And the loser is……

And the loser is……

Well the results are in and normally we’d say the winner is but when it comes to competitive bidding there are no winners. As once again the big, no correct that, the huge loser is the entire conventional blood glucose monitoring community with the exception being those ultra-cheap offshore companies. And it does not matter what type of monitor either, today’s results old fashioned non-cloud enabled monitors and way cool whiz bang cloud enabled systems. The sad truth is competitive is like cancer, it does not discriminate and it’s just as lethal.

Remember after the last round of competitive bidding reimbursement fell over 70% dropping to just over $10 for a box of 50 test strips. Well the new number is even LOWER coming in at …. wait for it …. Just $8.32 which equals almost 17 cents per test strip. We’ll pause there for a moment which should allow everyone a chance to let that soak in.

Ok take a deep breath and let’s examine what this means. Truthfully it does not mean as much as many would believe as the conventional BGM market was already circling the bowl. Where it could really hurt and hurt worse than an infected tooth is when private payors begin to realize that even though they are already in the catbirds seat when it comes to demanding lower prices, they are now in complete control and demand even further price concessions. Again we will pause for a moment to allow our friends in the BGM market a moment to collect themselves. We would also recommend updating resumes and getting a good stiff drink ready.

Ok another deep breath and let’s continue. As we noted yesterday the smart BGM companies, and yes we believe there must one or two who are smart, will find alternate methods to monetize their installed user base. Since we just wrote about this yesterday no need to repeat ourselves as we aren’t that old, at least not yet anyway no matter what the kids say.

Nor do we feel it necessary to review once again how the industry has no one but themselves to blame for this mess. Also no need to point out that competitive bidding did not cause the demise of BGM it merely threw fuel on an already raging fire. A fire that just got more intense which will claim even more victims.

Let us not forget that patients, especially those on Medicare are also big losers. Given this new number it’s unlikely that any of the major players will remain in this channel, nor can the newer smaller group of whiz bang way cool cloud enabled systems. Basically Medicare patients will become second class citizens regulated to using some no-name system that may or may not deliver an accurate test result. And what was that about everyone wanting the FDA to require that monitors become even more accurate.

And while we’re on the subject does anyone seriously believe that after this decision that Medicare will start reimbursing for more expensive continuous glucose monitoring systems. Yes, we would like this to happen but how can it be justified when millions of Medicare patients are about to be told to take a long walk on a very short pier.

Another less obvious loser is any company trying to develop a generic test strip and yes they are still out there. Heck if there is a company out there who can make a profit when reimbursement is at $8.32, do we really need a generic strip.

One last thing as we know the pain is becoming unbearable, for those who complain long and loud about the rising cost of healthcare take a very good look at the collateral damage that’s being left behind here. Think for a moment what will happen when Medicare goes to competitive bidding for prescription medications. Listen there is always some company out there who’s willing to go ultra-cheap figuring volume will make up for lower margins. This might be fine for generics but what about when there is no generic alternative.

Sorry have to add this in too, as anyone who wants to preview of the impact of the coming price war in the diabetes drug market they need look no further.

As we said there are no winners here only losers.