The global pandemic of COVID-19 has led to an unprecedented demand for medical supplies and equipment all over the world.
Particularly here at home, however, shocking information is emerging about how much states are having to pay for supplies to keep their medical teams safe and as many patients as they can alive.
The Trump administration has left states to fend for themselves in a devastating time of need.
New York state has paid 20 cents for gloves recently, where they have normally paid less than a nickel. Masks? $7.50 now- that’s FIFTEEN TIMES the normal cost.
It has also had to pay twice the normal price for infusion pumps, bringing that total to $2,795 and get this: A portable X-ray machine normally costs between $30,000 and $80,000 but NY has had to pay $248,841. All this in a time of crisis.
State officials have provided this payment data to show how the shortage of CRUCIA
L medical equipment is causing prices to skyrocket. States and cities are being forced to look elsewhere, outside their normal vendors and contracts, and finding that they are having to pay shocking amounts of money. Even though New York’s attorney general has denounced the high prices, and ordered for an end to price gouging by merchants for things like hand sanitizers and cleaning supplies, the issue is that those state laws that can stop that type of price gouging doesn’t usually apply to government purchases. to stop overcharging people for hand sanitizers and disinfectant sprays, state laws against price gouging generally don’t apply to government purchases.
The Trump administration has been of little help to states, leaving them hanging out to dry in many cases. New York estimates it will see $15 billion in spending and lost revenue. The competition amongs states, cities, and federal agencies also mean that places with low budgets, like rural clinics, definitely will not get the supplies they need.
New York state has become the epicenter for the US outbreak and they are absolutely desperate for necessary medical equipment. Budget office spokesman Freeman Klopott said in an email, “We know that New York and other states are in the market at the same time, along with the rest of the world, bidding on these same items, which is clearly driving the fluctuation in costs.”
The Office of General Services is New York’s main procurement agency, and they are refusing to say who is overcharging for what. Spokeswoman Heather Groll wrote in an email, “At this moment in time the New York State team is focused on procuring goods and services based on current market conditions… There will be time to look back and pull together info on all this, that time will be when the pandemic is over.”
New York isn’t state in this situation. Houston Mayor Sylvester Turner told reporters that he had even authorized paying up to $4 for each N95 mask and that wasn’t even the winning bid. According to Turner’s spokeswoman Mary Benton, that price is now commonplace.
Benton told ProPublica, “What Mayor Turner mentioned was not an isolated incident but rather the norm for today’s extreme demand on masks… Given the urgency of the city’s COVID-19 response and the focus on doing the work, the need for masks and other supplies, at this time we see no value in publicly calling out other cities or companies by name.”
Even the U.S. Coast Guard can’t compete with these prices- It first ordered 1 million N95 masks on March 17 only to slash that order to 200,000
That same price was apparently too much for the U.S. Coast Guard. It ordered 1 million N95 face masks for $5 apiece on March 17, then downgraded the order to 200,000 masks and then canceled altogether, according to contractor Clean Harbors.
Clean Harbors’ senior vice president of field services, Chuck Geer, said the company doesn’t manufacture masks but it had offered to help out in this situation.
New York Gov. Andrew Cuomo, who has emerged as a clear and competent leader, holding daily press briefings, has complained about the level of competition for PPE and for ventilators. Cuomo said, “It’s like being on eBay with 50 other states bidding on a ventilator… And then, FEMA gets involved and FEMA starts bidding! And now FEMA is bidding on top of the 50! So FEMA is driving up the price. What sense does this make?”
A FEMA spokesperson stated: “If a bidding conflict does arise, we will work closely with the state to resolve it in a way that best serves the needs of their citizens.” FEMA has yet to reveal what it has paid for equipment of supplies during the pandemic.
New York state normally purchases an extensive range of medical supplies all off of an approved distributors list and those distributors agree to a set price.
That coronavirus outbreak changed all that. New York invited anyone and everyone with needed supplies to offer to sell them to the state. That meant that they could ask whatever price the market could take but now the inventory is gone, and vendors are just passing on the outrageous costs from their suppliers.
Shield Line LLC, from Hackensack, NJ, was recently approved as a New York state vendor. Their price list shows 3.5 cents per glove and 3 cents for a simple mask although their CEO, Joe Kastner, says that their inventory is almost completely sold out. He said that if NY, who hadn’t yet purchased from him, decided to- he would likely have to raise his prices. Because he gets a portion of his products from China, exports that are being allowed again are “in some cases… 15 to 20 times higher,” Kastner said.
Justin Oberman, a former Transportation Security Administration official who now consults for businesses who are trying to navigate federal procurement says, “The government has in normal times a lot of things to protect it, including lengthy contracts and oversight… In this case, raised voices may end up carrying the day.”
In normal times, price gouging is not considered a crime. In most states, in fact, it’s only illegal during declared states of emergency. Even though New York and other states have enacted their price gouging statutes, most of those laws are only going to apply to consumer goods and services- NOT to purchases made by states of private or nonprofit businesses, according to Gretchen Jankowski, a commercial litigation attorney with Buchanan Ingersoll & Rooney.
So, current price gouging laws in New York state and NYC will do nothing to help with that $248,881 X-ray machine. Even though X-rays aren’t used to diagnose COVID-19, they ARE used to assess damage to lungs from the disease. Portable machines are much more preferred in the current crisis because they can be brought to the patient rather than moving a highly contagious patient throughout different parts of a hospital.
There’s also another factor in New York’s high prices. Large distributors in the US are hesitant to send equipment to the states with the most cases of the virus because the do not want to be seen as playing favorites, so they have put all their customers on the same “allocation” meaning they’ll basically get what they’ve had in the past. But distributors themselves are saying that the federal government should intervene to adjust the allocations and help the supplies and equipment get to the places they are most needed.
Health Industry Distributors Association President Matthew Rowan wrote to FEMA administrator Peter Gaynor, “Only the federal government has the data and the authority to provide this strategic direction to the supply chain and the healthcare system.”
A letter coordinated by the nonprofit Public Interest Research Group asking the federal government to name a “medical equipment czar” to over see the buying of supplies and the fulfillment of requests from local jurisdictions has now been signed by dozens of cities. Sen. Chris Murphy, a Connecticut Democrat, sponsored a bill that would do the same.
If the Trump administration does not lead the federal government to intervene, states and hospitals will simply become more and more vulnerable to this new way of bidding. Chaun Powell, vice president for strategic supplier engagement at the national health care conultant Premier Inc, which works to negotiate hospital and health system contracts, says, “The more COVID patients they get, the more masks they’re going to burn… They’re getting desperate because they’re running out faster, so they’re willing to pay.”