‘Gold standard PCR’ push leaves a gaping hole in rapid test supply

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‘Gold standard PCR’ push leaves a gaping hole in rapid test supply

By Jessica Yun, Supratim Adhikari and Paul Sakkal

Federal and state governments’ decision to fully back PCR tests instead of Rapid Antigen Tests (RATs) to detect COVID-19 infections in the early stages of the pandemic forced local manufacturers to sell their products overseas, leaving Australia now scrambling to secure supply.

Melbourne-based Lumos Diagnostics executive chairman Sam Lanyon said the company participated in discussions about the local manufacture of RATs in Australia with government representatives in mid-2020, as part of a federal government initiative to improve sovereign manufacturing capabilities. However, the talks ultimately proved fruitless.

While the federal government’s focus at the time was on essential medical kit, like face masks and ventilators, Mr Lanyon said RATs were also part of the conversation. Lumos, which listed on the ASX in July this year, was spun out of Melbourne health-tech commercialisation group Planet Innovation.

Lumos Diagnostics executive chair Sam Lanyon.

Lumos Diagnostics executive chair Sam Lanyon.Credit: Eamon Gallagher

“My personal frustration was that in mid-2020, we made submissions to state and federal governments on the need to include and trial rapid antigen tests as part of a broader set of diagnostic tools in preparation for the recovery phase because we knew that it was coming,” he said.

However, Mr Lanyon said the interest proved to be cursory, with the use of RATs not deemed a high priority at the time.

“Everyone kept talking about ‘gold standard PCR’ ... fundamentally there wasn’t any demand.

“The idea that people would test or frequently test from home – that was just a really hard concept for people to understand, especially when they hadn’t seen how bad the pandemic would get,” Mr Lanyon said.

Millions of rapid testing kits, made by Brisbane-based Ellume, have since been sent to the US.

The Therapeutic Goods Administration (TGA) approved the use of RATs at home in November and has since approved 15 kits. However, their use remains banned in Western Australia.

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Ten out of the 15 RATs are made in China. Another two are from the US, plus the one from Germany and another from Korea. Only one out of the 15 approved kits – the Innoscreen COVID-19 Antigen Rapid Test Device – is made in Australia.

Lumos’ rapid COVID-19 test, which is still pending approval from the TGA for use in clinical settings and at home, hit the Canadian market earlier this month and Mr Lanyon said the lack of local interest in rapid COVID-19 testing meant it had to focus its attention overseas. The company this year built a rapid diagnostics facility in Florida capable of manufacturing 120 million tests a year.

“We did exactly what we suggested to the government – we just happened to do it overseas,” he said. “I guarantee you we would have had manufacturing in Australia already. We would have been producing tests in Victoria, and we would have been shipping them nationally.”

A spokeswoman for the Department of Health said no records of meetings between Lumos and former industry minister Karen Andrews in mid-2020 were found by the Department of Industry Science Energy & Resources or the Department of Health.

“There was an approach to the office of the Minister for Health in September 2020,” the spokeswoman added.

“The office indicated that as numerous unsolicited proposals were received, for reasons of probity and assessment for safety and quality, the Department uses rigorous tender and competitive processes to assess all proposals.

“We are not aware as to whether the company made an application under such processes as no details have been provided.”

Meanwhile, Brisbane-based Ellume cannot provide the kits to Australian users until mid-2022. The more than 100,000 rapid antigen test kits made every day at Ellume’s Richlands factory are all headed to the United States, even as demand for the kits in Australia escalates.

Ellume plans to scale up to 200,000 kits per day to the United States as American demand grows.

In February 2021, the Queensland company won a $300 million contract to supply 8.5 million rapid antigen test kits to the US market.

More than 100,000 COVID-19 home test kits per day are being made here at Richlands and exported to the United States by Queensland firm Ellume. The company needs Therapeutic Goods Administration approval to sell their product in Australia.

