Abbott ad tackles Medicare change

From: Crain’s Chicago Business

By  Andrew L. Wang

Abbott Laboratories is running a national television ad that takes a pre-emptive strike at suppliers trying to shift Medicare patients away from the company’s diabetes test strips amid a rule change to the health care program for the elderly.

The advertisement, which has run on ESPN, USA Network, MSNBC and other channels, warns that suppliers of the test strips, which some diabetics use several times daily to monitor their blood glucose, could switch beneficiaries to “a brand that might not be as accurate, a brand your doctor never heard of” because Medicare is changing the way those products are paid for.

The North Chicago-based medical products and drug company is a leader in the growing market for diabetes products. The commercial promotes an Abbott sales program that gives patients a FreeStyle glucose meter but charges for the chemically treated strips used to test drops of blood.

Abbott’s FreeStyle test strips, the spot continues, still will be covered by Medicare Part B regardless of the changes, which are set to take effect in July, a gray-haired actor intones.

“That is a relief,” a woman in the commercial says in response.

With the ad, Abbott is trying to protect its market share while peeling away customers from other brands, one marketing expert said. At the same time, the company appears to be playing on fears over a change in the status quo among seniors, a risk-averse group, he said.

“There’s this aspect of fear, whether its fear of ‘I won’t get coverage’ or ‘I’ll have to pay more out of pocket,’ ” said Ankit Makim, director at CarbonSix, a Chicago-based health care marketing research firm. “Probably 80 percent is protective and 20 percent is about increasing their share.”

The ad, along with a press release that Abbott’s diabetes unit published last week, targets a Medicare rule taking effect July 1 that impacts beneficiaries who get their diabetes testing supplies via mail order. In a cost-savings move, Medicare is requiring beneficiaries buy supplies from designated suppliers if they want the costs covered and maintain a low co-pay.

The mail-order supply program is intended to lower prices for diabetes supplies through competitive bidding, but critics say it will limit the choices beneficiaries have from suppliers because the suppliers’ margins will be squeezed.

Beneficiaries whose current suppliers don’t have contracts with Medicare will have to switch either to a contracted supplier, a retail supplier or an alternative test-strip brand.

The upshot is that seniors may have difficulty getting the specific brand of testing supplies they want, according to the Diabetes Access to Care Coalition, a Washington-based lobbying group that includes Abbott and other diabetes products makers.

“What you had before will no longer be available,” said Andrea Bergman, the Washington-based senior director of legislation and health policy at law firm McDermott Will & Emery LLP, which represents the coalition. “And what you have now, the quality is in question.”

In 2010, about 27 percent of Americans over 65, or about 10.9 million people, had diabetes, according to the U.S. Centers for Disease Control and Prevention. Seniors make up 42 percent of all diabetics nationwide, the agency says.

The global market for blood glucose monitoring devices — including meters, strips and lancets — grew to $8.9 billion in 2010 from $6.2 billion in 2003 and is expected to grow to $10.9 billion in 2017, according to GlobalData, a London-based business intelligence firm.

Neither a spokesman for Abbott nor a spokeswoman for the company’s diabetes care unit responded to requests to comment.