Opinion | The actual cost of a COVID-19 test is less than $ 100, so why can labs charge us up to $ 395 per test?

Current health regulations require all travelers to submit a negative COVID-19 test before boarding an international flight. The test must be done less than 72 hours before departure, with no exceptions.

Getting the exam on time is a hassle, but more importantly, it imposes a huge cost on travelers.

Given that provincial public health systems are overwhelmed, governments saw fit to outsource pre-departure testing to private companies with licensed laboratory services.

This, in principle, makes sense. Those who have symptoms can be tested for free at a provincial testing center, and those who wish to travel for pleasure or business must pay out of pocket for the test.

But when it comes to pricing, the market was left without government oversight, and with limited competition, some players are charging outrageous fees for testing.

A family of five heading overseas from Canada, for example, if you’re not careful to book pre-shipment testing at a lab that charges fair prices, you might have to pay up to $ 2,000 in additional costs for COVID-19 testing. in case they require it. one at the last minute.

The vast majority of countries require passengers to submit the results of a PCR (polymerase chain reaction) test. In essence, the PCR test is a method of duplicating a small sample of genetic material (a swab from the nose or throat) to see if the virus is present in that sample. Some countries, including the US and the UK, are accepting an antigen test, which is cheaper to process.

To receive a license to offer COVID-19 testing to travelers, private labs must go through a rigorous approval process. But once approved, the price is at your sole discretion.

A group of researchers from McGill University recently published an academic article that estimates marginal cost A standard lab-processed PCR test, which takes up to eight hours to process, costs $ 34. Laboratories must add the costs of overhead, equipment, rent, utilities, and shipping. So charging, say, $ 100 for a standard PCR test should cover all costs and bring in a considerable profit.

But most private labs want more.

Biron Health Group will charge you $ 199 if you need results within 24 hours, and “only” $ 149 for results within 48 hours. Shoppers Drug Mart, with 1,300 locations nationwide, is charging $ 158 in Alberta, $ 170 in Ontario and $ 221 in Saskatchewan (including tax). And if you chose White Cap Medical based on Vancouver, prepare to pay $ 252.

These are steep fees, but they pale in comparison to what travelers waiting until the last minute will have to shell out at the airport for a so-called “rapid or rapid PCR test,” with results within an hour.

Amir Barnea is an associate professor of finance at HEC Montr al and a freelance columnist for the Star. Follow him on Twitter: @ abranea1

At Montreal’s Trudeau Airport, Biron Health Group, which describes itself as “A company with a human dimension that takes its role in the community very seriously”, charges $ 299 for a rapid PCR test, with results in one hour.

And near Toronto Pearson Airport, FH Health, a licensed lab with 15 locations in the GTA, will hit you with a outrageous $ 395 (including tax) for the “quick” test.

Jan Eric is the CEO of Lilium diagnosis, which offers only the standard (not rapid) PCR test for $ 99, the lowest price in the industry.

Eric agrees with the McGill researchers’ estimate that the marginal cost of reagents and raw materials for the standard PCR test is about $ 35. But he stresses that the rapid test is more expensive for labs. “I’ve seen it cost more than $ 100,” he tells me in a telephone interview.

Still, $ 100 is not $ 299 or $ 395. How can companies justify the extremely high price of rapid tests?

In an emailed statement, Annie Gauthier, a spokeswoman for Biron, highlights additional elements that explain the high fee ($ 299) such as “labor shortages” and “costs associated with installing the infrastructure for testing on site at the airport.” Fair points.

But Gauthier also mentions the “reality of the market” and that “COVID testing is affected by the same market rules as other consumer products.”

In other words, as long as competition is limited (Biron is the only company offering testing at Trudeau airport, basically a monopoly), and there is no government oversight (there isn’t), Biron could charge whatever he wants (he does) .

The same reality exists in Ontario. Despite the high prices of the tests, Bill Campbell, a spokesman for the Ontario Ministry of Health, sees no room for government intervention.

“The government has no role in setting or suggesting prices for private tests in Ontario. It is at the provider’s discretion to determine the cost of their services, ”he wrote to me in an email statement.

That is exactly where the Competition Office should play a role.

In the UK, the Competition and Markets Authority launched an investigation into the COVID-19 testing market. the British watchdog said it is exploring “if there are structural problems in the PCR testing market that affect price or reliability, and if there are immediate actions the government could take.”

Our Competition Office must do the same and send a clear warning message to the opportunistic private labs: the party is about to end. Political leaders should do the same. Setting a maximum price for PCR testing is also an option to consider.

Eric from Lilium Diagnostic told me that a lot of clients ask him “what is the problem” or “if they offer a bad service”. This tells you how strange it is to be when a business is simply charging a fair price.

Hopefully other players will follow Lilium’s lead. But if not, it’s up to regulators to stop COVID-19 testing scams that are causing private labs to generate millions at the expense of travelers.

Amir Barnea is an associate professor of finance at HEC Montréal and a freelance columnist for the Star. Follow him on Twitter: @ embranea1


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