After faulty test kits, now comes a row over pricing

After a controversy over faulty rapid antibody test kits imported from China now comes a row over the discrepancy in the cost of the imported kits ordered by various states.

Andhra Pradesh is embroiled in a controversy over the purchase of two lakh rapid test kits from South Korea at an exorbitantly high price. The opposition parties have alleged kickbacks in the deal, a charge vehemently denied by the Jagan Mohan Reddy government.

AP had placed an order with the Korean company, SD Biosensors, and agreed to pay ₹730 per kit while the neighbouring Chhattisgarh government has procured the kits from the same company at ₹340 apiece.

On the other hand, the Haryana government has cancelled an order to import one lakh Chinese rapid test kits, citing high price, and opted to procure the kits from the South Korean firm instead.

It had ordered Chinese kits at a cost of ₹780 each, almost double the price quoted by Korean company SD Biosensor (₹380).

The ICMR has validated 14 rapid antibody test kits companies — nine domestic and five foreign, mostly Chinese and Korean. Most of the approved companies in India are acting as selling agents or representatives of companies making such kits from China or Korea having FDA certification.

How a tweet started it all

It all started with a tweet by the Chhattisgarh Health Minister TS Singh Deo who declared that his state had purchased 75,000 rapid testing kits from the South Korean firm at ₹337 per piece.

This sparked off a huge row in neighbouring AP after it turned out that the state government had paid twice as much for the kits procured from the same company.

The State Medical Infrastructure Development Corporation Ltd managing director V Vijaya Rama Raju has since sent a notice to the South Korean company’s local dealer Sandor Medicaids, seeking an explanation for the huge price difference.

“We are now renegotiating the price,” official sources told The Federal.

One of the contract conditions empowers the government to recover the price difference. It says, “If any instance comes to the notice of the government that the above medical items are supplied at a lower price than the price quoted now, the government can recover the price difference”.

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“The payment will now be made as per the Chhattisgarh Medical Services Corporation Limited rate of ₹337 per each kit for the supplies made to the Government of Andhra Pradesh,” the notice issued to the local dealer said.

Opposition charges

“How could we pay ₹730 for the same test kit which the Chhattisgarh government had bought for ₹337? Can you please explain, whether it is called commission or third-party payment or J-tax (Jagan tax)?” asked senior Telugu Desam Party MLA Gorantla Buchaiah Chowdary.

The issue acquired political overtones with the supporters of the ruling YSR Congress party and the opposition TDP taking to social media platforms to trade charges against each other.

The state government had placed an order with the supplier for two lakh kits. According to this deal, the government would pay ₹730 per kit excluding GST. When the first consignment of one lakh kits reached the state government via a special Air India flight last week, there were photo-ops at the chief minister YS Jagan Mohan Reddy’s camp office. He received the first testing kit and even had himself tested.

The Deputy Chief Minister A Krishna Srinivas, who holds medical and health portfolio, insisted that the state had been transparent about the entire deal. “The purchase was made from the lowest bidder and the entire transaction was done according to the guidelines framed by the Centre,” he said.

The Commissioner of Health and Family Welfare K Bhaskar said that the difference in pricing of the kits could be due to the fact that Chhattisgarh is procuring them from the company’s India manufacturing unit.

This unit was not functional when the AP government placed its order, compelling it to source the kits from South Korea.

“At the time we had placed our order, the company’s manufacturing unit in India did not have permission to run. Now, Chhattisgarh is procuring from the Indian unit of the same company (SD Biosensor),” Bhaskar said.

“The test kits market is a dynamic one and is presently undergoing churning. We should not be surprised if the price of each kit comes down to ₹50 in the future,” said an official source.

No clarity from the Centre

While the states are required to procure test kits and other medical equipment from companies approved by the Indian Council of Medical Research (ICMR), there is no clarity on the role played by the Centre in fixing the price.

“As far as we understand, the central government is not involved in negotiating the prices. It is for the individual states to finalise an agreement with suppliers as per market conditions,” the official said.

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However, when similar questions were raised in Tamil Nadu recently, the Chief Minister K Palaniswami said his government had placed an order for 1.25 lakh rapid testing kits with a Chinese company at the rate approved by the Centre.

On his part, the Chhattisgarh minister, in his tweet, credited the South Korean Ambassador in India Shin Bong-Kil, the Indian Ambassador in Seoul Sripriya Ranganathan and the central government for helping in closing the deal at a rate that is “lowest in India.”

Rapid antibody test kits have been recommended by ICMR to carry out screening in areas where the spread of COVID-19 is high. The antibody or serological tests are done to determine whether an individual has developed resistance to a virus. In the Indian context, this has been done to determine whether a person was COVID-19 positive but remained asymptomatic.

The test requires just two drops of blood from a pinprick and takes just 15 or 20 minutes to get the result. This test has three distinct advantages over traditional tests: they can be mass-produced and are relatively less expensive and easy to self-administer.