[Senate Hearing 116-520, Part 2]
[From the U.S. Government Publishing Office]
S. Hrg. 116-520
PART 2: PROTECTING THE RELIABILITY
OF THE U.S. MEDICAL SUPPLY CHAIN
DURING THE COVID 19 PANDEMIC
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HEARING
BEFORE THE
COMMITTEE ON FINANCE
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
JULY 30, 2020
__________
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Finance
__________
U.S. GOVERNMENT PUBLISHING OFFICE
46-633 PDF WASHINGTON : 2022
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COMMITTEE ON FINANCE
CHUCK GRASSLEY, Iowa, Chairman
MIKE CRAPO, Idaho RON WYDEN, Oregon
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
TIM SCOTT, South Carolina ROBERT P. CASEY, Jr., Pennsylvania
BILL CASSIDY, Louisiana MARK R. WARNER, Virginia
JAMES LANKFORD, Oklahoma SHELDON WHITEHOUSE, Rhode Island
STEVE DAINES, Montana MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana CATHERINE CORTEZ MASTO, Nevada
BEN SASSE, Nebraska
Kolan Davis, Staff Director and Chief Counsel
Joshua Sheinkman, Democratic Staff Director
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Grassley, Hon. Chuck, a U.S. Senator from Iowa, chairman,
Committee on Finance........................................... 1
Wyden, Hon. Ron, a U.S. Senator from Oregon...................... 3
WITNESSES
Denning, Cathy, R.N., MSN, group senior vice president, Sourcing
Operations, Analytics, and Center of Excellence, Vizient,
Irving, TX..................................................... 6
Wiehe, Robert J., senior vice president and chief supply chain
and logistics officer, UC Health, Cincinnati, OH............... 8
Johnson, Charles, president, International Safety Equipment
Association, Arlington, VA..................................... 10
Grant, Ernest, Ph.D., R.N., FAAN, president, American Nurses
Association, Silver Spring, MD................................. 12
ALPHABETICAL LISTING AND APPENDIX MATERIAL
Denning, Cathy, R.N., MSN:
Testimony.................................................... 6
Prepared statement with attachment........................... 39
Responses to questions from committee members................ 52
Grant, Ernest, Ph.D., R.N., FAAN:
Testimony.................................................... 12
Prepared statement with attachments.......................... 57
Responses to questions from committee members................ 65
Grassley, Hon. Chuck:
Opening statement............................................ 1
Prepared statement........................................... 70
Johnson, Charles:
Testimony.................................................... 10
Prepared statement with attachments.......................... 71
Responses to questions from committee members................ 81
Wiehe, Robert J.:
Testimony.................................................... 8
Prepared statement........................................... 85
Wyden, Hon. Ron:
Opening statement............................................ 3
Prepared statement with attachments.......................... 92
Communications
Center for Fiscal Equity......................................... 105
Healthcare Leadership Council.................................... 108
National Association of Manufacturers............................ 112
Premier Inc...................................................... 129
City of York Healthcare Authority................................ 134
(iii)
PART 2: PROTECTING THE RELIABILITY
OF THE U.S. MEDICAL SUPPLY CHAIN
DURING THE COVID-19 PANDEMIC
----------
THURSDAY, JULY 30, 2020
U.S. Senate,
Committee on Finance,
Washington, DC.
The hearing was convened, pursuant to notice, at 9:32 a.m.,
in Room SD-215, Dirksen Senate Office Building, Hon. Chuck
Grassley (chairman of the committee) presiding.
Present: Senators Crapo, Thune, Portman, Toomey, Cassidy,
Lankford, Wyden, Carper, Cardin, Brown, Bennet, Casey, Warner,
Whitehouse, Hassan, and Cortez Masto.
Also present: Republican staff: Daniel Boatright,
Investigative Counsel; Caitlin Soto, Oversight Counsel; and
Jeffrey Wrase, Deputy Staff Director and Chief Economist.
Democratic staff: David Berick, Chief Investigator; Peter
Gartrell, Investigator; and Joshua Sheinkman, Staff Director.
