The Atlanta Journal-Constitution
For resale: diabetes test strips
Marketplace for strips is legal and one of the vagaries of health care in the United States.
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 West 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 U.S. 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
Though it soft-opened right after Christmas, Gocha’s Breakfast Bar on Cascade Road near the Cascade Heights neighborhood in southwest Atlanta had its official gala grand opening on Jan. 10.
The breakfast and brunch concept is the dream project of Gocha Hawkins, a Detroit native and the owner of Midtown’s Gocha Salon. Hawkins may be best known for styling celebrity clients such as Kandi Burruss, Nicki Minaj, Serena Williams, Beyonce, Drake and many more. But at Gocha’s, the talented home cook is showing off her culinary skills.
Nicknamed GBB, and featuring Hawkins’ recipes throughout the menu, Gocha’s signature dishes include Southern favorites like chicken and waffles and shrimp and grits, and more personal items, such as Gocha’s “KrunchTastic” French Toast, a crunchy battered indulgence served with fresh mixed berries and house vanilla bean sauce.
For those looking for hearty meatless choices, there’s loaded multigrain avocado toast, as well as Gocha’s Impossible Burger with Parmesan Truffle Fries, served on a brioche bun with tomato, mixed greens, onion, and house aioli sauce.
The full bar includes Gocha’s Hail Mary, a bloody mary variation garnished with celery, olives and two strips of bacon, plus there’s a variety of house cocktails, beer, wine and bottomless mimosas.
The busy location in the Publix Shopping Center at the intersection of Cascade and Fairburn roads is close to home for Hawkins. And she took on the design and buildout of the long, narrow storefront herself, with seating at booths, the cozy bar at the front of the space or circled around the exhibition-style open kitchen.
Last week, Hawkins sat down at a booth at GBB to talk about going from the beauty business
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 10 times a day.
Test strips are a multibillion-dollar industry. A 2012 study found that among insulin-dependent patients who monitor their blood sugar, strips accounted for nearly a quarter of pharmacy costs. Today, four manufacturers account for half of global sales.
In a retail pharmacy, namebrand strips command high prices. But like most goods and services in U.S. health care, that number does not 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 started 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, Massachusetts, 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 and shipping for a 100-count box of 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 noninsulin medications or with diet and exercise needn’t test their blood sugar daily, a recent analysis of insurance claims found that nearly 1 in 7 patients still used test strips regularly.
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 is a rebate the manufacturer has already paid for this box of strips.
Glenn Johnson, general manager for market access at Abbott Diabetes Care, which makes about 1 in 5 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.