A new glucose monitor is a big step in the quest for an artificial pancreas, but winning reimbursement is a challenge.

BY JIM McCARTNEY
Pioneer Press

Karyn Jones of Blaine hopes she never again wakes up in the middle of the night to find her daughter Alyssa in the grips of a life-threatening seizure.

Two weeks ago, 10-year-old Alyssa, who has Type 1 diabetes, became one of the first children in the Twin Cities to test Medtronic's new continuous glucose monitor, one of two on the U.S. market.

The device, about the size and weight of a pager, will alert Alyssa when her blood sugars get too low or too high -- both equally risky conditions.

"Seizures are so scary, and they are so dangerous," Karyn Jones said.

Advances in treating diabetes are big news in the medical world because the cost of treating diabetes is huge -- $132 billion in 2002 -- and growing as the disease becomes more prevalent in the United States. These advances could have a direct impact on the Twin Cities economy, which includes two big players in the diabetes device industry: the Arden Hills division of London-based Smiths Medical and Fridley-based Medtronic.

"Before she got this (monitor), Alyssa might be having high blood sugars without knowing it," said Alyssa's endocrinologist, Dr. Jennifer Kyllo, at Children's Hospital in St. Paul. "This will help her get as close to normal as possible."

As many as 3 million people have Type 1 diabetes, a condition in which the pancreas no longer produces insulin, the hormone that breaks down glucose, or sugars, in the blood. An additional 17 million people have Type 2 diabetes, which can set in as people age and become overweight.

High levels of blood sugars can cause serious damage to the body's organs, resulting in loss of limbs, blindness and death. Low levels, called hypoglycemia, are just as dangerous and can lead to a seizure, a coma and death. The low level is what most worries diabetics -- and their parents -- at night.

"My husband was out of town the first two times it happened," Karyn Jones said about Alyssa's seizures. "The last time, he was home and it really upset him to watch her go through it."

Aside from their alarms and improved control of blood sugars, monitors are a crucial step forward to the development of the "artificial pancreas" in which a microcomputer reads the data from a monitor and tells the pump to adjust the insulin levels.

At stake is a market that could run into the billions of dollars, according to Jan Wald, a securities analyst with A.G. Edwards.

For Medtronic, the diabetes business could rival its booming implantable heart defibrillator and spinal products businesses, Wald said. Medtronic controls 77 percent of the U.S. insulin-pump market, with the rest split between Smiths Medical's Arden Hills division (formerly called Deltec) and Animas, a division of Johnson & Johnson. Pumps accounted for most of Medtronic's diabetes division's $722 million in sales last year, about 6 percent of the company's overall sales.

Competition in monitoring is expected to be far more intense. Besides Medtronic, which rolled out its new system last month, San Diego-based DexCom sells a monitor, and Abbott Laboratories is waiting for regulatory approval of its version. About two dozen more efforts are under way to develop sensors, including one that measures blood-sugar levels by scanning the eye, said Brian Johnson, director of marketing for Smiths Medical's diabetes division.

The monitors cost from $500 for DexCom's to $1,000 for Medtronic's, but it's the sensors that should bring in the money.

"It's like the razor and the razor blades -- clearly they will make the most money off the sensors," Wald said.

At $35 apiece, the sensors must be replaced every three days, which could rack up about $4,200 a year in additional sales per patient. Patients already spend more than $6 billion a year for finger-stick tests and insulin needles, and nearly $1 billion more on pumps -- not counting the estimated $10 billion spent on drugs.

But the monitor might not become a big seller for anyone until insurers, including Medicare, agree to pay for it.

EVIDENCE AND ADVOCACY
In the face of soaring costs, Medicare recently proposed sharp cuts in reimbursement for the medical-device industry. Like many insurers, the federal program is demanding ample evidence that expensive new products are clearly superior to the treatments they replace.

"Reimbursement is a big issue," said John Mastrototaro, vice president of sensors and implantable products for Medtronic's diabetes division. "Until (the monitor) is reimbursed, it's not something everyone can afford."

Advocates of the monitor argue that it saves costs because, when patients can better control their blood sugars, there will be fewer trips to emergency rooms, fewer complications and fewer hospital stays.

Medtronic is sponsoring a 350-patient, $20 million trial that it hopes will show the monitor improves the health of diabetics.

If evidence is critical, then so is advocacy, says Gunderson of Piper Jaffray.

The Juvenile Diabetes Research Foundation, one of the most powerful lobbies in Washington, D.C., recently orchestrated a campaign in which 64 U.S. senators and 260 representatives signed a letter to urge Medicare to reimburse for the monitor.

"We want to accelerate the availability; it's an area of high interest to our community," said Lawrence Soler, vice president of government relations with the foundation. There has yet to be a response, he said.

