The newest member of our team, Wil Dubois, takes on a sweet-and-sour issue here: organizations that purport to help out diabetics in need, and possibly do so, yet their facade of "charity" masks a thriving business. Read on and let us know what YOU think…
Diabetic Supply Rescue, known as DSR, is a New Mexico based non-profit that bills itself as a charity. Their slogan is “Recycle. Save a life,” and in their promotional materials they sate that they “recycle excess and unused diabetic supplies, especially meters and strips.”
Recycle. An interesting choice of words to describe DSR’s operational blue print.
DRS brags that it has sent diabetic supplies to uninsured patients in 45 states and 15 overseas counties. They have donation drop boxes and actively solicit donations of meters and strips, much like many in the DOC do. While New Mexico based, DSR has licensed their model to create “branches” in Michigan and Florida, with more branches in the pipeline. A branch could be opening in your state any day.
However, the DSR story is more complex than it appears on the surface. I recently met DSR’s President, Jay Koch, at the opening of our state’s first diabetes-friendly restaurant. He’s a tall, broad shouldered man with short hair, approaching middle age, carrying the visceral fat that is the common hallmark of Type-2 diabetes, but he’s not diabetic himself. He was wearing a black shirt with the DRS logo embroidered on the chest. He has the friendly, outgoing manner of a salesman.
I actually liked him right off the bat, which makes this article that much harder to write. Because although Koch seems like a nice guy, and while there is nothing wrong with what he’s doing, the way in which he’s doing it makes me…. angry.
Koch’s test strip recycling model borders on being a black market. He buys strips for pennies on the dollar from people who don’t need them, and then turns around and sells them to uninsured patients at significant discount off of retail prices, while taking a middle-man mark up for himself. He views this as a valuable service. It allows people with too many strips to convert them to cash while at the same time it gives access to strips for the uninsured at a cost that can actually be afforded. Koch sells strips for as little as $9 per 50 count.
So who doesn’t need their test strips? Well, dead diabetics for one. Koch tells me he’ll buy up excess strips from families of deceased PWDs. He also looks for unused strips left over from meter changes, when someone’s insurance changes meter brands and the patient starts the new meter without using up the strips from the old meter.
And from my own clinical experience, I know that seniors on Medicare frequently get tangled up in multiple TV offers of free strips billed to their Medicare, and on occasion are literally awash in test strips. Other times, Type-2’s on oral medications may stop testing all together but continue to let the strips pile up.
There’s a lot of smooth and slippery use of language on DSR’s website and in its promotional literature, especially in materials aimed at soliciting the donation of test strips. Materials aimed at donors push DSR’s desire to “get” supplies to PWDs without insurance. DSR avoids speaking the truth: getting supplies to PWDs without insurance really means selling them other people’s surplus materials for profit.
Of course, Koch’s main market for his strips are the uninsured with jobs. When I asked him if he had a charity program for patients who are both uninsured and without resources he told me no, he could not afford to as DSR was his only income.
This sounds more like a business than a non-profit to me.
DSR’s web site offers 15 different types of test strips, covering most of the major brands. His discounts range from 50% to 81% off of retail cost. He’s selling WaveSense Presto 50 count vials for nine bucks, FreeStyle Lite for $18, and OneTouch Ultra strips for $22. Those prices are for members of his “DSR Test Strip Buying Club.”
This “club,” after a 1 cent trial membership, is $5 per month. The DSR website states that “many of the people who DSR gets test strips for cannot afford computers. We have to meet them face-to-face. While this method of distribution is important, it is also more expensive and time-consuming than selling via the internet. Since DSR is a non-profit organization, we ask the people who can afford computers to help defray the costs for people who do not have access to the internet.”
On the one hand, this organization is making itself out to look like the equivalent of the American Red Cross, while on the other, they’re playing “Sam’s Club” by offering deep discounts on bulk supplies — in this case, supplies that have already been purchased once by the insurance company and are now essentially going “black market.”
The whole behind-the-scenes selling of test strips (apparently done by some other orgs as well) conjures up visions of street-corner drug sales to me. Psssssst! Here’s the money. Gimme the stuff!
Koch will also throw in 50 free expired strips when you purchase strips from him in what he has framed as “The Great American Test Strip Experiment,” or G.A.T.S.E.
According to DSR’s website, G.A.T.S.E. is a clinical trial of sorts, to investigate the accuracy of expired strips. The web site asks for help in answering the accuracy question in the following way. If you buy a box of strips from DSR they’ll send you an expired box of the same kind and ask you to compare five strips from the expired box to five strips of the “fresh” box. What you do with the other 45 is up to you.
But is all of this even legal? Well… Yes. No? Maybe.
Test strips and meters, while commonly prescribed, are not actually prescription devices or supplies. The prescription doctors write is simply a formality for insurance billing purposes. You can walk into any Walgreens with nothing more than a credit card and buy strips. I say with a credit card, because at $1 or more per strip at retail, most of us don’t carry enough cash to buy a vial of strips without plastic.
So it isn’t really illegal for DSR to sell the strips. Koch told me that he makes sellers sign a form that states they are not intentionally acquiring strips through their insurance companies just to re-sell to DSR. I got the feeling that there was sort of a wink and a nod here, but realistically, for the seller, there’s not that much money to be made given how hard it can be to get any volume of strips out of your insurance company and the low dollar amount DSR is likely paying seller to make Koch’s business model work. That said, it’s likely insurance fraud to re-sell strips to a third party.
DSR received 501(c)3 non-profit status in January, under the heading of a Public Charity, and is soliciting donations to the “cause” via PayPal. Koch told me that he originally got the idea for DSR from a classified ad in the Thrifty Nickel newspaper. Again, he’s not outside of legal boundaries being classified as a non-profit here, but…
Maybe what appalls me is simply the fact that “sneaky” test strip sales is big enough business for some clever guy to be making a living at it. That says a lot about the iniquities of the American health care “system” as it stands today.
So legalities aside, is this ethical? Isn’t it like a garage sale? You get a few bucks for something you don’t need and someone else gets something they do need for a song. Is there anything wrong with that?
Think about the “middle men” who take a cut of the action for listing stuff on eBay for folks who have things to sell but don’t have the time/inclination/knowledge to do it themselves. Anything wrong with that? Again. No. I don’t think so.
And if DSR and Koch were not out there buying and selling strips, what would be the effect? Most likely, the “recycled” strips would be in landfills. Uninsured patients would either not be testing, would be testing much less, or would be forced to make deeper finical sacrifices in other parts of their lives while they struggle to keep their diabetes in check.
But what ruffles my feathers is the smoke and mirrors. The façade of a charity non-profit. The tremendous effort to look like donated strips are being given away, rather than being sold. It feels deceptive to me. I also got a bit irked about the tone of the copy, designed to sound like diabetics helping diabetics. But DSR is, pretty much, one man. And he’s not a PWD.
He’s a PMMOD.
(Person Making Money Off Diabetes)
What are your thoughts, Folks?