Laredo wasted $500,000 on COVID-19 tests — highlighting crisis of hospitals scrambling to obtain supplies

When thousands of rapid COVID-19 tests were delivered to the South Texas city of Laredo late last month, it looked as if a visiting dignitary had arrived. With lights flashing and sirens blaring, Webb County sheriff’s deputies escorted a red tractor-trailer carrying the tests to a local emergency room, whose owner had purchased them from a Chinese manufacturer.

Longtime Laredo Congressman Henry Cuellar, who helped facilitate the arrival of the tests, smiled broadly as he carried boxes of them inside the clinic. Believing the tests would detect an active infection, Laredo leaders hustled to set up a drive-through testing site to welcome anxious residents the following morning.

But the promise of the 20,000 tests would soon become a bitter example of what can go wrong when local governments and private medical firms try to buy supplies on the open market from unknown manufacturers, as policies from the U.S. Food and Drug Administration shift and anxiety increases over a lack of test kits from official sources.

As they tried to validate the tests to ensure their accuracy, city health workers in Laredo quickly determined that they were unreliable and unusable. And even if they had passed the city’s testing, it’s unclear how helpful they would have been for the city at that early point in its battle against the coronavirus. They were antibody tests, which seek evidence that someone’s immune response has encountered the virus, not diagnostic tests that detect active infection.

Within a week, investigators from the U.S. Department of Homeland Security would seize the 20,000 tests, as Laredo police and federal authorities tried to determine the validity of the tests’ FDA status.

“We’re very disappointed, because we thought we had secured a supply,” Laredo Mayor Pete Saenz said. “It set us back, but we can’t give up. Plan B is acquiring (tests) wherever we can find them.”

Laredo’s attempt to secure the testing kits highlights what is happening not only in Texas but across the country, as a stubborn shortage of COVID-19 tests has led private sector and government leaders to take risks that they normally would not.

But as local governments and private laboratories across the nation similarly seek out stores of test kits, critics say the FDA isn’t keeping up with a growing number of international manufacturers peddling kits in online emporiums, sometimes claiming FDA authorizations that don’t exist.

“This is one of those things where, can you imagine ... a city government trying to figure this out? This shouldn’t be the process,” said Scott Becker, chief executive officer with the Association of Public Health Laboratories. “The concern is that we’re starting to see tests that have not been vetted, where we don’t know their quality, and they are already coming into the country.”

Cuellar refused to answer questions this week from ProPublica and The Texas Tribune about his role in the procurement of the tests or their FDA status, issuing a statement thanking federal authorities for seizing the tests.

Today, Laredo, a city of 260,000 on the banks of the Rio Grande, faces a much more dire coronavirus situation than it did a week ago when the tests arrived. As the kits sat unused, six Laredoans died of COVID-19 over seven days, giving the city one of the highest per capita death rates in the state.

“We haven’t tested enough,” said Dr. Hector Gonzalez, Laredo’s health director. “The number of residents tested is still too small to predict any model or scenario with any confidence.”

A Rush to Buy COVID-19 Tests. Confusion Ensues.

The test saga in Laredo began last month with a chance encounter in the waiting room of Cuellar, a Democrat serving his eighth term representing the area in Congress. Robert Castañeda, who last year built what he says is Laredo’s most modern free-standing emergency room, Clear Choice ER, had just left a meeting with Cuellar to discuss the lack of protective equipment and testing in the border city.

In the lobby, as he was leaving, Castañeda ran into another group waiting to talk to the congressman about telemedicine. According to Castañeda, a member of that group, whom he declined to identify, said he knew how to score a huge quantity of 15-minute COVID-19 tests from a Chinese company called Anhui DeepBlue Medical Technology.

The only catch: Castañeda would have to buy 20,000 units, the minimum amount the company’s American distributor would sell.

“That was one of the causes of concern,” Castañeda told ProPublica and The Texas Tribune. “It was about a half million dollar buy.”

In Laredo, city leaders were desperate for additional tests and agreed to buy 2,500 of the kits (Clear Choice would donate another 2,500). Like their neighboring counties along the Texas border, they were scrambling to find enough tests for a population with high levels of preexisting health conditions that doctors warned would leave residents more susceptible to complications from the coronavirus. As a state, Texas ranked low in per capita testing units, leaving many local governments hunting for tests anywhere they could find them.

“We felt like we were all competing with each other for whatever was out there,” Saenz said.

And so with the congressman facilitating the deal, Castañeda paid $500,000 up front and bought the tests. Cuellar would later write on Facebook that he worked with the FDA and U.S. Customs and Border Protection to get the kits “approved and sent down to Laredo.”

Despite Warning Signs, the Tests Are Bought

But even before the purchase, there were warning signs.

First, Anhui DeepBlue, a 10-year-old firm specializing in diagnostic devices, only had so-called antibody tests, not the diagnostic tests that are used to detect an active infection. Antibody tests are meant to detect molecules in the blood that can indicate an immunity after an infection has passed, and the FDA has warned against using them to diagnose active infection.

It also wasn’t clear to Castañeda if the Chinese tests had received authorization from the FDA. The company’s website indicated the tests were registered with the U.S. government. Castañeda said he contacted the FDA and a representative told him the tests weren’t currently approved, but that the agency was authorizing new manufacturers and relaxing regulations at a rapid rate.