OPENING STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM
IOWA, CHAIRMAN, COMMITTEE ON FINANCE
The Chairman. Before I read a short opening statement, I
want to explain that Senator Cassidy is going to--is it Senator
Cassidy? Oh, Senator Roberts is going to take over while I do
two things: one, go over and open the Senate up; and secondly,
I have to be in Judiciary because we have some things where we
have to have a majority to get things done.
So I do not know to what extent I am going to be face to
face with you folks, but usually I would have gotten here 5
minutes early, and I would have come down and looked you in the
eye and said ``thank you'' for participating.
I want to welcome everyone to Part 2 of the committee's
hearing on ``Protecting the Reliability of the U.S. Medical
Supply Chain During the COVID-19 Pandemic.'' This is the second
hearing to discuss COVID-19's effect on our Nation's medical
supply chain.
Two days ago, we heard from the Department of Homeland
Security's Office of Procurement, U.S. Customs and Border
Protection, and the U.S. Immigration and Customs Enforcement's
Homeland Security Investigations on their efforts to shore up
the integrity of our supply chain.
Today we are going to hear from a panel of industry experts
who represent all corners--maybe I should say various corners,
but maybe you actually do represent all corners of the supply
chain. These witnesses have an insider's perspective and will
be able to tell us about the challenges that our Nation's
health-care industry is facing right now. And we will also hear
how the Federal Government is collaborating and communicating
with its industry partners during the pandemic.
Indeed, during our first hearing we heard that DHS is
engaged in a whole-of-government response to combat the virus
and is working with State, Federal, local, tribal, and
international partners in a unified effort to ensure the
integrity of our Nation's supply chain. Example: we heard from
Homeland Security Investigations on their efforts to prevent
and investigate criminal activity surrounding the pandemic, and
how--it is unbelievable--they have seized hundreds of fake and
faulty items of personal protective equipment, and they
returned over $17 million to victims of COVID-19 fraud.
We also heard from the Department's Chief Procurement
Officer on their efforts to cut bureaucratic red tape so that
FEMA could easily procure larger volumes of emergency services
and supplies. These are things that front-line workers
desperately need, and the Department answered the call by
working with industry to review and vet companies offering
COVID-19 solutions to the Federal Government.
I want to highlight that this continues to be an incredible
challenge, as thousands of really unscrupulous sellers claim to
be able to produce safe and legitimate supplies when what they
are actually selling is fake and faulty.
Lastly, we heard from Customs and Border Protection on
their efforts to speed up the delivery of high-demand personal
protective equipment from manufacturers overseas. As a result
of this agency's efforts, we have had over 1.3 billion pieces
of personal protective equipment enter swiftly into the United
States.
The list can go on and on, with many of these efforts being
initiated at the beginning of the virus's foothold in the
United States. However, my colleagues on the left are not
telling the public these success stories. They would rather
spread doom and gloom, a narrative for purposes of, I suppose,
winning elections. It is a fact that the Federal Government's
approach to emergency preparedness has always been fraught with
challenges, and this goes back to prior administrations--and
that word is plural--and beyond.
However, my Democratic colleagues would make you believe
that these problems are just specific with this administration.
So it is simply not true, and we have several witnesses before
us today who will testify to the very fact which I will state
simply here and now. The Federal Government has never been
prepared to address a national emergency of this type or this
scale--period.
In closing, I want to thank the witnesses present today,
and all the medical and professional and first responders who
work day after day to keep Americans safe and healthy. Your
dedication to your community is essential to the days and weeks
ahead.
Before Senator Wyden speaks as ranking member, I want to
thank Senator Roberts and any other Senator who helps us out
with this very difficult Thursday that I have, being three
different places now. Thank you very much.
[The prepared statement of Chairman Grassley appears in the
appendix.]
The Chairman. Senator Wyden, take over.
OPENING STATEMENT OF HON. RON WYDEN,
A U.S. SENATOR FROM OREGON
Senator Wyden. Thank you very much, Mr. Chairman. And----
The Chairman. Senator Wyden, are you there?
Senator Wyden. I am right here, Mr. Chairman. Can you hear
me?
The Chairman. We need to turn up your volume.
Senator Wyden. Okay.
