SALT LAKE CITY (ABC4 News) – A complaint filed in federal court states, Co-Diagnostics,a Utah company that’s responsible for the COVID-19 tests at Test Utah, is misleading the public and shareholders about how effective the tests are.
The Utah Department of Health Communications Director Tom Hudachko tells ABC4 News, “TestUtah is a State of Utah contract. The contract is with Nomi Health, and Nomi subcontracts for all the elements of the program. The sub-contractor for test kits is Co-Diagnostics. The Co-Diagnostics test is FDA authorized.”
Co-Diagnostics tells ABC4 News Investigator Jason Nguyen the COVID-19 tests have showed 100 percent concordance with its evaluations and the results are indicated on its website.
“There is a reason the company has stuck to its guns on 100 percent, they know that the difference between 100 percent and 95 percent is monumental in terms of the viability of the tests for public health purposes,” said D. Loren Washburn who is a lawyer for Gelt Trading.
That 95 percent accuracy result recently came from the Iowa State Hygienic Lab and was announced by Governor Kim Reynolds during a press briefing.
Washburn represents select stockholders who say they bought Co-Diagnostic stock because they were sold on the reliability of the tests.
“Since evidence has come to the market’s attention, that shows those representations of 100 percent accuracy were wrong, the stock prices has fallen in half. To put that in perspective, $400-million of shareholder value in Co-Diagnostics has evaporated,” he said.
The complaint alleges, “There are, however, some companies and corporate executives who have sought to unfairly exploit this novel pandemic for their financial gain—including by, among other things, misleading the public about the efficacy of their products in combatting the pandemic. Defendant Co-Diagnostics is one of those companies.”
“This is a company that made a few thousand dollars last year. It’s only real economically viable product are these COVID-19 tests, and so making representations about the accuracy of those tests is fundamentally making representations about the future profitability and the economics of the company overall,” said Washburn.
When it comes to the 95 percent testing accuracy, Washburn says the five percent matters.
“On testing, it makes a huge difference though. Especially if you have false positives. So a 95 percent rate, if you were to test 100,000 people, in Utah at most testing facilities you had about a five percent positive rate. Over time that has varied a bit, but five percent positive, which means we test 100,000 people you’d expect 5,000 to test positive. But if your test is only 95 percent accurate and you have five percent false positives, you’d have another 5,000 people who tested positive who didn’t have the disease at all,” he said. “Which means if you put a 1,000 people in a room who had tested positive it would be a coin flip as to each person actually had the disease or not.”
Washburn says his clients have evidence that the COVID-19 test provides false negatives.
“What that means is people are testing negative but actually have the disease,” he added. “That becomes less valuable as a tool for public health but in our instance, it means your product is less valuable and so your company is less valuable.”
When asked if the state is going to continue to use the Co-Diagnostic testing information given the federal complaint, Governor Gary Herbert says he is satisfied with the testing results.
“I have no idea what that is, but if they are 95 percent accurate, that is pretty good compared to all the other tests that are out there. So maybe not 100 percent, but 95 percent is pretty good, and we will continue to work with anybody that is in that 90 percent ratio accuracy because it is hard to find anybody better than that. There is just variables that make it difficult to make it 100 percent accurate.”
Co-diagnostics Andrew Bensen tells ABC4 News in a statement:
“Co-Diagnostics stands behind the quality of our technology platform, and performance of our testing products. We intend to vigorously defend this matter.”
Nomi Health adds in a separate statement:
Public companies are often subject to shareholder lawsuits like this, driven by shareholders’ monetary agendas. We have every confidence in our partners at Co-Diagnostics. The accuracy of their COVID-19 testing products speaks for itself, and TestUtah continues to rely on them for statewide testing needs. The Co-Diagnostics test is FDA-authorized and continues to demonstrate exemplary sensitivity and specificity (the benchmarks for accuracy) in multiple, independent evaluations of its clinical performance across the world.
The Nomi Health contract extension with the State of Utah expires on July 15th.
The Utah Department of Health put out a request for proposal for lab capacity and sample collections.
Hudachko added, “RFP closed last Friday night and the sample collection RFP closes tonight. We anticipate it will take a couple weeks to review the proposals and select a vendor(s).”