Why Europe Has At-home Tests And the US Doesn’t
Rather than a market failure, our at-home testing shortage is another government failure
Over a year and a half into the pandemic, the US still has a shortage of at-home COVID-19 tests. Consumers wanting to quickly test themselves struggle to find them, and when they do, they are forced to pay high prices. Meanwhile, in Europe tests are abundant and cheap, or provided by the government. At first glance, you might think it’s a clear example of where the market fails. Unfortunately, the market was never given a chance.
Around the world from East Asia to Europe, people are able to find cheap or free at-home COVID tests. People routinely use them to know whether they need to stay home for a few days, or if they can safely visit older friends or family members. They are a low-cost solution that gives people knowledge about their risk to others and can be used for those who are still nervous about COVID to return to a state of normalcy.
But in the US, it has been an entirely different story. Since the beginning of the pandemic, testing has been an issue. All tests had to be approved by the FDA, which had to be conducted in certified clinical labs and regulated under the Center for Medicare and Medicaid Services. The only test allowed for use by public health officials was the CDC’s test. The same flawed test that set back our testing ability by weeks at the outbreak of the pandemic. It was only Helen Chu’s flouting of the FDA guidelines that forced the FDA to change its policy, allowing private labs to develop and use tests.
Red tape and central planning stymied our early response. But rather than learn from it, we continued to let it stifle our ability to test for COVID.
A recent ProPublica article details the difficulty of obtaining an Emergency Use Authorization for rapid at-home tests. The process, all occurring during a pandemic that required the total uprooting of society, was described as arbitrary, opaque, and meandering. This is the exact opposite of what you want to see during a crisis.
I will share a few of their many examples. One firm submitted an at-home test application in March of 2021. The FDA did not respond until late May, and only to ask questions which were answered in the original application. The firm responded within the 48-hour window they were given, only to be forced to wait until September for the FDA’s response. Then the FDA “identified other deficiencies” and refused to review the rest of the application, sending it to the back of the line. This company’s tests were approved in the European Union, where they fill the shelves of stores.
Another submitted an application and waited months without a response from the FDA. When they finally did respond, the FDA gave the firm just 48 hours to respond to questions. They could not put together a response in that time, and the test was never made available for consumers.
Throughout the pandemic, the FDA has caused long delays for companies trying to get regulatory approval. The ProPublica article contains several complaints about the lack of urgency by regulators. The time it took the FDA to review EUA applications reached 99 days by November 2020. It was not until October 25th that the Department of Health and Human Services announced that the FDA will streamline its approval process.
The FDA demanded a high level of accuracy for the at-home tests. This is understandable. Inaccurate tests giving people false confidence to go out in public could cause more infections rather than fewer. However, many of the tests not approved by the FDA were approved in the EU. The FDA has authorized just 9 at-home rapid tests that can be taken without a prescription, while Europe has authorized 39.
The FDA regulators in charge of the emergency authorization process treated the situation as business as normal. Rather than trying to get as many tests approved, working with companies to ensure they were up to par, they set impossibly short response timelines, slow-walked applications under review, and set higher standards than necessary. They continued to see their job as preventing anything imperfect from ever being used by Americans.
One solution would have been to take Arnold Kilng’s advice and fire all the peacetime bureaucrats, replacing them with people ready to handle a crisis. Career bureaucrats do not face incentives that encourage risk-taking, so their actions should be no surprise. Taking a risk will not lead to a promotion if it is successful, but it will get you fired if it is not. In addition to (or instead of) replacing them, it is imperative to change the incentives they face. We were able to do just that with Operation Warp Speed.
The difference between vaccines and tests highlights the difference that regulators can make. Rep. Kim Schrier remarked “It feels like in one place we’re in a rocket ship and in another place, we’re on training wheels,” contrasting vaccines and testing. But we should expect this. In the case of vaccines, the government made it easier for companies that developed vaccines to obtain regulatory approval through Operation Warp Speed. In the case of testing, it was slow-moving, duplicative, and even vindictive.
FDA officials, like Rep. Schrier, blamed the federal government for not purchasing large quantities of tests. They see this as an indictment of the free market. But it is the roadblocks needlessly thrown up by the government’s own regulatory agencies that prevent people from having access to tests.
Some safety standards are necessary, whether for medical treatments or tests. But the FDA delays were extreme, preventing or delaying many good tests from being brought to the market. For the FDA, it was business as usual, even though we were in the throes of a pandemic.
As long as the government stands in the way, the market cannot provide, no matter how loudly politicians or proponents of government complain.
Conor Norris is a research analyst at the Knee Center for the Study of Occupational Regulation at Saint Francis University. He graduated from George Mason University with an MA in economics.