Dive Brief:
- The Centers for Medicare and Medicaid Services has proposed new draft coverage guidelines for continuous glucose monitors.
- Under the proposal, the CMS would cover CGMs for diabetes patients who are treated with insulin or “have a history of problematic hypoglycemia,” as defined by the frequency or severity of low blood sugar events, seemingly regardless of whether they have Type 1 or 2 diabetes.
- Analysts at J.P. Morgan said the proposal reads “very favorably” for Abbott and Dexcom, leading CGM manufacturers that are targeting the “massive and highly under-penetrated Type 2 market opportunity.”
Dive Insight:
The CMS coverage currently applies to patients who take at least three doses of insulin a day, limiting CGM reimbursement to people with intensive Type 1 and 2 diabetes. The proposed coverage will expand CGM use beyond that limited population if finalized in its current form.
The CMS is proposing to cover CGMs in all patients who use insulin at least once a day. If a patient does not take insulin each day, they will still be covered if they have a history of problematic hypoglycemia. A patient who has recurrent level 2 hypoglycemic events, despite treatment changes, will receive coverage as will a person who has experienced at least one level 3 event that required third-party assistance, according to the CMS.
Neither the insulin nor hypoglycemia criteria for coverage differentiate between Type 1 and 2 diabetes. Analysts at J.P. Morgan interpreted the proposal as a positive for the push to access the Type 2 market.
“It’s a step in the right direction and points to [a] clear path to coverage for all insulin using diabetic patients, opening up a massive opportunity for both Dexcom and Abbott over the next 1-2 years,” the analysts wrote in a note to investors. “Penetration rates in the Type 2 population remain exceptionally low, with our forecast across the intensive patients at ~25%+ in 2022.”
The analysts wrote that they are bullish on the impact of expanding CMS coverage to people who take insulin once a day, calling the expansion into the basal insulin population “a major near-term driver for growth” that “doubles [the] market opportunity of 2M US Type 1 patients and 2M US Type 2 insulin intensive patients.”
The proposal is open for comment until Nov. 19. The analysts said they expect a final coverage decision next year.
