UNDERSTANDING BLOOD GLUCOSE TESTING STRIPS IN A CANADIAN FORMULARY
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.
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
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?
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
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
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.
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
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.
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.