Why are the rates for diabetic test strips constantly changing?
Good question. Although every market has its fluctuations, the market for diabetic testing supplies has shown major instability in the recent past.
With diabetes becoming so prevalent there is a continually increasing demand for testing supplies. In turn, there should be hundreds of manufacturers competing for market share and thus driving the prices down. Unfortunately, the Blood Glucose Self-Monitoring (BGSM) market is anything but normal.
Over the past 20 years, four manufacturers have managed to control over 90% of the BGSM market, those being:
Lifescan – One Touch Ultra Blue and Verio
Roche – Accu-chek Aviva Plus and Smartview
Abbott – Freestyle Lite and Precision Xtra
Bayer – Bayer Contour and Contour NEXT
With so much market share, these four manufacturers have created an Oligopoly that prevents competition. In other words, prices can be controlled and raised systematically through collusion and lobbying.
Big Pharma is not the only culprit. Both the Government and Health Insurance companies also add to the confusion and limited choices.
The Competitive Bidding Program was implemented by the Center for Medicare and Medicaid Services (CMS) in 2013 forcing suppliers of test strips to compete for Medicare bids. It prevented 90% of suppliers from selling to Medicare. While these suppliers can still sell to Medicare customers, they would not be reimbursed. If you’re looking to restrict access and decrease affordability, that’s how you do it. For more, checkout this blog on the Competitive Bidding Program and it’s impact on diabetes.
But it’s the insurance sector causing the most recent fluctuations in the prices of diabetes supplies. Health insurance giants, represented by Pharmacy Benefit Managers (PBMs) have cornered the insurance market the same way manufacturer’s did medical supplies. The three main PBMs involved are:
1. OptumRx (United Health)
2. CVS Health
3. Express Scripts
Starting in 2017, OptumRx instituted the Verified-Accredited Wholesale Distributor Program (VAWD). Any distributor selling to pharmacies were forced to get “VAWD Accredited.” And using the same strategy as the Competitive Bidding Program, the process was both impractical and slow. Any company that wasn’t accredited would not be reimbursed by OptumRx.
In 2017, CVS Caremark and Express Scripts decided to change Drug Formulary (the list of drugs and medical equipment reimbursed to pharmacies). Many brands of test strips and even insulin were removed.
For more information, please refer to the NPR Report on 2017 Formulary changes.
How and why does this affect the rates we offer you?
The test strips and lancets we purchase from you are resold to individuals or wholesale distributors. While we need to make a profit, we try to offer affordable rates. As the market shifts, we have to adjust the amount we’re able to pay for your supplies. We pride ourselves on customer service, keeping you informed, and offering the highest rates possible for your test strips and lancets.