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Profiteering in sale of Covid-19 rapid test kits to ICMR exposed in court
Delhi HC says mark-up is much on the higher side, asks test kits to be sold at Rs 400 per unit
BS Web Team & Agencies Last Updated at April 27, 2020 12:53 IST
Covid-19: India receives 500,000 antibody testing kits from China[/paste:font]
Genes2Me to deliver 3 mn rapid test kits in coming weeks: CEO Neeraj Gupta
Efforts on to develop antibody-based test kits for Covid-19: Biocon CMD
Covid-19: ICMR to get nearly 700,000 rapid antibody testing kits by April 8
Private labs wait for govt go-ahead to launch coronavirus test kits
At a time when India is facing an unprecedented crisis because of the coronavirus (Covid-19) pandemic, a legal dispute between an importer and a distributor has exposed massive profiteering in the delivery of coronavirus testing kits to the Indian Council of Medical Research (ICMR).
According to the details provided in Delhi High Court, SARS CoV-2 Antibody test kits procured from China, whose delivered cost was Rs 245 per test, were sold to the ICMR for Rs 600 per test, a huge mark up of 145%.
The case came to light when Rare Metabolics Life Sciences Pvt Ltd and Aark Pharmaceuticals, distributors of Wondfo Biotech’s SARS CoV-2 Antibody kits imported by Matrix Labs approached the Delhi High Court to get their contract enforced.
The facts of the case
Matrix Labs is the sole importer of SARS Cov-2 Antibody kits manufactured by China’s Wondfo Biotech. Rare Metabolics entered into an agreement with Matrix Labs for distribution of these kits in India and expressed a desire to import 1 million of these tests. Rare Metabolics also signed an agreement with Aark Pharmaceuticals and appointed them distributors of these kits in India.
ICMR placed an order of 500,000 kits with Aark at a price of Rs 600 plus GST.
Matrix Labs sold the kits to Rare Metabolics for Rs 400 per test and Rare Metabolics and Aark Pharmaceuticals supplied them further to ICMR for Rs 600 (plus GST) per test. In the first batch, Matrix delivered 276,000 of these tests to Rare and Aark for ICMR.
ALSO READ: Coronavirus LIVE
The total amount to be paid by Rare Metabolics and Aark to Matrix Labs for these 500,000 kits was Rs 21 crore (including GST). Out of this Rs 12.25 cr has already been paid to Matrix. Matrix demanded payment of the remaining amount before delivery of the remaining 224,000 tests to Rare Metabolics and Aark.
At this point Rare Metabolics approached the Delhi High Court seeking the delivery of the remaining 224,000 tests which were to be delivered to ICMR. Rare Metabolics argued that the payment will be made as soon as it is received from ICMR.
Rare Metabolics also told Delhi HC that Matrix had entered into a separate agreement to supply 50,000 kits to the Tamil Nadu government at the ICMR approved price (Rs 600 plus GST) via Shan Biotech & Diagnostics. Out of these 50,000 tests 24,000 have already been delivered.
Antibody tests run into trouble
These Wondfo SARS Cov-2 Antibody test kits have run into trouble with the ICMR and states for inaccurate results. After facing faulty results in states, ICMR asked states to not use them till it reverified their results.
ALSO READ: Rajasthan ceases use of China-made rapid testing kits as most results invalid
Delhi High Court on the high mark-up
"The Court is of the view that a profit mark-up of Rs. 155, i.e. 61 per cent on the landed cost price of Rs. 245, is much on the higher side and in any case more than sufficient for the seller, for the kits/tests to be made available in India for urgent extensive tests through the country, especially in these present extraordinary circumstances of the worldwide pandemic... Public interest must outweigh private gain. The lis (litigation) between the parties should give way to the larger public good. In view of the above, the kits/test should be sold at a price not beyond Rs. 400 per kit/test inclusive of GST," said the Delhi HC.
After hearing both sides, the court said in its order on Friday that the tests "are required in the country on an urgent basis in view of the worldwide pandemic" and directed that the remaining 224,000 kits would be delivered to ICMR the moment they arrived in India.
The court further directed that the remaining amount of Rs 8.25 crore (at Rs 600 per test) to be paid to Matrix would be done within 24 hours of receiving payment from ICMR.
Of the remaining 500,000 units, out of the initial order of 1 million, 50,000 has to be kept aside for Tamil Nadu government, the court said and added that the remaining 450,000 units be sold at the price of Rs 400 to any government, governmental agency or private entity.
