Insulet’s Insulin Pump Gets Medicare Coverage

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By Dana A. Elfin

Medicare will now cover patch pumps for insulin delivery treatment, which expands diabetes patients’ access to treatment options under Medicare Part D.

The coverage decision is incredibly valuable to Billerica, Mass.-based Insulet Corp. because it means Omnipod, its tubeless insulin pump, will be eligible for reimbursement under Medicare and many state Medicaid programs. According to Insulet, the Centers for Medicare & Medicaid Services’ Jan. 5 coverage decision expands the product’s potential market to about 450,000 additional U.S. individuals with Type 1 diabetes.

On the day of the CMS coverage decision, Insulet’s stock jumped almost 14 percent from the previous trading day’s close. But even more important than the CMS decision itself is its impact on private payers, David Kliff, publisher of the Chicago-based Diabetic Investor, told Bloomberg Law Jan. 10. Private payers often model their coverage and reimbursement decisions after Medicare’s, he said.

“The importance of the Medicare decision is it opens the door for them with private payers,” he said.

Two Market Players

With Johnson & Johnson closing Animas Corp., its insulin delivery subsidiary, and with San Diego-based Tandem Diabetes Inc. effectively going out of business, the insulin pump market is down to two players: Insulet and Medtronic Plc. Dublin-based Medtronic is the dominant player in the business, with about 85 percent of the market.

Although the CMS decision to cover Omnipod is a positive for Insulet, it’s far from a game changer, Kliff said.

Nonetheless, the Omnipod coverage decision represents “somewhat of a leveling of the playing field,” Kliff said. The CMS’s decision isn’t “going to vault Insulet into a billion-dollar company,” Kliff said, “but I think they will get bigger.”

“They are doing everything they need to do to improve margins,” he said.

DME Coverage

Omnipod, approved by the Food and Drug Administration in 2005, is the only tube-free patch pump currently on the market. The pump, known as a patch pump, delivers continuous insulin and eliminates the need for multiple daily insulin injections.

Although other insulin delivery pumps for Type 1 diabetes are covered under Medicare Part B as durable medical equipment (DME), the CMS had refused to cover Omnipod as DME because the pod part of the Omnipod system is disposable.

An estimated 1.5 million people in the U.S. have Type 1 diabetes. Without Medicare and most Medicaid coverage, only two-thirds of people with Type 1 diabetes had access to Omnipod prior to the CMS decision. Medicaid covers low-income patients and Medicare covers patients over 65.

Expanding Medicaid Coverage

The government’s decision to cover the Omnipod System under Medicare Part D also means expanded state Medicaid coverage of the product because CMS prescription drug coverage guidance drives coverage decisions for many state-run Medicaid programs.

Gaining Medicare coverage of the Omnipod System was one of Insulet’s top priorities, according to Patrick Sullivan, Insulet’s chairman and chief executive officer.

“[P]atients who age into Medicare will no longer lose access to this treatment therapy like they have for years prior, and Medicaid patients could now have the opportunity for new treatment therapies unlike before,” Insulet said in a Jan. 8 statement.

Bridgewater, N.J.-based Valeritas Inc.'s insulin delivery device for Type 2 diabetes, V-Go, is also covered under Part D.

To contact the reporter on this story: Dana A. Elfin in Washington at delfin@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

For More Information

The CMS guidance is at http://src.bna.com/vxu.

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