Continuous monitoring mixed results
Last week on the Monday after the Thanksgiving holiday Medtronic (NYSE:MDT) released a press release with the title “GuardControl Study shows improved glycemic control in type 1 diabetes using real-time continuous monitoring.” After reading through the press release and then reading the study which was published in the December 2006 Issue of Diabetes Care, Medtronic may wish to re-think their PR strategy.
The study consisted of 81 children and 81 adults with stable type 1 diabetes, 78 used insulin pump therapy and 84 followed multiple daily injection therapy. All participants had A1C levels of greater than 8.1%. Subjects were randomly assigned 1:1:1 for 3 months to Guardian RT continuously (arm 1) or bi-weekly for 3-day periods over two weeks (arm 2) or to continue conventional SMBG (control).
While it is true participants in arm 1 and arm 2 did see a reduction in A1C, more meaningful is how this happened. According to the published study, “In this study, the patients did not register specific information about their self-management of diabetes therapy on a daily basis. Therefore, we cannot delineate in detail the link between the use of real-time CGM and the improvement in glycemic control. However, despite no overall change in total daily dose of insulin, almost all patients using real-time CGM reported making treatment adjustments and/or changes to their lifestyle and food intake.”
Diabetic Investor has long maintained that there is a place for CGM, in particular for insulin pump and MDI patients. However, the key for CGM to be commercially successful is not the sale of CGM systems but the continual sale of sensors. The fact of the matter is once patients build a database of information using a CGM; there is little need for daily usage of the product. As pointed out in this study participants were smart enough to recognize that there are a multitude of factors which affect their diabetes. While we do not know for sure how they used all this information Diabetic Investor can make a strong educated guess. By combining CGM reads with food and insulin intake participants gained a better understanding of how their bodies reacted to food intake. Based on this information they adjusted both insulin levels and food intake. The key here is that the study did not look beyond the 3 month study period to ascertain sensor usage.
Diabetic Investor maintains that patient’s lifestyles and eating habits do not change dramatically over time, simply put people have comfort zones. Once patients gain an understanding of how their bodies react to various activity levels and food intake there is little reason to use a CGM on a regular basis. This is especially true given the fact that no CGM on the market or getting reading to enter the market is approved as a replacement to conventional finger stick monitoring. Add in the fact that reimbursement for CGM is problematic at best and out of pocket cost becomes an issue. Even this study acknowledges they could not draw a direct line between using a CGM and better outcomes, they could only offer antidotal evidence. The fact remains that without showing a direct link between CGM usage and improved outcomes it is doubtful reimbursement will ever be achieved.
Diabetic Investor also sees the reimbursement process being driven by Medtronic, not unexpectedly this study used the Guardian RT and nearly half the patients were on pump therapy. Medtronic has been down the reimbursement path before and understands that the government and private payors, like the Food and Drug Administration (FDA), move using baby steps. Medtronic also sees quite clearly that without reimbursement Dexcom (NASDAQ:DXCM) will have difficulty surviving over the long haul. Abbott (NYSE:ABT) has yet to gain approval for the Navigator system and is losing valuable market experience by their foolish decision to initially seek approval for Navigator as a replacement device.
Using their dominance in the insulin pump market and experience with the reimbursement process look for Medtronic to control the process. Initially seeking reimbursement when the system is used with an insulin pump, next moving to MDI patients and finally any insulin using patient. The bottom line is Medtronic can afford to be patient.
Looking at Dexcom rumors are swirling that a deal is just around the corner with Bayer the likely suitor. For the sake of Dexcom shareholders Diabetic Investor hopes the rumors are true as it is unlikely the company can afford to wait for the reimbursement environment to change.
The Street may not want to admit it but the CGM market isn’t what they thought it was and is unlikely to ever reach the lofty sales projections they once predicted. In that respect CGM is like inhaled insulin, an interesting product with limited commercial potential that is has been over-hyped by analysts.