The 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. "To manufacture the most advanced test strip is no more than 15 cents per strip."
Neither Roche nor Johnson & Johnson, the two strip manufacturers interviewed for our test strip article, would comment on cost specifics. But both companies said there's more to test strips than meets the eye. "The cost of our strips includes their research and development, state-of-the-art production, comprehensive quality processes, verification, clinical and analytical performance studies, continued process improvements, and ongoing compliance to all regulatory and government standards," says Todd Siesky, group manager of communications and external relations at Roche.
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.