ALBANY — Last winter, New York and California purchased rapid at-home coronavirus tests that were exactly the same.

But California paid about 45% less per test than New York spent, records show. If New York had paid the same price, the state would have saved $286 million.

The Times Union reported last week that Governor Kathy Hochul’s administration bought 52 million “Carestart” tests, made by New Jersey-based company AccessBio, for $637 million – paying an average of 12, $25 per test.

Unlike California, New York purchased the tests through a New Jersey-based distributor, Digital Gadgets, LLC, a New York family-owned company that donated nearly $300,000 to the Hochul countryside.

California purchased the tests directly from AccessBio and paid significantly less, despite California being nearly 3,000 miles from the company’s main manufacturing site.

On January 11, California signed a purchase order with AccessBio for 10.02 million Carestart tests at $6.75 per test, for a total of $67.6 million. The California Department of Health Services has confirmed that the state has received all tests ordered from AccessBio.

New York bought five times more AccessBio tests than California. Typically, buying in bulk would result in a lower price, although last winter’s testing shortage created an unusual market.

The comparison between the states is not exact. New York’s purchases began about three weeks earlier, when the supply of rapid antigen tests was even more limited.

An initial order for 26 million tests was placed on December 21 at a price of $13 each. According to state records, Digital Gadgets offered to sell all 26 million tests on Dec. 20, and Hochul’s office approved the purchase the same day.

The second order from New York was placed on January 4 – then amended on January 20 – for $11.50 each for 26 million tests. (Digital Gadgets says the deal for the second order was reached earlier, on Dec. 30.) Of those 26 million tests ordered, 12 million were originally purchased by the administration through iHealth Labs for $5 each. .

The state health department declined to say why it ‘converted’ that purchase in January to buy 12 million tests from Digital Gadgets at the higher price, rather than buying from iHealth – a difference of $78 million.

Bill Hammond, senior health policy fellow at the Empire Center for Public Policy, said the purchase price paid by California seemed to confirm that New York got a bad deal.

“The price is just off the charts, and we still haven’t heard anything close to a convincing explanation as to why the price was so high, and why the Hochul administration not only agreed to such a high price, but made them their main supplier,” Hammond said. “If the tests were sold to another state at the same time – at a better price – New York should have been able to get something closer to that price, even if the state seizes the last available tests.”

Of approximately 90 million rapid antigen tests purchased by New York last winter, 52 million were supplied through Digital Gadgets, which was paid $12.25 per test. Three other providers charged the state $7.80 or less.

John Gallagher, a spokesman for Digital Gadgets, told the Times Union that the price paid by New York was “very competitive at the time”. Because the tests were manufactured in New Jersey, Digital Gadgets was able to provide a “level of certainty regarding delivery and shipping that the state needed.”

Gallagher declined to say how much profit Digital Gadget made on the $637 million in trades, but said the company made “a profit nowhere near $286 million.”

“Any implication to the contrary is misleading and deliberately ignores the fact that Digital Gadgets paid more per unit for AccessBio testing than the State of California due to order size and date, risked hundreds of millions of dollars in capital costs to fulfill an order of this size, incurred millions of dollars in costs to charter planes and cover employee overtime over Christmas and New Years, and then also had to meet the later requirement of the state for the tests to have an extended expiration date — requiring the additional supply of materials,” Gallagher said.

The costs of delivering 52 million tests to tight deadlines forced the distributor’s employees to work overtime, and the company was able to secure nationwide production space in various states, including New Jersey, La California, North Carolina, Florida and Massachusetts.

On Dec. 30, New York issued a requirement that test kits must have later expiration dates, which the company said added expense and required Digital Gadgets “to ship fresh components from around the world and establish delivery schedule and new requirement.” According to the company, it uniquely guarantees that it will replace any tests that are about to expire, a “vital part of our value” that adds considerable expense.

“We have committed hundreds of millions of dollars in capital to secure these assets as well as hundreds of people working on the project to provide the manpower needed to deliver 52 million tests in a compressed timeframe,” the company said. company, adding that it was “keeping our commitment to (New York) despite much higher offers from many governments to buy the tests from us.”

Digital Gadgets did not specify which government entities made the offers.

