How Are Connected Medical Devices Revolutionizing Diabetes Care?

U.N. Sustainable Development Goal 3 states that good health and well-being are essential to a sustainable world.* Healthy people can be more productive in the workplace, support the economy and place less of a burden on health care systems. At American Century Investments, this view relates directly to our objective of identifying and investing in companies that we believe will help to define and thrive in a sustainable global economy.

An estimated 537 million adults have diabetes, almost quadrupling from 1980-2014, posing challenges for health care systems worldwide.¹ The number of people affected by this chronic health condition is rising steadily, and it’s expected to affect over 640 million individuals by 2030. See Figure 1.

Health care costs associated with diabetes are immense — $966 billion worldwide in 2021, or 9% of total health care spending on adults.² Ripple effects include higher insurance premiums and workplace productivity losses when employees miss work to deal with diabetes-related medical problems.

This article discusses how continuous glucose monitoring (CGM) technology is a game-changer for better diabetes management. We believe this technology will improve patient outcomes and help lower health care costs by preventing the severe complications that often arise from uncontrolled glucose levels.

Diabetes Has Staggering Costs for Individuals and Society

Diabetes is the most expensive chronic health condition in the U.S., according to the Centers for Disease Control and Prevention (CDC).³

• $1 of every $4 in health care expenditures covers care for people with diabetes.

• $237 billion is spent annually on direct medical expenses related to diabetes, while reduced productivity costs $90 billion.

• 48%-64% of lifetime medical costs for a person with diabetes are related to complications like heart disease and stroke.⁴

Although we now have the tools to treat and manage diabetes better than ever before, the disease still imposes hefty costs on individuals and society:⁵

1. People with diabetes visit doctors’ offices more frequently than those without the disease.

2. People with diabetes are more likely to visit the emergency room than the general population.

3. Complications from diabetes may result in hospitalization, and multiple hospitalizations are common.

4. People with diabetes are more likely to be admitted to nursing homes and to require home health care.

5. More than 75% of home health care patients with diabetes also have cardiovascular disease, increasing costs and health care delivery demands.

For many people with diabetes, the impact of the disease goes beyond glucose monitoring and insulin injections — it’s also a source of major financial distress. As of 2021, roughly 1.3 million people, almost 17% of those who use insulin in the U.S., reported having rationed insulin due to its high cost.⁶ In many cases, this decision was lethal. (Note: Eli Lilly recently capped insulin prices at $35/month, consistent with a recently enacted $35 monthly cap for Medicare patients’ insulin).⁷

More than 130 million adults in the U.S. (almost 40% of the population) live with diabetes or pre-diabetes, so the societal scale of this issue is immense.⁸ Many struggle to afford the insulin and other medications needed to manage the disease. Plus, there are extra costs for dealing with other chronic health problems that diabetes can trigger. The total cost of care can rapidly become untenable and interfere with an individual’s ability to cover additional living expenses.

Transforming Diabetes Care with Connectivity

Connectivity and technology offer great convenience, allowing us to shop, bank and pay bills anywhere, anytime. Connectivity can also mean the difference between successfully managing diabetes or suffering from its costly and even deadly consequences.

Connected medical devices like CGMs improve health care delivery and help achieve better, more sustainable health care. While the tools to manage diabetes (and other diseases) have improved for decades, connectivity boosts their impacts exponentially.

CGMs are revolutionizing diabetes care because they are so easy to use for patients and health care providers. People with diabetes must monitor their glucose levels throughout the day, and glucose monitoring devices automate this practice. Staying “in range” helps to prevent complications and reduce visits to the ER.

CGMs continuously measure blood sugar levels, replacing the unpleasant fingerstick method of obtaining blood samples multiple times daily. The newest example of a CGM is Dexcom’s G7 device, made available in the U.S. in February 2023.⁹ This coin-sized, wearable skin patch measures glucose levels and sends readings to a smartphone application every five minutes.¹⁰ The app displays the current glucose level and a trend line, helping patients anticipate and prevent problems.

By providing a simple, automated and discreet approach to glucose monitoring, CGMs like the G7 mean patients are more likely to keep their diabetes under control. This helps lower the frequency of costly complications that occur when glucose levels are out of balance.

Continuous Glucose Monitoring Empowers Patients and Doctors

Diabetes patients are primarily responsible for managing their disease. Fingersticking in public may embarrass some people, who delay doing it and end up in a blood sugar danger zone. CGMs are easy to use and discreet, so patients don’t avoid monitoring. The real-time data that CGMs generate lets them quickly know if more intervention is necessary.

Glucose monitoring tools have been available for some time, but older versions are less convenient, lack automation and are more conspicuous than CGMs. As a result, patients may use them infrequently. By eliminating bulky equipment and making the process painless, connected CGMs remove significant physical and psychological barriers to glucose monitoring. This increases patients’ willingness to use the devices consistently to help better control their blood sugar levels.

