The Competition Commission says the pricing of rapid antigen tests for Covid-19 is next in its crosshairs after it reached an agreement with SA’s two largest private pathology laboratories to cut the price of PCR tests — the gold standard — by almost half.
The authority, which seeks to prevent abuse by companies with dominant market positions, said on Sunday it had reached a settlement with Ampath and Lancet laboratories to cut the prices of their Covid-19 PCR tests to R500 including VAT.
Competition commissioner Tembinkosi Bonakele said during an urgent briefing that the cost of Covid-19 PCR tests would drop “with immediate effect” from their previous levels of about R850 per test.
James Hodge, the commission’s chief economist and acting deputy commissioner, said during the media briefing that the regulator would also look into the pricing of rapid antigen tests for Covid-19. “In terms of the antigen test and the price of that ... that is certainly next on our list,” said Hodge. “PCR is the gold standard in testing — it seems that for travel it is becoming a requirement. But we also think that where alternatives such as the antigen test can be brought in where a PCR is not a requirement, that can also bring pressure on PCR test pricing.”
The commission received a complaint from the Council for Medical Schemes in October alleging that the price of Covid-19 PCR tests was unfairly inflated, exorbitant, unjustifiable and in contravention of the Competition Act. An investigation found private laboratories were earning “excessive profit” on the PCR tests — which it regards as an essential product or service to combat the pandemic — because they failed to reduce prices in response to falling testing costs.
“Even though in recent months there have been some negligible downward price adjustments, the price for tests remained excessively high,” said Bonakele. “We did see excessive margins at this time and we also did see an abnormal profitability by these companies.”
Bonakele declined to specify the profit margins of the private laboratories on Covid-19 PCR tests, because the commission’s settlement with Ampath and Lancet was conducted on a “without prejudice basis”. He did disclose the commission opted to forgo taking a legal route that would have enabled it to impose a fine to achieve an immediate price decrease.
“A full investigation of an excessive price, which is a very rare species of competition law and a difficult one, would’ve at least taken us ... [about] a year.
“For us to get these price levels took some compromises and one of those was this issue of a fine. We decided to forgo a fine for an immediate and deep price decrease.”
The commission’s investigation focused on three private pathology labs: Ampath, Lancet and PathCare. Bonakele said talks with PathCare are ongoing.
“The status of the discussions with PathCare is ... it was very slow, I must say,” said Bonakele. “We will see after this settlement whether it helps that organisation to pick up speed.”
Bonakele said the commission was considering lodging an interim application for urgent relief against PathCare at the Competition Tribunal.
He also said the commission was concerned about the “abuse” of travellers who require urgent Covid-19 PCR tests when leaving the country. “We will be getting data on what’s happening at the airports.”
Bonakele urged other labs to comply with the pricing settlement reached with Ampath and Lancet even though they are not party to the agreement.
He said the commission had received reports that some labs were charging as much as R1,000 for Covid-19 PCR tests and would be looking into these reports.
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