The Chairman. You have volume now. Go ahead. And, Senator
Wyden, I am sorry I am not going to be able to hear your
testimony.
Senator Wyden. Thank you, Mr. Chairman. Thank you for your
courtesy.
The Finance Committee, as the chairman indicated, is
focusing this week on issues dealing with the lack of high-
quality PPE and other equipment during the pandemic. Now the
chairman has made the focus China, and China, and China some
more. And I want to be clear. I agree that counterfeiting is a
problem.
What I also want to point out is, if you are focused
entirely on that aspect of the issue, you skip right past
something that is much bigger, which is the Trump
administration's casual disinterest in leadership when it comes
to getting PPE and making sure that our health-care heroes are
equipped. And it goes back quite some ways.
Now the chairman said that Democrats just are spreading
doom and gloom here. So what I am going to do, just for a few
minutes this morning, is to spread some facts, some facts that
are not in dispute.
In 2019, the Federal Government conducted a pandemic war
game called ``Crimson Contagion.'' In it, a hypothetical
airborne virus originated in China made its way to the United
States, infecting 110 million people and killing nearly
600,000.
The exercise concluded that the United States would need
3.5 billion N95 masks to fight a large-scale pandemic. The
Trump administration took no action to acquire them. The
coronavirus arrived just months later.
On March 19, 2020, with the cases beginning to go skyward,
the President said the following when asked about buying and
distributing PPE, and I quote: ``The Federal Government is not
supposed to be out there buying vast amounts of items and then
shipping. Governors are supposed to be doing it,'' unquote.
On March 29th, Donald Trump said nurses and doctors--he
actually said this--were stealing PPE. He said, and I quote,
``Something is going on. You ought to look into it, as
reported. Where are the masks going? Are they going out the
back door?''
In mid-April, Donald Trump called reports of PPE shortages
``fake news.'' On May 6th, a nurse told reporters gathered in
the Oval Office that the availability of PPE was sporadic.
Donald Trump said--and this was in the Oval Office--Donald
Trump said: ``Sporadic for you, but not sporadic for a lot of
other people. I've heard we have a tremendous supply in almost
all places.''
Just last week, Donald Trump said, ``My administration
currently has zero unfilled requests for equipment, for
anything else that they need from the Governors. We are stocked
up and ready to go.''
So those are the facts. And the statements that the
President has made are just wrong, wrong, wrong.
In the last few days, the Democratic Finance Committee
staff has gathered direct accounts from health-care workers
around the country about PPE shortages that devastate
communities, given the recent spikes we have seen across
America.
The committee, for example, heard from nurses in Dallas,
TX, where COVID cases are surging, who recently began buying
their own surgical masks since the hospital was requiring staff
to re-use old ones for days at a time.
The committee heard from an administrator of a 33-bed
hospital in rural Alabama, serving a majority black community,
who told the committee her hospital is so low on PPE that she
keeps an emergency supply stashed in her office for
safekeeping.
One Oregon home health-care nurse who did not want to
provide their name for fear of retribution from an employer,
told the committee they have so few disinfectant wipes that
they are cutting them in quarters to last through the week.
Imagine that. Cutting disinfectant wipes in quarters so they
will last through the week.
Finance Committee Democrats want to make sure these
important stories still get heard, so I encourage doctors and
nurses and first responders and nursing home staff who are
dealing with shortages and defective equipment to submit
personal stories for the hearing record at
[email protected].
If we have learned one thing, it is that getting these
stories into public view and in front of Senators can really
make a difference. This week, the National Nurses Union
released a survey of 21,000 hospital nurses. Eighty-seven
percent of the nurses reported having to re-use PPE that is
designed for one use.
According to data from the Centers for Disease Control,
hundreds of nursing homes did not have PPE in mid-July, and
thousands more had less than a week's supply.
States like Oregon, cities, and health-care providers have
been forced to compete against each other and pay a real ransom
for equipment on the open market. This has opened the door to
junk sold by scam artists and incompetent vendors.
A group of health systems was so concerned about losing
access to PPE that it actually bought a minority stake in a big
PPE manufacturer just to keep the pipeline open.
