Competitive Bidding The Bigger Picture

Competitive Bidding The Bigger Picture

Ok let’s see if we understand this correctly, the country is headed for a fiscal cliff due mainly to politician’s inability to work together and their zest to spend taxpayer money on bridges to nowhere and $1000 toilet seats. As per usual they wait until the very last minute to come up with a “compromise” which includes some new rules which they claim will save $600 million. It just so happens these new rules will make it more difficult for patients with diabetes to get their diabetes testing supplies, supplies which when used properly could help patients better manage their diabetes.

Now if there is anyone out there who believes this is an overly drastic reaction to the new rules and competitive bidding as a whole consider the following:  While Medicare patients will be the first to be impacted by this they are just the tip of the iceberg. As we have noted before many private insurers base their reimbursements rates on what Medicare pays , so it’s just a matter of time before these private insurers squeeze even harder and demand further price concessions from the makers of diabetes testing supplies.

Since these companies are not non-profit entities and have stakeholders to answer to they will need to make some serious decisions. Do they accept these new lower prices and therefore make much less money or do they exit the business because there just isn’t enough money to be made? Should they stay in the business this would likely mean even greater cost cutting and since these companies have already cut costs the next round of cuts would come from areas that directly impact the patient, i.e. fewer customer service reps and lower R&D budgets. Although glucose monitors are not overly complex devices most people would be amazed at just how many calls these companies receive from patients. Simple put the less help available means longer wait times on the phone or forcing patients to the internet which is fine for some but not for all.

The sellers of diabetes testing supplies are also for profit entities and they too have some decisions to make. Do they continue to accept Medicare patients or do they exit supplying these patients with diabetes testing supplies, for just as the monitor makers they might not make any money here. Those that continue to work with Medicare patients, at least those who want to make a profit will have little choice but to buy the cheapest system available, which means we’ll see a flood of cheap imports. Imports that while approved by the FDA, just might not carry the same quality standards patients are accustomed too.

Think for moment about how a Medicare patient will feel when all of a sudden they are told they can no longer use the system they been using and must switch to a new system. Glucose monitors may be a commodity but it would surprise, likely shock many how patients actually this constant switching. Something that’s been going on not just with Medicare patients but private insurers who also switch patients from one system to the next depending on which meter maker offers the biggest incentive for primary formulary placement.

Looking at the latest figures from the American Diabetes Association (ADA), in 2007 the total economic impact of diabetes was $174 Billion, $116 Billion direct medical costs and $58 billion for indirect costs (disability, work loss, premature mortality). It is also well known that diabetes is growing at epidemic rates and that one out of every three born today will likely develop diabetes in their lifetime. Oh and did we mention the other 60 to 70 million people with pre-diabetes who will also likely develop full blown diabetes. Lastly it would remiss if we did not repeat the harshest statistic of all, nearly two-thirds of all diagnosed patients with diabetes are not properly controlling their diabetes, which not just leads to the already mentioned huge economic cost but extends to untold suffering by patients who experience the many complications that result from poorly controlled diabetes.

Now before we go any further let’s be clear that we fully understand the need to rein in government spending and that going over the fiscal cliff would have a total disaster. Still, one has to wonder about the logic, if you can call that, which went into this decision on the chance it might save $600 million. Like so many decisions made under pressure and not well thought out, no one thinks about the additional costs Medicare will incur because patients are not properly controlling their diabetes. We can debate all we want about how many times a patient should test or how these test results should be used, but one thing is certain if patients aren’t testing there is nothing to debate.

The fact is glucose monitoring when performed can be an invaluable tool. Think of it this way, and let’s take away insulin using patients who must have this information so they can properly dose their insulin, glucose monitoring is the patients early warning system not unlike radar or satellites used to detect a nuclear launch. With no early warning system in place the patient has no way of knowing that a nuclear strike is headed their way and by the time they do know it’s too late. The government is spending billions to protect against a nuclear strike but is doing everything they can to make it more difficult for the people their protecting to better manage their diabetes and as we noted earlier their actions do not stand in a void and are duplicated by the private sector.

Now we shouldn’t lay all the blame for this at the halls of government as there is plenty of blame to go around here. However, this situation shows what happens when organizations such as the ADA remain silent, more like mute, on issues that directly impact the lives of millions of patients with diabetes. Had the government gone after the tax deduction for charitable contributions or wanted to ban large sodas, you can bet the ranch the ADA would be screaming long and loud.  Yes we know this is a crazy idea but would it not make sense for organizations like the ADA to get together with other diabetes organizations such as the Juvenile Diabetes Research Foundation (JDRF) and spend some of their considerable lobbying budgets on making politicians aware of this, is this not the reason many donate to these organizations.

The harsh reality is for as much good work these organizations do, they are far too focused on pie in the sky research, that even if effective won’t have any impact on patient lives for years, if ever. The JDRF is funding millions of dollars’ worth of research to come up with an artificial pancreas which even if successful will only impact a handful of patients. As we have noted before we do see some good coming from this research will benefit a greater percentage of patients, however where is their voice and money for issues that impact patients today.

The same can and should be said about the ADA, who for reasons only they understand, won’t accept money from certain companies but will waste millions on pie on the sky research that quite frankly hasn’t yielded all that much.

It’s has been said before that there are two things people don’t want to see made, law or sausage, as the processes for both are pretty ugly. Yet it is also true that when it comes to making law those who are willing to fight, kick, scream and basically do whatever they can, often times get what they want for the people who hired them. Well the millions of people with diabetes and the millions more who are about to develop diabetes, they have hired the likes of the ADA and JDRF and based on their results it’s about time these organizations actually produced something of real substance.

The clock is ticking and time is running out.