The Food and Drug Administration surprised almost everyone on March 24 by approving the DexCom STS Continuous Glucose Monitoring System. Even DexCom’s President and CEO Andrew Rasdal seems to have been surprised.

He told analysts in a conference call on March 27 that he had expected an “approvable letter” requesting more information. I was surprised as anyone, even though a few months ago I bought stock in the company.

Even more surprising is that Rasdal says that they will start selling the STS system immediately and anywhere in the country. This is in marked contrast to the Medtronic Diabetes marketing strategy for the other continuous sensor, the Guardian RT. While it works out the reimbursement issue, Medtronic is limiting sales to just seven large cites.

Getting health insurance coverage is the big challenge for all continuous sensors simply because they are so expensive. Rasdal told analysts that those of us who can afford the out-of-pocket costs will be the company’s first customers.

“We can get meaningful adoption based on patients paying,” he says. “Meaningful adoption will drive reimbursement.”

We don’t know yet exactly how expensive the DexCom STS will be, but industry consultant Kelly Close expects the total annual cost, including the device itself plus sensors and calibration strips, will be around $4,000 to $5,000, about the same as the Guardian RT.

That’s far more than most people with diabetes can afford to pay. But for some it will be well worth it.

“Any hyper intensively managed patient is already spending well over half that on strips, without nearly the same value,” Kelly says. “Just assume one fewer severe hypo a year, and the device has paid for itself multiple times over.”

David Kliff, an investment advisor who publishes “Diabetic Investor” newsletter, is equally optimistic. He estimates that 30 percent of the insulin pump users will adopt a continuous glucose monitor even without reimbursement. He says that they test their levels on average seven times each day and are acutely aware of the benefits of the data that continuous sensors provides.

Not everyone is sanguine about DexCom’s prospects. Insurance approval is even more important than FDA approval, the owner of a company in the diabetes market tells me.

“The quality of the DexCom product looks good,” he says. “But cost will be the major barrier. Few people will pay the $4,000 to $5,000 annually that it will cost.”

The FDA approved the DexCom STS for both type 1s and type 2s, but only for adults over 18. Note that this excludes a group who could benefit more than most – children. But don’t be surprised to see doctors prescribing it to them “off label,” something that is common and completely legal.

Both the DexCom STS and the Medtronic Guardian RT have to be regularly calibrated against regular blood glucose meters. Another forthcoming continuous sensor, Abbott’s FreeStyle Navigator, will replace the meter, something never done before.