On Monday, the Food and Drug Administration granted an emergency use authorization to Roche (OTC:RHHBY) for its COVID-19 diagnostic test. The test, which is intended to be given to people who have already been confirmed to have the disease, measures whether a patient's immune system has started developing antibodies for SARS-CoV-2. The idea is to find the people who might have developed an immunity to the coronavirus.

The diagnostic is meant to exclude antibodies that your immune system creates to fight other coronaviruses (like the common cold). Based on a measurement of 5,272 samples, Roche's diagnostic found antibodies at a 100% rate, and was 99.81% accurate in distinguishing SARS-CoV-2 antibodies from other antibodies.  

blood test COVID-19

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It's a crowded market.

When the pandemic escalated back in March, the FDA decided to relax its traditional oversight function over antibody tests in order to increase the speed at which they could be brought to market. This was done because of the emergency nature of this threat, and because antibody tests are not used to determine whether someone has COVID-19.

As a result, the market has been flooded with more than 200 SARS-CoV-2 antibody tests. Yet the FDA has only authorized 12 such tests. When Roche reported its earnings in April, CEO Severin Schwan did not mince words about the other antibody tests on the market. "It's a disaster," he said. "These tests are not worth anything, or have very little use." 

On the same day as it authorized Roche's new diagnostic, the FDA also issued more stringent rules for SARS-CoV-2 antibody tests. The agency is now requiring that all antibody diagnostics for the coronavirus must obtain explicit FDA authorization within 10 days of being on the market.