Memorandum

FDA clears Abbott’s FreeStyle Libre 2 as iCGM; available in pharmacies and DME suppliers in “coming weeks” – June 12, 2020

Executive Highlights

  • In major news from this morning, Abbott announced FDA clearance for its long-awaited FreeStyle Libre 2 as an iCGM and for patients as young as 4 years old. The second-generation FreeStyle Libre device adds Bluetooth connectivity, enabling optional hypoglycemia and hyperglycemia alarms, and keeps the same scanning functionality for grabbing glucose and trend data. FreeStyle Libre 2 has 14-day wear, 1-hour warmup, factory calibration (i.e., no fingersticks required), and is cleared for non-adjunctive use. Compatible apps for scanning and data upload will come “as quickly as possible.” Accuracy of the Libre 2 is high, with a MARD of 9.3% for adults and 9.7% for kids.

  • FreeStyle Libre 2 will be available at “participating pharmacies” and DME suppliers in the “coming weeks.” Remarkably, FreeStyle Libre 2 will be offered at the same cash-pay price as the first-gen system. Given the addition of Bluetooth, this is quite an impressive accomplishment and a testament to Abbott’s dedication to access and affordability.

  • For Abbott, FreeStyle Libre 2 is only building on an already massively successful franchise that shows no signs of slowing down. FreeStyle Libre 2 certainly has implications for Abbott and competitors, but more importantly, the device will be a driver as the entire CGM continues to expand rapidly. Abbott’s commitment to global access and affordability has been a huge part of FreeStyle Libre’s and, more broadly, CGM’s expansion.

  • The clearance for FreeStyle Libre 2 comes with a “warning/limitation” against use with “automated insulin dosing (AID) systems, including closed loop and insulin suspend systems.” Abbott (and its partners) maintained confidence to us that this “limitation” would be eventually removed, but for now, this has some partnership implications:

    • This will affect the Bigfoot partnership for Autonomy (closed loop), but not Unity (smart pens are completely unaffected).

    • If this affects FreeStyle Libre 2 for more than six months, it could affect Insulet’s integration timing with Omnipod Horizon.

    • It is a positive for Dexcom on the Tandem front, since we envision what could be a ~3-9 month delay.

    • Ultimately, it is also a negative for Abbott because the work on AID has been long-awaited, even if it is a small part of revenue.

      • We heard one investor this morning point out that there will be less complexity near-term, without AID; while true, AID is a place where Abbott wants to be, where the field, perhaps sans competitors, wants Abbott to be, etc. Ultimately, the delay keeps a lower-cost player from entering AID, which we had been excited about.

  • Big picture, the FreeStyle Libre 2 focus was always going to be on both type 1 and type 2, and it will continue to be. We assume this time may be used to work even more on type 1 MDI and most type 2s, helping them learn alarms, and avoid more hyperglycemia. While AID does not yet affect type 2 much, certainly type 1s interested in AID are growing – it’s just a part of the field that Abbott will continue to be uninvolved in for a few more months.

  • See below for more, including a feature comparison between FreeStyle Libre 2, Dexcom G6, and Guardian Connect, and Eversense; accuracy comparison between those devices; and Close Concerns’ Questions.

Product Features and Indications

The second-generation FreeStyle Libre device adds Bluetooth connectivity, enabling optional hypoglycemia and hyperglycemia alarms. Users will be able to get real-time alarms for high or low glucose and lost signal, but will still have to scan the device via a reader or smartphone to get real-time glucose values, trend arrows, and eight-hour history. In other words, FreeStyle Libre 2 preserves the same (and very popular) FreeStyle Libre user experience, while adding in alarms. Impressively, FreeStyle Libre 2 also maintains the original FreeStyle Libre’s slim form factor and fully-disposable design, even with the addition of Bluetooth capability.

FreeStyle Libre 2 comes with a blue-colored reader (vs. a black-colored reader for FreeStyle Libre “1”), but otherwise appears more-or-less identical to the first-generation system. On the reader, users can toggle and specify alert thresholds, between 60-100 mg/dl for hypoglycemia alerts and 120-400 mg/dl for hyperglycemia alerts, in addition to alerts when signal between the sensor and reader is lost. Alerts can come via sound and/or vibration (user preference), prompting the user to scan their sensor to grab the real-time glucose value and trend. We’ve gotten to see the alarm set-up process for FreeStyle Libre 2 and it looks very intuitive and user-friendly.

