More Bad News for BGM Companies

More Bad News for BGM Companies

Henry Kissinger once stated “All too frequently a problem evaded is a crisis invited.” The way things are going it looks like glucose monitoring companies will soon be facing a major crisis. Already besieged by a host of issues like slowing market growth and intensifying pricing pressure, you can add a new problem to this mix, reimbursement. For years Diabetic Investor has been predicted it was only a matter of time before insurers stopped reimbursing for test strips for non-insulin using patients.

While the industry sat around getting fat and lazy, studies were coming out that concluded there was no correlation between glucose monitoring and improved outcomes for non-insulin using patients. Like ostriches they stuck their heads in the sand and ignored how insurers began raising co-payments levels making glucose monitoring more expensive for the patient. Today they seem to playing the part of Nero who sits around playing his fiddle while Rome burns.

The great state of Washington has decided to take a closer look at the cost/benefit of glucose monitoring. The Washington State Health Care Authority (WSHCA) using their Health Technology Assessment Program (HTA) is seeking public comment as to whether or not the state should continue reimbursing residents for test strips. According to the WSHCA web site; “Concerns about efficacy, safety, cost, and health impact of glucose monitoring on clinical outcomes among patients with diabetes (and/or subgroups). The role of glucose monitoring is unclear. Glucose monitoring employs a probe placed by the patient on the skin that checks glucose levels. Continuous glucose monitoring uses a probe that automatically checks throughout the day and signals to the patient when their glucose is rising or falling. Important questions remain about its effect on education regimens, titration schemes, and determining adequacy of an overall treatment plan.

Primary Criteria Ranking

Safety = Med
Efficacy = High
Cost = High”

(Highlighting Added By Diabetic Investor)

Again according to the WSHCA web site “The primary purpose of HTA is to ensure medical treatments and services paid for with state health care dollars are safe and proven to work.”

Looking at that this statement and the Primary Criteria Ranking for this process where COST equals a HIGH concern, one has to wonder if BGM companies will finally sit up and realize there is a major crisis headed their way. More like a tsunami that is about to come crashing ashore that could destroy their industry.  

All it will take for the domino’s to start falling is for one state to conclude glucose monitor is not cost effective and pretty soon cash strapped across the nation will have the cover they need to cut or eliminate reimbursement for glucose testing supplies. Once this occurs it won’t be long before health insurers follow suit and eliminate reimbursement as well. And it shouldn’t be too long after that Medicare follows suit and the rest they say is history.

Some may conclude this really isn’t a big deal as non-insulin patients are the least frequent testers and as long as insulin using patients receive reimbursement everything will be ok. As foolish as this belief may be take a look at the numbers, insulin pump patients who make up less than 2% of the total patient population  account for nearly 20% of all test strips sold, patients following multiple daily injection therapy come next, followed by insulin plus oral patients and finally non-insulin using patients. However what’s missing from these numbers is that there is about 5 million or so insulin using patients and there are upwards of 13 to 15 million patients on oral medications or using diet and exercise to control their diabetes. Even if this group monitors just once a day that’s 15 million test strips per day that won’t be reimbursed.

But the problem doesn’t stop there; unlike conventional glucose monitoring the reimbursement environment for continuous glucose monitoring (CGM) is improving. It just so happens that insulin pump patients, the ones who test their glucose levels an average of 8 times per day are beginning to embrace this technology with greater frequency. All of sudden the most important customer for BGM companies will go from 8 tests per day to less than half that amount. Say goodbye to another 16 million or so test strips per day.

Not like the problem needs to get any worse consider that of the 5 million or so patients on insulin therapy more than half are patients with Type 2 diabetes and not Type 1 patients who MUST use insulin. These patients are prime candidates to switch from insulin therapy to GLP-1 therapy, a therapy option which is not dose dependent and requires no glucose monitoring. As Diabetic Investor has stated on numerous occasions GLP-1 therapy is gaining traction and products like Victoza® and Bydureon will only hasten the move from insulin therapy to GLP-1 therapy.

So when it’s all said and done what are the BGM companies left with? Answer; Type 1 patients not using an insulin pump.

Yet even with these facts right in front of their very eyes what are BGM companies doing? Do they wake up and realize it might be a good idea to start helping patients understand these numbers or how these numbers can help them better manages their diabetes? Do they reach out to their existing customer base with programs that encourage glucose monitoring? Do they band together to fight what’s about to happen in Washington and will soon spread like wildfire throughout the country? Do they finally find religion and realize that testing frequency and patient education are linked like peanut butter is to jelly?

The answer to all these question is; of course not. Just take a look at what they are doing; slashing costs wherever they can and milking these businesses until there is no milk left. Once the milk is gone they will find another sucker to buy what remains as they know if there is one theory that never fails in the BGM space it’s the greater fool theory.