ROB ROSE: Behind the R8bn Covid test racket

It may have taken the Competition Commission two years to cotton on to one or the more obvious rackets around, but finally it is investigating just why private laboratories were, until fairly recently, charging a uniform R850 fee for a Covid test. The windfall is immense: so far, 19.7-million Covid tests have been conducted, according to the National Health Laboratory Service. More than half of these — 10.65-million — were done by the private labs, mainly Lancet, Ampath and Pathcare, which charged R850 per polymerase chain reaction (PCR) test. In recent weeks, they have slashed those fees to between R710 and R725 a test.

Still, these laboratories are likely to have scored more than R8.3bn in just 20 months, if we extrapolate the figures from SA’s largest medical aid, Discovery Health.

Discovery Health’s Noluthando Nematswerani tells the FM that in the 20 months to November, the medical aid has paid R2.1bn for 2.7-million Covid tests, nearly a quarter of all the private tests. This works out to R785 a test, on average.

"These are not cheap tests," she says. "Many people will have gone for more than one test during the different waves and in some cases, it may be a requirement."

It suggests that while the laboratories may not have quite made out like Digital Vibes — they are providing an actual service, after all — it’s hard to shake the impression that they’re coining it far more than they should.

Aslam Dasoo, of the Progressive Health Forum, tells the FM that while the R850 price may have been justified in March 2020 because of the scarcity of tests, this is no longer the case. "Now there are plenty of testing kits, so the labs can certainly drop their prices. Because, I can assure you, they have been making out like bandits," he says.

But getting a grip on the real cost of testing isn’t easy.

At the beginning of the pandemic, GroundUp canvassed various experts to come up with an estimated cost of a PCR test of between R150 and, at the top end, R400. Others also put the cost at R400. Since then, however, the cost of Covid tests have, according to some experts, halved in price.

Says Dasoo: "It’s hard to know what their cost is, because there are different tests, and different reagents. But it seems reasonable to conclude that at a cost of R850, the laboratories are making vast amounts of profit."

It doesn’t help that when the FM asked the labs about this, Ampath ignored the questions completely, replying with a vacuous corporate mission statement.

Lancet was little better, stating baldly that "we deny allegations of price gouging — a Covid test result is about much more than just the reagent price of the test".

If there’s one outcome, it will be greater transparency over how the price of these tests has been arrived at

Fortunately, John Douglass, CEO of Pathcare, seemed far less out of his depth — and he argues that any notion of windfall profits is misplaced.

Douglass says the labs use up to 10 different PCR tests, all of which have different base costs. "One of the most typical ones from GeneXpert costs more than R500 just for the cartridge. But really, our biggest cost is our people. So, no, we’re not making massive profits."

Actually, he says, at the beginning of Covid, Pathcare made losses on its tests. "The costs have been very variable, but once we saw the inputs stabilising, we wrote to [health minister Joe Phaahla] in August to say we’re ready to review our costs. And we’ve since reduced them."

Interestingly, the government is also scoring in tax from these private tests, since the labs pay R111 in VAT for each test. Douglass says were the government to zero-rate the tests for VAT, it would immediately bring the price down.

The way he tells it, the R850 price was first agreed to by former health minister Zweli Mkhize early on in the pandemic, in a joint conference call with all the laboratories.

If so, that makes the confusion of his successor, Phaahla, on the Covid tests all the more surprising. He is reported to have told parliament recently: "The department has no idea why the test for Covid still costs R850 per unit despite the volumes, scale and technological advances."

This, he said, is why an investigation is needed.

Still, if there’s one outcome from the Competition Commission investigation, it will be greater transparency over how the price of these tests has been arrived at.

There is a cheaper option: some countries are now providing their citizens with rapid antigen tests, which can be done at home. While these rapid tests are less sensitive than PCR tests, Harvard immunologist Michael Mina has argued that they’re still pretty accurate when it comes to identifying people most likely to transmit the virus.

In the UK, the state-run National Health Service (NHS) sends rapid antigen tests to people’s homes for self-testing, free of charge. As the NHS puts it: "If people test positive and self-isolate, it helps stop the virus spreading. Research shows rapid tests are a reliable test for Covid … doing rapid tests helps to protect yourself and others."

Here, however, the SA Health Products Regulatory Authority apparently doesn’t want people using these rapid tests. Partly, this is because they aren’t as reliable as the PCR tests, and partly it is because of "the risk associated with misinterpretation" of the results. In other words, the (less reliable) antigen tests may lead some people to think they’re not infectious, when they may well be.

Which is a pity, since these rapid tests cost about R150.

Nematswerani argues that despite their limitations, these rapid tests have a clear role to play during the high infection waves. "What you’re testing [with these antigen tests] is infectiousness, which is what you want to know during peaks. You get your results in 15 minutes, and that’s good enough to begin treatment," she says.

Getting to a situation where these tests could be used at home would be "ideal", she says. It may not be a replacement for the PCR tests, but it’s a quicker alternative to reduce the number of infections. And far cheaper.