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HealthCoronavirus

COVID test makers set to make $4 billion in U.S. government work

By
Kristen V. Brown
Kristen V. Brown
,
Paul Murphy
Paul Murphy
, and
Bloomberg
Bloomberg
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By
Kristen V. Brown
Kristen V. Brown
,
Paul Murphy
Paul Murphy
, and
Bloomberg
Bloomberg
Down Arrow Button Icon
January 21, 2022, 9:50 AM ET
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President Joe Biden’s promise to provide one billion free rapid COVID-19 tests to Americans is set to be a boon for test makers, as the highly contagious Omicron variant has left pharmacies and clinics scrambling to find supplies.

The U.S. government has committed to spend at least $4.2 billion to develop, manufacture and produce rapid antigen tests since the start of the global pandemic in March 2020, according to a review of Bloomberg Government’s contracts database.

And that’s before fulfilling Biden’s latest free-test pledge. Supplying the first 500 million tests alone will cost the government $4 billion, a senior Biden administration official told reporters last week.

Abbott Laboratories, maker of the popular BinaxNOW over-the-counter test, is in line to receive more than half the government’s total outlay on rapid COVID screening, with some $2.2 billion in commitments. The test maker has been rushing to ramp up production amid the latest wave of the virus after initially shuttering one of its factories and scaling back production as U.S. cases waned before the Delta variant hit.

Abbott was not the only testing company to slow or stop production in the aftermath of guidance from the Centers for Disease Control and Prevention last spring that suggested vaccinated people no longer needed to take tests. The scaled-back manufacturing, along with skyrocketing case numbers, supply-chain issues and labor shortages, have conspired to constrain supplies.

The government began taking orders for free tests on Tuesday though it hasn’t finalized which manufacturers will supply them. Abbott is set to supply $306 million worth of tests to support Biden’s one billion test pledge. But it’s unclear how quickly the company will be able to deliver them.

iHealth Labs, a unit of the Chinese company Andon Health Co. Ltd., also inked a $1.3 billion deal to provide COVID-19 tests for Biden’s free at-home testing program. That test was among several that received authorization from the Food and Drug Administration just last month. The U.S. has still only authorized a small fraction of the tests that have been cleared in Europe.

Other test makers that have significant government contracts include Quidel Corp., which has been awarded at least $636 million for its antigen test kits, and OraSure Technologies Inc., which has so far signed $554.6 million worth of contracts to supply tests and conduct studies, according to the database.

In total, the U.S government has issued contracts to at least 60 test makers since the onset of the pandemic. Those contracts include more than $33 million alloted to Ellume. Last fall, Ellume recalled at-home tests distributed between April and August after reports of higher-than-expected numbers of false positive results, which are often the result of a test being contaminated with the virus at some point during production.

—With assistance from Courtney Rozen, Shira Stein and Allison Reed.

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