Dexcom Shares Jump – Take care before you leap

Dexcom Shares Jump – Take care before you leap

Yesterday shares of Dexcom (NASDAQ:DXCM) jumped over 21% on news that Anthem Blue Cross Blue Shield issued a medical policy stating they would reimburse patients using a continuous glucose monitoring system. To many this was considered excellent news as there is widely held belief that all that stands in the way for CGM systems to become used on a regular basis is reimbursement. Before everyone starts jumping for joy, a closer examination of Anthem’s medical policy is in order.

Here is what the medical policy states:

II. Monitoring of Glucose in the Interstitial Fluid (i.e., continuous glucose monitoring):
Medically Necessary:
Intermittent, short-term use of continuous interstitial glucose monitoring devices as an adjunct to standard care are considered medically necessary in the care of patients with Type 1 diabetes, when all of the following criteria are met:
1. Inadequate glycemic control despite compliance with frequent self-monitoring (at least four times per day) and including fasting hyperglycemia (>150 mg/dl) or recurring episodes of severe hypoglycemia (>50 mg/dl). This poor control is in spite of compliance with multiple alterations in self-monitoring and insulin administration regimens to optimize care; and
2. Insulin injections are required 3 or more times per day or an insulin pump is used for maintenance of blood sugar control; and
3. Four or more fingersticks are required per day; and
4. Monitoring and interpretation under the supervision of a physician; and
5. The device is only used for seventy-two (72) consecutive hours on an appropriate, periodic basis.
Note: Continuous interstitial glucose monitoring devices, as described above, are used episodically to direct changes in diabetic management. Given several month timeframe to determine the efficacy of these treatment modifications, it is anticipated that when the above medical necessity criteria are met, the devices would be used up to only two times in a given year.
Long-term use of continuous interstitial glucose monitoring devices as an adjunct to standard care is considered medically necessary in the care of the following:
1. Patients with Type 1 diabetes who have experienced recurrent episodes of severe hypoglycemia with blood glucose less than 50mg/dL; or
2. Patients with Type 1 diabetes who are pregnant, during the course of the pregnancy;
When all of the following criteria are met:
1. Inadequate glycemic control despite compliance with frequent self-monitoring (at least four times per day) and including fasting hyperglycemia (>150 mg/dl) or recurring episodes of severe hypoglycemia (<50 mg/dl). This poor control is in spite of compliance with multiple alterations in self-monitoring and insulin administration regimens to optimize care; and 2. Insulin injections are required 3 or more times per day or an insulin pump is used for maintenance of blood sugar control; and 3. Four or more fingersticks are required per day. Although Diabetic Investor does see this as good news for Dexcom and Medtronic (NYSE:MDT) it is hardly a ringing endorsement of CGM technology. As one can see from reading the policy the patient and their healthcare team must jump through several hoops to receive reimbursement. This is not unlike the policy several insurers use for reimbursing insulin pumps. Diabetic Investor has consistently maintained that CGM reimbursement would follow a path similar to what insulin pumps went through when they were first introduced. Anthem’s policy is evidence of this. While insulin pumps have been around for over 20 years and are widely reimbursed, insulin pump therapy as effective as it is, is limited to less than 30% of the type 1 population and less than 5% of the type 2 population. This low level of usage flies in the face of mountains of data that conclusively proves the effectiveness of insulin pump therapy. Since the first CGM systems have come on the market Diabetic Investor has believed that usage would be limited to insulin pump patients and patients following multiple daily injection (MDI) therapy. We further believe that only a small percentage of patients in both groups would use CGM on a regular basis. Finally, while having the systems reimbursed certainly won’t hurt CGM usage it will not solve some of the fundamental issues with CGM. It was not until the results of the DCCT trial became public and the benefits of tight glycemic control were proven did insulin pump therapy become readily accepted in the diabetes medical community. Even with this evidence insulin pump usage remains far below the levels companies anticipated. This in spite of the fact that insulin pumps are widely reimbursed. The fact is insulin pump therapy is more complex and requires a greater patient and physician commitment than alternative therapy options. Additionally, while insulin pumps are reimbursed patients and physicians must jump through several hoops to receive reimbursement. The same is true with CGM with one very notable exception; so far there is no conclusive evidence that patients using CGM achieve better outcomes than patients using a conventional finger stick monitor. Diabetic Investor believes CGM can be a very effective tool when used properly. However, like insulin pumps, patients and their physicians must be very committed to experience the full benefits of CGM. The fact is only a small percentage of patients fall into this category. It should also be noted that this decision by Anthem points to another issue with CGM, namely reimbursement will likely come incrementally. This is not dissimilar to what happened with insulin pump reimbursement. Effectively Dexcom and Medtronic must go to each insurer and make their case. This is a long and expensive process. The decision by Anthem is a good first step, but that’s all that it is –the first step in a long and grueling process. Several high hurdles remain for CGM to reach the potential that many see for this new tool. At this point Diabetic Investor sees no reason to change our view that CGM is nothing more than a niche product that will be used by small percentage of patients on a regular basis. David Kliff Publisher Diabetic Investor www.diabeticinvestor.com www.davesrunfordiabetes.blogspot.com 847-634-4777 800-783-3712 847-634-4646 fax 224-715-3761 mobile