Blood glucose test strips in a Canadian formulary environment

UNDERSTANDING BLOOD GLUCOSE TESTING STRIPS IN A CANADIAN FORMULARY

ENVIRONMENT

PURPOSE

This paper is prepared by Winnipeg Pharmacy GMHS.ca explores the science behind glucose test strips and proposes the format by which

insurers can implement a reference based, interchangeability formulary.

HISTORY

In 1962, Leland Clark and Champ Lyons at the Medical College of Alabama developed the first

glucose enzyme electrode. The enzyme in the electrode functioned in the presence of glucose to

decrease the amount of oxygen available to the oxygen electrode, thereby relating oxygen levels

to glucose concentration.

Home glucose monitoring was demonstrated to improve glycemic control of type 1 diabetes in the

late 1970s, and the first meters were marketed for home use around 1981. The two models initially

dominant in North America in the 1980s were the Glucometer, introduced on November 1981

whose trademark is owned by Bayer and the Accu-chek meter (by Roche). Consequently, these

brand names have become synonymous with a generic product description to many health care

professionals.

Over the last 30+ years, the features of glucose testing machines and strips have improved, but

pricing has not properly reflected the competition in the marketplace.

MARKET SIZE AND GROWTH

Self-monitoring of blood glucose (SMBG) is big business and is getting bigger every year. Since

1980, the market for blood glucose monitoring products has undergone phenomenal growth. While

the United States is the single largest market for SMBG, with about 40% of the global market, there

has been dramatic growth in demand for these products across the globe. To provide some

perspective, Enterprise Analysis Corporation estimates that the world market for SMBG testing

supplies was $1.7 billion in 1994. By 2000, the market had reached approximately $3.8 billion, and

by 2008, worldwide sales of these products climbed to an astonishing $8.8 billion. This represents

an approximate 12.5% compound annual growth rate since 1994. In fact, the SMBG testing market,

which barely existed in 1980, now accounts for approximately 22% of the entire $39 billion IN

VITRO diagnostics industry.1 In 2011, Visiongain reported global sales of $9.7 billion and

predicted that the market would be worth 27.42 billion by 2022.

DEFINING THE DIFFERENCES

ACCURACY – A KEY DIFFERENTIATOR?

Health Canada has adopted the standard ISO 15197:2003 for accuracy. Health Canada will only

license products that meet this standard. Proof of a products’ acceptable level of accuracy?

Licensure.

Health Canada Therapeutic Products Directorate's (TPD) Recognized Standard for medical devices:

ISO 15197:2003: In Vitro diagnostic test systems – Requirements for blood-glucose monitoring

systems for self testing in managing diabetes mellitus.

Many meters already meet new standard including value priced strips. Those that do not are

already working towards meeting the draft new standard.

REAGENTS DEFINE THE METER

Reagent type is an important clinical consideration when selecting the most appropriate

meter and strip type due to possible interactions associated with each strip type.

One of the best kept secrets in the category is that of the 25 meters in the marketplace,

48% use a GOD reagent strip,

30% use at GDH-FAD or NAD strip

12% use GDH PQQ, or its mutated version MUT Q-GDH.

THE SCIENCE OF STRIPS

A key component to understanding the SMBG marketplace

is to understand the difference and classification of

glucose testing strips

There are three common Reagent Types. They are based on

the following action: Electrons from the glucose oxidation

reaction are first taken up by the enzyme's cofactor (primary

electron acceptor) and transferred to either oxygen (first

generation), an electron mediator (second generation), or

directly to the electrode (third generation).

 

THE TRUE COST OF TEST STRIPS

Test Strips can run from 40 cents to well over $1 apiece, and people often question why they cost so

much. Beyond the enzymes, precious metals, chemicals, and other materials that make up test

strips, manufacturers must design and build plants to produce the strips. Once those upfront costs

have been paid, the everyday cost of making strips goes down. Strip makers are “buying this

material in huge quantities and spreading this cost over a billion pieces,” says diabetes business

expert David Kliff, founder of DiabeticInvestor.com

Kliff estimates that manufacturers reap a 70 to 80 percent profit on strips. “This is America; you are

allowed to make money,” he says, adding that a part of the profits is plowed back into strip-making

to “make better systems.” Investment in new technology over the past couple of decades has made

blood glucose testing faster, easier, and less painful for people with diabetes.

