“Very few companies would make the bet that we’re making,” Kevin Sayer.
In the first half of our interview with Dexcom CEO Kevin Sayer, we focused on the company’s efforts to expand beyond the Type 1 diabetes community and tap into the much larger Type 2 and pre-diabetes markets. To pull that off, they’ll need to convince insurers that even people with no risk for hypoglycemia can greatly benefit from a continuous glucose monitor (CGM), primarily by the feedback the system can offer regarding diet choices and pharmaceutical dosing. And in all likelihood, they’ll need to make it more accessible, less expensive, and even easier to use.
I really wanted to talk about the upcoming Dexcom G7 system, but Sayer wanted first to make sure I understood that they are not at all done improving the G6.
“Before I get to the G7 let me talk about the G6 for a little bit. This product’s only been out for a year, and the response to this product has been overwhelming. We will continue to make the G6 system better.
“We realized tremendous improvements on the G4 and G5 systems when we upgraded the algorithm. We have developed upgraded algorithms that we can and more than likely will move into G6 to continue to make that better. We’re also going to continue to upgrade the app on the G6. And to make it better as well. So we’re not done with the G6.”
Indeed, Dexcom continues to announce new collaborations with other firms that will enhance the G6’s functionality. In the past year, Dexcom acquired diabetes management system TypeZero and announced partnerships with several other firms to increase the system’s interoperability. And continually improving accuracy is a constant goal with the company, Sayer assured me.
“All these features we’re putting into the G6 are going into the G7, because the G7 is not a change of the algorithms or app experience, it’s a completely physical change.
“The insertion will be actually easier than G6. The transmitter will be disposable. The sensor is significantly smaller than the G6. We have committed internally to an extended life of up to 14 or 15 days. It is designed to be manufactured at mass volumes. Our hope is that, over time, it will be a cost-saving endeavor, that it’ll actually save money.
“Very few companies would make the bet that we’re making. For the first 12 years of Dexcom’s commercial life, the insertion system and all of the hardware and all of the parts, they were pretty much the same. We didn’t make any big changes. When we went to the G6, the molds, the plastics, the springs, everything was completely different. When we go to the G7, we’re doing the same thing again. We’re doing something that we waited 12 years to do before, in three. Having the courage and the determination to do something like that, you don’t see that at big companies. G7 is a bigger departure from G6 than G6 was from G5.”
The cost of the G6, of course, is still prohibitive for many. Sayer promises that they are trying to bring the price down, and I asked him how he’d accomplish that:
“One of the easiest ways to bring the cost down is to make the model for getting sensors to people easier. If we can make this product a one stop shop where you can pick it up at the drug store, or you can get it easily through a mail-order distribution channel, that removes a lot of burden on us here at Dexcom, because that’s a big operating expense. Not only just to get the product to patients but we need to bill and collect payment from the insurance companies, we have to collect the money from patients, insurance companies may not pay the same amount and you have to follow up. If we can simplify the business model, that’s one way costs can go down.
“The other way costs come down over the next several years, we are designing future products – and in all candor, we even designed the G6 this way – to be less expensive on a cost per day per patient than our previous product offerings.
“We try and be as fair as we possibly can, and one of the reasons the sensors cost more is that it’s not necessarily our cost that’s gone up, it’s the insurance plans have changed. You know many patients now are on high deductible plans and we can’t control or fix that and even if we reduce costs, that isn’t going to reduce costs for those patients, because they have an insurance plan that makes it difficult.”
Sayer also indicated that T1D’s might benefit from some horse trading with the insurers:
“It is not as simple as just going into the insurance companies and saying ‘we’d like to cut out prices.’ There are tradeoffs. If we’re going to reduce price on our product we’d like to get something back, like, let’s cover the Type 2 insulin users. And so these are negotiations like any business transaction.”
When I asked Sayer if he had ever envisioned selling different models at different price points, his answer helped underline the complexity of the market:
“I could see that happening. We could also do that just by selling the same product and having a different software app. Where this gets difficult again is back to the people who pay. How do you determine who gets the more advanced feature one versus who gets the basic one? And if you set a low price for a basic one, is the insurance company going to pay the rest on the full feature one?”
The subject of cost led naturally to talk about the various ways in which Dexcom users hack their systems. Undoubtedly, even many enthusiastic Dexcom users could not afford the technology if they were unable to illicitly extend the life of their sensors.
“Our best answer on the length of wear is to answer that in two ways. To make our sensor last longer, and to make it less expensive.”
I also asked Sayer what he thought about the hacker community modifying Dexcom CGMs and using them to build DIY artificial pancreases.
“Well, we think about in a number of ways.
“You’ve got to understand, medical device companies and hacking, those two concepts don’t go together well. So we were very upset and we were pretty aggressive speaking out that this is not a good thing.
“But in all reality, the hackers are Dexcom patients. They purchase product from us, they’re so dedicated to it that they use it and try to make their lives better by developing tools that they think are better than ours. The right answer for this community is to put the features into the system that they want to make it better and make it more usable for them. We have ideas to help this community and ideas to embrace and engage them.
“Now let’s go to the flipside of that. The FDA is concerned about this and they’re going to regulate this. I see a day where, maybe not of our own choice, we will have to tighten up our product to whereby that doesn’t happen. And if FDA requires it, we will.”
As a final question, I asked Sayer for his perspective – as an expert in a related field – on the insulin price crisis.
“I just think it’s amazing that somebody cannot have access to something they need to stay alive easily. Let me just start there. It’s foreign to me, I can’t understand it.
“That being said, this is not the insulin companies’ fault – not completely. There’s a lot of middlemen and a lot of stuff that happens by the time insulin gets into your hands. And we have a system that is designed where everybody makes more money if the price is higher: the drug store, the distributor, the pharmacy benefit manager, the insulin company, even the insurance company, because they get bigger rebates. Think about that. I believe that if people knew how much net the insulin companies actually received when it’s all said and done, they’d be shocked. And even when they try and sell a lower cost alternative for cash it doesn’t fit in the system and it doesn’t work either.
“I can’t wait to see it play out. I think it’s something that needs to be addressed across the board, more than just insulin.
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