Contract with diagnostics company will allow California to process up to an additional 150,000 COVID-19 tests a day with a contractual turnaround time of 24-48 hours

Groundbreaking deal will disrupt testing market and drive down cost of tests for everyone; it expands California’s ability to fight COVID-19 and protect essential workers and those most at risk of infection

SACRAMENTO — Governor Gavin Newsom today announced that California has signed a groundbreaking contract with a major diagnostics company, which will allow California to process up to an additional 150,000 COVID-19 diagnostic tests a day, with a contractual turnaround time of 24-48 hours. The goal is to stand up a laboratory facility and begin processing tens of thousands of additional tests by November 1 and run at full capacity by ­no later than March 1, 2021.

This first-of-its-kind agreement aims to disrupt the testing marketplace, help break supply chain logjams and drive down the costs for tests for every Californian. It will greatly expand California’s ability to track and prevent COVID-19 infections across the state and create additional testing capacity that will allow the state to increase testing in communities at high risk for contracting COVID-19, like essential workers, those in congregate settings and communities of color.

“California is using its market power to combat global supply chain challenges and protect Californians in the fight against COVID-19. Supply chains across the country have slowed as demand for COVID-19 tests has increased, and flu season will only exacerbate the problem,” said Governor Newsom. “So we are building our own laboratory capabilities right here on California soil with a stable supply chain to fight the disease, lower the prices of testing for everyone and protect Californians most at risk from COVID-19.”

Under the contract with PerkinElmer, the state will utilize polymerase chain reaction (PCR) diagnostic testing, which is considered to be the gold standard in testing. The state continues to evaluate new technological breakthroughs in testing, which is why this contract includes provisions that enable the contractor to adopt new technology at a lower price point. Additionally, the state plans to leverage multiple technologies or modalities with multiple laboratory partners to ensure that we diversify our testing capabilities.

The per-test cost would be $30.78 at 150,000 tests per day. For context, Medicare and Medicaid both reimburse at roughly $100 per test, while the average cost of a COVID-19 test ranges from $150 – $200 per test. To support this contract at the lowest cost to taxpayers, the state will enter into a contract for third-party billing services to recoup costs from health insurance companies or other payers.

“Californians need testing that is accessible, equitable, cost-effective and timely,” said Senate Budget Chair Senator Holly Mitchell. “This deal meets all those metrics.”

“Our Latino community is disproportionately devastated by this public health crisis. Latinos perform the essential work in our agricultural fields, our garment factories and our meatpacking plants that increase their chances of contracting COVID-19 and put their lives at risk,” said California Latino Legislative Caucus Chair Assemblymember Lorena Gonzalez. “Expanding testing for all Californians means that our essential workers will have more access to information to protect themselves, their families and their communities.”

“Black Californians have been disproportionately sickened and killed by COVID-19,” said California Legislative Black Caucus Chair Assemblymember Shirley Weber. “I am pleased that Governor Newsom is prioritizing more testing equity for all Californians.”

Senate Health Committee Chair Senator Richard Pan and Assembly Health Committee Chair Assemblymember Jim Wood also joined the Governor during today’s announcement and voiced their support for the plan.

“Physicians have been on the front lines of this pandemic from Day One. To provide the best care possible to our patients we need fast, reliable diagnostic testing,” said Peter N. Bretan, Jr., M.D., President of the California Medical Association. “We applaud Governor Newsom for helping us address that need. Rapid testing also increases our ability to do effective contact tracing to help stem the spread of COVID-19.”

“Every Californian, regardless of age, race, income or immigration status, needs rapid and reliable results for testing for COVID-19, if we are to ultimately contain this coronavirus,” said Anthony Wright, Executive Director of Health Access California. “Californians will benefit from us having this increased capacity for COVID-19 testing, at a set and affordable price.”