An AccessBio official declined to explain the difference in prices paid by New York and California, telling the Times Union that the company “cannot provide the details you request because we are bound by nondisclosure agreements. with our customers”.

Cort Ruddy, a spokesperson for the state Department of Health, declined to say why New York made the purchases through Digital Gadgets, rather than directly from the manufacturer as California did and as New York l ‘did with other test manufacturers.

“The circumstances New York State faced at different times during the pandemic varied significantly from other states based on several factors and, as with other waves, the omicron wave hit New York first,” Ruddy said. “At the time these tests were purchased, New York State’s seven-day case average had more than doubled over the course of a week and was rapidly increasing, and … our seven-day case average for (100 000 people) was four times that of California. New York was struggling to get ahead of that wave and contracted three weeks ahead of California.

Still, a good government group on Thursday called for a federal investigation into purchases of digital gadgets.

“Why did New York buy these tests at exorbitant prices from Digital Gadgets – an intermediary with no history of distributing COVID tests when all other distributors and manufacturers were selling at much lower prices? said Reinvent Albany executive director John Kaehny. “Yes, New York was in crisis, but so was the rest of the country, and other states and the feds didn’t pay for what New York did for the same test. It’s either monumental incompetence or a paying game and the feds should take a serious look at it.”

The Hochul administration has defended the purchase of the 52 million tests, arguing that only digital gadgets could supply New York with significant numbers before schools reopen the week of Jan. 3.

The administration argues that the rapid tests were necessary to keep schools open after the winter break, a top priority for Hochul, which did not want closures caused by the highly infectious omicron variant.

The Times Union reviewed invoices Digital Gadgets sent to the state Department of Health which show that through Jan. 3, the company provided the state with approximately 1.5 million tests. This figure represents less than 3% of the total number purchased through Digital Gadgets.

As Hammond wrote, about 62% of New York’s payments to Digital Gadgets, or about $395 million, came after the omicron variant disappeared in late February. New York paid for the tests as they were delivered. Digital Gadgets says the bulk of the $637 million in testing was delivered to New York in late February.

Due to a standard clause for COVID-19 purchase orders in New York, the state likely could have avoided paying the inflated prices to Digital Gadgets before spending the full $637 million.

The Department of Health declined to say whether New York could have purchased more tests in late December from other cheaper suppliers. Just before New York signed its first purchase order with Digital Gadgets for $13 per test on Dec. 21, the Department of Health had struck a deal for 5 million tests — at $5 each — with iHealth Labs. Digital Gadgets argued that Chinese-made iHealth tests are inferior to those from AccessBio.

The price New York paid for digital gadgets wasn’t entirely an outlier. The Times Union contacted governments across the country that allegedly purchased AccessBio tests, and officials in the city of Malden, Mass., said that on Dec. 22 they purchased 12,000 two-test AccessBio kits at a price of $14 per test – $1 more than New York paid its first order of 13 million a day earlier. Like New York, Malden purchased the tests through a third-party distributor, in Malden’s case a company called Trans Med USA.

Before the New York purchase orders with Digital Gadgets were signed in December and January, the Tebele family who own Digital Gadgets donated approximately $70,000 to Hochul’s campaign. The Tebele family donated about $227,000 more to Hochul after the purchase orders were signed, and Digital Gadgets founder Charlie Tebele hosted a fundraiser for her on April 10.

Hochul said she was unaware of the family’s donations at the time the order was placed.

“I didn’t know it was a company that supported me,” Hochul said in July, referring to the donations. “I don’t keep track of that. My team, they have no idea. But the fact that there was someone who could meet that need at the time allowed us to deliver kits critically important test when no one else, including the federal government, could get their hands on it.”

Following the Times Union story last week, House Republicans called for law enforcement investigations and a budget committee hearing. On Monday, Hochul said she was suspending the emergency executive order — first issued in November — that granted her administration unchecked authority over the purchase of COVID-19 supplies, including authorizing the purchase of antigen testing without tender.

“We feel comfortable being able to suspend them,” Hochul said. “We have been following normal procurement rules for some time, but this has allowed us other extraordinary measures which we will not need at this time.”