Insurers hold key to diabetes device sales

By Susan Kelly - Analysis

CHICAGO (Reuters) - Companies that make continuous glucose monitors to help diabetics manage their blood sugar will see an upturn in demand for the devices in the next few years as more private insurers agree to pay for them.

Medtronic Inc (MDT.N: Quote, Profile, Research, Stock Buzz), DexCom Inc (DXCM.O: Quote, Profile, Research, Stock Buzz) and Abbott Laboratories (ABT.N: Quote, Profile, Research, Stock Buzz), a recent entrant to the market, make the devices, which allow diabetics to keep a tight watch on their blood glucose levels. But until recently, lack of widespread insurance coverage had limited their appeal, and most diabetics continue to use finger-stick meters to test themselves.

"There's an aching need for these technologies. It's incredible, the demand. But there are obstacles to people getting this technology," said Aaron Kowalski, research director at the Juvenile Diabetes Research Foundation.

Those barriers are starting to lift as more insurers recognize the benefits of the devices, company executives and analysts said.

Last month, No. 3 U.S. health insurer Aetna Inc (AET.N: Quote, Profile, Research, Stock Buzz) became the second national plan to issue a formal policy providing coverage for continuous glucose monitors in certain circumstances. That followed a similar decision in April by WellPoint Inc (WLP.N: Quote, Profile, Research, Stock Buzz), the largest U.S. health insurer by membership.

Other large health insurers are expected to follow suit.

"You are seeing the clinical community and now the insurance companies say, OK, this should be the standard of care, and this should be covered," said William Blair & Co analyst Ben Andrew.

Tight blood sugar control reduces the risk of long-term complications from diabetes such as blindness, kidney failure, heart disease, or amputation.