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Covid testing providers scale back despite worries of another winter surge

Should the U.S. see another surge, Americans could find themselves in a similar testing bind as last winter, when at-home tests quickly sold out.
A laboratory technician prepares Covid-19 patient samples for semi-automatic testing at Northwell Health Labs, in Lake Success, N.Y., on March 11, 2020.John Minchillo / AP file

WASHINGTON — Covid testing labs and at-home test manufacturers have been downsizing after government funding cuts and waning demand, despite concerns from health officials that the country could face another winter surge in infections. 

It is unclear what trajectory the pandemic will take as the U.S. enters the cooler fall and winter months that have preceded past spikes in cases; some public health groups are forecasting another winter wave of infections.

Just how severe that wave will be will depend on whether the virus mutates to evade immunity from previous infections. But should the U.S. see a surge similar to last winter's, Americans could find themselves in a similar testing bind, with at-home tests quickly selling out and people encountering long waits for laboratory PCR test results, public health officials said. 

Manufacturers of rapid at-home Covid tests are making only half the number of tests as they were in February, when they ramped up production in response to the omicron wave, and the White House committed to buying 1 billion at-home tests, according to data compiled by Mara Aspinall, a professor at Arizona State University who has consulted with companies and institutions on testing.

Image: Home Covid-19 tests
Distributing rapid at-home Covid-19 test kits at the GreenRoots environmental protection organization and Chelsea Community Connections in Chelsea, Mass., on Dec. 17, 2021.Joseph Prezioso / AFP via Getty Images file

But since last winter, demand for testing has gone down and the White House has run out of money to keep purchasing tests on such a large scale, causing some companies to cut back on capacity.  

“There are definitely manufacturers stepping back without full confidence there will be a government or any market for Covid tests,” said Aspinall. “That being said, I believe some of the larger providers will remain committed to the market. Some of the smaller ones, there is a question.”

Laboratories that process PCR tests have also cut their capacity by a third as more people turn to at-home tests, and public health guidance has become more relaxed around testing for schools and travel, according to Aspinall's data.

Opko Health’s BioReference Labs, for example, has gone from processing 3 million PCR tests in the second quarter last year to 1 million in the same period this year. As a result, it has cut its testing workforce by more than 4,000 since its peak, including laying off 700 workers in June and July, the company said during its quarterly earnings report last month. 

Companies making Covid tests, equipment and supplies have also seen a hefty drop in Covid-related sales. Becton Dickenson saw its Covid testing revenues tumble to $76 million in the most recent quarter, from $300 million a year earlier, and executives said they expect demand to continue to decline throughout the year. 

The number of reported Covid cases is currently a quarter of what it was at its peak last winter. But Chris Murray, director of the Institute for Health Metrics and Evaluation, estimates that only 4% to 5% of infections are being reported, because so many are uncovered through at-home tests and aren't reported to public health departments, or they aren't being detected at all. He expects to see infections start to increase next month and continue to rise through the winter.

"Waning immunity from the last Ba.5 round of infections and waning immunity from vaccination combined with people being indoors should combine to mean that we should see infections start to go back up starting in October and go up quite a bit," Murray said.

The Biden administration had aimed to provide some stability to the Covid testing market by purchasing a steady supply of Covid tests to send to Americans for free. But Congress has failed to pass a Covid spending package that included $2 billion for testing, and last month the White House said it was ending its free Covid testing program.

With its remaining funds, the White House said this month it would buy 100 million more tests to stockpile in case of another surge, far short of what the administration had hoped to do had its funding from Congress come through, administration officials said.

IHealth Labs, one of the biggest beneficiaries of federal spending on Covid tests earlier this year, said it was now making around a tenth of the tests it was in February. But the company said it was prepared to quickly ramp up production — up to 50 million tests per month — if there is another winter surge.

“We need to prepare for the fall and winter. We don’t know if there’s any new wave, but we need to be ready because it’s happened for the last few winters,” said Jack Feng, CEO of iHealth. “We are always convinced there will be an end, but it always comes back.”

State and local governments have also been running short on funding to provide free PCR tests, making pop-up Covid testing centers on street corners or at large gathering sites a thing of the past in many areas.

Among state and local health officials, many have largely shifted their attention away from Covid, especially with the rise of monkeypox, and there is little talk of ramping up to prepare for a potential winter surge, said Marcus Plescia, chief medical officer for the Association of State and Territorial Health Officials. His group represents the public health agencies of all 50 states, Washington, D.C., five U.S. territories and three Freely Associated States.

“Even public health people seem to have this kind of magical thinking that everything is going to be OK and maybe it won’t be OK, but I don’t think anybody’s gearing up. I think for the most part, everybody’s waiting to see what happens and they’ll gear up if the needs arise,” said Plescia. “I think it’s kind of human that everybody’s just taking a break and waiting to see what happens.”

Part of that mindset comes from confidence in treatments, like Pfizer’s Paxlovid, that reduce the risk of severe disease, and new boosters specifically targeted at omicron, health officials said.

But as the virus continues to spread, there remains the threat that a new variant could develop that would evade the immunity much of the population has from past infections and vaccinations, Murray said. 

“There’s only so much capacity, so much staff, so much mental bandwidth to tackle Covid," Murray said. "I think the problem now is the public health community may be more focused currently on what’s happening and trying to think about relatively small effects on the big picture for Covid, as opposed to putting a lot of energy into the sort of preparedness plans if a bad variant comes along."

Test manufacturers and laboratories say they are in a stronger position than last year to be able to quickly scale up capacity should there be another surge because of the investments they have already made in equipment and facilities. 

Abbott, one of the largest makers of at-home tests, said it has continued to make “tens of millions” of rapid tests at its two facilities in Maine and Illinois, and has the capacity to produce 100 million tests per month if needed. Abbott saw its Covid testing revenue decline by 29% in the most recent quarter, though its sales nearly doubled over the past year.

“Maintaining our domestic rapid test manufacturing infrastructure is mission critical for pandemic preparedness,” the company said in a statement. “This includes responding quickly to seasonal Covid waves and new variants, and ensuring that rapid tests are readily available so that Covid therapeutic treatments can be administered quickly.”

One of the biggest barriers to being able to quickly scale up would be finding enough people to work in the labs and manufacturing lines or collect samples from patients.

“One of our limitations like every industry right now is people,” said Alex Greninger, an assistant director of the clinical virology laboratories at the University of Washington Medical Center. “The burnout is real. It’s hard to do. We’ve done about 105 years of testing in the last two and a half years. Imagine you had to increase your productivity like 50-fold.”

The decline in PRC testing and a shift to at-home tests also leaves public health officials increasingly flying blind with regard to the spread of infections because few at-home test results are reported to public health departments, unlike with laboratory tests. That could make it more difficult for testing manufacturers and laboratories to see a surge coming and ramp up accordingly. 

There have also been other concerns about the accuracy of at-home tests, which tend to be less sensitive than PCR tests.

“I do worry that the public has gotten a little bit too reliant or trusting in the sensitivity of home tests,” said Plescia. “I think they’re a good tool, but they’re clearly imperfect.”