More than 100,000 COVID-19 home test kits per day are being made here at Richlands and exported to the United States by Queensland firm Ellume. The company needs Therapeutic Goods Administration approval to sell their product in Australia.Credit: Tony Moore

The Queensland government in May 2020 gave an undisclosed sum to Ellume from its $50 million pot of money to improve Queensland’s supply chain of essential goods.

However, the company has had its sights firmly set on the US market, with Ellume yet to lodge an application with the TGA.

Businesses have faced increased disruption as the explosion of COVID-19 cases has forced workers to isolate and wait several days for a PCR test result. Prime Minister Scott Morrison announced this week that the federal government had purchased 6 million rapid antigen tests that would go to a “national stockpile”, but emphasised state governments were responsible for procuring their own RATs.

NSW has ordered 50 million RATs and will distribute them for free, as will Victoria, which has ordered more than 34 million test kits. Queensland has scrapped the PCR test requirement for interstate travellers in favour of rapid antigen tests.

However, Mr Lanyon said the belated interest in rapid testing leaves Australia miles behind the likes of the US and the UK, where they have been in use since last year.

“The solution that we’ve now got in Australia, while it seems new, has been in place globally throughout the pandemic. So, there’s only one way to describe where we are and that is, in catch-up mode,” he said.

“We’re 12 to 18 months behind the eight-ball.”

Senior pharmacy association executives have warned of RAT shortages heading into the new year, particularly as state and Commonwealth governments have placed their own orders.

“We’ve probably got the next two weeks where supplies are going to be short, demand will outstrip supply, and we will have regional outages,” said Pharmacy Guild of Australia national president Terry Twomey. “Around the 14th of January, we will see supply start to normalise. That’s still two weeks away. So for the next fortnight or so, they’ll be difficult to get.”

Meanwhile, Chemist Warehouse director Mario Tascone said his company approached the federal and state governments including NSW and Victoria about a fortnight ago offering them kits for purchase. Only the Queensland government has so far accepted the company’s offer.

The chemist chain, which retails and wholesales the tests and has its own supplier in China, has imported about 5 million at-home kits since they were approved for use in November. It will acquire about 5-6 million more over the next few weeks to cater to soaring demand.

“Even on our forecasts, Omicron got us on the hop,” he said, noting that governments and companies may have been reluctant to buy large volumes before the Omicron wave because they feared being left with excess stock.

“We did offer to help governments in the last few weeks. They are aware we have stock we can put in orders for them.”

Victoria has secured 34 million rapid antigen tests which the Andrews government has said will be free for its citizens by the end of January. A spokesperson for the Victorian Health Department said this was done through a tender process.

“This has included the establishment of a formal tender process for the supply of Rapid Antigen Tests through state purchase contracts,” they said.“This process is now complete. Any supplier was welcome to make a bid through that process.”

A NSW Health spokeswoman said that the state government had secured sufficient supply of rapid testing kits for the months ahead.

“The specific offer from Chemist Warehouse was for a supply of kits that would be delivered from mid-January 2022.“

“NSW Health has already secured more than 50 million kits at competitive prices, that are all TGA approved and can be delivered in January 2022. Deliveries for February have also been secured.”

“All manufacturers, suppliers and retailers are invited to register their interest in doing business with the NSW Government via the Buy NSW portal,” the spokeswoman said.

Mr Tascone said the federal government should urgently exempt antigen tests from GST.

The tax applies to the products because they are categorised as medical devices rather than medicines. “We would drop the price by 10 per cent immediately,” he said.

Pharmacy Society of Australia board director Caroline Diamantis, who owns Balmain Community Pharmacy, said she had been forced to take her pharmacy’s phone off the hook due to the overwhelming volume of inquiries about rapid tests.

“There’s not enough supply. This has hit like a whirlwind,” she said. “It feels like decisions are being made and changed and pivoting back and forth by politicians without being aware at all about what’s going on down on the ground.”

clarification

This story has been updated with comments from NSW Health. 

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