What’s up with Dexcom?
With its shares jumping over 30% today, Diabetic Investor has received several inquires as to what’s up with Dexcom (NASDAQ:DXCM). While Diabetic Investor is slightly surprised by the reaction this jump in Dexcom shares is likely related to the favorable coverage decision the company received from United Healthcare. Although Diabetic Investor sees this as a positive development for Dexcom, the news really should come as no surprise and is actually a continuation of trend that began last year.
As Diabetic Investor has been stating since continuous glucose monitoring systems (CGMS) came on the scene, coverage decisions would follow a path similar to the early days of insulin pumps. In the beginning everyone believed CGMS would have a favorable impact on patient outcomes but there was little clinical evidence to back up this belief. Now that several studies have concluded that use of a CGMS can improve outcomes, insurers have the evidence they need and favorable coverage decisions are coming with greater regularity.
Before everyone hails today’s news as a watershed event for CGMS, allow Diabetic Investor to bring a little perspective to how this decision will impact CGMS usage. The reality is this decision will only have a limited positive impact on CGMS usage. From the start Diabetic Investor has maintained that the CGM market would be limited to insulin pump patients and patients following multiple daily injection (MDI) therapy. Today’s decision does nothing to change that.
Additionally we have long maintained that even if systems were fully reimbursed, this would do little to increase sensor usage among existing CGM patients or place additional systems in the hands of new patients. The fact that patients will no longer pay the full cost for sensors does not change the corresponding fact that sensor usage is not tied to what the sensors cost. In the real world patients use their sensors well beyond their approved or stated life span.
This coverage decision does nothing to address the fundamental problem with CGMS; the majority of patients still don’t understand what these numbers mean and more importantly what to do with all this data. As we have seen with conventional blood glucose monitors making them more affordable to the patient does nothing to increase usage. This is exactly the reason why insulin pump and MDI patients use more test strips than patients who follow insulin plus orals or oral medications alone as their therapy regimen. The same is true with CGM insulin pump and MDI patients understand what these numbers mean and just as important how to use all this information to more effectively manage their diabetes.
Finally it should also be noted that this coverage decision does not address the fact that it’s not just the majority of patients who don’t understand or know what to do with all this information. This issue extends to the physicians that treat these patients. Even when a patient takes the time to record all the data rarely does their physician even bother to look at it.
There is no question that CGM can be an extremely valuable tool helping patients better manage their diabetes. However, it’s equally true that the market for CGM will be limited until patients and the physicians that treat them gain a better understanding of how to apply all this data. If anyone doubts this to be the case just look at the conventional BGM market. For the most part conventional meters and test strips are fully reimbursed, meter and strip technology has improved dramatically over the years making testing less painful and more patient friendly. Patients no longer have to record their readings in log book and can download their readings easily to their computers. Patients have access to fairly easy to use software that helps them analyze the data and/or share it with their physician or educator. Still the majority of patients either fail to test their glucose or test infrequently. Average testing frequency has barely budged over the past 10 years while testing technology has improved 10 tenfold.
One thing that hasn’t changed over this period is that until a patient and their physician understands what these numbers mean and how to apply this data, it won’t make one bite of difference if the readings are point to point or continuous. It won’t make one bite of difference if patients have to pay for their supplies out of pocket or if they are fully reimbursed. Information by itself means little. Knowledge combined with information can be a powerful force leading to better outcomes.
When it comes to glucose monitoring, continuous or conventional, what John Naisbitt, the author of Megatrends, said is all too true; “We are drowning in information but starved for knowledge.”