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Rapid testing has been a powerful tool to control COVID-19 outbreaks around the world (see Iceland, Germany, …). While many countries support testing through government sponsored healthcare infrastructure, in the United States COVID-19 testing has largely been organized and provided by for-profit businesses. While financial incentives coupled with social commitment have motivated many scientists and engineers at companies and universities to work hard around the clock to facilitate testing, there are also many individuals who have succumbed to greed. Opportunism has bubbled to the surface and scams, swindles, rackets, misdirection and fraud abound. This is happening at a time when workplaces are in desperate need of testing, and demands for testing are likely to increase as schools, colleges and universities start opening up in the next month. Here are some examples of what is going on:

  • First and foremost there is your basic fraud. In July, a company called “Fillakit”, which had been awarded a $10.5 million federal contract to make COVID-19 test kits, was shipping unusable, contaminated, soda bottles. This “business”, started by some law and real estate guy called Paul Wexler, who has been repeatedly accused of fraud, went under two months after it launched amidst a slew of investigations and complaints from former workers. Oh, BTW, Michigan ordered 322,000 Fillakit tubes which went straight to the trash (as a result they could not do a week worth of tests).
  • Not all fraud is large scale. Some former VP at now defunct “Cure Cannabis Solutions” ordered 100 COVID-19 test kits that do who-knows-what at a price of 50c a kit. The Feds seized it. These kits, which were not FDA approved, were sourced from “Anhui DeepBlue Medical” in Hefei, China.
  • To be fair, the Cannabis guy was small fry. In Laredo Texas, some guy called Robert Castañeda received assistance from a congressman to purchase $500,000 of kits from the same place! Anhui DeepBlue Medical sent Castańeda 20,000 kits ($25 a test). Apparently the tests had 20% accuracy. To his credit, the Cannabis guy paid 1/50th the price for this junk.
  • Let’s not forget who is really raking in the bucks though. Quest Diagnostics and LabCorp are the primary testing outfits in the US right now; each is processing around 150,000 tests a day. These are for-profit companies and indeed they are making a profit. The economics is simple: insurance companies reimburse LabCorp and Quest Diagnostics for the tests. The rates are basically determined by the amount that Medicare will pay, i.e. the government price point. Intiially, the reimbursement was set at $51, and well… at that price LabCorp and Quest Diagnostics just weren’t that interested. I mean, people have to put food on the table, right? (Adam Schechter, CEO of LabCorp makes $4.9 million a year; Steve Rusckowski, CEO of Quest Diagnostics, makes $9.9 million a year). So the Medicare reimbursement rate was raised to $100. The thing is, LabCorp and Quest Diagnostics get paid regardless of how long it takes to return test results. Some people are currently waiting 15 days to get results (narrator: such tests results are useless).
  • Perhaps a silver lining lies in the stock price of these companies. The title of this post is “$ How to Profit From COVID-19 Testing $”. I guess being able to take a week or two to return a test result and still get paid $100 for something that cost $30 lifts the stock price… and you can profit!Screen Shot 2020-07-31 at 2.03.23 AM
  • Let’s not forget the tech bros! A bunch of dudes in Utah from companies like Nomi, Domo and Qualtrics signed a two-month contract with the state of Utah to provide 3,000 tests a day. One of the tech executives pushing the initiative, called TestUtah, was a 37-year old founder (of Nomi Health) by the name of Mark Newman. He admitted that “none of us knew anything about lab testing at the start of the effort”. Didn’t stop Newman et al. from signing more than $50 million in agreements with several states to provide testing. tl;dr: the tests had a poor limit of detection, samples were mishandled, throughput was much lower than promised etc. etc. and as a result they weren’t finding positive cases at rates similar to other testing facilities. The significance is summarized poignantly in a New Yorker piece about the debacle:

    “I might be sick, but I want to go see my grandma, who’s ninety-five. So I go to a TestUtah site, and I get tested. TestUtah tells me I’m negative. I go see grandma, and she gets sick from me because my result was wrong, because TestUtah ran an unvalidated test.”