Health insurers can also affect the price of strips. “Ninety percent [of test strips] are paid for with

insurance,” says Kliff. This gives insurance companies negotiating power over the price they pay for

strips—as well as the ability to specify which brands they’ll cover.8

THE NEED TO RE-EVALUATE COSTS

The benefits of well managed blood sugar are well known. However, leading authorities agree:

From the Canadian Diabetes Association (CDA)

Cost of Diabetes Medication, Supplies and Medical Devices

Position Statement:

Federal, provincial and territorial governments should commit to a strategy such that the cost to

the individual of diabetes medication, supplies and medical devices, as well as the costs associated

with diabetes-related complications, are not a barrier or a burden to managing the disease.

From the Canadian Agency for Drugs and Technology in Health (CADTH)

Cost-Effectiveness of Blood Glucose Test Strips in the Management of Adult Patients with Diabetes

Mellitus

A reduction in the price of blood glucose test strips would improve the cost-effectiveness

of SMBG. For patients with insulin-treated type 2 diabetes, SMBG testing frequencies

beyond 21 test strips per week require unrealistically large A1C estimates of effect to

achieve favourable incremental cost per QALY estimates.

And patients have spoken:

57% of Canadians with diabetes say they do not comply with their prescribed therapy

because they cannot afford their medications, devices and supplies, thus potentially

compromising their diabetes management.

FORMULARY MANAGEMENT: A TWO-FOLD PROCESS

Strip use limitations have long been eyed by public and private insurers as a method of gaining

control over spiraling costs; however concerns regarding the many variables associated with

patient need has many insurers cautious in this approach.

The Institute for clinical Evaluative Sciences in their report “Blood Glucose Test Strip Use –

Patterns, Costs and potential cost reductions10 identified four diabetes therapy groups:

 

Further they offered 5 scenarios for strip usage restrictions within these groups

 

Strip limitation by treatment type has already been implemented in Canada through the Ontario

Provincial Health Insurance Program and the Federal Non Insured Health Benefits Program for

First Nations nationally. Although initially thought to have been a successful transition to restricted access, healthcare providers are now seeing that the shortfalls in coverage are now causing cracks

in a patient’s ability to manage their diabetes. For federally funded Aboriginal and First Nation

patients they are relying more and more on other transfer funding to supplement their need to

access SMBG supplies. Unfortunately, transfer funding does not include items covered by Non

Insured Health Benefits and funds used to buy glucose test strips will likely clawed back in

government audits of Band expenditures.

PRICE MANAGEMENT

By reference pricing the blood glucose testing strip category by reagent group, not only does the

formulary offer the choice required by clinicians and addresses all possible interactions, but limits

pricing to lowest cost product in that category while not restricting strip utilization requirements.

This paper has previously identified that manufacturers have long since recouped their research

and technology investment costs, and while manufacturers admittedly continue to invest in

improved technology, the majority of the profits appear to funneled back into the listing, facings

and advertising programs with the Canadian national pharmacy chains. Given the anecdotally

reported fees charged by the pharmacy chains, the number of chains, and the numbers of glucose

test strip manufacturers in Canada, the fees paid to these chains are potentially in the millions of

dollars annually.

Ontario is currently experimenting with price management, but are keeping true costs hidden from

consumers. Information that has been circulated within the industry indicates that Ontario has

advised strip manufacturers that they are to “rebate” back to the government a portion of the cost

of the strips paid for by the government on behalf of consumers. If this in fact the case, they have

not made pricing transparent, and they have negotiated pricing that does not benefit all Ontarians

that need to use SMBG testing.

Over the last four years the Canadian government through their Pan Canadian pricing committee

have reduced generic prices by more than 50%. They have been transparent in the process, and all

Canadians benefit. Perhaps it’s time for the Pan Canadian Pharmaceutical Alliance to negotiate

pricing for SMBG on behalf of all Canadians.

 CONCLUSION

SMBG systems represent a large portion of healthcare expenditure in Canada and abroad. A solid

understanding of the technology can help insurers and users alike make informed choices. Various

methods to restrict expenditures are being explored or are in use, but profits used to fund

expensive placement and marketing campaigns with large Canadian Pharmacy chains may not be

the best stategy for patient or government funded healthcare programs. A non-restrictive, value

priced SMBG strategy ensures transparent and fair access to this important health management

tool. The Pan Canadian Pharmaceutical Alliance is in the best postion to negotiate fair pricing for all

Canadians. Using the science of reagents helps to clearly categorize the marketplace thus creating

the potential framework for category and reference based pricing.

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