RAT pricing impacts supply chain

Disparity in the retail price of the Rapid Antigen Test (RAT) in Australia is being investigated by the nation’s competition watchdog.

Access to efficient, affordable testing is essential to keep everyone, including all supply chain participants, safe and Covid compliant.

The Australian Competition & Consumer Commission (ACCC) is reviewing more than 1,800 reports from the public about the cost of RATs and is concerned about excessive pricing amid pandemic. These tests are used to diagnose illness and should be available at reasonable prices.

RAT is reported to vary from $500 for two tests online to more than $70 per test via convenience stores, service stations and supermarkets. Other ranges include $20-30 per test through smaller retail outlets, while wholesale ranges between $3.95 and $11.45 a test.

ACCC Chair, Rod Sims, said this is clearly outrageous and businesses have been approached by the Commission to explain the prices they are charging.

The ACCC has contacted more than 40 test suppliers, major retailers and pharmacy chains seeking information about their costs, current pricing, and stock availability, and reminding them they need to be able to substantiate any claims they make to consumers about the reasons for higher prices.

“The supply chain is often complex, with several businesses involved from the initial supply to the retail sale of tests to consumers,” said Sims.

“Retailers operating under the same brand or chain may be setting prices and selling tests independently of the other stores in the chain.

“This means the wholesale and resulting retail prices can vary significantly.

“Our inquiries so far confirm that a large volume of orders have been placed. However, given delays in the supply of tests, or test parts, into Australia, delays in distribution due to Covid illness or isolation requirements within workforces and at the retailer level, there is significant difficulty forecasting accurate supply.”

From 7 January 2022, the average and the highest prices reported to the ACCC have increased to around $24 and $80 to $100 respectively. The highest price reported for a single test is $100. Some of the higher prices relate to reports of selling through online marketplaces.

“Only a few weeks ago tests were readily available at most chemists and supermarkets for around $10 for a single test,” said Sims.

“We realise demand and supply chain issues have impacted since then, but our initial research suggests that a price of around $20 per test or more, however packaged, may be hard to justify based on the average wholesale costs and such retailers should explain why the price is so high.

“As supply chain issues ease and orders arrive, consumers should be able to access tests at more reasonable prices.

“Any test costing more than $30, even with supply constraints, is almost certainly too expensive and would seem to be taking advantage of the current circumstances.”

Meanwhile, Greg Twomey, President of the Pharmacy Guild of Australia, aims to launch a website next week to help people find stores stocked with RATs after witnessing what he believes to be a market failure following instances of price gouging.

On 5 January 2022, National Cabinet noted that Covid-19 tests are free and available at state testing clinics for people who have symptoms or are a close contact. It agreed that up to 10 RATs over three months (a maximum of five in a month) will be made available for free from pharmacies to people holding Pension Concession Card, Commonwealth Seniors Health Care Card, Department of Veteran’s Affairs Gold, White or Orange Card, Health Care Card or Low Income Health Card.

About 10 million RATs were also being allocated to states and territories to assist with testing and laboratory capacity to be funded in line with existing National Partnership Agreement on the Covid-19 Response.

Anti-hoarding measures with the Pharmacy Guild of Australia and other major retailers that stock RATs were implemented.

Price gouging, as defined by National Cabinet, is offering or supplying essential goods at a price that is more than 120 per cent of the initial price (a 20 per cent markup) and penalties for not complying with this direction will range up to five years imprisonment and $66,000.

Changes to testing requirements also came into effect for Australia on 5 January with the exception of Western Australia which included:

  • Removing the requirement for truck drivers to have rolling seven days tests.
  • Testing will not be required before patients present to hospital.
  • Confirmation PCR test will not be required after a positive RAT. Individual states and territories will provide further information on how a positive RAT will be recorded. Anyone who tests positive is encouraged to contact their GP for support as required.
  • Testing before interstate travel will no longer be required except for Queensland, Tasmania and Western Australia, with Queensland and Tasmania to review these requirements in the coming weeks. State testing clinics will not be able to be used for interstate travel purposes.
  • A second post arrival test for international travellers will not be required except for Queensland, who will review this requirement when they reach 90 per cent double vaccination rate.

Three million free RATs arrived in Victoria this week. The Victorian Government has received its first bulk delivery with another 41 million on the way. Victorians working in essential services as well as those with pre-existing health conditions will take priority in this latest rollout.

“We are very confident in its accuracy and that really does relate to how much Omicron is out there at the moment,” said Victoria Chief Health Officer, Brett Sutton. “When you’ve got really high prevalence, then when you get a positive rapid antigen result we can be very confident that it is a true positive result.”

In other news, employers to bear costs of limitless tests is unworkable, said the Chief Executive of Ai Group, Innes Willox, while the Treasurer, Josh Frydenberg, also weighed in on the matter.