    P.S. There has been a disturbing TestUtah hydroxycholorquine story going on behind the scenes. I include this fact because no post on fraud and COVID-19 would be complete without a mention of hydroxycholoroquine.

  • Maybe though, the tech bros will save the day. The recently launched $5 million COVID-19 X-prize is supposed to incentivize the development of “Frequent. Fast. Cheap. Easy.” COVID-19 testing. The goal is nothing less than to “radically change the world.” I’m hopeful, but I just hope they don’t cancel it like they did the genome prize. After all, their goal of “500 tests per week with 12 hour turnaround from sample to result” is likely to be outpaced by innovation just like what happened with genome sequencing. So in terms of making money from COVID-19 testing don’t hold your breath with this prize.
  • As is evident from the examples above, one of the obstacles to quick riches with COVID-19 testing in the USA is the FDA. The thing about COVID-19 testing is that lying to the FDA on applications, or providing unauthorized tests, can lead to unpleasantries, e.g. jail. So some play it straight and narrow. Consider, for example, SeqOnce, which has developed the Azureseq SARS-CoV-2 RT-qPCR kit. These guys have an “EUA-FDA validated test”: Screen Shot 2020-07-31 at 2.14.45 AM
    This is exactly what you want! You can click on “Order Now” and pay $3,000 for a kit that can be used to test several hundred samples (great price!) and the site has all the necessary information: IFUs (these are “instructions for use” that come with FDA authorized tests), validation results etc. If you look carefully you’ll see that administration of the test requires FDA approval. The company is upfront about this. Except the test is not FDA authorized; this is easy to confirm by examining the FDA Coronavirus EUA site. One can infer from a press release that they have submitted an EUA (Emergency Use Authorization) but while they claim it has been validated, nowhere does it say it has been authorized.Clever eh? Authorized, validated, authorized, validated, authorized, .. and here I was just about to spend $3,000 for a bunch of tests that cannot be currently legally administered. Whew!At least this is not fraud. Maybe it’s better called… I don’t know… a game? Other companies are playing similar games. Gingko Bioworks is advertising “testing at scale, supporting schools and businesses” with an “Easy to use FDA-authorized test” but again this seems to be a product that has “launched“, not one that, you know, actually exists; I could find no Gingko Bioworks test that works at scale that is authorized on the FDA Coronavirus EUA website, and it turns out that what they mean by FDA authorized is an RT-PCR test that they have outsourced to others.  Fingers crossed though- maybe the marketing helped CEO Jason Kelly raise the $70 million his company has received for the effort; I certainly hope it works (soon)!
  • By the way, I mentioned that the SeqOnce operation is a bunch of “guys”. I meant this literally; this is their “team”:
    Screen Shot 2020-07-31 at 2.18.45 AM
    Just one sec… what is up with biotech startups and 100% men leadership teams? See Epinomics, Insight Genetics, Ocean Genomics, Kailos Genetics, Circulogene, etc. etc.)… And what’s up with the black and white thing? Is that to try to hide that there are no people of color?
    I mention the 100% male team because if you look at all the people mentioned in this post, all of them are guys (except the person in the next sentence), and I didn’t plan that, it just how it worked out. Look, I’m not casting shade on the former CEO of Theranos. I’m just saying that there is a strong correlation here.

    Sorry, back to the regular programming…

  • Speaking of swindlers and scammers, this post would not be complete without a mention of the COVID-19 testing czar, Jared Kushner. His secret testing plan for the United States went “poof into thin air“! I felt that the 1 million contaminated and unusable Chinese test kits that he ordered for $52 million deserved the final mention in this post. Sadly, these failed kits appear to be the main thrust of the federal response to COVID-19 testing needs so far, and consistent with Trump’s recent call to, “slow the testing down” (he wasn’t kidding). Let’s see what turns up today at the hearings of the U.S. House Select Subcommittee on Coronavirus, whose agenda is “The Urgent Need for a National Plan to Contain the Coronavirus”.



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