So the question becomes--and we have a lot of Senators who
represent areas with small hospitals--what about the small
hospital and the independent doctor's office and nursing homes
that cannot afford to go out in the open market and buy their
own manufacturer?
The Trump administration has touted Jared Kushner's Project
Air Bridge as a PPE game changer, but Project Air Bridge
brought in just 4.5 million N95 masks over the course of 3
months this spring.
The Department of Health and Human Services' estimate--this
is the Trump administration--their estimate said that the
United States needed 300 million N95 respirators every month.
The fact is, these shortages of PPE have put our doctors and
nurses and caregivers in grave danger. An ongoing study by
Kaiser Health News and The Guardian has identified at least 851
deaths among front-line health-care workers, likely due to
COVID-19.
From sea to shining sea, Americans are desperately hoping
now that there are going to be safe and successful vaccines on
the market in the coming months. They need to be distributed in
a fair and methodical and medically sound way.
Unfortunately, the country's experience over the past 5
months, particularly with PPE, raises serious concerns about
whether or not Americans can have confidence that the
administration will handle things in that fashion.
So there is a lot to talk about today. Before I wrap up, I
would ask unanimous consent--I gather, Chairman Roberts, you
are going to be running things, so Kansas is out there on both
the majority and the minority side. Mr. Chairman, I ask
unanimous consent to enter statements on PPE shortages into the
record at this point.
[The prepared statement of Senator Wyden appears in the
appendix.]
Senator Roberts [presiding]. Without objection, it is so
ordered.
[The statements appear in the appendix beginning on p. 93.]
Senator Wyden. And one last thought, Mr. Chairman. I want
to also thank Chairman Grassley for adding, at our request, the
second hearing on this important topic. We requested it because
we felt it was important to hear directly from people who are
on the front lines having to face these kinds of difficult
choices, and I would just like to close by giving a thanks to
Chairman Grassley for agreeing to hold the second hearing on
the topic.
Thank you, Mr. Chairman.
Senator Roberts. The statement with regard to Senator
Grassley is duly noted. It is my privilege now to introduce the
witnesses.
First we have Cathy Denning, the senior vice president for
Vizient's Sourcing Operations, Analytics, and Center of
Excellence. In her role, she provides strategic and operational
leadership that guides the philosophy and methodologies for the
company's contracting process and related technology, as well
as its sourcing, focused research initiatives, and training
activities.
We also have Robert Wiehe, senior vice president and the
chief supply chain and logistics officer for UC Health. He is
responsible for providing both strategic and operational
direction for all supply chain and pharmacy operations within
the UC Health Enterprise, including the flagship University of
Cincinnati Medical Center, Westchester Hospital, and the Daniel
Drake Center for Post-Acute Care.
Our next witness is Charles Johnson, who is the president
of the International Safety Equipment Association, the trade
organization for personal protective equipment and
technologies. Mr. Johnson previously served as vice president
of policy for the Aluminum Association, acting as their
strategic advisor to the industry.
Finally, we have Dr. Ernest Grant, currently serving as
president of the American Nurses Association. He has over 30
years of nursing experience and is a recognized burn care and
fire safety expert. Dr. Grant has previously served as the burn
outreach coordinator for the North Carolina Jaycee Burn Center
at the University of North Carolina hospitals in Chapel Hill.
We will proceed with Cathy. We have two present and two
virtual. Cathy, please.
STATEMENT OF CATHY DENNING, R.N., MSN, GROUP SENIOR VICE
PRESIDENT, SOURCING OPERATIONS, ANALYTICS, AND CENTER OF
EXCELLENCE, VIZIENT, IRVING, TX
Ms. Denning. Good morning, Senator Roberts, Chairman
Grassley, Ranking Member Wyden, and members of the committee.
And thank you for holding this critically important hearing and
giving me the opportunity to testify today.
My name is Cathy Denning, and I am the group senior vice
president of Sourcing Operations at Vizient and a registered
nurse. Prior to joining Vizient, I worked as a nurse in both
the acute care and home care settings.
