Posted on 01/17/2019 10:45:35 AM PST by Red Badger
Jeenah Moon for The New York Times
On most afternoons, people arrive from across New York City with backpacks and plastic bags filled with boxes of small plastic strips, forming a line on the sidewalk outside a Harlem storefront.
Hanging from the awning, a banner reads: “Get cash with your extra diabetic test strips.”
Each strip is a laminate of plastic and chemicals little bigger than a fingernail, a single-use diagnostic test for measuring blood sugar. More than 30 million Americans have Type 1 and Type 2 diabetes, and most use several test strips daily to monitor their condition.
But at this store on W. 116th Street, each strip is also a lucrative commodity, part of an informal economy in unused strips nationwide. Often the sellers are insured and paid little out of pocket for the strips; the buyers may be underinsured or uninsured, and unable to pay retail prices, which can run well over $100 for a box of 100 strips.
Some clinicians are surprised to learn of this vast resale market, but it has existed for decades, an unusual example of the vagaries of American health care. Unlike the resale of prescription drugs, which is prohibited by law, it is generally legal to resell unused test strips.
And this store is far from the only place buying. Mobile phones light up with robo-texts: “We buy diabetic test strips!” Online, scores of companies thrive with names like TestStripSearch.com and QuickCash4TestStrips.com.
“I’m taking advantage, as are my peers, of a loophole,” said the owner of one popular site, who asked that his name not be used. “We’re allowed to do that. I don’t even think we should be, frankly.”
Test strips were first developed in 1965 to provide an immediate reading of blood sugar, or glucose, levels. The user pricks a finger, places a drop of blood on the strip, and inserts it into a meter that provides a reading.
The test strips were created for use in doctors’ offices, but by 1980 medical-device manufacturers had designed meters for home use. They became the standard of care for many people with diabetes, who test their blood as often as ten times a day.
Test strips are a multi-billion-dollar industry. A 2012 study found that among insulin-dependent patients who monitor their blood sugar, strips accounted for nearly one-quarter of pharmacy costs. Today, four manufacturers account for half of global sales.
In a retail pharmacy, name-brand strips command high prices. But like most goods and services in American health care, that number doesn’t reflect what most people pay.
The sticker price is the result of behind-the-scenes negotiations between the strips’ manufacturer and insurers. Manufacturers set a high list price and then negotiate to become an insurer’s preferred supplier by offering a hefty rebate.
These transactions are invisible to the insured consumer, who might cover a copay, at most. But the arrangement leaves the uninsured — those least able to pay — paying sky-high sticker prices out of pocket. Also left out are the underinsured, who may need to first satisfy a high deductible.
For a patient testing their blood many times a day, paying for strips out-of-pocket could add up to thousands of dollars a year. Small wonder, then, that a gray market thrives. The middlemen buy extras from people who obtained strips through insurance, at little cost to themselves, and then resell to the less fortunate.
That was the opportunity that caught Chad Langley’s eye. He and his twin brother launched the website Teststripz.com to solicit test strips from the public for resale. Today they buy strips from roughly 8,000 people; their third-floor office in Redding, Mass., receives around 100 deliveries a day.
The amount the Langleys pay depends on the brand, expiration date and condition, but the profit margins are reliably high. For example, the brothers will pay $35 plus shipping for a 100-count box of the popular brand Freestyle Lite in mint condition.
The Langleys sell the box for $60. CVS, by contrast, retails the strips for $164.
The Langleys are mainly buying up excess strips from insured patients who have been flooded with them, sometimes even when not medically necessary.
Although patients who manage their diabetes with non-insulin medications or with diet and exercise needn’t test their blood sugar daily, a recent analysis of insurance claims found that nearly one in seven patients still used test strips regularly. ‘It’s a tiny little piece of plastic that’s super cheap to manufacture, and they’ve managed to make a cash cow out of it.’
Gretchen Obrist
The market glut is also a consequence of a strategy adopted by manufacturers to sell patients proprietary meters designed to read only their brand of strips. If a patient’s insurer shifts her to a new brand, she must get a new meter, often leaving behind a supply of useless strips.
While some resellers use websites like Amazon or eBay to market strips directly to consumers, the biggest profits are in returning them to retail pharmacies, which sell them as new and bill the customer’s insurance the full price.
The insurer reimburses the pharmacy the retail price and then demands a partial rebate from the manufacturer — but it’s a rebate the manufacturer has paid already for this box of strips.
Glenn Johnson, general manager for market access at Abbott Diabetes Care, which makes about one in five strips purchased in the United States, said manufacturers lose more than $100 million in profits a year this way, much of it in New York, California and Florida.
The company supported a new California law that prohibits pharmacies from acquiring test strips from any but an authorized list of distributors. Mr. Johnson said he has spoken with lawmakers about similar efforts in Florida, New Jersey, New York and Ohio.
