A controversy has erupted around Andhra Pradesh’s decision to procure one lakh rapid antibody testing kits for COVID-19 from the South Korean company, SD Biosensor. The debate is around the price at which the kits were procured. Questions being raised over why Andhra is paying a higher price, when Chhattisgarh, which is also apparently sourcing the kits from the same company, is paying less.
The Andhra Pradesh government earlier justified paying the higher price for ‘reliability’ of the kits, but later backtracked saying they will pay the same price as Chhattisgarh. The controversy and allegation around this deal insinuate irregularities in Andhra’s procurement deal.
On Sunday, a tweet from the Health, Medical & Family Welfare Department of Andhra Pradesh said, “Malicious campaign is being run that AP procured rapid kits at around 1200 rs. AP got the kits at around 700 Rs. Final prices are being negotiated. Appropriate legal action will be initiated against such false information. (sic)”
Malicious campaign is being run that AP procured rapid kits at around 1200 rs. AP got the kits at around 700 Rs. Final prices are being negotiated. Appropriate legal action will be initiated against such false information#APFightsCorona #RapidTestKits
— ArogyaAndhra (@ArogyaAndhra) April 18, 2020
For the one lakh rapid testing kits procured by the Andhra government from South Korea, the vendor – Sandor Medicaids, a Hyderabad-based medical equipment supplier – that sourced them for the government has quoted a price of Rs 700 plus GST, said S Rajiv Krishna, advisor to the Andhra Pradesh Government.
In Chhattisgarh on the other hand, rapid test kits are being bought at Rs 337 (plus GST) per unit. On Friday, Chhattisgarh Health Minister TS Singh Deo tweeted that the Chhattisgarh government is procuring 75,000 test kits from the lowest bidder, which is a South Korean company based in India.
We are procuring 75,000 high quality rapid testing kits at a benchmark price of ₹337 + GST from a South Korean company based in India, which has proven to be the lowest bidder. The rate we have been able to close at is the lowest in India. (1/2)
— TS Singh Deo (@TS_SinghDeo) April 17, 2020
Initially justifying Andhra’s decision, Rajiv Krishna told TNM that the state government’s priority is to increase procurement to conduct more tests, and to procure reliable test kits. “Even if the price is higher by Rs 100 per kit, for one lakh test kits, that’s an additional cost of Rs 1 crore. The state is losing Rs 170 crore for every day of the lockdown. An additional amount spent on the kits for reliability and comfort is well worth it,” he said.
Further, Commissioner of Health and Family Welfare Department Katamneni Bhaskar told reporters on Sunday that the difference in pricing of the kits compared to Chhattisgarh is owing to the fact that the latter is procuring them from the company’s India manufacturing unit. This unit, the Andhra minister said, was not functional when the state government placed their order, compelling them to source the kits from South Korea.
“At the time we had placed our order, the company’s manufacturing unit in India did not have permissions to run. Now Chhattisgarh is procuring from the Indian unit of the same company (SD Biosensor),” Bhaskar said.
However, Rajiv Krishna told TNM that this price has not been finalized yet. “We are in negotiations with them. Based on trust, we have procured the kits. The price will be fixed based on a number of factors. It will depend on the functionality of the kits, once we start using them. It will depend on future supplies which they (vendor) are guaranteeing us. So it depends on a number of factors which are not yet set in stone.”
Later though, officials appears to backtrack when Bhaskar noted that their agreement for procuring the kits states that if the company quotes a lower price for any other state, they must quote the same price for Andhra Pradesh. “So we will now pay the same amount as Chhattisgarh,” Bhaskar said.
In a letter to Sandor Medicaids dated April 18, the Andhra Pradesh Medical Services and Infrastructure Development Corporation wrote that since the SD Biosensor had offered the rate of Rs 337 per kit (exclusive of GST) to another state, Sandor Medicaids must explain the reason for quoting a higher rate.
Declaring that Andhra Pradesh will also pay the same price as Chhattisgarh, the corporation noted the following clause from the purchase order with Sandor Medicaids. "It is also informed that if any instance comes to the notice of the corporation that the above medical items are supplied at a lower price than price quoted now then the differential amount will be recovered from the bills due or any other mode deemed fit,” the purchase order dated April 7 said.
As of Sunday, Andhra Pradesh has tested a total of 26,958 samples, of which 26311 samples returned negative. So far, the state has recorded 647 positive cases, of which 565 cases are active. While 65 people have recovered and been discharged, 17 people lost their lives to the disease.
Currently, Andhra Pradesh has nine testing labs, with the capacity to perform 5,000 tests in a day.