Before we start today, I would like to tell you a little
bit more about Vizient, the Nation's largest member-driven
health-care performance improvement company. Our members
include more than half of all the acute care hospitals,
including pediatric facilities, community hospitals, and almost
all of the Nation's academic medical centers.
Through our group purchasing arm, we help providers by
negotiating discounts and other terms resulting in greater
value than individual hospitals can typically negotiate on
their own. We offer other services which I have outlined in my
written testimony.
Today I am focused on the critical issue of the U.S. supply
chain during the pandemic, and specifically counterfeit PPE in
the gray market that exploits hospitals, patients, and the
government with false and often harmful claims of having
medical supplies to offer.
When COVID-19 hit, one of our first actions was to set up a
war room to field our member providers' requests. We received
more than 1,000 inquiries each week, including requested
products that members were considering purchasing from
nontraditional manufacturers or brokers.
From March 29th through July 13th, we received 1,320 unique
member requests for new manufacturers and products. Ultimately,
we found that more than 500 of these products failed to meet
the applicable FDA or NIOSH standards. And as emergency use
authorization changes, so does the complexity of these issues.
This study and validation process was only one piece of our
overall pandemic response. And I have included additional
examples of our efforts in my written testimony.
Despite our efforts, bad actors still reach out to
providers in need, and our members continue to search for the
vitally needed safe supplies wherever they can. I will
highlight two examples, and there is another in my written
testimony.
First, in late March our member Yale New Haven Health
learned of possible counterfeit Dasheng KN95 respirators in the
market. Combing through their donations, they in fact found
that they did have a significant number of these respirators.
They also had placed an order with Dasheng for KN95s, so
they immediately canceled those orders. Later, Yale learned
that most of PPE vendors with whom they had been engaging were
not actually dealing directly with factories in China, but
rather third-party distributors or gray market brokers.
Yale also discovered that many of these vendors had sent in
false test results. So that prompted them to send out their
masks for their own testing, identifying that only 85-percent
efficiency was rated with the mask. And this led Yale to become
even more skeptical of these vendors.
Second, one of the large acute-care systems in the Pacific
Northwest is still currently sorting out a questionable
situation in which they were sent small-sized Halyard N95s from
a third-party company. They were in baggies with a seal on
them, which was not like they were used to receiving. Halyard
usually sends them in a box.
So when they questioned the company about it, they found
out that this company said they had a ``reallocation process''
for those N95 masks. They continued to press. They still have
not been able to identify what the issue is. This company is
normally a sterilization solutions company, so you can draw
your own conclusions from that.
Another burden our members face is the gray marketeers
offering products that typically go for 84 cents and trying to
sell them to them, like an isolation gown, for $8.50. And when
the same masks that I talked about normally would go for 80
cents, we had offers for as high as $11 per mask.
There are countless other stories out there like this. But
despite the contemptible actions of these bad actors and the
overall challenges presented by COVID-19, I would like to end
my remarks today with a hopeful outlook to the future.
The health-care supply chain needs three things to be more
resilient: enhanced transparency, redundancy, and
diversification. We also need to take lessons we learned
regarding the strategic national stockpile and do better to
ensure that it is truly a resource.
First, we need more transparency into manufacturing
locations, raw materials, and storage locations. This
information should be made available to the public as well as
to the private sector, and not just government entities, so
that we can all work towards resilience efforts.
Redundancy of manufacturers is the next step. The best way
to achieve availability and cost savings is to encourage
competition. The industry needs multiple manufacturers
producing the same product so that we do not have one event
wipe out the entire supply chain.
Regarding diversification, our supply chain should be
global in nature, but we also should strive to significantly
increase our domestic footprint across the United States, as
well as across the globe.
Finally, I believe the strategic national stockpile does
need to be bolstered. The stockpile should have at least 90
days of supply for key items, and the government should
continue to engage the private sector to help provide feedback
on appropriate quantities and the best storage and management
practices. Health-care systems in States need to be able to
quickly access these products during a disaster.
With that, thank you again for the opportunity to testify
today. I am passionate about these issues and strongly believe
that working together, we can all help health-care providers,
their patients, and the public get through this crisis.