  • FreeStyle Libre 2 is cleared for patients as young as four years old, making Abbott’s CGM available to pediatric patients in the US for the first time. The first-gen FreeStyle Libre was under FDA review for a pediatric indication since 3Q18, though it’s been available for pediatrics in Europe since launch. That said, we do know many teens use FreeStyle Libre in the US off-label. The addition of alarms in FreeStyle Libre 2 puts the device in a strong position to capture more of the pediatric market.  

  • Similar to first-gen FreeStyle Libre, FreeStyle Libre 2 has 14-day wear, 1-hour warmup, factory calibration (i.e., no fingersticks required), and is cleared for non-adjunctive use. Abbott’s marketing for FreeStyle Libre has focused around factory calibration (e.g., “Live life without fingersticks”), a message that certainly resonates with patients. Lastly, Abbott is also working on bringing compatible smartphone scanning and data upload apps, LibreLink and LibreLinkUp, to the US market “as quickly as possible,” but there is no firm timeline.

  • The bottom of Abbott’s press announcement lists: “The System must not be used with automated insulin dosing (AID) systems, including closed loop and insulin suspend systems.” We are working with Abbott to understand this limitation and how it affects the planned integration between FreeStyle Libre 2 and Insulet’s Omnipod Horizon (also see quotes from Bigfoot CEO Jeffrey Brewer below). It’s possible that, even as an iCGM, the FDA simply needs to see data on human factors and safety with AID, or even a small clinical trial, before removing this limitation, but this is purely our speculation.

    • The FDA definition for the new product code “QLG” reads: An integrated continuous glucose monitoring system for replacement of finger stick blood glucose testing for diabetes treatment decisions in persons with diabetes, unless otherwise indicated. The system automatically measures glucose in bodily fluids continuously or frequently for a specified period of time. The system is also designed to reliably and securely transmit glucose measurement data to digitally connected devices and are intended to be used alone or in conjunction with these digitally connected devices where the user manually controls actions for therapy decisions. The system is not intended to be used with automated insulin dosing (AID) systems.

  • To achieve iCGM classification, accuracy for FreeStyle Libre 2 was significantly improved, particularly in hypoglycemia ranges (see details below). The FDA’s special controls for iCGM set a high bar and it’s been impressive to watch both Dexcom and Abbott push each other and the entire field (including payers, other manufacturers, regulatory, and providers) forward.

Launch Timing, Pricing, and Reimbursement

FreeStyle Libre 2 will be available at “participating pharmacies” and DME suppliers in the “coming weeks.” Abbott is also aiming to bring the updated smartphone apps for scanning and data uploads, LibreLink and LibreView, to the US market “as quickly as possible.” Over email, we learned that FreeStyle Libre 2 has launched in Germany, France, and Italy “among others.” So far, we’ve heard little on the market response to FreeStyle Libre 2, though we certainly know that FreeStyle Libre, as a whole, is growing rapidly. In the US, as in Europe, Abbott will continue to offer FreeStyle Libre in addition to FreeStyle Libre 2, though at the improved accuracy at same price and ability to turn off alarms, we would be surprised to see many users opt for the first-gen FreeStyle Libre.

  • Remarkably, FreeStyle Libre 2 will be offered at the same cash-pay price as the first-gen system. Given the addition of Bluetooth, this is quite an impressive accomplishment and a testament to Abbott’s dedication to access and affordability – the pricing will also continue to serve Abbott well compared to Dexcom’s much more expensive G6. Notably, with the iCGM classification, Medicare reimbursement for FreeStyle Libre 2 will actually be lower than for FreeStyle Libre “1.” On Dexcom’s 2Q19 call, we learned that Medicare lowered the reimbursement rate for iCGMs by ~13%-14% relative to class III CGMs (reimbursed at ~$8/day or $248/month) – this backs out to ~$7/day or ~$200/month reimbursement for iCGMs.

