Twin Cities has growing, unregulated 'gray market' for diabetic test strips
ST. PAUL, Minn. (FOX 9) - A homemade sign stapled to a telephone pole in St. Louis Park advertises cash for unused diabetic test strips, pointing the way to a growing resale market that raises concerns among patient advocates.
The sign, near the corner of 36th Street and Texas Avenue, is one of many around the Twin Cities. Multiple businesses advertise this way, offering to be middlemen between diabetics that have good insurance and those who are under-insured and must pay high prices for supplies.
A 100-count box of the strips, which diabetics use to monitor their blood sugar, can retail for more than $100. Because some diabetics use eight to 10 strips per day, they could cost $300 a month without insurance.
"What you never want to get is to be caught paying the retail costs of those things," said Rachel Hickok of New Brighton, whose 7-year-old son Sam is diabetic.
Here's an example of how the resale market works: a 100-count box of test strips costs little or nothing to someone with good insurance. That person could sell extras to a middleman for $30 cash, who then sells to a buyer for $60.
In theory, everyone benefits. The seller gets paid for unused test strips, the end user gets a significant discount off retail price, and the middleman makes a profit.
A 'gray market'
But the unregulated market troubles doctors and diabetes advocates, who say second-hand test strips could harm patient health.
State Sen. Matt Klein, a medical doctor, said the market would not exist if manufacturers were forced to bring their prices down.
"If you don’t have insurance, test strips – which are essential to your health – might cost you thousands of dollars," said Klein, DFL-Mendota Heights, "so people who have excess from their own supply will sell those on a gray market.
"As stories like this one come up, that now you have test strips being sold in dark alleys in Minnesota, I think it gets a little more traction."
The American Diabetes Association has also raised concerns about the resale market, noting that the test strips could be tampered with or expired.
The ADA's standards of care warn that "patients should be advised against purchasing or reselling preowned or second-hand test strips, as these may give incorrect results," said Alex Day, a spokesperson for the organization.
The 'test strips guy'
The Better Business Bureau of Minnesota and North Dakota hasn't gotten any reported complaints over the industry locally, said spokesperson Bess Ellenson.
Resellers argue they are simply filling a need in the diabetic supply market.
Val, a reseller who agreed to an interview on the condition that FOX 9 would conceal his face and not use his full name, said he got into the business four months ago when a diabetic friend told him about the opportunity. He said he plans to launch a website and register with the state but, for now, clients simply call him the "test strips guy."
Val said he buys unused test strips from clients for $30-40 per 100-count box, meeting them at their homes, at gas stations, or in grocery store parking lots.
"I run into a lot of people that have extra test strips that they’re ready to put in the trash can because they didn’t know that they can sell them and help other people," Val said. "I tell them about it, and they’re so excited."
Val said he resells the test strips online. He declined to say which websites he uses -- other than Craigslist -- but said he only does business with sites that won't dramatically increase the price. The goal is to offer test strips to end users at a 50 percent discount, he said.
Val said he also works as a nurse, and wants to take products "from the haves and get it to the have-nots." He'll accept expired test strips and gives them away, he said.
Asked about the potential for fraud in the market, he downplayed it.
"I don’t tell people, 'Oh, go talk to your doctor or your insurance company and try to get more boxes.' No, no, no. I don’t do that kind of business. I just work with people who have excess products that they want to get rid of," he said.
Return to sender
Hickok said her son Sam's diabetes supplies regularly cost her family about $400 per month.
Last year, she bought second-hand test strips that she found on Amazon. A seller was offering 50-count boxes for $8.73, which was at least 80 percent off the retail price.
Hickok said she bought a six-month supply but grew concerned when the boxes arrived in the mail. Each one had a bright yellow label that read "For Medicare/Medicaid use only."
She sent them back.
"For me, the idea that this was supposed to go Medicare only was just a weird red flag," Hickok said.
She said the high cost of diabetes supplies is forcing families like hers to take calculated risks.
"People are trying to find a way to manage this safely and affordably, and there aren’t just many options," Hickok said. "So that creates a market where people are trying to make a buck off of us."