I would also like to offer my absolutely sincere
appreciation for all the front-line health-care workers out
there who have given all of themselves tirelessly throughout
the pandemic, and I look forward to your questions.
[The prepared statement of Ms. Denning appears in the
appendix.]
Senator Roberts. Thank you, Cathy.
Our next witness is Robert Wiehe. He is senior vice
president, chief supply chain and logistics officer for UC
Health. Robert, why don't you now proceed? Robert is also with
us virtually.
STATEMENT OF ROBERT J. WIEHE, SENIOR VICE PRESIDENT AND CHIEF
SUPPLY CHAIN AND LOGISTICS OFFICER, UC HEALTH, CINCINNATI, OH
Mr. Wiehe. Thank you, Senator. Chairman Grassley, Ranking
Member Wyden, and members of the committee, thank you for the
opportunity to speak today about protecting the reliability of
the U.S. medical supply chain. As the senior vice president and
chief supply chain and logistics officer for UC Health,
southwest Ohio's only academic health system, my
responsibilities include strategy and oversight of sourcing,
acquiring, and distributing all supplies and capital equipment
within our health system. Challenges that have emerged from the
COVID-19 pandemic are unlike anything we have encountered in
our lifetime.
Coronavirus-related disruptions to supply chains, combined
with dramatic increases in global demand, are among the many
challenges that hospitals and systems are facing in today's
environment. While there is substantially more detail in my
written testimony, I would like to highlight for you a few
challenges and opportunities to be considered by the committee.
As for the challenges, first: hot spots. While southwest
Ohio was not an initial hotspot, and that allowed us the
benefit of learning from others, it also meant that the region
was not prioritized in terms of obtaining limited resources.
As resources were distributed to national hotspot areas, we
often needed to engage our elected leaders to intervene on our
behalf with Federal leaders and/or manufacturers in order to
obtain the items we needed to provide a stable and ongoing
COVID-19 response in southwest Ohio.
We view the current medical supply chain for PPE, testing
supplies, and machinery as comfortable, not confident. We
continue to advocate for a national and State distribution
strategy, public and private, that allows resources to be
distributed to all geographic regions.
Second: rapid changes in our supply chain strategy. With
limited supplies and increased demands, we see how we had to
quickly pivot to source PPE from non-standard suppliers. The
change was dramatic. It shifted from supplies on automatic
replenishment with one vendor to reaching out and making over
500 new sourcing inquiries in a 30- to 45-day period to vendors
we had no prior experience with. This presented the unique
challenge of balancing the urgent need for product and the
inherent risk in dealing with unknown third parties.
Third: avoiding fraudulent suppliers. Through procuring
large items or quantities of PPE in partnership with other
regional hospitals, we learned that there were many scams and
promises of large quantities of supplies coming in from outside
of the United States. These scams involved large sums of money
being placed into escrow or cash-in-advance purchases for goods
that did not materialize. We saw how quickly it pivoted into a
mitigated risk by scrambling multiple smaller orders over
various vendors versus trying to rely on a single large
purchase to meet our needs.
The majority of the product we successfully sourced came in
from China or other Asian Pacific countries. During our vetting
process, we found that a significant number of the FDA and
third-party testing certificates presented by potential
suppliers were not able to be authenticated or verified.
For overseas products during the initial months of the
pandemic, we saw several shipments delayed, and our suppliers
communicated to us that this was due to supplies being either
purchased or seized by the Federal Government. We were not
direct recipients of this communication, and we can only attest
to what we were told by our suppliers.
Another frequent communication from suppliers was
concerning the lack of available capacity with commercial air
freight companies instead of limited stockpiles. UC received
communication from the ODH in March that the regional and State
stockpile was very limited due to expired or destroyed
supplies.
In early March, we received our first supplies from our
regional stockpile. In late March, we received our first
shipment of PPE from the strategic national stockpile.
Lastly: price gouging. I have provided more detail in my
written report, but UC Health has experienced increases on
price for PPE up to 6 to 10 times the original price.
As for the opportunities, the first is innovation. A great
example is the virtual stockpile that was created by the Ohio
Hospital Association in partnership with Governor DeWine
whereby the hospital industry contributes supplies to a virtual
stockpile to ensure that Ohio's economy could open and remain
open.
