Pharmacy retailers say the cost of rapid antigen tests (RATs) is skyrocketing as small businesses continue to struggle to keep costs low.
- Pharmacy owner Curtis Ruhnau says he has been asked to pay up to $ 15 wholesale plus GST per rapid antigen test
- Mr Rahnau says it is very difficult to keep retail prices down
- Dr Bi Mian says import costs and additional “compliance layers” are driving up RAT prices on retail shelves
One pharmacy owner in Sydney’s west says a wholesaler charged him $ 15 per test, while a major supplier of RATs says he has been quoted about $ 10.
This month, the federal government banned mark-ups of more than 20 per cent on take-home tests, and the consumer watchdog ACCC said the price of the kits when bought from a wholesaler should range between $ 3.95 and $ 11.45.
Pharmacy owner Curtis Ruhnau, who is still waiting on a shipment of tests, says once he gets them it will be impossible to keep prices down.
“The prices that we’ve been asked to pay for them – sometimes up to $ 15 wholesale plus GST per test – are just absolutely ridiculous,” he said.
“It’s really tricky setting the prices [for customers] because we do not want to be accused of price gouging ourselves, but at the same time we have rent, we have wages, we have other overheads that we have to pay for, so we have to make sure that we can cover those.
“It feels like we’re walking a tightrope.”
Mr Ruhnau says he is doing all he can to ensure prices are as low as possible even if it means not profiting from selling the tests.
“It’s not about us making money; we need to make sure that we cover costs, we need to make sure that the business remains going, but it’s not about that for us. For us, it’s about making sure that we get tests into people’s hands, “he said.
‘You’re easily marking up RATs 40, 50 per cent’
Dr Bi Mian, who has been importing RATs for at least a year and has developed strong contacts within the complex world of kit distribution, says the enormous import costs and the additional “compliance layers” are driving up the price on retail shelves.
“I’ve seen prices of $ US1 to $ US1.50 out of the factory in China, and that’s the kind of pricing you’ll be getting when you export this to the EU, south east Asia, where [retail] prices are roughly $ US5-6, “he said.
He says with most of the tests made in China, the cost of refrigerated freight means tests are $ US4-5 ($ 5.70 to $ 7.10) once they land in Australia.
An importer or sponsor approved by the Therapeutic Goods Administration then takes the product and sells them to wholesalers at another mark-up before it eventually reaches the shelves of Australian retailers.
He says the slow uptake of RATs in Australia also meant prices had been driven up within the supply chain.
“When the factories in China are at the limits of production it’s again about price, competing to get supply before someone else, so what you end up seeing is some suppliers having products redirected from Europe and obviously you have to pay a premium on that, “he said.
“[And] once you get through all those different levels you’re easily marking up [RATs] 40, 50 per cent. “
Prices likely to come down as supply increases, says expert
Consumer law academic Dr Katharine Kemp said businesses can pass on the legitimate costs they incur when charging a customer.
“It will be possible for them to take those costs into account in setting the price of these tests,” she said.
“That is a legitimate thing to do, but it would be a risky thing as far as business and the law goes, if they were to attempt to make as much profit as possible out of this situation at the expense of people in a very vulnerable position.”
Dr Kemp believed it was unlikely prices would come down until supply issues were resolved.
“I think that we are not going to get a complete solution in the short-term to the present problem until we see these supplies increasing and the difficulties in the current supply chain resolved,” she said.
“So it will come down to the government working together with businesses to do whatever can be done to change this shortfall in the supply of the tests.”
The federal government has committed to purchasing 72 million RATs, which it hopes will ease supply concerns.
It also says its concessional access program has already been providing tests to pharmacies.
“In the first week of the program, 2.4 million RATs have been provided through 2,800 pharmacies to 563,000 concession card holders, which was well over double the expected supply in the first week,” a spokesman for Federal Health Minister Greg Hunt said.
“Minister Hunt has been a strong and early supporter of the role of rapid antigen tests. We’ve been providing continuous supply and that has helped keep people safe. But equally, we recognize that there’s been a global spike in demand and states and territories , and the Commonwealth and the private sector, are all bringing additional tests into the country. “
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