GRAY MARKET

Amid concerns, secondary sales arising for diabetes test strips

Five words in a recent classified ad revealed that a secondary market for lower-priced diabetes test strips is reaching into the greater Pittsburgh area.

“I Buy Diabetic Test Strips!” the ad in the Pittsburgh Post-Gazette declared, with an 800-number and requirements that boxes be unopened and strips be unexpired.

The secondary purchase and resale of test strips, typically advertised through Craigslist, is centered for now in Michigan, with several ads showing up in eastern West Virginia and western Maryland.

With retail prices for test strips as high as $1.79 each, the so-called black or gray market finds people selling excess strips to buyers, who in turn resell them at sizable discounts. People with diabetes use these strips to test blood glucose levels, with those on insulin sometimes using 10 strips or more daily to manage their disease.

Physicians, medical insurance providers and test- strip

and efficacy of test strips. It may be dangerous to consumers to use test strips that were not handled and stored correctly.”

Chris Leake, who placed the Post-Gazette ad, says he operates two family-owned companies — the Diabetic Supply Team, which purchases off-market test strips, and Valley Rain Medical, an online company based in Clovis, Calif., that resells test strips on its website.

He warned that it’s illegal to resell strips acquired through Medicare and Medicaid.

“We turn away people all the time and do not buy strips from them when we find out they received their strips through Medicare/ Medicaid,” Mr. Leake said.

He said his companies are properly licensed, pay taxes and have insurance. Other secondary operations, however, aren’t so transparent and don’t follow the professional guidelines that he said he does, including climate-controlled storage of strips.

“We’re absolutely trying to rise above the fly-bynight, first-name-only, grabthe-cash-and-go person buying strips on Craigslist,” Mr. Leake said in an email exchange.

Secondary sales of test strips, he said, “undercut the prices of huge medical distributors who would otherwise have the market pretty well monopolized. I believe this is doing much to help hold down the price of test strips. So I see what we do as contributing more to holding down health care costs than raising them.”

Test-strip “manufactures, of course, hate this,” he said.

Retail realities

levels, making them essential tools in diabetes management, especially for people who are insulin-dependent.

Name-brand test strips — OneTouch and Accu-Chek, among others — are sold over the counter in containers of 25, 50 or 100, costing about $1.50 each, with some variation. Bargain or generic brands offer strips for as low as 17 cents each. But there always are questions and debates about test-strip reliability, regardless the brand, but more so with cheaper brands. Most brands also sell control solutions to test the accuracy of strips and monitors.

People with diabetes who have health insurance typically get a prescription and acquire test strips with a copay. But it remains unclear whether reselling prescribed strips constitutes insurance fraud. Extra strips do turn up when patients die, change brands upon doctors’ advice, have too many to use before the expiration date, or no longer need or use them.

In a story on Healthline, an online consumer site, a reporter wrote that he met a representative of a firm that advertised “Ca$h paid for Diabetic Strips” in a McDonald’s parking lot in Scottsdale, Ariz., to sell him a box of 50 strips for $20. The purchaser then said he would resell them for $40, which still represents a notable discount over the $75 to $90 retail cost.

The secondary market, Mr. Leake said, is popular because “retail prices are extremely high for a product that people have to have.” Some people with diabetes must choose between buying test strips or insulin. The strips he sells, he said, are 50 to 75 percent below the retail price.

“Despite the large, active secondary market that exists for test strips, thousands upon thousands of dollars worth of perfectly good test strips are still ending up in landfills every single week,” he said. “Meanwhile, many diabetics out there are struggling mightily to be able to purchase the strips they need.”

His companies, he said, bridge that gap, with “thousands of messages from our customers telling us how happy they are to have found us and thanking us for providing the strips at such a discount.”

Copays and controversies

Local health insurance providers said they were unfamiliar with the secondary market for test strips.

One hundred to 200 test strips per month represent common insurance limits. Some individuals, especially those with insulin-dependent Type 1 diabetes, often test blood-glucose levels more often than the prescribed rate of three to six times daily. It’s a key factor fueling the secondary market.

But UPMC Health Plan and Highmark, the major health insurance providers in southwestern Pennsylvania, said people they insure generally can get the number of strips their doctors prescribes for a copay. Joseph R. Mayer, registered pharmacist on Highmark’s pharmacy case management team, said in an email that most private plans provide 200 test strips per month but “coverage does vary by plan and some commercial plans may not offer coverage.” He recommended that people check the test-strip policy before enrolling in a plan.

UPMC Health Plan said it doesn’t limit the number of test strips for Medicare members and children but does limit adult members to 150 strips a month. A doctor can request more strips for a patient whom UPMC says it grants if the amount is deemed “reasonable and appropriate.”

Medicare and Medicaid limits strips to 100 a month more strips], and go for prior — about three a day. authority through their insurer,

Echoing warningsinsurer, the insurer typically against the off-market purchase provides it,” Dr. Bononi of strips, Patricia Bononi, said. “You have to work with medical director of the the provider for a reasonable Allegheny Health Network number that makes Center for Diabetes, said her sense clinically.” patients have discussed For Medicare or Medicaid their problems in acquiring patients, she said, she recommends enough tests strips, “and buying less-expensive they want to use more than generic strips and they are allowed.” meters.

She discourages use of offmarket Otherwise, she said, “I’d test strips, saying, be careful. You could be putting “You don’t know how they your life at stake.” were stored, and I think they are unreliable.”

“In my experience, if patients tell me about [needing