Over the past two months, the FDA has been loosening regulations in hopes of spurring more supply. In February, it allowed manufacturers to apply for emergency authorizations and, in a March 16 policy update, distribute test kits even without the authorization if they could show proof of the test’s validation.

On Monday, the FDA reported that some firms “are falsely claiming that their (antibody) tests are FDA approved or authorized, or falsely claiming that they can diagnose COVID-19.” The agency vowed to take action against firms that are falsely marketing tests that aren’t accurate or reliable.

On Thursday night, the FDA provided ProPublica and The Texas Tribune with an updated list of companies that had received an emergency authorization or were listed among the companies operating under the FDA’s March 16 policy. Anhui DeepBlue was not on those lists.

Also late Thursday, Anhui DeepBlue sent ProPublica and The Texas Tribune documentation that the FDA had received its submission for an emergency authorization, the same documentation it previously sent Castañeda, and said it continues to submit materials for FDA review. The company also noted that its antibody tests should not be used as the sole basis to diagnose patients in the early stage of infection, but rather be used as a supplemental test, a warning statement in line with FDA guidance.

Castañeda said trying to decipher Anhui DeepBlue’s claims about FDA registration, certification and, ultimately, authorization was vexing, but in the end he agreed to buy the antibody tests, figuring they were better than nothing:

“It was something that would allow us to do an initial screening and calm the fears of people who wanted to get tested but couldn’t because of the shortage. It was not the be-all. It was just an additional tool.”

Unreliable Tests. Law Enforcement Steps In.

The day after the tests arrived, city health workers began expressing alarm over what they were seeing as they tried to validate their accuracy, and they left the drive-thru site shuttered.

“Until we finish our quality controls, we can’t provide them,” Gonzalez, the health director, said during the city’s daily web-based press briefing.

The following day, the fifth in a row on which city leaders would announce a COVID-19 death, Gonzalez was even more pessimistic. “We had been told by the manufacturer of the test and the literature that it was 93% or 97% effective, which is great,” he said. “But doing our controls, we didn’t like the results that we were getting because they weren’t anywhere near” those numbers.

Anhui DeepBlue told ProPublica and The Texas Tribune that Laredo health officials should have reached out to them before declaring the kits unusable and said it is seeking a detailed report of the city’s validation test.

Gonzalez said the health department tested individuals known to be positive or negative through previous swab testing, and that the Anhui DeepBlue tests only had about 20% accuracy, “too low of a rate to use.”

The health director added that he believed the kits could have been used to screen for active infection, since they could detect a type of antibody called IgM, which is one of the immune system’s first responders during an infection . According to the FDA, when igM antibodies are found in the blood, they “can indicate” an active or recent infection.

“It would have allowed us to test large numbers of persons and give us an indicator of the level of possible infection,” he said.

On April 2, Laredo police began asking questions about the FDA documentation the company’s distributor had presented, according to a press release announcing the city would not use the tests.

The same day, Homeland Security Investigations, an arm of U.S. Immigration and Customs Enforcement, seized the kits and launched an investigation of its own.

Then, in yet another example of the confusing rules around international test manufacturers, Castañeda said that Homeland Security on Wednesday agreed to return his tests. ICE spokeswoman Nina Pruneda declined to explain why.

What happened in Laredo isn’t the first time the company has run into controversy. Last month, federal agents seized 100 of the company’s COVID-19 tests, which were on their way to a Portland, Oregon, man for home use. It’s illegal to send testing kits to a private individual and not a health care provider, according to FDA rules. But in an example of how murky FDA regulations can be, an FDA consumer safety officer told The Oregonian that he couldn’t say at that time whether the company was authorized to distribute its tests to clinical labs.

Laredo health administrators are not the first to complain about unreliable testing kits from China. European nations have complained for weeks about receiving substandard tests from that country.

Disputed purchases include 1.2 million faulty antibody tests in Slovakia, a batch of 300,000 quick tests in the Czech Republic that local authorities said were about one-third defective, and tests sent to Turkey that officials said were just 35% accurate. Spain returned about 9,000 faulty rapid tests that it purchased from an unauthorized Chinese firm last month.

$500,000 Worth of Tests, in Limbo

When Homeland Security releases the tests, Castañeda said he is not sure how they will be used, and there aren’t firm guidelines on how antibody tests should be deployed. Some have argued the tests should be used to clear first responders and other front-line workers to return to their jobs; others believe they will be part of a massive testing effort nationally to identify those with immunity.

“We’ll try to use them wisely to make them available to the community as soon as possible,” he said.

Saenz, the Laredo mayor, said he is hopeful that Texas Gov. Greg Abbott, who has come under criticism for the state’s slow pace of test procurement, will follow through on a promise to ensure a reliable flow of authorized testing kits to cities and counties. On Wednesday, Abbott announced that Walgreens intends to begin offering drive-thru testing, potentially serving thousands of Texans per day.

“We need a secure, proven supply chain where we don’t have to question the validity of the product,” Saenz said. “We know there are people trying to take advantage of a lot of entities.”