Washington, D.C. (July 2, 2020)—Today, Rep. Carolyn B. Maloney, the Chairwoman of the Committee on Oversight and Reform, sent a memo to Select Subcommittee on the Coronavirus Crisis Chairman Rep. James E. Clyburn summarizing discussions between Committee staff and representatives of six large medical equipment distribution companies that are playing a role in the Trump Administration’s response to the coronavirus crisis.
“The United States has had more cases and more deaths from coronavirus than any nation on Earth,” Maloney wrote in today’s memo. “Despite months of effort, there are still severe shortages of PPE and critical medical equipment, and the Trump Administration has no coherent national strategy to address these deficiencies. These shortages continue even as coronavirus cases are now re-surging dangerously to record highs after the President insisted that states re-open prematurely. These shortages are also occurring as public health officials warn about the possibility of an even more grave recurrence in the fall.”
Private sector officials representing Cardinal Health, Concordance Healthcare Solutions, Henry Schein, McKesson, Medline, and Owens & Minor agreed to talk with Committee staff about challenges they faced over the past six months in providing personal protective equipment (PPE) and other critical medical supplies to communities across the country. They also agreed to provide information about their interactions with the White House Supply Chain Task Force and a project led by Jared Kushner known as “Project Airbridge,” which provides free air transportation for certain companies bringing PPE into the United States.
The memo also includes information provided by the Health Industry Distributors Association (HIDA), a trade group that has acted as a conduit between members of the healthcare distribution industry and the Trump Administration.
Below are highlights from the memo:
- Industry officials told Committee staff that in the first three critical months of the coronavirus crisis—from January to March—private sector companies were desperate for guidance from the federal government, but the Trump Administration failed to provide it. According to these officials, calls with Administration officials were merely “informational” and “largely educational,” and “folks in the industry saw that things were getting worse, and their requests for guidance was increasing week by week.” They added: “everyone was asking the same questions, but guidance wasn’t coming.”
- On March 28, 2020, the President of HIDA sent a letter urging the Administration “to provide the strategic direction needed to more effectively target PPE supplies based on greatest need.” He wrote: “Only the federal government has the data and the authority to provide this strategic direction to the supply chain and the healthcare system.”
- Unfortunately, the Trump Administration decided not to lead a federal effort to procure PPE directly, forcing state and local governments, hospitals, and others to compete for scarce supplies. One company told Committee staff that the failure to bring procurement efforts under a federal umbrella was “one of the biggest missed opportunities.” The company explained that it proposed this federal umbrella approach directly to the Administration, but that “politics has gotten in the way of that.” As a result, the company explained that states have been forced into “working through brokers in China, which has led to a series of problems,” and warned that there is “way too much reliance on these Chinese brokers rather than a public-private partnership to procure necessary PPE.”
- Instead of procuring PPE directly, the Administration established Project Airbridge to provide transportation for PPE procured by private sector companies. Contracts for Project Airbridge do not require distributors to report back information about the pricing of PPE, despite the fact that taxpayers cover the costs of transportation. Distributors were told to deliver 50% of the PPE “across the customer base in the hotspot,” but they were provided little guidance on how to prioritize specific end-users who need PPE most urgently or what to do with the other 50% of PPE imported at taxpayer expense.
- Officials from several companies informed Committee staff that the Trump Administration, through the Department of Health and Human Services, spent many weeks pressing them to buy PPE directly from one particular Chinese company, but the U.S. companies declined because the Administration was asking them to “purchase at a price that was fairly high.” One company “made the decision to decline purchasing” from the Chinese company because of the “high price for a very uncertain supply chain market.” None of the companies had insight into why the Trump Administration did not purchase PPE directly.
- Finally, the companies informed Committee staff that they have serious concerns that “raw material for PPE is now in a really bad position worldwide.” As one company official stated: “Supply is still coming in, but not enough to meet demand.” The companies cautioned that prices for raw materials have gone up dramatically and that, for example, “raw material for gowns is unavailable at any price, at least in the quantities we need to make gowns.” They warned that continuing to supply PPE under these conditions is “not sustainable.”
Committee staff contacted these companies because the Trump Administration has not been transparent about the actions of the Task Force or Project Airbridge. On April 7, 2020, the Committee on Oversight and Reform and the Committee on Homeland Security sent a joint letter to the Federal Emergency Management Agency (FEMA) requesting documents relating to how FEMA is working with the private sector to acquire and distribute PPE and medical supplies. FEMA has not provided a single document in response to this request.
Chairwoman Maloney released the memo ahead of a hearing being held today by the Select Subcommittee on the Coronavirus entitled, “The Administration’s Efforts to Procure, Stockpile, and Distribute Critical Supplies.” The hearing begins at 9 a.m. in room 2154 of the Rayburn House Office Building and will be livestreamed.
Click here to read the full memo.
Click here to watch today’s hearing.
Click here to read the Memoranda of Agreement between the companies and the Trump Administration.
Click here to read a Sample Attachment A to the Memoranda of Agreement.
Click here to read a Sample Attachment B—dated March 28, 2020—to the Memoranda of Agreement.
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