CGMs allow people to monitor their diabetes, pursue care when needed and give physicians instant access to the data to provide targeted treatments faster. For those with insulin-deficient Type 1 diabetes who may require frequent interventions to keep their glucose levels within range, the information a CGM provides can prevent a situation from becoming critical.

National Institutes of Health (NIH) studies show that people with Type 1 and Type 2 diabetes who use CGMs experience fewer hypoglycemic (low blood glucose) events and see reduced A1c, a benchmark measure of average glucose levels.¹¹ That’s just one benefit CGMs offer. While A1c is a critical measure in diabetes management, it doesn’t capture the variability in glucose levels, and fluctuating between hyper- and hypoglycemia increases health risks. A1c can be measured only through blood tests conducted months apart. At the same time, CGMs can capture glucose volatility instantaneously, helping patients to make more informed decisions about food intake, insulin dosing and physical activity.

CGMs also help medical professionals like endocrinologists and dieticians provide more tailored advice. The more frequent and granular the glucose data, the more helpful these specialists’ counsel can be to patients. CGMs allow patients to store this data in the cloud to share with their medical teams. This makes routine medical and nutritional consultations more effective in addressing problems and lifestyle choices to help keep diabetes under control.

Sharing CGM data may help patients overcome emotional hurdles that keep them from being candid with their doctors. In short, convenience, miniaturization and wireless connectivity make CGMs easy to use, thus increasing patients’ willingness and ability to use these devices as intended, reducing the risk of costly medical complications that burden health care systems and drive up insurance costs.

Connectivity and Data Prevent Costly Diabetes Complications

These benefits of CGMs significantly reduce the probability that patients will develop serious complications, including acute, short-term shocks such as diabetic ketoacidosis and long-term problems such as retinal deterioration that can be extremely expensive to treat. This reduces the cost of diabetes to patients, hospitals, insurers, employers, and society overall.

For these reasons, CGMs are increasingly viewed as the single most effective form of preventative care in the field of diabetes. New tools, such as the Omnipod^® 5 device from Insulet, are also starting to come to market. The Omnipod, a wireless automated insulin delivery system, can pair with a CGM to automate insulin delivery based on data received from the CGM. This creates a closed-loop system that can further minimize risks, and thus costs, to the patient.¹²

Access and Affordability to CGM Devices – A Holistic Perspective

Insurance coverage is a key factor in determining the affordability of any medical treatment. According to the American Diabetes Association, access to health insurance is the leading predictor of a diabetic adult’s ability to receive high-quality diabetes care in the U.S.¹³ Without insurance, CGM devices can cost a few thousand dollars annually — unaffordable for those in financially precarious situations.

As a result, these individuals suffer the worst effects of this disease.¹⁴ The NIH reports that low income is associated with an increased hospitalization rate for diabetes-related complications. The federal agency cites evidence that even in countries with a universal health care system, the least affluent patients were admitted to hospitals 43% more often than the wealthiest patients.¹⁵

Reimbursement schemes negotiated between insurers and CGM manufacturers are critical in determining whether these devices will be affordable for most patients. Reimbursement has drastically improved since the Food and Drug Administration approved the first device in 1999. Since then, adoption rates and coverage have steadily increased, creating a virtuous cycle: Lower out-of-pocket costs increase patient adoption, leading to greater proof of clinical efficacy. This convinces insurers that CGMs reduce the total cost of diabetes care by reducing the number of expensive complications many people with diabetes experience.¹⁶

When American Century engaged with Dexcom’s management team in 2022, the company noted that 70% of patients paid $60 or less per month, with one-third of that group paying nothing. While the device’s average annual cost is $2,200 per patient, the company estimates it saves the health care system $5,000 annually. By the end of 2023, Dexcom expects the G7 to be fully covered by Medicare, 97% of private insurers and Medicaid in 45 states.¹⁷

Increased coverage, particularly by state Medicaid programs, is critical to ensure access to this technology. According to the American Diabetes Association, patients covered by Medicaid are two to five times less likely to use a CGM than those with private health insurance. This highlights how a socioeconomic disadvantage can lead to racial inequity. Black Americans comprise a disproportionately large percentage of low-income individuals likely to be on Medicaid, and the lack of use of CGMs is particularly pronounced among Black Americans.¹⁸

Connected devices such as CGMs show how technology can improve health care and reduce costs to benefit society, with the patient at the center. CGMs help health care practitioners allocate time and resources and reduce costs for the overall health care system by producing better health outcomes. Patients have better access to care when needed while reducing the cost of managing their condition.

Device manufacturers have a vested interest in establishing robust reimbursement schemes with insurers. By offering increased value per out-of-pocket dollar spent by patients, companies can grow the total addressable market and their market penetration while minimizing customer churn due to affordability issues. These devices financially benefit patients, health care practitioners, insurers (including Medicare and Medicaid), and manufacturers.

Health and health care costs affect a society’s sustainability. A health care system that leverages technology to help patients improve their health can create durable, long-term value and reduce costs for individuals, insurers and employers. Harnessing connectivity to drive a healthier society can dramatically reduce the time, resources and capital required to treat diabetes, helping individuals and health care systems worldwide.