Roche Gets It Right

Roche Gets It Right

As everyone knows Diabetic Investor has been less than kind to the folks at Roche. The problems at their diabetes unit are well documented and it’s unlikely a major transformation is coming in the future. In spite of these troubles the company should be applauded for looking out for the best interest of Medicaid patients in North Carolina. It appears this basketball crazy state is so desperate to save money they are willing to make life more difficult for the 50,000 Medicaid patients in the state with diabetes.

According to a story published in the Charlotte Observer; “The state contract, signed in October, gave an exclusive deal to Prodigy Diabetes Care without competitive bids by other companies. The contract establishes Prodigy as the only supplier of glucose monitors and test strips for the 50,000 Medicaid recipients in North Carolina who have diabetes.”

While Diabetic Investor understands the need to hold the line on costs, choosing a relatively unknown company such as Prodigy to be the exclusive supplier just doesn’t pass the smell test. According to the article in the Charlotte Observer; “One competitor, Roche Diagnostic Corp., wrote a letter of protest to the state, contending that the no -bid process violates federal Medicaid rules.

Certainly, had Roche been given the opportunity, we could have also negotiated with DHHS or its agent and may have provided even greater cost savings to the state of North Carolina,” a company official wrote.”

Given the increasingly competitive nature of the blood glucose monitoring market where every share point counts one just might think that North Carolina could have secured major price concessions from the major BGM companies. 50,000 patients may not seem like much but when every share point counts it’s almost a certainty that Roche, LifeScan, Abbott (NYSE:ABT), Bayer and Home Diagnostics (NASDAQ:HDIX) would have sharpened their pencils had they been given the opportunity to do so.

The truly sad part here is this move by North Carolina is an example of what to expect in the future. All along Diabetic Investor has been stating that this push towards healthcare reform has little to do with improving the quality of healthcare. The fact is healthcare reform is all about who pays for what service. In typical government fashion the state of North Carolina is being penny wise and pound foolish. In their zealous attempt to cut costs they have failed to consider the long term costs when patients fail to monitor their glucose levels.

This is exactly what will happen here as the Prodigy line of monitors is unknown not just to patients but to their physicians too.  Once again the state of North Carolina has given patients another reason not to monitor their glucose levels. A totally unnecessary move when with just a little work they could have worked out a deal with the major players.

Even with the heat the state is taking for making this decision they remain committed to this dubious move. According to news report by WRAL a local television station in the state the contract with Prodigy will remain in force for two years and then be reopened for competitive bidding. The question that needs to be asked here is why the state felt complied to do a deal with Prodigy, which besides being relatively unknown has a checkered business history, and did not pursue competitive bidding in the first place. State officials claim that speed was necessary and the state will save nearly $4 million as a result of this move.

Unfortunately when everything is all said and done it is the patient who receives the short end of the stick here. The state can claim they made this move in the best interest of all North Carolina residents touting the supposed $4 million in savings. What the state doesn’t mention is what will happen when these residents are hit with an even higher bill further down the road. For as sure as night follows day, this is exactly what’s in store when patients who were previously monitoring their glucose levels on a regular basis change their monitoring habits by being forced into a system they are not comfortable with.

We can only hope that the other major BGM companies join Roche and protest this poor decision by North Carolina. This is one time when Roche got it right.