Texas paid hundreds of millions for COVID tests later flagged by FDA

Texas' lead emergency agency paid a small California firm more than $385 million for COVID tests that were subsequently flagged for potential false results by the U.S. Food and Drug Administration.

State of play: The Texas Department of Emergency Management has shelled out roughly $150 per PCR test kit to Gothams, an emergency management firm run by ex-military personnel, according to an Axios analysis of procurement data collected through open records requests.

• TDEM paid hundreds of millions of dollars to Gothams for the Curative PCR test kits, ordered between April and December 2020, which were then distributed to prisons and other facilities.
• But in January 2021, the FDA warned that COVID-19 tests made by Curative might tell patients they were free of the virus, even when they weren't.

Why it matters: In retrospect, Texas may have been paying for tests with so-called false negatives — which could lead people to unknowingly spread the disease.

Officials with TDEM defended the use of the tests.

• "False results are possible with all COVID-19 tests," Seth Christensen of TDEM told Axios. "That is one reason why public health officials have continuously encouraged people to not rely solely on one negative test, but to be tested multiple times."

Officials at Gothams — which counts Curative as a client and was founded by a partner in a venture-capital firm that invested in Curative — didn't respond to interview requests.

But Curative officials told Axios the validity of their tests was never called into question — they previously received a federal emergency use authorization — and the FDA warnings restated the need to use their tests in accordance with the label and instructions.

Reality check: In January, FDA officials issued an alert about the risk of false results from the Curative SARS-CoV-2 test.

• "To reduce the risk of false negative results, it is important to perform the test in accordance with its authorization and as described in the authorized labeling," the FDA warned in a Jan. 4 safety communication.
• Per state records, TDEM didn't purchase any more of that particular Curative test after the FDA warning.
• By July, the FDA reported that test is "no longer being offered and is no longer authorized for emergency use by the FDA."

Of note: The FDA's warning about the Curative test wasn't as strongly worded as two alerts issued later in 2021 that urged the public to "stop" using certain other COVID tests.

What they're saying: TDEM officials say the $150-per-test expenditures include setup, staffing and test site operations, as well as processing, and that the expenditures are eligible for federal reimbursement.

• The agency has purchased a variety of tests as it seeks to "expand testing options and ensure a diversity of tests," Christensen told Axios.
• "TDEM closely monitored the FDA's guidance on the need to use Curative tests in accordance with its labels and instructions for use," Christensen said. "This guidance did not recommend discontinuing use of these tests."
• "TDEM's continued goal is to ensure that Texans have access to a wide variety of COVID-19 testing options across our state," he said.

Curative officials told Axios they never observed any changes in test performance.

• The company currently has nearly 1,000 workers in Texas, including more than 265 people at a lab in Pflugerville.
• "Curative has built and operates thousands of testing sites … that have enabled testing in some of the most difficult-to-reach communities with limited access to healthcare," Curative spokesperson Pasquale Gianni tells Axios.
• "This far exceeds what is provided by other contractors offering only lab services and enabled the State of Texas to respond rapidly to increase testing capacity across the state," Gianni added.

The big picture: The dizzying amount spent reflects how getting tests for every governmental entity has been a pandemic priority.

• In July 2021, following the FDA setback, Curative partnered with health care giant Abbott to use that company's COVID test through the Curative lab network.
• In August, TDEM paid Gothams $11.25 million for 75,000 of those tests.