Why Do Test Strips For Blood Glucose Monitoring Cost So Much?
If you've ever had the misfortune to pay for test strips for a blood glucose monitor over the counter, then you know how staggeringly expensive they can be. We have paid $56.98 for 50 strips for my son. It's not tough to do the math (particularly with the help of the calculator on my cell phone) to figure that works out to be $1.14 per strip.
Okay, I'll admit that this instance was during our early days of diabetes management and we had not shopped around for the best deals on strips, but my jaw hit the floor when I computed that. It was at that time that I realized how expensive managing Type 1 is. Forget my mind being boggled by the need for ongoing militant management, hyper focus and awareness and the ultra control that is necessary to avoid a potential disaster - the impact of the price of test strips on our bottom line astounded me.
For argument's sake, let's say that the over-the-counter price for test strips is roughly $1 a piece. If a diabetic tests his blood even six times per day, that comes out to $2,190 per year. Let's say the same diabetic tests his blood on the lower end of the spectrum - four times per day - that yearly price tag is still $1,460.
If this Type 1 is struggling to make rent or put food on the table, you can guess what will probably "take the hit" - you got it: blood glucose monitoring. And we've all had it drilled into our heads what the long-term consequences of Type 1 can be, particularly Type 1 that is not well controlled. It's the stuff of nightmares.
It wasn't until I found out that our health insurance did cover the cost of test strips (which is very lucky, indeed) and that the price of 300 test strips was $25 (which tallies to $.083 per strip) that I began to wonder what was really going on.
My son uses a OneTouch meter, which is made by LifeScan, a Johnson & Johnson Company (J&J). As a member of the Dow Jones, J&J is one of the blue chips that serves as a financial benchmark and I know that the company is not in the medical device business for charity - the company was the third strongest player on the Dow last year boasting a net income increase of 22% to $12.95 billion. Rather, J&J is a shrewd, tightly run company focusing on the bottom line and profit margins. And I am not faulting them for that - the U.S. is built on a market-based economy.
With that in mind, I suspect that even at offering test strips at $.083 cents per strip to diabetics with health insurance coverage, J&J is still making some type of profit off of them. In a post written by Amy Tenderich in her DiabetesMine blog, she spoke to David Kliff, a diabetes industry consultant, who indicated that the costs for manufacturing the strips can be as little as $.08 and vendors can rake in at least 60% to 80% in profits on these strips. The diabetes division within Roche Diagnostics, a competitive vendor to J&J, has a reported $1 billion in gross profit annually, with much of this cash coming from diabetes supplies including test strips.
For me, there is a bit of irony to this; I am familiar with J&J's company credo because I actually have presented this credo in an Introduction to Business class I teach at a local community college. The credo is an example of a well structured and well crafted statement that takes into account the many players in the dynamic world of a corporation and also because of the credo focuses on doing right by these players. Because of its length, I won't print the entire credo, but you can find it here.
I do want to offer excerpts that now give me pause, as the mother of a diabetic son who is a J&J customer: "Our [Johnson & Johnson's] first responsibility is to the doctors, nurses, and patients, to mothers and fathers who use our products ... We must constantly strive to reduce our costs in order to maintain reasonable prices.... We are responsible to the communities in which we live and work and to the world community as well ..."
When I reread this, I almost blew the Diet Coke I was drinking through my nose. Sorry, J&J, I don't find charging un- or underinsured diabetics a buck a test strip "fair" and the price "reasonable" particularly when I suspect that the company is making a substantial profit on the strips.
My question is simple: how can a company make the over-the-counter price for the strips so prohibitively expensive so as to potentially impact someone's - many someone's health - specifically those that do not have their test strips covered by an insurance program. These are usually the very same people that can least afford to pay a dollar a strip. This is where I have an issue with J&J and its competitors.
It is one thing for a device manufacturer to assign a hefty price tag to an insulin pump. Pumps are technologically advanced, expensive to produce and often require a lot of user support. Furthermore, there is a less expensive alternative to a pump with syringes, even though these are not always desirable.
But this is not true with test strips.
I suspect that it simply comes back to money - forget the credo. Diabetes is a big money-making market, and it's growing. Diabetic patient monitoring systems, of which blood glucose monitoring systems make up the largest part, are forecasted to grow to a $12 billion market by 2012, with test strips expected to experience double digit growth. When one is ruled by Wall Street, who wouldn't one want to be a part of this cash-rich market?
They Aren't All Bad Guys
There are cost-effective alternatives to the usual $1 per test strip price from the major manufacturers. WalMart for one, offers the ReliOn Micro meter.
And What Are We To Do About It?
It's easy to sit here, ranting and raving about what's wrong. It's another thing to fix it. A fix certainly won't be a silver bullet and won't come over night. Rather, I think it will need to come from within the diabetes community itself. Maybe we can look for alternatives outside of the current vendors - like the ReliOn meter - or be innovative, and turn to the market, and supply and demand, to set prices.
Just look at the LifeCase& LifeApp System, designed by Eric Schickli and Samantha Katz, as a part of Amy Tenderich's DiabetesMine 2009. This iPhone application combines a blood glucose monitor (complete with test strips) and pump interface. Imagine if this device and application were produced and distributed by one of the non-major device vendors - maybe then the diabetic market could influence price by demand.
I think the solution lies with us, the diabetic community, to make our voice heard and to demand fair-market pricing for all diabetics, not just those fortunate enough to have health insurance.