The 'Razor and Blade' Business Model in MedTech

The 'Razor and Blade' Business Model in MedTech

The razor-and-blade model means selling the base product cheaply, or giving it away, and earning money on the refills it needs [1]. In diabetes care, the blood glucose meter is the razor and the test strip is the blade. As of October 2026, Ascensia Diabetes Care gives a free Contour Next Gen meter to eligible privately insured patients who buy at least 50 Contour Next test strips [2], and Roche's cash discount program prices an Accu-Chek Guide Me meter at $7.50 [3]. The meter is the cheap part. The strips are what you keep buying, and your insurance decides much of what they cost you.

What the Gillette record actually shows

Gillette is the textbook example, and here's what surprised us: Gillette didn't run the strategy when it was best placed to. A 2011 study in the University of Chicago Law Review found that from 1904 to 1921, while its original patents were in force, Gillette did not sell cheap handles to drive blade sales [1]. It switched to low-priced handles only after those patents expired, and then to match the market [1].

The main patent, US 775,134 for a "Razor," was filed by King C. Gillette in December 1901 and granted on November 15, 1904. The Google Patents record lists its anticipated expiration as November 15, 1921 [4]. The study's point is that a patent can tie the refill to the base product. Once it lapses, a rival can sell blades that fit your handle [1].

Why meters and strips fit the pattern

A meter and its strips are built as a pair. FDA's September 2020 guidance for over-the-counter glucose meters says it plainly: "test strips and meters work as integral systems" [5]. Strips from a company other than the meter's maker do exist. FDA calls them third-party test strips and asks their makers to explain, in the 510(k) premarket filing FDA reviews, how they will avoid wrong results if the meter maker changes its design. One way, FDA says, is an agreement with the meter maker [5]. For the legal side, see our article on third-party generic strip litigation.

Volume is what makes the blade side matter. A study of US health-plan claims from 2007 to 2009 found that insulin users with strip claims went through about 764 strips a year, at an average cost of $0.98 per strip [6]. Their average spending on strips and testing supplies was $772 a year, compared with $2,078 for insulin and its supplies [6].

How a free meter reaches you

Free-meter offers come with conditions, and they're worth reading closely. Ascensia's Contour Next Gen offer requires private or commercial insurance, a prescription, and a purchase of at least 50 Contour Next strips at the pharmacy. Government health beneficiaries aren't eligible [2].

Roche's Accu-Chek Prescription Discount Program shows the price gap directly. As of October 2026 it lists the Accu-Chek Guide Me meter at $7.50 and the Accu-Chek Guide meter at $12.50, while Accu-Chek Guide strips cost $19.99 for the first 50 plus $10 for each additional 50 [3]. The program is cash only. It can't be combined with health insurance, excludes Medicare, Medicaid and other government plans, and allows one discounted meter every 24 months [3]. So the meter costs less than a single 50-strip fill.

Formularies, co-pay cards and cash prices

One way insurers push back on strip prices is by naming a preferred brand. In 2009, a market profile in the Journal of Diabetes Science and Technology described makers competing in bids for "preferred status" on managed-care pharmacy formularies, the lists of products a plan covers at its lowest cost share [7]. Patients who wanted a brand off the list paid more [7]. The same profile found mail-order suppliers handling roughly 30 to 40% of the US business, and drugstore chains' own brands pulling the average strip price down [7].

Manufacturers answer with savings programs aimed at the patient. As of October 2026, Ascensia's Contour Choice card has eligible privately insured or cash-paying patients pay the first $25 for Contour Next strips in 25-, 50- or 100-count boxes. Savings are capped at $105 for insured patients and $66 for cash payers [8]. LifeScan's OneTouch offers page draws a hard line between the two channels. Discounts on cash purchases can't be used with insurance, and the money spent can't count toward a deductible under a government program such as Medicare [9].

Does the price you pay change how often you test? A study at Kaiser Permanente Northern California found that strip use fell as copayments rose [10]. Then the plan gave strips away free for two years, and use didn't go up. When the plan later added a 20% coinsurance for part of its membership, use fell by only about 1 to 3 strips a month [10]. How often you should test is a question for your care team, not your copay.

Medicare follows its own rules

Medicare's rules for home glucose meters and strips sit in a local coverage determination, LCD L33822. As of October 2026 it covers up to 100 strips every 3 months for people not treated with insulin and up to 300 for people who are, with more covered when extra documentation criteria are met [11]. The manufacturer offers above exclude Medicare beneficiaries [2] [3].

Medicare has also used competitive bidding to cut what it pays. In 2011 it launched a bidding program for diabetes supplies in nine markets, meant to lower costs [12]. A Diabetes Care analysis of insulin users found that partial or no purchase of prescribed testing supplies rose 23.0% in those markets, against 1.7% elsewhere [12]. In the authors' matched analysis, that shift was associated with more deaths and hospital admissions [12].

Where the model strains

The model leans on buyers staying with one system. Hughes wrote in 2009 that consumers and insurers saw meters and strips as "essentially generic products" [7]. In 2008, Roche held 30.8% of the world market, LifeScan 27.2%, Bayer 16.3% and Abbott 15.4% [7]. Bayer's diabetes business has since become Ascensia Diabetes Care, formed in 2016 when PHC Holdings, then Panasonic Healthcare Holdings, bought it [13]. For how store brands fit in, see the rise of white-label and generic test strips.

What we couldn't find is any manufacturer's published figure for what a strip costs to make. Without it, we can't say how wide the margin on the blade really is.