A Chicago business that buys and resells diabetic testing supplies has drawn attention to a hazy “gray market” of online buyers and sellers.
Surplus Diabetic Supplies LLC, which operates online as CashNowOffer.com, is the subject of 355 complaints to the Better Business Bureau of Chicago, most of them in the past few months. Consumers say they were never paid for their testing strips and couldn’t get answers when they complained.
The BBB has issued an alert, calling the pattern of complaints “troublesome.”
Brenda Ducksworth, of Justice, said she sent three boxes of testing strips to the company last November but wasn’t paid the $154 she was promised. She said she had extra strips after a switch in insurance coverage.
“I sent several emails,” Ducksworth said. “I called them numerous times.”
Deborah Booth, of Chino Valley, Arizona, said she sent four boxes in June but didn’t get her promised $102 payment.
Booth said she had extra strips because her treatment protocol changed, so she donated some to charity and tried to sell some to Surplus Diabetic Supplies. The company was quick to send her a U.S. Postal Service postage-paid box but slow to respond about her missing money, she said.
“When it comes to paying you, it’s a different story,” she said.
After the Chicago Sun-Times interviewed a handful of victims and asked about their cases, company official Jonathan Avila paid Booth and said he was in the process of paying some of the others this week.
“We’re aware of the numerous complaints,” Avila said, “but we are working to get those complaints resolved.”
Steve Bernas, president of the Better Business Bureau of Chicago, said his agency has contacted the company numerous times, most recently in August, to try to resolve the complaints, which have gotten the company an “F” rating.
The company is part of an industry that’s disrupting pharmacy sales, much as Uber and Lyft took business away from taxis.
Thirty million diabetics in the United States use about $4 billion in testing strips each year. Some diabetics use up to 12 strips a day to monitor their blood sugar levels.
That huge volume has given rise to a booming resale market. But the unregulated industry is drawing concern from patient and consumer advocates.
Cash offers for unused testing strips can be found online, on social media, even printed on signs at the side of a road. Some resellers operate out of a basement or garage. They resell the strips to other patients at cut-rate prices that still leave them a hefty profit.
A typical example: A box of 50 strips priced at $99 at a pharmacy is purchased for $15 on the resale market from a patient who has extras. The reseller sells them to other patients for $35 — far less than the pharmacy’s price.
It’s legal to resell unexpired strips, according to the U.S. Food and Drug Administration — unless patients fraudulently obtained extras through Medicare or Medicaid for the sole purpose of cashing in.
But even when the strips are obtained legitimately, the FDA and the American Diabetes Association warn that resold strips can be unsafe. They say that once out of an accredited pharmacy’s supply chain, the strips could be stored at improper temperatures, tampered with or replaced with counterfeits.
Matt Petersen, vice president of medical information for the ADA, says the strips contain sensors that react to chemicals. If not handled properly, they can malfunction — even if they aren’t past their expiration date — causing erroneous blood sugar readings, Petersen said.
“You could be greatly overusing or underusing insulin” because of an incorrect result, he said. “That’s where it would be a really critical health issue.”
Petersen worries that the gray market for test strips could encourage people to forgo their own testing so they can make money by selling their personal supplies.
Carmen Catizone, executive director of the National Association of Boards of Pharmacy, an umbrella group for state licensing boards, said he wants to “tighten up” the rules on resales.
“The people that are selling these are not interested in the patient. They’re interested in profit,” Catizone said.
The inspector general’s office for the U.S. Department of Health and Human Services did an analysis of two years of claims and, in a 2011 report, found that Medicare had “inappropriately allowed” $6 million in claims for diabetic test strips, sometimes to people who didn’t have a proper diagnosis or who already were in a hospital or nursing facility where the strips would be available.
The inspector general also has warned of schemes in which suppliers obtain people’s Medicare information and send them “free” diabetes supplies that they didn’t order and which are ultimately paid for by taxpayers.