China testing blunders stemmed from secret deals with firms

The widespread test shortages and problems at a time when the virus could have been slowed were caused largely by secrecy and cronyism.

By Associated Press

In the early days in Wuhan, the first city first struck by the virus, getting a COVID test was so difficult that residents compared it to winning the lottery.

Throughout the Chinese city in January, thousands of people waited in hours-long lines for hospitals, sometimes next to corpses lying in hallways. But most couldn’t get the test they needed to be admitted as patients. And for the few who did, the tests were often faulty, resulting in false negatives.

The widespread test shortages and problems at a time when the virus could have been slowed were caused largely by secrecy and cronyism at China’s top disease control agency, an Associated Press investigation has found.

The flawed testing system prevented scientists and officials from seeing how fast the virus was spreading — another way China fumbled its early response to the virus. Earlier AP reporting showed how top Chinese leaders delayed warning the public and withheld information from the World Health Organization, supplying the most comprehensive picture yet of China’s initial missteps.

Taken together, these mistakes in January facilitated the virus’ spread through Wuhan and across the world undetected, in a pandemic that has now sickened more than 64 million people and killed almost 1.5 million.

Communist cronyism

China’s Center for Disease Control and Prevention gave test kit designs and distribution rights exclusively to three then-obscure Shanghai companies with which officials had personal ties, the reporting found.

The deals took place within a culture of backdoor connections that quietly flourished in an underfunded public health system, according to the investigation, which was based on interviews with more than 40 doctors, CDC employees, health experts, and industry insiders, as well as hundreds of internal documents, contracts, messages and emails obtained by the AP.

The Shanghai companies — GeneoDx Biotech, Huirui Biotechnology, and BioGerm Medical Technology — paid the China CDC for the information and the distribution rights, according to two sources with knowledge of the transaction who asked to remain anonymous to avoid retribution. The price: One million RMB ($146,600) each, the sources said. It’s unclear whether the money went to specific individuals.

In the meantime, the CDC and its parent agency, the National Health Commission, tried to prevent other scientists and organizations from testing for the virus with their own homemade kits.

In a departure from past practice for at least two epidemics, the NHC told Wuhan hospitals to send virus samples — from which tests can be developed — only to central labs under its authority. It also made testing requirements to confirm coronavirus cases much more complicated, and endorsed only test kits made by the Shanghai companies.

These measures contributed to not a single new case being reported by Chinese authorities between Jan. 5 and 17, even though retrospective infection data shows that hundreds were infected. The apparent lull in cases meant officials were slow to take early actions such as warning the public, barring large gatherings and curbing travel.

One study estimates that intervention two weeks earlier could have reduced the number of cases by 86 percent, although it’s uncertain whether earlier action could have halted the spread of the virus worldwide.

When tests from the three companies arrived, many didn’t work properly, turning out inconclusive results or false negatives. And technicians were hesitant to use test kits that would later prove more accurate from more established companies, because the CDC did not endorse them.

With few and faulty kits, only one in 19 infected people in Wuhan was tested and found positive as of Jan. 31, according to an estimate by Imperial College London. Others without tests or with false negatives were sent back home, where they could spread the virus.

Days after he first started coughing on Jan. 23rd, Peng Yi, a 39-year-old schoolteacher, waited in an eight-hour line at a Wuhan hospital. A CT scan showed signs of viral infection in both his lungs, but he couldn’t get the test he needed to be hospitalized.

When Peng finally got a test on Jan. 30, it turned out negative. But his fever wouldn’t drop, and his family begged officials for another test.

His second test, on Feb. 4, turned out positive. It was too late. Weeks later, Peng passed away.

“There were very, very few tests, basically none….if you couldn’t prove you were positive, you couldn’t get admitted to a hospital,” his mother, Zhong Hanneng, said in a tearful interview in October. “The doctor said there was nothing that could be done.”

China was hardly the only country to grapple with testing, which varied widely from nation to nation. Germany, for example, developed a test that became the World Health Organization gold standard days after the Chinese government released genetic sequences on Jan. 12. But in the U.S., the CDC declined to use the WHO design and insisted on developing its own kits, which turned out to be faulty and led to even longer delays than in China.

Other countries also had the benefit of learning from China’s experience. But China was grappling with a new pathogen, and it wasn’t yet clear how bad the pandemic would be or how many tests would be needed.

“It was very early,” said Jane Duckett, a professor at the University of Glasgow examining the Chinese government’s response to the coronavirus. She said the government was “just trying to figure it out.”

Still, the hiccups and delays in China were especially consequential because it was the first country to detect the virus.

“Because you have only three companies providing testing kits, it kept the capacity of testing very limited,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. “It was a major problem that led to the rapid increase in cases and deaths.”

China’s foreign ministry and China’s top medical agency, the National Health Commission, did not respond to requests for comment.

“We did a brilliant job, we worked so hard,” said Gao Fu, the head of China CDC, in a videoconference in July. “Unluckily, unfortunately, this virus we are facing, it’s so special.”

New companies, no experience

None of the first three diagnostics companies tapped to make test kits for the biggest pandemic in a century were well-known in the industry. For one engineer from a Wuhan-based diagnostics firm, the Shanghai competitors popped out of nowhere “like bamboo shoots” – all the more so because his company had the factories and expertise to produce testing kits in the city where the virus was first detected.

“We were surprised, it was very strange,” the engineer said, declining to be named to speak on a sensitive topic. “We hadn’t heard about it at all, and then suddenly there’s test kits from certain companies you have to use, and you can’t use ones from anyone else?”

BioGerm was officially founded just over three years ago in a conference room, where the CEO mulled how to survive in a small and crowded market for test kits. GeneoDx had fewer than 100 employees, according to Tianyancha, a Chinese corporate records database – compared to competitors that employ hundreds or even thousands of staff.

But what the companies lacked in resources or experience, they made up for in connections.

Company posts, along with hundreds of internal emails and documents obtained by The Associated Press, show extensive ties between the three companies and top China CDC researchers in Beijing and Shanghai. Chinese regulators barred AP attempts to obtain credit reports on the companies, saying they were classified as “confidential enterprises” during the outbreak.

Despite China’s efforts over the years to reform public health and push for open bidding in a competitive marketplace, medical companies still cultivate personal relationships with officials to secure deals, according to seven executives from different competitors.

Under President Xi Jinping, China has cracked down on corruption, but industry insiders say a lack of firm boundaries between public and private in China’s health system can create opportunities for graft.

It’s unclear whether the agreements between the China CDC and the three test kit companies violated Chinese law.

They raise questions around potential violations of bribery laws, along with rules against abuse of authority, self-dealing and conflicts of interest, said James Zimmerman, a Beijing-based corporate attorney and former chairman of the American Chamber of Commerce in China. Even amid the uncertainty of the pandemic, “there is no excuse for the flow of cash from these companies to the CDC,” he said.

Chinese bribery laws also state that any financial transaction has to be recorded and documented clearly. The AP was unable to ascertain whether the agreements between the CDC and the Shanghai companies were documented, but a CDC employee with access to some of the agency’s finances said there was no record of them.

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