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Why RT-PCR COVID-19 test can be cheaper than the Rs 4,500 ICMR price cap

Moneycontrol learns that this was possible due to easing supply position and drop in prices of RT-PCR test kits that constitutes about one-third of a COVID-19 test

April 23, 2020 / 12:16 PM IST
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The Karnataka government on April 17 said some private diagnostic laboratories in the state have agreed to offer novel coronavirus, or COVID-19, tests at Rs 2,250 for samples sent by the government. That's half the price for the test as capped by Indian Council of Medical Research (ICMR) for private laboratories using the RT-PCR method.

RT-PCR still remains the gold standard for COVID-19 testing.

Private labs were asked by the Supreme Court to offer free COVID-19 testing for those eligible under Ayushman Bharat.

The private labs agreement with Karnataka government to offer tests at truncated prices has raised questions over their claims till just a few days ago that anything below Rs 4,500 may not be viable.

Moneycontrol learns that this was possible due to easing of supplies and drop in prices of RT-PCR test kits that constitutes about one-third of a COVID-19 test.


COVID-19 Vaccine

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A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

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Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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ICMR also approved test kits of 16 companies -- both domestic and overseas -- for sale in India. This this led to glut of test kits in the market.

Track this blog for latest updates on the coronavirus outbreak

"Prices of test kits, which start at Rs 1,500 (per test kit), are now selling at Rs 800," GSK Velu, Chairman of Neuberg Diagnostics, said. "At Rs 2,500, a lab will not lose money, in fact they will make a bit of money. At Rs 4,500, this is like any other profitable test," Velu said.

Four labs of Neuberg in Bengaluru, Chennai, Pune and Ahmedabad are performing COVID-19 testing. They have the ability conduct up to 2,000 to 2,500 tests per day.

Velu said there are two ways to look at testing.

"We all have to make profit as our conventional business is down 80 percent. Another way to look at this is we should not look at COVID-19 as a profit making venture. From day one, independent of Supreme Court and our government instructions, we said we will do COVID-19 testing free for below the poverty line people at our Chennai, Bengaluru and Pune laboratories," Velu said.

Other diagnostic labs such as Thyrocare Technologies are offering COVID testing at Rs 2,500 for dialysis and cancer patients in a 300 km radius of Mumbai.

The healthcare NGOs like All India Drug Action Network (AIDAN) have been advocating for free testing of all citizens and arguing that tests cost a fraction of the price being permitted by ICMR

"Karnataka's decision to set a reimbursement rate, at Rs 2,250, for testing of government samples by private labs shows that the ICMR cap is significantly inflated," said AIDAN in a statement.

"Reimbursement rates should be based on rational assessment of costs and must take into account commercial test kits entering the market at disruptive prices as low as Rs 500," AIDAN added.

Difference of view

But other laboratories have a different view. They say it would be difficult for them to offer tests at the prices agreed by private labs to the Karnataka government.

"We are wondering, how they (Karnataka private labs) have offered to do carry out the tests at Rs 2,250," said Arunima Patel, founder and Managing Director, iGenetic Diagnostics.

"While the availability of test kits and personal protection equipment has eased, but prices have definitely not come down," she said.

Another executive of private lab chain echoed Patel. "There are variations of test kits, which determine prices. There are also factors like volumes. Bigger labs can make money at slightly lower prices due to economies of scale," the executive said.

Follow our full coverage of the coronavirus outbreak here
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Apr 22, 2020 10:49 pm
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