The Ohio Hospital Association coordinates this effort on
behalf of their membership. While it is in its infancy, it
shows the promise of what true collaboration could look like
during any disruption in the medical supply chain. This could
expand to a national level and include all parties: government,
suppliers, and end users.
Second: greater transparency in the critical supply chains.
Reporting of critical raw materials, finished goods, and
production capacity for major suppliers would help the Federal
Government to better understand critical supply chains and
their capacity and ability to react in a crisis.
Third: we favor a more regional approach towards
manufacturing of raw materials for critical supplies. Supply
chain resiliency must outweigh low cost for critical items. A
more regionalized approach to manufacturing would allow for a
quicker response when disruptions occur.
Lastly: improved transparency and communication on the
national stockpile. Trust is essential for a supply chain to
function efficiently. A better understanding at all levels of
the supply chain would help to eliminate both fear of the
unknown and competition between government and the private
sector.
Thank you for the opportunity today to share my insights
and experiences. I believe we have already learned many
valuable lessons that we can use to improve our health-care
supply chain resiliency moving forward.
I am happy to answer any further questions, should you have
any. Thank you.
[The prepared statement of Mr. Wiehe appears in the
appendix.]
Senator Roberts. I thank the witness.
Our next witness is Charles Johnson, president of the
International Safety Equipment Association. President Johnson--
if I can refer to you in that vein--you are here with us. Thank
you so much for being here. Please proceed.
STATEMENT OF CHARLES JOHNSON, PRESIDENT, INTERNATIONAL SAFETY
EQUIPMENT ASSOCIATION, ARLINGTON, VA
Mr. Johnson. Thank you, Senator Roberts, and thank you,
Chairman Grassley, Ranking Member Wyden, and members of the
committee, for this opportunity to present the industry's
experience during the COVID crisis.
I am the president of ISEA, the International Safety
Equipment Association, representing makers and distributors of
safety equipment and technologies. For more than 85 years, this
industry has stepped forward to aid the United States in the
face of emergencies of all types, and certainly for public
health emergencies.
When these events occur, ISEA members provide the equipment
that protects responders, the medical professionals, and the
public. We have battled two major challenges since the onset of
the pandemic.
The first is that the safety and effectiveness of the PPE
used to combat the COVID-19 pandemic have been compromised,
most notably by incredible increases in opportunistic market
behavior such as counterfeits, fakes, and fraudulent products.
The second is that the ability of the industry to get the
equipment to the people who need it, both in terms of the gross
amount of product and the systems which efficiently distribute
the products to the end users, has been sorely tested. We have
submitted detailed testimony which outlines our experience and
our recommendations in these areas. I would like to highlight
just a few.
The safety equipment industry is built on a foundation of
standardization and trust. Standardized performance is central
to the value of the PPE we provide to the wearer. They must
understand the parameters of performance for this equipment,
and they must trust that it will occur when needed.
Fake, fraudulent, and counterfeit products erode and steal
that trust. These illegal products do not just harm the
financial interests of our members, they put the end user at
risk of injury, sickness, and death. The various efforts to
control these activities range from the public sector to the
private.
Our own association manages a standardization process which
can confirm the legitimacy of products. Those tools and others
have been used by various government agencies from CBP to
Homeland Security to stop fraudulent and counterfeit products
at the U.S. border.
In the U.S. market, the CDC and other agencies have stepped
in to surveil the market and to identify fraudulent products.
Our own companies have policed the market. 3M Company has taken
down 10,000 false and deceptive social media posts, removed
7,000 fraudulent e-commerce offerings, and removed more than
140 deceptive Internet addresses.
Despite these efforts, these practices persist. ISEA
supports in general the National Association of Manufacturers
anti-counterfeiting efforts, which we have detailed in our
comments. It is not just about the products; it is also about
the platforms they are sold on.
On the e-commerce front, platforms have been working
cooperatively to crack down on illicit products during the
pandemic, but that begs the question of why these solutions
were ignored for so long. We support legislation requiring that
online sellers remove these products and hold the sellers
responsible for any injuries arising from their sale.
