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DexCom CGM Device Is First of Its Kind to Get Medicare, Medicaid Reimbursement

Shares of locally-based DexCom Inc. skyrocketed 26 percent January 13 following news that patients will have easier access to the medical device maker’s lead product.

In short, the U.S. Centers for Medicare and Medicaid Services (CMS) established unprecedented insurance coverage for DexCom’s G5 Continuous Glucose Monitoring (CGM) System by classifying it as Durable Medical Equipment. It was the first CGM system to ever qualify for reimbursement, cementing DexCom’s place in the market.

The move by CMS surprised analysts (and investors), as the approval was not expected until next year.

DexCom’s senior director for corporate affairs, Matt Dolan, said the company needed to get contracts in place before he could speculate on how reimbursement would affect DexCom’s sales.

“I can say that 20 percent of Type 1 diabetics are of Medicare age, so we think over time this will definitely help us attack a broader market opportunity,” Dolan said.

According to CMS, the reimbursement for buying the G5 system will be $236 to $277 (or $24 to $28 per month for renting the device). This is 10 percent of the purchase price.

DexCom’s stock (Nasdaq: DXCM) surged to $85.13 per share at close of market January 13. The company’s market cap climbed to $7.05 billion, making DexCom the third largest public life science firm in San Diego (just after Illumina Inc. and ResMed Inc.).

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