Earlier this month, the Indian Council of Medical Research (ICMR) sent out rapid antibody test kits to states. But, just recently, issued an advisory asking Chief Secretaries of all states to withdraw the kits and avoid usage. 

In its letter, ICMR said that since the results have shown wide variation in their sensitivity, despite early promise of good performance for surveillance purposes, their use for detecting Covid-19 positive patients should be discontinued and the kits should be sent back to the suppliers. 

It instead recommends using the throat/nasal swab based polymerase chain reaction (PCR) test as the best strategy to identify and isolate people suffering from novel coronavirus. 

The ICMR has blamed two Chinese companies for the faulty kits. Of the two Chinese companies cited by the ICMR for the supply of faulty test kits, Guangzhou Wondfo Biotech is the same one that was in the centre of the pricing controversy on Monday, after the Delhi High Court ruled that the price of the test kits imported and distributed by two Indian companies was exorbitant..  

While the high court had earlier in the day ruled that the test kits couldn’t be sold for more than  ₹400 a piece, it came to light that not only were these kits faulty but that ICMR was charged almost 145% profit for each kit. 

The high court order detailed that the landed cost of the test kits worked out to ₹245 a piece, inclusive of ₹20 as freight charges the importer and the distributor were charging the ICMR the full approved price of ₹600 a piece, netting them ₹7.75 crore and ₹9 crore as profit respectively

It is believed that the main entity responsible for these kits at a much higher price is the middleman Aark Pharmaceuticals, a medical distributor linked to Rare Metabolics Pvt Ltd. 

In order to procure the kits from China, the Indian Council of Medical Research (ICMR) paid middlemen more than double the import cost. 

The ICMR had ordered 5 lakh of these tests from Chinese company Wondfo on 27 March, for which they paid Rs 30 crore to Aark Pharmaceuticals. 

However, Matrix Labs, the company which imported the tests from China and supplied them to Rare Metabolics, only paid Rs 245 per test (as per the most generous estimate).  

The companies had signed an agreement for purchase of 10 lakh Wondfo tests, according to which Rare Metabolics/Aark would be the sole supplier of these tests in India. 

Five lakh of these tests were for the ICMR, for which Rare Metabolics had paid Matrix Labs Rs 12.75 crore already, covering all the costs of import/freight. 

Rare Metabolics and Matrix ended up having a payment dispute over the remaining 5 lakh kits, following which, Matrix Labs also entered into a deal with another distributor, Shan Biotech and Diagnostics, which was to supply 50,000 Wondfo tests to the Tamil Nadu government, at the same ICMR-approved price of Rs 600 per test. 

The actual cost of buying the 5 lakh Wondfo tests required by ICMR is Rs 11.25 crore – but the price being paid by India is Rs 30 crore.