  • Abbott’s press announcement calls FreeStyle Libre 2 “a third of the cost of other CGM systems.” Abbott is already working with CMS and other payers to secure reimbursement for FreeStyle Libre 2 and with the pricing parity, we can’t imagine this will take too long. Additionally, the company noted to us over email that the pediatric indication for FreeStyle Libre 2 will open up some “additional opportunity in Medicaid,” where half of beneficiaries are children. 

Implications for Abbott and Competition

For Abbott, FreeStyle Libre 2 is only building on an already massively successful franchise that shows no signs of slowing down. FreeStyle Libre delivered $604 million in revenue in 1Q20 and now has a global user base of “over 2 million” people. In the US alone, we last estimated FreeStyle Libre’s user base at ~650,000 (a conservative estimate). With the addition of real-time alarms, improved accuracy, and device interoperability all with no changes to form factor or cost, we can only imagine more positive drivers for the already-upward trajectory for the FreeStyle Libre franchise.

  • By getting FreeStyle Libre 2 cleared as an iCGM, Abbott opens up a lower-risk, class II, 510(k) pathway for its future products. Abbott has historically seen lengthy FDA reviews – FreeStyle Libre 2 was under review for well over a year. We will have to see whether that changes with the iCGM pathway now available, but crossing the high accuracy bar laid out in iCGM special controls is a great place to build from as Abbott develops its future FreeStyle Libre “3” and next-generation professional CGM systems.

    • Matching Dexcom with an iCGM offering is also a key competitive move. While many have a perception that FreeStyle Libre significantly overreports hypoglycemia, the ability to meet iCGM accuracy requirements may help FreeStyle Libre 2 mitigate that perception. As Dexcom plans to ramp up its direct-to-consumer marketing in the back half of this year, FreeStyle Libre 2 also prevents Dexcom from being able to advertise Dexcom G6 as the only consumer iCGM on the market. Abbott and Dexcom continue to separate themselves as leaders in the CGM landscape, though Medtronic and Senseonics also have plans to make their entries into the iCGM ring: Senseonics has plans to file for an iCGM indication in 4Q20 for Eversense XL, while Medtronic’s “Zeus” is expected to submit to the FDA as an iCGM by the “end of the summer.”

  • Though contraindicated for now (see above), we believe FreeStyle Libre 2 has the ability to drive automated insulin delivery (AID) systems. This capability was effectively confirmed back in February when Insulet announced that it was partnering with Abbott to integrate FreeStyle Libre 2 into its Omnipod Horizon hybrid closed loop system. Medtronic’s and Dexcom’s experience in building out and integrating with closed loop systems will become increasingly valuable as AID momentum continues to grow, but it’s encouraging to see Abbott getting involved earlier (with FreeStyle Libre 2), rather than later (with a future generation system).

    • Outside of AID, Bluetooth connectivity also opens FreeStyle Libre 2 to various device and software integrations. Bigfoot Biomedical recently announced that it plans to submit its first-generation “real-time, dose-decision support” system for MDI, Unity, to the FDA “in a month.” We believe that pen cap requires a scan over the FreeStyle Libre 2 sensor to grab glucose data, but we could certainly see automatic Bluetooth connectivity built into future versions. Abbott also has existing data integration partnerships with both Novo Nordisk and Sanofi. With data being sent continuously to a phone, Abbott may also be able to build out, or open its data for partners to build out, various apps utilizing FreeStyle Libre 2 data, such as auto-populating glucose values and trends into a dose calculator app, predictive alerts, etc.

  • FreeStyle Libre 2’s addition of alarms have been long-requested and we’re excited to see whether they’re able to drive improvements in Time in Range. Of course, if those alarms become a nuisance and negatively impact the user experience, outcomes could go in the other direction, but Abbott’s scan-based user experience and the ability to toggle alarms on and off should mitigate that problem. FreeStyle Libre 2 will also be a very compelling offering for people at risk of hypoglycemia and cost or reimbursement is a major consideration. Abbott doesn’t as broad of a device partnerships, data integrations, and software ecosystem as Dexcom, but with non-adjunctive labeling, no fingersticks, and now, real-time alarms, we’d imagine most people will view FreeStyle Libre 2 as a “fully-featured” CGM.

