Kerala High Court on Monday set aside the state government’s order capping the price of RT-PCR tests in all the private diagnostic laboratories.

The court directed the state government to take a fresh decision on the price after consulting private labs within three weeks.

A single-judge bench of Justice T.R. Ravi passed the directive based on two petitions filed by private diagnostic labs that claimed the price of Rs 500 for the test was too little. The petitioners had contended that many of them were incurring huge losses since a good quality test costs around Rs 1,500.

The cost of an RT-PCR test was Rs 4,500 at the beginning of the pandemic.

But the price was revised within months to Rs 1,700 last year after a Kerala State Medical Services Corporation Ltd market research showed a considerable reduction in input costs.

On April 30 last year, the state government capped the price at Rs 500. But the court noted that it would not be proper to permit the labs to immediately charge Rs 1,700.

“The interest of justice requires that the state government decide the matter after hearing the petitioners or their representatives at the earliest, at any rate, within three weeks from the date of receipt of a copy of this judgment,” the court order said.

The petitioners argued that the government never heard the labs before capping the price at Rs 500.

But the state government contended that it was empowered to order such a price cap according to provisions in several legislations, including the Disaster Management Act, 2005, the Epidemic Diseases Act, 1897, and the executive powers vested in the government under Article 162 of the Constitution.

In its defence, the Kerala government had made a comparison of RT-PCR rates in other states and cited the examples of Punjab where it was Rs 415, Odisha that offered tests for Rs 400, and Rs 500 in Maharashtra, Haryana and Uttarakhand. The government noted that the price cap was based on the advice of the Indian Council of Medical Research.

But the court concluded that the government order was open for judicial review since it “cannot be treated as a part of a legislative process”.

“The reliance placed on the cost of RT-PCR test in the other states, is also not a reasonable yardstick, since there is no material either before the government or before the court to ascertain how the prices were arrived at in the said states,” the court ruled.

The high cost of RT-PCR tests had led to widespread manipulation and fake negative reports in the state. Police in Malappuram had arrested the manager of a lab that sold fake RT-PCR certificates in September.

It was found that only a fifth of about 2,500 swab samples collected during August were tested for Covid-19. But all of them were provided Covid-negative certificates, posing a huge health risk in the state already reeling under a stubborn spike in cases.

The scam came to light when Dubai health authorities informed airline companies that it would not accept negative certificates issued by the said laboratory.

Karnataka police had arrested seven people from Kerala’s Kasaragod district with fake RT-PCR negative certificates in August. They had allegedly procured them at cheap rates before heading to Mangalore where a negative report is still mandatory for entry from Kerala.