Massive Overpricing in COVID-19 Rapid Test Kits Sold to ICMR Uncovered in Delhi HC

New Delhi: At a time when the country is going through a grave crisi on the public health front, a “scandalous” amount of profiteering of almost 145% has come to light in the sale of rapid test kits for novel coronavirus or COVID-19 to government-owned Indian Council of Medical Research (ICMR), which is at the centre of handling the country’s battle against the contagious virus.

According to report in Business Today, the rapid test kits, shipped from China, were sold to ICMR had heavily overpriced rates, forcing the Delhi HC to scale down the price by 33%.

The massive profiteering was exposed in the court’s ruling on a dispute by the importer and distributor (Rare Metabolics vs Matrix Labs).

“Observing that 61 per cent mark-up on such test kits is on the "higher side" but "more than sufficient", the Delhi High Court single bench of Justice Najmi Waziri disallowed a 145 pc mark-up from landed price of Rs 245 to ICMR's purchase price of Rs 600 per test. Instead, Justice Waziri slashed price for every kit by 33 per cent from Rs 600 to Rs 400 per test,” said the BT report.

Earlier in the day, Malini Aisola, convenor of the All India Drug Action Network (AIDAN); Campaign for Dignified and Affordable Healthcare; Hip Implant Patients Support group (HIPS), tweeted, attaching copies of the judgement.

“Delhi High Court judgement in Rare Metabolics v Matrix Labs has revealed scandalous details about the import of 5 lac Wondfo antibody test kits, order by @ICMRDelhi at Rs 30 cr through intermediaries who were taking a cut of 18.75 cr,” said one of her tweets.

Breakdown of pricing for 5 lac test kits ordered by ICMR:

Matrix import @ Rs 245 a piece = Rs 12 cr 25 lac

Matrix sale to Rare Metabolics with 7.75 cr markup = Rs. 21 cr

Rare Metabolic sale to @ICMR @ Rs 600 a piece (9cr markup)= Rs. 30 cr 2/n pic.twitter.com/9twlimLuRe

— Malini Aisola (@malini_aisola) April 26, 2020

Incidentally, according to Aisola, Matrix is also slated to provide 50,000 rapid test kits to the Tamil Nadu government through a dealers, Shan Biotech & Diagnostics at the ICMR approved rate of Rs 600 per test. Of these, 24,000 kits have already been supplied.

As per the BT report, the “dispute was over release of the remaining 2.24 lakh kits--of the 5 lakh imported from China--to be sent to ICMR. Importer Matrix Labs had argued that it had only been paid Rs 12.25 crore of the Rs 20 crore (plus GST) or Rs 21 crore import. As per the agreement, the balance amount of Rs. 8.25 crores had to be first paid to the importer before any monies received from ICMR.”

The petition in Delhi High Court was filed by Rare Metabolics, which sought release of the remaining 2.24 lakh test kits to be supplied to ICMR, arguing that under its agreement with Matrix Labs, no other company can market these in India.

“The company also said that it has already paid Rs 12.75 crore, which cover the freight cost for 5 lakh test kits. Rare Metabolics assured that payment due to Matrix Labs will be remitted as soon as it is received” the report said.

The matter between the importer and distributor came to head after Matrix labs reportedly demanded upfront payment, while Rare Metabolics held that payment could only be done after release of funds from ICMR.

“The petitioner informed the court that the consignment of 2.76 lakh rapid antibody tests has already been supplied to ICMR for which payment is still awaited,” the petitioner said, adding that it was subject to the tests meeting ICMR’s standards.

Meanwhile, ICMR has put the rapid tests on hold after detecting faulty results from the Wondo Biotech kits, something which the Chinese firm has refuted.

“The court was of the view that a profit mark-up of Rs. 155, i.e. 61 per cent on the landed cost price of Rs. 245, is much on the higher side and in any case more than sufficient for the seller, for the kits/tests to be made available in India for urgent extensive tests through the country, especially in these present extraordinary circumstances of the worldwide pandemic... Public interest must outweigh private gain. The lis between the parties should give way to the larger public good. In view of the above, the kits/test should be sold at a price not beyond Rs. 400 per kit/test inclusive of GST."

Following the Delhi High Court order, both parties have agreed to sell antibody test kits in India at the court-mandated price of Rs 400 per kit, inclusive of goods and services tax or GST, the BT report said.

After the judgement, Aisola expressed serious doubts over ICMR’s role in the entire matter.

“It’s hard to imagine that @ICMRDELHI was unaware of the profiteering by intermediaries. It would have known Wondfo price of $3/kit, prices of kits from other manufacturers & also prices at which they are being procured. ...” she said in a series of tweets.

Meanwhile, the Opposition parties, too, hit out at the Narendra Modi government for lack of transparency in such deals.

At a press conference via video conferencing, Congress spokesperson manish tewari said: "There seems to be absolute anarchy in procurement of equipment for fighting COVID-19," , and demanded that the government should make public details of all purchases made in the last one month to fight COVID-19, alleging that huge profiteering was being made at this time of crisis.

"This is an extremely serious matter which hurts the fight of India against COVID-19," he said, adding, that "our country's resources are scarce and we have to optimise the resources and not allow companies to make arbitrage of over 60 per cent in these transactions," as per a PTI report.

Hitting out at Modi government’s role in such deals during times of such a serious health crisis, CPI(M) general secretary, Sitaram Yechury, tweeted: “Serious questions raised about the kind of deals being stuck by the Centre with private companies at this time of a grave health crisis. But for the legal dispute, Modi govt would have suppressed this information too!”