Labs find lower Covid RT-PCR test pricing unviable, some may opt out

Unless a lab is doing a large volume of tests, the business will not be sustainable and smaller labs will not be able to continue

Even as the move by state governments to cap the maximum price of a Covid-19 reverse transcription-polymerase chain reaction (RT-PCR) test has made it more affordable, diagnostic laboratories (labs) feel otherwise. Lab executives say it will not be a viable business model and trigger losses. 

In fact, the not-so big labs may even stop Covid testing at these rock-bottom rates, forecast industry experts.

A Delhi-based lab owner said business would only be sustainable if a lab was handling a large volume of RT-PCR tests.

A Mumbai-based lab chain with a pan-Indian network echoed the sentiment. “Capping lab tests is vote-bank politics by state chief ministers. There is no earthly reason to have differential rates across states,” said a Mumbai-based lab executive, adding that Rs 1,000 or any price less than that translates into zero profit. 

On Wednesday, Odisha capped the price of RT-PCR test, the best available so far for detection of Covid-19, in private labs at Rs 400 — the lowest in the country. 

Delhi had earlier capped the maximum price of RT-PCR test by private labs at Rs 800. Haryana, too, slashed the price of RT-PCR test to Rs 900 from Rs 1,200 a month ago. The price of the test at other states are down from Rs 4,500 in the early days of the pandemic to Rs 1,600-2,400. 

Manufacturers say the cost of a test kit in May was between Rs 800 and Rs 1,200. This has come down to almost Rs 200.

An industry veteran said while raw material costs have come down (around Rs 300 for an RT-PCR kit and large chains can negotiate a lower price of Rs 200 per kit), there is the cost of manpower (ranging between Rs 100 and Rs 300 per test, depending on the volumes handled) and overheads like electricity and rentals.

Lab owners, however, say test kits are a fraction of their overall costs, most of which have remained fixed. “There is the cost of collection. No one is collecting at their own lab but renting premises and hiring transport. Add to this, the additional staff which has been hired to ensure maximum efficiency and faster turnaround,” rued a lab executive.

Many labs have invested a princely sum in automatic RNA extraction machines, which is an important part of the RT-PCR procedure — where a sample is prepared for detection. The cost of setting up an RT-PCR lab from scratch is Rs 3 crore and takes at least three months. 

“Prior to Covid-19, we were using our RT-PCR facilities for HIV and HCV tests, and were charging around Rs 3,000. During the pandemic, when the non-Covid business shrunk, we diverted some of these facilities to testing for the novel coronavirus. The same facility cannot do Covid-19 and non-Covid-19 tests simultaneously. We are setting up new RT-PCR facilities,” said a lab chain owner.

Dr Harsh Mahajan, founder and chief radiologist at Mahajan Imaging, said: “We will continue providing the service at the same quality we were since the start of the pandemic. But we will have to rationalise costs to cut our losses.” The firm has repurposed its genomics labs for RT-PCR testing, even though it forms a minuscule part of its overall business. 

Lab chain owners point out that since 50 per cent of the cost was for procuring the sample, they could give hospitals a discount. But at Rs 800 per test in Delhi, passing on any discount to health care institutions is not feasible.

Some labs are expecting to see a higher demand for testing, now that prices have come down by a third. “We expect a much higher percentage of the population opting for on-demand testing — both as a precautionary measure and anyone exposed to the virus,” said Chetan Kohli, chief operating officer, Genestrings Labs. The firm is planning to upgrade its infra to handle higher volumes anticipated due to the price cut. 

While prices have been brought down to encourage more people to get tested, labs feel the government and the Indian Council of Medical Research should ease the process for uploading the data. 

“This will be a key resource crunch area as testing increases, with the onset of winter when cases may surge,” added Kohli.