CA to renew COVID testing contract worth up to $1.7B with company reporting less efficient results

Stephanie Sierra Image
Wednesday, October 27, 2021
CA's $1.7B COVID testing contract renewal raises questions
California is about to renew a $1.7 billion contract with a company that may not be the most cost-effective, or efficient, option.

SAN FRANCISCO (KGO) -- The state is about to renew a sizeable contract worth up to $1.7 billion with PerkinElmer to provide COVID-19 testing services across California. But documents obtained by the ABC7 News I-Team show it may not be the most cost-effective choice.

"If you look across the country the average price per COVID test is $90," said Sasha Seletsky, co-founder of SummerBio.

The Menlo Park-based company processed a quarter of all California's COVID tests in early October- the largest volume of any other lab across the state, according to public records published this month.

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SummerBio charges around $10 per PCR test, a high quality COVID test that is licensed from Columbia University. While it's the lowest cost on the market, state records show the company's turnaround time is also one of the fastest. In the first two weeks of October, 96% of PCR samples were processed within 24 hours of receipt in the lab.

Yet, public records from the first two weeks of October obtained by the ABC7 News I-Team show the state's contract with PerkinElmer is charging five times more - around $53 per test. During that same time period, only 33% of their tests were processed within one day, according to state data.

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The ABC7 News I-Team asked the California Department of Public Health the state if they've been looking into other companies demonstrating more cost-efficient results.

We received the following statement:

"The State is constantly evaluating the testing needs and capacity across the state. Our testing program includes various modalities and includes a wide network of collection sites where testing is most needed and has struggled to take hold in the past."

Yet, the state's contract with PerkinElmer allows CDPH to terminate their agreement with 30 days' notice if a better or equivalent test becomes available at a lower cost. But the state confirmed PerkinElmer's contract worth up to $1.7 billion is set renew Sunday.

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COVID testing can get expensive. For example, Medicare will reimburse up to $100 per COVID diagnostic test if it's turned around within 24 hours, according to the Center for Medicaid and Medicare Services.

"There's no reason why a PCR test should cost $100," said Dr. Dave Chernoff, a 25-year veteran of the molecular diagnostics and biopharmaceutical industry. He currently serves as Chief Medical Officer for SummerBio. "Because of all the robotics and automation, we're able to do it at a price point that's equal to or less than what you would pay for an antigen test."

If CDPH contracted with a company charging $10 per test the state would have saved hundreds of millions of dollars over the past 14 months, according to public data.

The ABC7 News I-Team reached out to PerkinElmer several times for further comment but have yet to hear back.

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