After Long Wait, Omnipod Achieves Coverage Through Medicare Part D

The news this week that the Omnipod insulin pump had finally received Medicare coverage brought cheers from diabetes advocates and physicians alike—at long last, the popular tubeless device might soon be available to beneficiaries after a baffling odyssey, years after it received FDA clearance in 2005.

The action came after CMS opted not to classify the pump, made by Insulet Corp, as durable medical equipment eligible (DME) for coverage under Medicare Part B, but instead as a medical supply associated with insulin injection. Thus, Omnipod will be made available under Medicare Part D, and it will be distributed through the pharmacy chain, which Insulet’s Dan Trodden, vice president for Market Access, said the company believes will lead to a superior consumer experience.

For years, CMS refused to pay for Omnipod because its insulin delivery mechanism was disposable, even though the bulk of the device lasted more than 3 years, which is the test a device must meet for reimbursement under the definition of DME.

In the end, said Trodden, it appears CMS’ decision was finally driven by the Medicare Modernization Act, which President George W. Bush signed in late 2003. “That language did actually indicate that a medical supply that is directly associated with injecting insulin into the body,” that is not otherwise covered by Part B, should be covered by the Part D drug plan. “It took a long time for CMS to process that,” Trodden said.

CMS’ change of heart comes on the heels of 2 events that observers say forced regulators to take notice. First, last July, the Government Accountability Office (GAO) issued a report that said CMS’ approach to paying for medical technology was stifling innovation. Without naming Omnipod it clearly referenced the agency’s head-scratching refusal to cover the pump.

Second, the recent retreat of several pump makers from the market, including Johnson & Johnson’s decision in October to take the Animas pump off the market, caught CMS’ attention, Trodden said.

“When you have an organization like Johnson & Johnson leave the market, that’s really a significant event,” he said. The GAO’s prediction that CMS’ refusal to think broadly could stifle innovation—and leave patients with fewer choices—was coming to pass.

Insulet is still the smaller player in a pump market dominated by Medtronic, but CMS’ willingness to think differently leaves Trodden optimistic that the agency is starting to “catch up with innovation.”

Which is important, because a wave of smaller, less expensive, devices are about to hit the market—including another factory calibrated continuous glucose monitor (CGM) from Dexcom. In the past week, CMS granted reimbursement approval for Abbott’s factory calibrated CGM, the Freestyle Libre. (Abbott will also pursue distribution through the pharmacy chain).

For Trodden and Insulet, the work now is getting formulary access in Medicare plans; Trodden said Insulet will focus on securing the best possible formulary placement to keep cost-sharing low.

“Access to appropriate technology is paramount for people living with diabetes and is a key priority for our organization,” Shacey Petrovic, president and chief operating office, said in a statement. “With a low up-front cost and unique, disposable 3-day wear, the pharmacy channel is a natural fit for Omnipod and will provide Omnipod users an even better customer experience with broader and easier access to our unique platform through their pharmacy benefits.”

CMS’ decision “allows access for lower-income individuals and families on Medicaid for whom Omnipod is currently not an option,” the company said in the statement.