Over the last 10 years, major changes in diabetes device sales have been driven by those solutions that have demonstrated an ability to improve glycemic control (as measured by HbA1c reduction or time-in-range). The introduction of continuous glucose monitoring (CGM) started a sea change in the ability to increase time-in-range for the 30 million type 1 and 2 patients in the United States and over 400 million estimated people with diabetes globally. CGM is in the midst of transforming the standard of care with technological advancements enabling improved clinical outcomes; payers are responding by expanding market access.
Because insulin pumps by themselves have not proved to improve time-in-range relative to prior standard-of-care multiple daily injections, their adoption has grown modestly for the last 10 years. "That is starting to change with the ongoing innovations in the industry," states medical technology analyst Margaret Kaczor, "primarily the incorporation of CGM-enabled features allowing for improved glucose control but also good efforts to improve market access via innovative form factors (i.e., wearable, disposable pumps)."
Glycemic Control Is the Aim for Patients and Diabetes Technology
Diabetes is one of the largest health epidemics in the United States, with more than 30 million people affected and over $250 billion in annual healthcare costs associated with the disease, according to the Centers for Disease Control and Prevention (CDC). Further, average medical expenditures for type 1 and type 2 diagnosed patients are estimated to be 2.3 times higher than those without the disease, emphasizing the importance of glycemic control to improve patient outcomes and lower cost burdens. On a global basis, it is estimated that over 440 million individuals have diabetes, resulting in spending of over $825 billion per year, according to a 2016 analysis of more than 700 population-based studies. The clinical and economic significance of the global diabetes epidemic has led to decades of research in how to best manage the disease, although Kaczor believes we are just entering one of the most innovative and meaningful periods for diabetes management.
Although device adoption has been on the rise over the last several years, driven by next-generation products, Kaczor believes utilization is still in its early stages. The market, in her view, is on the cusp of a golden era in which clinical, economic, and quality-of-life data should continue to improve dramatically. More recently, CGMs have proved effective tools for people with diabetes to improve glycemic control, in turn supporting strong adoption of the technology over the last several years. While insulin pumps have proved some benefits in the diabetic population (largely quality of life), they have yet to show the same level of impact and have lagged their CGM peers in growth.
CGM Sets the Bar for Technology in Diabetes: Glycemic Control and Ease of Use
The past two years of innovation in glucose monitoring technologies have arguably brought some of the most impactful advances in diabetes management in recent history. Specifically, CGM technology has become increasingly easy to use with the introduction of new features like factory calibration, smaller transmitters (or elimination of transmitters), smart device integration (phones, watches, pumps), and improvements in sensor accuracy all bolstered by improving market access.
CGM Proves First Half of the Equation to Broad Adoption: Improved Glucose Control
While the benefits of using real-time glucose readings in insulin dosing decisions seem intuitive, several clinical trials have reinforced this point by demonstrating how the use of CGM technology can lead to significantly improved glucose control. Some of the most convincing data was presented in 2016 from two large randomized-controlled trials (the Diamond and Gold trials) that showed CGM alone (without the use of pumps) could significantly reduce HbA1C levels and improve time in healthy glucose ranges for type 1 patients—both of which should ultimately improve long-term clinical outcomes.
Next-Generation CGM Offers the Other Half of the Equation: Enhanced Features and Lowered CGM Burden
While clinical data and society endorsements provided a broad tailwind for CGM adoption, the last 12 to 18 months of next-generation CGM technology ushered in a new era of advanced features and, most importantly, meaningfully reduced the burden of CGM use, spurring a new level of market adoption. While the market has historically grown at about 30% annually, adding 40,000 to 50,000 users per year, Kaczor estimates the market grew 44% in 2017 and 90% in 2018, adding 124,000 and 377,000 patients, respectively. Acceleration in CGM adoption coincided with the most innovative product launches the space has seen thus far—FreeStyle Libre in late 2017 and G6 in early 2018—coupled with years of clinical data that reinforced the importance of CGM use. While some of the most important features were launched before 2017 (mostly nonadjunctive labeling), it was not until many of these features culminated in one new product in late 2017 and 2018 that the market accelerated meaningfully.
Diabetes is one of the largest health epidemics in the United States, with more than 30 million people affected and over $250 billion in annual healthcare costs associated with the disease.
Overall, these innovations have ushered in a new era in diabetes management centered on leveraging CGM data to improve glycemic outcomes, all while lowering the daily burden of diabetes management. Kaczor does not believe that insulin pumps (including first-generation closed-loop systems) thus far have demonstrated similar ease of use (or clinical outcomes) as CGM technology, which has limited adoption of insulin pumps over the last five years to about 15% to 20% of diabetics. Still, we believe next-generation closed-loop systems will introduce features capable of meaningfully lowering the burden of pump use, and subsequently unlocking another large portion of the remaining 80% of patients not using a pump.
While CGM has experienced rapid uptake in adoption recently, insulin pump adoption has been relatively stable, used by roughly one-third of type 1 diabetics and about 10% of type 2 diabetics exiting 2018. Still, Kaczor believes the product innovation roadmap in the pump market has never been more dynamic, and that adoption trends are accelerating, although the question remains where penetration will peak. "Specifically," she noted, "we expect next-generation insulin pumps should provide improved clinical outcomes that will drive significantly broader use."
Kaczor's research suggests that after affordability, patients most want simplicity and ease of use from their pumps. The automation features being developed by a variety of players, while still likely to fall short of a fully closed loop (how can a pump anticipate when a patient will eat a lot of carbohydrates?), can dramatically reduce the number of times per day patients must take an action to manage their diabetes. The algorithms being developed should do a better job than patients themselves at anticipating glycemic excursions, both high and low, improving short- and long-term outcomes. As these features are launched, Kaczor believes that clinical data will be developed to support accelerated adoption of pumps by patients.
As background, insulin is a protein and a hormone that helps regulate the amount of sugar in the bloodstream. Type 1 diabetics do not make their own insulin and are insulin-dependent. Type 2 diabetics typically either resist the effects of insulin or do not produce enough insulin to maintain normal glucose levels. Type 2s initially are treated with a variety of oral medications, but if these become ineffective, patients may also become insulin-dependent.
For a copy of the "Diabetes Tech Revolution: Targeting Improved Glycemic Control" report or for more information on the companies from Margaret Kaczor's coverage list, please contact your William Blair sales rep.