Such measures leave intact the inflated retail prices that make the gray market possible and which critics say benefit manufacturers and their retail intermediaries, pharmacy benefit managers.
In a lawsuit against P.B.M.’s and the dominant test strip manufacturers filed in New Jersey, consumer advocates presented data showing that the average wholesale price for test strips has risen as much as 70 percent over the last decade.
They alleged that this has allowed the defendants to pocket an unfair portion of the rebates. The price of a strip would be much lower if it wasn’t fattened by profiteering, said Gretchen Obrist, one of the lawyers who brought the case.
“It’s a tiny little piece of plastic that’s super cheap to manufacture, and they’ve managed to make a cash cow out of it,” she said.
To justify the rising price of strips, manufacturers point to advances in engineering that have made the strips smaller and more convenient to use. But there is little evidence those features have improved health outcomes for people with diabetes — and with increasingly unaffordable prices, the newfangled test strips may be even less accessible.
The markups on strips look particularly stark when compared to the cost of producing them.
“Test strips are basically printed, like in a printing press,” said David Kliff, who publishes a newsletter on diabetes. “It’s not brain surgery.”
He estimated the typical test strip costs less than a dime to make.
Gillette overprices their disposable razors as well.
Fellow across the street has a sign in his yard for this.
Hey, a new source of mad money!
When I turned 65 and got on Medicare, I was told that if I wasn’t taking insulin, I was limited to 1/day. If taking insulin you are limited to 2/day.
Wal-Mart sells their ReliOn brand for $18/100. Much better price than the name brand strips.
Of course a much better approach would be to prevent the fake pricing in the first place, but the insurance industry depends on inflated retail pricing to get them customers. Much of the motivation for having overpriced health insurance, instead of true catastrophic insurance, is to get the discount on medical services.
Without insurance you pay the fake, $600 fee for your checkup. With insurance you pay nothing, and the insurance company pays $90. Of course the insurance company pockets your monthly premium for doing you that "favor".
I buy all my test strips on E-Bay and have for years. I always look for any deals for multiple boxes, especially if they are out of date ones. I usually buy at least 100 at a time and if I find the right deal 200 to 300.
Even if they are out of date they are still good for say 5 years. Lots of bargains out there if you look.
I’m 64. I don’t have diabetes and so I’m limited to 0 per day!.................
I was just in the grocery store yesterday and got blades. I buy the BIC blades for women, $2.89 for 12 and they work just fine and are cheap. A pack like that might last me for a 2 or three months. I refuse to pay the high prices for Gillette or other brands.
You’d think they’d look better with a donation center instead of buying them.
Is he buying for himself or for resale?..............
We Are Special!
That’s the beauty of the market.
The establishment would try to goad people into donating them. That’s fine if you want to, but not when they make you.
It’s similar to organs. I a proponent of being able to sell organs upon your death. Sort of like an added life insurance bonus to your family.
The establishment forces us to either keep them or donate them. Healthy organs have great value, why shouldn’t we be able to choose to keep them, donate them or sell them? It’s our property and should be ours to do with what we wish.
For a similar reason, I refuse to show my receipt when I’m leaving a store. Our legal system requires the prosecution to prove guilt, not the defendant to prove innocence. Forcing me to show my receipt is requiring me to prove that the product I purchase, legal title of which transferred to me the second I handed over payment is mine. Instead, it should be incumbent upon them to prove I stole it.
About 7 years ago I was told that my blood sugar levels made me a border line diabetic. So I bought one of those meters and strips and began testing blood sugar every day.
However I quickly observed that on days when levels were high (130+) I also noticed bottom of my feet had that tingling sensation. Who says diabetes has no symptoms? Soles of our feet give us the warning! Since then I rarely use those strips and have added 30 minutes on a treadmill every other day, and noore tingles!
I have been a type 1 since 1981. I have been testing on a regular basis since 1996 but never heard about this.
And the actual cost for a cup of coffee,$.15-.20 And the actual cost for a 12oz soda $.15-.20 And how much is the grey market markup on the test strips?
“Wal-Mart sells their ReliOn brand for $18/100. Much better price than the name brand strips.”
Exactly.
Had a diabetic kitten, raised him to adulthood and after 17 years he succumbed.
Used the ReliOn brand exclusively once I found out about the brand.
10,000 injections and 4,000 test strips add up over time.
Damn fine cat, I miss him dearly.
Best to you, FRiend.
In the future these strips will be wound around the inside of your computer watch and test STDs, HIV, and pregnancy. Test your pick-up on the way to his place.
Check your local paper classified ads, personals and any weekly ‘thrifty’ ad papers there may be.
I see ads for these all the time.....................
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