Throw another shrimp on the barbie

Throw another shrimp on the barbie

According to a company issued press release:

“Today, Abbott (NYSE: ABT) announced that it has received approval from the Therapeutic Goods Administration (TGA) in Australia for its FreeStyle® Libre Flash Glucose Monitoring System, a revolutionary new glucose sensing technology for insulin-using Australians with diabetes2,3.  The system eliminates the need for routine finger pricks1, reading glucose levels through a sensor that can be worn on the back of the upper arm for up to 14 days. In addition, no finger prick calibration is needed — a key differentiator from current continuous glucose monitoring systems.”

According to Diabetes Australia there are 1.2 million Australians diagnosed with diabetes and another 500,000 who are “silent” on the subject. Diabetes Australia states Type 1 accounts for 10% of the population or approximately 120,000 of the diagnosed population. Assuming that Australia is similar to the USA we’d estimate that another 120,000 of those diagnosed with Type 2 are using insulin therapy. Basically that means based on the approval Abbott’s potential market is 240,000 patients as the approval is just for insulin using patients.

At the moment the Australian government does not subsidize continuous glucose monitoring systems. According to The Department of Health web site;

“CGM devices and sensors, which are generally used with insulin pumps, are not currently available for Government subsidy under the NDSS. The Government is always willing to look at new products as they become available, however there is currently no formal way for assessing the clinical and cost-effectiveness of new technologies, such as CGM sensors, for inclusion on the NDSS.

The Minister for Health has asked the Department of Health to provide her with options for establishing an appropriate assessment pathway for new technologies in the future, within the wider context of other diabetes-related activities, and arrangements for the NDSS beyond 30 June 2016.

If a person with diabetes has private health insurance, he/she may wish to contact their health insurer to discuss if they can access a CGM device and consumables, and receive possible reimbursement options. Under the Private Health Act 2007, private health insurers are required to pay benefits for items on the Prostheses List – Part C of which contains insulin pump devices, some of which include CGM or have glucose monitoring capability.

Access to these devices through existing private health insurance will depend on the type of general treatment cover and benefits offered. Private health insurers can also offer benefits towards the cost of medical devices not listed on the Prostheses List under their general treatment cover (also referred to as ‘extras’ cover). Availability and quantity of benefits varies between insurers and between private health insurance products.

If a person with diabetes does not currently have general treatment cover, or the cover held does not currently include benefits for devices such as blood sugar level monitors, they would generally need to serve a waiting period after taking out or upgrading cover, to claim benefits.”

Ok let’s see if we’ve got this straight – Dexcom (NASDAQ: DXCM) and Medtronic (NYSE: MDT) already have a presence in Australia which means it’s unlikely the Libre will capture 100% of the market. Let’s also go out on a limb and state that not every insulin patient wants to use a CGM. Let’s go even more out on a limb and speculate that since the government does not cover CGM’s this will shrink the market as well. Now for those of you who aren’t part of the Abbott management brain trust – we think your waking up to the fact that this isn’t exactly a big opportunity.

Frankly Diabetic Investor is amused by this announcement as it is so Abbott. As we have stated consistently we have yet to meet a CGM expert who believes the Libre will be approved here in the US. The fact is the system just isn’t accurate enough. Yet even if it was it would come to market as the third entrant in a market dominated by Dexcom and Medtronic. Even worse to gain any market share at all Abbott would have to do what they been doing overseas with the Libre and heavily subsidize the product. Again for those who are not part of the Abbott management team this isn’t exactly a formula for success.

Now we hate to bring up the past but Abbott does not exactly have a great track record when it comes to CGM. A market they could have owned but royally screwed up.  For new subscribers we suggest searching the archives section of the web site and just type in Navigator.

Just to show that a leopard has not changed its spots check out this quote in the press release;

“We know through our research that pain, inconvenience and indiscretion of finger pricking were the key reasons people with diabetes aren’t managing their diabetes as well as they should,” said Jared Watkin, senior vice president, Diabetes Care, Abbott.  “Addressing these concerns has guided the development of FreeStyle Libre – a transformational product designed to not only remove the pain of routine finger pricking1 but also seamlessly integrate into daily lives – empowering people with diabetes to make better-informed treatment decisions and live their best lives through better health.”

We hate to break the news to Jared – and boy is it taking a ton of will power not to make a joke about the other Jared who used to be spokesmen for Subway – the reasons patients don’t test as frequently as they should has nothing to do with the so-called pain, inconvenience and indiscretion of finger pricking. The reason is they don’t value the information provided by the test. They are not transforming data into relevant and actionable information.

This one statement by Jared shows just how out of touch Abbott is and why their diabetes care unit is circling the bowl. Yet for reasons only Abbott seems to understand they continue to shovel manure in the hopes something good will grow.

Listen we don’t want to dump on Abbott CEO Miles White but we’re not sure he wants his legacy to be that he screwed up not one but two acquisitions in glucose monitoring. That he could have owned the CGM market and screwed that up as well. Yet once again Miles is proving he just can’t let go, he cannot accept the fact when it comes to diabetes devices Abbott has the reverse Midas touch.

Basically what Miles and his clueless diabetes management team has proven is something that Momma Kliff said many times; “The best way to make a small fortune is to start with a big one.”