  • For the first time, Dexcom will face competition in the US pediatric market. While there has certainly been off-label use of FreeStyle Libre in teens, the addition of alarms and the pediatric indication will certainly accelerate FreeStyle Libre 2 in pediatrics. We would suspect that many parents, particularly of young children, will still prefer Dexcom for its real-time remote monitoring. The ability to drive closed loop may also be a differentiating factor as more AID systems become available for the pediatric population.

  • FreeStyle Libre 2 certainly has implications for Abbott and competitors, but more importantly, the device will be a driver as the entire CGM continues to expand rapidly. Abbott’s commitment to global access and affordability has been a huge part of FreeStyle Libre’s and, more broadly, CGM’s expansion. Still, the market opportunity and remaining runway for all CGM manufacturers remains enormous and as we heard at DTM 2019, Abbott’s marketing efforts have helped the entire field build visibility and awareness.

  • There are a few open questions for FreeStyle Libre 2 revolving around manufacturing. Integrating and powering a Bluetooth chip, in addition to improvements to sensor chemistry, are not trivial tasks and we wonder how they might contribute to manufacturing complexity or cost. FreeStyle Libre has been capacity constrained in the past, suggesting that actual demand for the device could be even higher than the adoption we’ve already seen. Back in July 2019, a Reuters/NYT article outlined Abbott’s plans to increase production capacity by “three to five times” in the “next few years.”

Feature Comparison: FreeStyle Libre 2, Dexcom G6, and Guardian Connect, and Eversense

In the table below, we’ve summarized the key features of all four approved standalone CGMs in the US. The yellow highlight denotes which system(s) has the advantage on a particular category; of course, this is our opinion and some is subjective!

 

FreeStyle Libre 2 (US)

Dexcom G6

Medtronic Guardian 3

Senseonics Eversense

Fingerstick Calibration

None – Factory Calibrated

No optional user calibration in cases of sensor inaccuracy

No sensor calibration code required

 

None – Factory Calibrated

Each sensor has a unique calibration code – captured via photo

2/day

 

2/day

Accuracy (MARD)

9.3%

9.0%

~9% (upper arm)
10.6% (abdomen)

8.9%

Labeling

Non-adjunctive – Replaces fingersticks for treatment decisions

Interoperability now part of indications for use

Non-adjunctive – Replaces fingersticks for treatment decisions

Interoperability now part of indications for use

Adjunctive – requires fingerstick confirmation

Non-adjunctive – Replaces fingersticks for treatment decisions

 

Device Class

Class II, 510(k) -– “Integrated CGM” pathway

Class II, 510(k) - de novo – “Integrated CGM” pathway

Class III, PMA for traditional CGM

Class III, PMA for traditional CGM

Population

4+ years

Medicare

2+ Years

Medicare

14+ years

No Medicare

18+ years

Medicare

Warmup

1 hour

2 hours

2 hours

24 hours

Wear length

14 days

10 days

7 days

90 days

Mandatory shutoff?

Mandatory shutoff

Mandatory shutoff

Not shared, but presumably sensor can be restarted

Mandatory shutoff

Alarms

Yes – real-time alarms on reader, must scan sensor to see glucose, eight-hour history stored on sensor patch

Threshold alerts for highs and lows

Yes – data sent continuously to two display devices – receiver and app

Predictive alerts for lows

Yes – data sent continuously to Apple iOS app

Predictive alerts for highs and lows

Yes – data sent to app and on-body transmitter for vibration alerts

Threshold alerts for highs and lows

Data display

FreeStyle Libre reader device only

Mobile apps coming

 

Apps for Apple iOS and Android, plus smartwatch apps for viewing RT data

G6 receiver

Apple iOS app only; Apple Watch app only mirrors phone notifications

No receiver

Apps for Apple iOS and Android

Transmitter design and on-body form factor

~2 stacked quarters
(flat disc)

Fully disposable and integrated with sensor patch

 

Small eraser-sized

Three-month use transmitter separate from sensor

 

~2.5 stacked quarters (clamshell)

Rechargeable transmitter separate from sensor

Significant on-body tape

~3 silver dollars

Rechargeable transmitter separate from sensor

Insertion and Approved Location

Single-press inserter device with each sensor

Upper arm only

Single-push-button applicator with each sensor

Abdomen (adults)

Abdomen and upper buttocks (children)

Inserter device, requires pulling needle out manually

Abdomen & upper-arm

Sensor implanted every 90 days

Upper arm

Pricing without insurance (one-month supply)

$109

$350

$345

$99 per 90-day sensor through Eversense Bridge Program

Pricing with insurance (one-month supply)

Average US copay not given, though “many pay as little as $10 out of pocket”

~$50-80

$50

Not shared

Distribution

Major Retail Pharmacies

Growing pharmacy distribution for G6 exists, but mostly mail order through Dexcom or distributors

Mostly mail order from Medtronic and distributors. No comments ever shared on pharmacy distribution.

