The search for rapid COVID-19 tests could get a whole lot worse

Pharmacy shelves were bare this summer and early fall as demand for tests—which cost between $25 and $35 for a box of two—rose with the fourth wave of the pandemic, spurred by the Delta variant and a return to in-person schooling. The shortage of tests has eased in recent weeks, but experts are worried an increase in demand as the country embarks on its fifth wave could have them flying off shelves again.

“I think it’s getting better,” says Mara Aspinall, a professor of the practice at Arizona State University College of Health Solutions and co-founder of the life sciences fund BlueStone Venture Partners. “Is it where we need it to be? No.”

In the latest issue of the Coronavirus Testing Capacity newsletter Aspinall sends out, the estimated December capacity for home rapid tests is 242 million, up from 141 million in November. That sounds like a lot, until you compare it to the U.K. where the government offers to send citizens a pack of seven rapid tests every single day. If the U.S. were to meet that bar for just one day, we would need 2.3 billion tests.  

In addition to an expected rise in use over Thanksgiving, Christmas, and New Year’s, two pending changes to the country’s pandemic response will likely drive demand for rapid tests even higher. 

The first is the Biden administration’s mandate that companies with more than 100 employees ensure that their workers are either vaccinated or submit to weekly screening tests. Although that is now being challenged in the courts and the Occupational Safety and Health Administration (OSHA) has halted enforcement in the interim, many businesses are already implementing the policy to keep their workers safe. New York City is also pushing ahead with its own mandate, requiring over 184,000 employers to implement vaccine mandates by Dec. 27. Workplace vaccine mandates have proven effective, with only a tiny minority of employees refusing. However, tests for even the small fraction of the workforce that’s unvaccinated can add up quickly, stressing the national supply of tests.

Second, two new oral antiviral drugs from Pfizer and Merck are making their way through the FDA emergency use authorization (EUA) process. If they are greenlit, both medications could be taken at home by infected individuals, which would be a gamechanger in terms of COVID-19 treatment. It would also likely lead to another boost in demand for rapid tests because the medications are only effective if taken within either three or five days (depending on the drug) of symptom onset. That’s not a lot of time for a PCR test to be returned to you by a pharmacy or doctor’s office, so rapid tests will likely be called upon to make a quick diagnosis to confirm a patient has the virus.

An added challenge is the recently discovered Omicron variant, which experts estimate is even more transmissible than Delta. U.S. cases were already on the rise again before Omicron was detected, signaling we could be in for a record number of infections this winter. 

On the supply side of the equation, the federal government and test manufacturers have been working together to scale up inventory over the past two months. Much of the blame for low test supply has been placed on the FDA, which has authorized just 14 rapid antigen tests for COVID-19. Compare that to the 46 available in Europe. According to reporting by ProPublica, the agency has moved painstakingly slowly in evaluating EUA applications for rapid tests, many of which have already been approved in other countries. One FDA scientist even quit in protest over the delays.

Faced with mounting criticism, the FDA has accelerated their authorization process over the last few months, granting EUAs to four new tests in October and November. They’ve also partnered with the NIH to launch the Independent Test Assessment Program (ITAP), a $70 million initiative paid for by the American Rescue Plan that will help test manufacturers move through the EUA process faster.

Biotech companies making COVID-19 tests have also faced the same challenges as every other type of manufacturer: supply chain issues. In response, the Department of Health and Human Services awarded more than $560 million to 13 companies in October to aid in the production and distribution of COVID-19 tests. Much of the money is going to the production of pipettes and reagents needed for PCR tests, but rapid antigen test manufacturers are getting roughly one-third of the investment to increase production capacity for at-home kits. Even US Cotton received $6.5 million to make more nasal swabs.

Aspinall says accelerating the authorization process for new tests and giving federal money to test manufacturers will help increase supply, but whether enough tests will come in time to meet the current rise in demand remains to be seen. 

“All those I would call real positives that have given companies confidence, and hopefully we’re seeing the importance of that happening in the marketplace,” she says. “It’s going to be a close call. I think if the manufacturers are able to truly, fully scale up and distribute this as planned, I think we might just make it.”

A big lingering question that will impact consumers is whether these extra tests will wind up on Walmart shelves or at Walmart HQ. Many biotech manufacturers have forged deals with large employers to provide them with millions of tests so they can adhere to the OSHA test requirements.

For example, Intrivo, which partnered with Access Bio to produce the rapid test On/Go, recently announced deals with Publix, Norwegian Cruise Line, and other Fortune 500 companies. The same tests are also available direct to consumers through Walmart and Amazon. Intrivo co-CEO Ron Gutman says that right now, a higher percentage of the tests they produce are going to business clients rather than individual customers, but he emphasized that the company is working hard to meet both sides of the demand.

“We’re selling so much it’s unbelievable. And we want to make sure that people that trust us know that they can find [tests] with us,” Gutman told Fortune. “We’re working really hard right now on some scaling strategies that will enable us to go even faster on demand, and I’m feeling very confident that we will be able to do it in time for the coming surge.”

Gutman admits that focusing purely on business customers, who place large, recurring orders, makes the most sense from a financial perspective. But he says the company is committed to serving individual customers too.

“I see that we have a responsibility to serve all needs,” he says. “At this point, we’re able to fulfill the demand. If we are able to be involved and do a good job, we will continue to do that.”