Delhi HC says mark-up is much on the higher side, asks test kits to be sold at Rs 400 per unit
BS Web Team & Agencies Last Updated at April 27, 2020 12:53 IST
Covid-19: India receives 500,000 antibody testing kits from China[/paste:font]Genes2Me to deliver 3 mn rapid test kits in coming weeks: CEO Neeraj Gupta
Efforts on to develop antibody-based test kits for Covid-19: Biocon CMD
Covid-19: ICMR to get nearly 700,000 rapid antibody testing kits by April 8
Private labs wait for govt go-ahead to launch coronavirus test kits
At a time when India is facing an unprecedented crisis because of the coronavirus (Covid-19) pandemic, a legal dispute between an importer and a distributor has exposed massive profiteering in the delivery of coronavirus testing kits to the Indian Council of Medical Research (ICMR).
According to the details provided in Delhi High Court, SARS CoV-2 Antibody test kits procured from China, whose delivered cost was Rs 245 per test, were sold to the ICMR for Rs 600 per test, a huge mark up of 145%.
The case came to light when Rare Metabolics Life Sciences Pvt Ltd and Aark Pharmaceuticals, distributors of Wondfo Biotech’s SARS CoV-2 Antibody kits imported by Matrix Labs approached the Delhi High Court to get their contract enforced.
The facts of the case
Matrix Labs is the sole importer of SARS Cov-2 Antibody kits manufactured by China’s Wondfo Biotech. Rare Metabolics entered into an agreement with Matrix Labs for distribution of these kits in India and expressed a desire to import 1 million of these tests. Rare Metabolics also signed an agreement with Aark Pharmaceuticals and appointed them distributors of these kits in India.
ICMR placed an order of 500,000 kits with Aark at a price of Rs 600 plus GST.
Matrix Labs sold the kits to Rare Metabolics for Rs 400 per test and Rare Metabolics and Aark Pharmaceuticals supplied them further to ICMR for Rs 600 (plus GST) per test. In the first batch, Matrix delivered 276,000 of these tests to Rare and Aark for ICMR.
ALSO READ: Coronavirus LIVE
The total amount to be paid by Rare Metabolics and Aark to Matrix Labs for these 500,000 kits was Rs 21 crore (including GST). Out of this Rs 12.25 cr has already been paid to Matrix. Matrix demanded payment of the remaining amount before delivery of the remaining 224,000 tests to Rare Metabolics and Aark.
At this point Rare Metabolics approached the Delhi High Court seeking the delivery of the remaining 224,000 tests which were to be delivered to ICMR. Rare Metabolics argued that the payment will be made as soon as it is received from ICMR.
Rare Metabolics also told Delhi HC that Matrix had entered into a separate agreement to supply 50,000 kits to the Tamil Nadu government at the ICMR approved price (Rs 600 plus GST) via Shan Biotech & Diagnostics. Out of these 50,000 tests 24,000 have already been delivered.
Antibody tests run into trouble
These Wondfo SARS Cov-2 Antibody test kits have run into trouble with the ICMR and states for inaccurate results. After facing faulty results in states, ICMR asked states to not use them till it reverified their results.
ALSO READ: Rajasthan ceases use of China-made rapid testing kits as most results invalid
Delhi High Court on the high mark-up
"The Court is of the view that a profit mark-up of Rs. 155, i.e. 61 per cent on the landed cost price of Rs. 245, is much on the higher side and in any case more than sufficient for the seller, for the kits/tests to be made available in India for urgent extensive tests through the country, especially in these present extraordinary circumstances of the worldwide pandemic... Public interest must outweigh private gain. The lis (litigation) between the parties should give way to the larger public good. In view of the above, the kits/test should be sold at a price not beyond Rs. 400 per kit/test inclusive of GST," said the Delhi HC.
After hearing both sides, the court said in its order on Friday that the tests "are required in the country on an urgent basis in view of the worldwide pandemic" and directed that the remaining 224,000 kits would be delivered to ICMR the moment they arrived in India.
The court further directed that the remaining amount of Rs 8.25 crore (at Rs 600 per test) to be paid to Matrix would be done within 24 hours of receiving payment from ICMR.
Of the remaining 500,000 units, out of the initial order of 1 million, 50,000 has to be kept aside for Tamil Nadu government, the court said and added that the remaining 450,000 units be sold at the price of Rs 400 to any government, governmental agency or private entity.