Soler said his organization is careful to avoid financial ties with device makers, although that policy did not restrict its Minnesota chapter from recently holding a meeting at Medtronic's headquarters.

Gunderson thinks it will take two years to win reimbursement for the new monitor. Some patients, like Alyssa, might get it covered by their insurers on a special-case basis. Others might be willing to shell out their own money.

"If there are visible benefits, many parents won't wait for reimbursement," Wald said.

FINGER STICKS STILL NEEDED
Like all Type 1 and many Type 2 diabetics, Alyssa has to prick her finger many times a day to test her blood-sugar level. If her sugars are too high, she injects insulin; if they are too low, she needs to eat something.

But Alyssa lacks the usual physical warning signs. Most people whose glucose falls too low feel weak and light-headed, but Alyssa often does not. Since she is a competitive dancer and fast-pitch softball player, her condition is challenging because exercise reduces blood sugars. That's why Alyssa's doctor prescribed the monitor even though it is approved only for people over 18 with insulin-dependent diabetes.

The monitor reads levels every few minutes using a small sensor under the skin that transmits data to a hand-held device -- or in Alyssa's case, her Medtronic insulin pump. The patient then uses a calculation device to determine the dosage of insulin.

While the current version of the monitor cuts down the need for finger sticks, it does not eliminate them. Before patients make changes in their insulin levels based on a monitor reading, they are urged to double-check with a finger stick first. Finger sticks are also required to calibrate the monitor.

It will likely take at least three years before monitors will evolve to the point where they replace finger sticks, said Thomas Gunderson, securities analyst with Piper Jaffray.

Still, monitors are expected to be much more effective than finger sticks in helping patients like Alyssa understand, keep track of and control their blood-sugar levels. The direction of the level is as critical as the level itself in determining how much insulin to take or whether it is time to load up on sugar.

"You see exactly how a certain meal affects blood sugars," said Aaron Kowalski, who is on the scientific staff of the Juvenile Diabetes Research Foundation. "You can find out how much insulin is required for two slices of pizza and a Coke or what jogging for a couple miles does to your blood sugars."

As a Type 1 diabetic who uses Medtronic's monitor, Kowalski said he has seen a marked improvement in his blood-sugar levels since using the device. Patients like Alyssa, who have a hard time controlling their blood sugars, should see a significant benefit from the monitor, Kowalski said. The early clinical data confirm that, Gunderson said.

While device companies promote the monitor's alarm system, one industry official said the alarm level is tricky to set.

"Sometimes the alarms can go off even though the patient is fine," said Johnson of Smiths Medical.

During her three-day trial last month, Alyssa's alarm went off once at about 3 a.m. because her blood sugars were too high, said her mom. The alarm beeped, much like a pager. Although Alyssa's parents were warned that it might take awhile to set the alarm at the right levels, they could clearly see the value of the monitor, Jones said. They have one on order, and expect to get it next month.

NEXT GOAL: ARTIFICIAL PANCREAS
As the first monitor to be tied to an insulin pump, Medtronic's Paradigm is a sign that the artificial pancreas is not a "pipe dream," said Scott Thoma, a securities analyst with Edward Jones.

"It's a step toward the Holy Grail," Thoma said.

The idea is to take the patient out of the loop. Dr. Bruce Buckingham, a Stanford University pediatric endocrinologist who tests a variety of monitors, said that while monitors help adolescents control their blood sugars, many youths revert to their bad habits.

"To really have a major impact, it needs to be automated -- where you take it out of the patient's hands," Kowalski said.

The artificial pancreas would consist of an implanted insulin pump and sensor that would essentially act as the pancreas by detecting blood-sugar levels and administering insulin doses as needed in any given situation.

"It's a huge market opportunity," Wald said. "Medtronic is further ahead than anyone."

But there are challenges. For example, it's critical for the insulin to be delivered at least 15 minutes before a meal in building this link between the pump and the sensor.

"The system can't anticipate when we're going to eat," Mastrototaro said.

Although the artificial pancreas has long been described as the Holy Grail for diabetics, Kowalski said, it's really just a stopgap measure on the way to the true goal -- a cure.

Drug companies are coming up with better insulin and better ways to deliver it. But Kowalski is talking about advances in reproducing, reviving or transplanting islet cells, which are the cells in the pancreas that produce insulin.

Such biological cures have been slow to develop, Gunderson said.

"Research experts tell me the biological 'Holy Grail' is five, 10, 20 years away," Gunderson said. "If I had to guess, I would say it's closer to 20 than five or 10."

Jim McCartney can be reached at jmccartney@pioneerpress.com or 651-228-5436.