Mostly mail order from Senseonics and distributors. No comments ever shared on pharmacy distribution.

Accuracy Comparison: FreeStyle Libre 2, Dexcom G6, Guardian Connect, and Eversense

The FDA letter for FreeStyle Libre 2’s clearance has not yet been published and the accuracy data for FreeStyle Libre 2 below come from the user guide for FreeStyle Libre 2 in Germany.

Performance Standard: Lower bound of one-sided 95% confidence interval

Abbott FreeStyle Libre 2

Dexcom G6

Medtronic Guardian Sensor 3

2 cals/day

Senseonics  Eversense

Euglycemia: >70% within ±15% for 70-180 mg/dl

YES

73.1%

YES

74%

YES

78.6%

YES

80.5%-85.6%

Euglycemia: >99% within ±40% for 70-180 mg/dl

YES

99.4%

YES

99.3%

Likely NO

98.6%

YES

99.0%-99.6%

Overall: >87% within ±20% over full device measuring range

YES

88.7%

YES

90.6%

Likely YES

88.2%

YES

92.8-94.3%

Hypoglycemia: >85% within ±15 mg/dl for <70 mg/dl

YES

86.7%

YES

89%

Possibly YES

77.9%-87.3%

Likely YES*

83.3%-91.9%

Hypoglycemia:>98% within ±40 mg/dl for <70 mg/dl

YES

99.1%

YES

99.3%

YES

99.7%-100%

YES

99.1%-99.6%

Hyperglycemia:>80% within ±15% for >180 mg/dl

YES

89.4%

YES

85%

Likely NO

76.9%-79.5%

YES

84.8%-96.8%

Hyperglycemia: >99% within ±40% for >180 mg/dl

YES

99.9%

YES

99.9%

Likely YES

98.9%-100%

YES

99.2%-100%

Quotes from Bigfoot CEO Jeffrey Brewer

  • “We are thrilled that PWDs in the US will now have access to the Freestyle Libre 2, which will support both Bigfoot Unity (MDI) and Bigfoot Autonomy (pump based) systems. Libre 2’s clearance as an iCGM paves the way for Bigfoot Unity’s FDA submission this month.”

  • “FreeStyle Libre 2 is an ideal sensor for Bigfoot's AID system that is in development, as well as our MDI solution launching later this year. We have seen the FreeStyle Libre 2 performance data and are quite confident that it will robustly support closed-loop systems. We have modeled the FreeStyle Libre 2 sensor performance and our in silico simulations demonstrate strong performance with our AID algorithms. We look forward to demonstrating the safety and efficacy of FreeStyle Libre 2 for AID in our closed-loop system, Bigfoot Autonomy, in a future trial post-launch of Bigfoot Unity.”

Close Concerns’ Questions

  • Will US launch be a slow roll-out or is there enough capacity to do a “full launch” at start?

  • What is meant by the warning regarding AID systems? Will FreeStyle Libre 2 ever be able to drive AID? What additional data does the FDA need to see to remove that warning?

  • What sorts of changes were needed to improve FreeStyle Libre 2’s accuracy in hypoglycemia? Did the algorithm need to be tweaked?

  • How large were the studies for getting iCGM approval (for both adults and pediatrics)? How many paired points were used?

  • What is the timing for the mobile app?

  • Is there an expected timeline for getting Medicare reimbursement?

  • What countries is FreeStyle Libre 2 currently available in? What are user numbers? What has been the percentage of FreeStyle Libre 2 vs. FreeStyle Libre sales there?

  • When was FreeStyle Libre 2 first submitted to the FDA? Was Dexcom G6 the predicate device for getting clearance?

  • What would be required to get FreeStyle Libre 2 available in the US without a prescription?

 

--by Albert Cai and Kelly Close