By Julie Steenhuysen

CHICAGO (Reuters) – The U.S. Food and Drug Administration on Friday granted approval for Tandem Diabetes Care’s software program that uses readings from a continuous glucose monitor to predict and deliver corrective doses of insulin to patients using the company’s t:slim X2 insulin pump.

Tandem’s Control IQ algorithm is the first insulin dosing software approved under the FDA’s new “interoperability” approval pathway. This allows companies to develop components of so-called artificial pancreas systems that can be used with products sold by other companies that have gone through the same approval process.

The FDA designed this speedier approval strategy to bring new technology to people with diabetes more quickly.

“That’s a really big deal for the industry,” Tandem Chief Executive John Sheridan said in a phone interview.

Tandem’s t:slim X2 insulin pump won the interoperability designation in February. Its device works with Dexcom Inc’s G6 continuous glucose monitor (CGM).

In October, Tandem announced a deal with Abbott Laboratories to make insulin pumps that work with Abbott’s FreeStyle Libre glucose sensors.

Tandem plans to roll out the software update in mid-January to new customers purchasing its pumps, Sheridan told Reuters.

It will also make the software upgrade available free of charge to the more than 80,000 people currently using the company’s t:slim X2 pump with its older Basal-IQ algorithm.

Tandem plans to roll out future upgrades to customers in the same way cell phone companies upgrade software.

The company does not plan to increase the price of new pumps with the Control IQ algorithm, which has a list price of $4,000. Typically, insured patients pay about 20% of that, or $800 to $1,000.

Current integrated insulin pump systems, such as Medtronic Inc’s 670G artificial pancreas, are on a four-year reimbursement cycle, Sheridan said.

“If you purchase a pump, an insurance company will reimburse you for it once in four years. If any new technology is made available during that period, you don’t have access to it unless you buy a new pump,” he said.

Sheridan said Tandem plans to gather information on how patients fare using its new technology, which it will take to payers after six months to a year to seek more favorable insurance coverage.

Shares of the company were up 1% at $58.25 in afternoon trading.

(Reporting by Julie Steenhuysen; Editing by Bill Berkrot)