC device will be sold through professionals,” added Martin. “Most likely the audiologist involvement will be more around selling and less around fitting and adjusting. But good subsequent fine-tuning and adjusting will be key.”
Sawalich added: “You’re dealing with all-day wear. You’re dealing with sweat and wax. It’s not a consumer electronic, it’s a medical device.”
Although Geigel of Widex doesn’t see “throes of 75-year-olds self-assessing and self-fitting,” he said that OTC devices will create more flexibility in clinical pricing structure, creating an expanded product line with a broader array of price points in the audiological clinic.
“Our customers are saying to us, I’d like to offer an OTC device,” Geigel said, referring to audiologist interest in offering the devices. “The OTC space will bring in people a lot earlier into the funnel of hearing healthcare.”
The possibility still exists that these three global hearing aid companies will participate in the new OTC category. The FDA will not publish final guidelines for OTC hearing aids for one to two years, and the executives interviewed may not have wanted to divulge proprietary strategies. Regardless, it is almost inevitable that a large retailer, deep-pocketed consumer electronics company, or new player with substantial venture capital backing will make the required investments in OTC hearing aids to create awareness and fuel adoption.
Photo: Getty Images
