PhotoDrive along any city street or rural highway and you might see a hand-lettered sign reading “We’ll Buy Your Test Strips,” followed by a phone number.

The signs refer to diabetic test strips used to measure blood sugar levels. But why would anyone be trying to buy them on the street -- or want to sell them, for that matter?

It turns out that many people with diabetes and good health insurance get their testing supplies free, or at very little cost. But just as many people with diabetes -- perhaps more -- don’t have good insurance and have to pay for their supplies out of pocket.

The situation has created a black market of sorts, managed by entrepreneurial middle-men who buy unused test strips from the first group of diabetes patients and sell them to the second group.

Not cheap

Like anything having to do with medicine and health, diabetic testing supplies are not cheap. At retail, they cost about $1 or more per strip. A 2012 study published by the National Institutes of Health (NIH) concluded that test strips account for about a quarter of all pharmacy costs for diabetes patients.

One reason for that is that testing supplies are priced in a similar way as prescription drugs. The manufacturer sets a very high list price, then offers significant discounts and rebate throughout the process, which substantially lowers the costs for consumers with good insurance.

Diabetes patients who pay little or nothing for their supplies find they can get a little extra cash by selling them, even though it might negatively affect their health since they aren’t testing as often as they should. The middle-man can add a nice mark-up and sell the unused strips to a patient without insurance, who will still pay less than at the corner drug store.

According to the New York Times, this informal economy has existed for decades and is not illegal, though it appears to be a gray area. If medical supplies are handed out as part of a government benefit, should it be legal to sell them? After all, food stamp recipients aren’t allowed to sell their unused stamps.

When it’s illegal to sell test strips

DollarsForStrips.com, a site that buys and resells unused test strips, offers this distinction: selling off-the-shelf test strips is legal, but selling strips provided through Medicare or Medicaid is not.

“That’s because these strips have been paid for by the federal government, and you cannot profit off of their programs and services,” the company warns.

You can identify testing supplies provided through those government programs because the boxes will have a red line on them. You are also prohibited from selling test strips that have expired, been used, or are in open boxes.

With so many players entering this fast-growing market, not every party may be on the up and up. Last year, the Chicago Better Business Bureau warned consumers about some strip-buying businesses, reporting that one had generated 246 complaints.

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