Update: Updated with analyst information on Insulet and DexCom, and Insulet’s response.
The shift will go into effect July 1 this year, and will remove all insulin pumps other than Medtronic devices as in-network options for UnitedHealth members, San Diego, Calif.-based Tandem Diabetes said.
Last year, Tandem shipped 15,483 insulin pumps, with approximately 1,200 going to UnitedHealth members, according to analysts at Seeking Alpha.
Tandem Diabetes said the decision was “unexpected” and will prevent a majority of UnitedHealth members from purchasing insulin pumps on an in-network basis from Tandem Diabetes and “several other durable medical equipment providers.”
“Having diabetes isn’t a choice. How people manage it should be. Insulin pumps are not a 1-size fits all solution. Selecting which pump is the best fit for a person to manage their therapy needs should be a decision made between a person and their healthcare provider,” Tandem Diabetes CEO Kim Blickenstaff said in prepared remarks.
Tandem Diabetes said the decision would not apply to members under 18 years, as well as UnitedHealth Sierra Health and Life Commercial members and Medicare Advantage members.
While both Insulet and Dexcom stocks slipped with the news, Leerink Partners analyst Danielle Antalffy said the drop and selloff is “overdone.”
Reimbursement through UnitedHealth for Insulet pumps was already “difficult to get”, according to Antalffy, which said that only 1 distributor ships Insulet’s OmniPods to UnitedHealth patients.
Despite the optimism, Insulet shares have slipped 11.4% to trade at $29.20 as of 2:28 p.m. EDT.
Dexcom will be less affected as the change only affects insulin pumps, not continuous glucose monitors, the company’s bread and butter, Antalffy said. Only a small portion of patients who are on integrated pump/CGM system will be affected by the change.
Dexcom shares have drooped 3.4% to trade at $62.90 as of 2:30 p.m. EDT.
Other payors are not expected to follow suit, said Antalffy, who predicted “aggressive pushback” on the policy change.
“Our sense is that industry – from manufacturers to physicians and patients – will aggressively pushback on this policy change that allows no options for the patient in what is a very personal decision. We estimate that UNH represents 15% of total covered lives in the U.S. However, this policy relates to only those patients over 18 years of age and excludes certain other patient populations within UNH and Medicare Advantage, thus the impact is something much less than 15% of covered lives. As to whether CGM is next, we believe this is highly unlikely,” Antalffy wrote in a letter to investors.
In response to the news, Insulet reaffirmed its 2nd quarter and full year 2016 guidance, saying that the UnitedHealth decision “is not expected to have a material impact on OmniPod System ocverage nor on Insulet’s financial results.”
UnitedHealth will continue to cover supplies for all insulin pump brands in warranty and still functioning.
Shares in Tandem Diabetes have dropped 23.2% to $7.96 as of 11:39 a.m. EDT.
DeviceTalks Minnesota's leadership track is designed to provide attendees with insights on topics such as:
Use code SAVE15 to save 15%!