The second major challenge we have faced is getting the
equipment into the hands of those who need it. Our industry has
experience with abnormal demand surges, and we are capable of
and we have ramped up production. The hard truth is that no
planning with existing capacity will address the fact that
industries are scaled to meet the regular forecasted demand of
their markets, and not to plan for emergencies on this scale.
For these issues, public policy interventions are required,
such as the strategic national stockpile. We were an original
partner with the Federal Government when the SNS was
implemented. Since 2009, we have asked that PPE stocks be
properly maintained in the SNS. We support Senator Alexander's
Preparing for the Next Pandemic Act, which would provide long-
term funding for State and Federal stockpiles, and we recommend
that comprehensive, quantitative approaches be included for
demand planning.
Some of those approaches could be used now. FEMA needs the
authority during a public health emergency to gather data from
State and local governments on the supply, use, and demand of
PPE.
Regarding the support for domestic PPE production and use,
our industry has had a positive experience with the Defense
Production Act, used as a tool to help signal demand up the
supply chain. Recent results are that funding for both 3M's
personal safety division and Honeywell's safety products has
more than doubled production of respirators in the U.S.
Broadly, ISEA supports legislation which focuses on direct
and sustained support for domestic PPE production. We applaud
recent actions to address liability for companies stepping
forward to help during a crisis, and we ask that clear
reference to gloves and garments be included in the future. And
we support tax credits for end users as the American workforce
gets back to work, so that they can afford and provide the PPE
needed to protect the workforce.
Thank you very much for this opportunity to testify.
[The prepared statement of Mr. Johnson appears in the
appendix.]
Senator Roberts. Thank you, Mr. Johnson. Thank you for
mentioning Senator Alexander's bill. A great number of us, on a
bipartisan basis, are supporting that.
Dr. Grant, 30 years of nursing experience. Thank you so
much for being here in person. You are next, sir.
STATEMENT OF ERNEST GRANT, Ph.D., R.N., FAAN, PRESIDENT,
AMERICAN NURSES ASSOCIATION, SILVER SPRING, MD
Dr. Grant. Thank you, sir. Good morning. My name is Dr.
Ernest Grant. I am president of the American Nurses
Association, which represents the interests of the Nation's 4.3
million registered nurses. I would like to thank Senator
Grassley, Ranking Member Wyden, and other members of the
Finance Committee for this opportunity to be with you here
today. I would also like to pay homage to the front-line
workers who are still working hard and so diligently.
At the beginning of this crisis, nurses, doctors, and other
members of the health-care team recognized that there was a
shortage of PPE and began to improvise, using PPE that they
made themselves, or using garbage bags for gowns.
Some left the profession due to unsafe working conditions
or for protection of their family members or themselves. Some
still report suffering emotional, psychological, and mental
health stress. Some have also given the ultimate sacrifice.
Over 230 registered nurses have died providing care in your
communities.
This is unacceptable. Currently, PPE is not being provided
in the quantity or quality that is required for nurses to
safely provide care for patients. In May, the American Nurses
Association conducted a survey, and 45 percent of the
respondents stated that their facilities are still experiencing
a shortage; 79 percent, or 4 out of 5, of the nurses reported
that they are encouraged or required by their employer to re-
use single-use PPE, as health-care facilities are stretching
their supply of PPE resources. Fifty-nine percent say that re-
use of PPE makes them feel unsafe. Nurses should not be exposed
to any unnecessary risk in the course of their work. They share
human and workers' rights, including the right to be safe at
work.
That was 2 months ago. Currently, the ANA is fielding yet
another survey, and the preliminary data is showing that
nothing has changed. I hear from nurses across the country that
the PPE supply continues to be strained.
Colleagues in Oregon report that a large hospital system
purchased and reported ample supply of masks. Unfortunately,
the hospital switched brands, likely due to supply issues, and
the current stock of masks they did receive were all large in
size and do not fit or provide adequate protection for most of
the staff. Nurses report that the quality of the masks was so
poor that the wire that forms around the nose does not fit
properly. This causes extreme safety concerns that the facial
seal is not tight.
Other concerns that I have heard: nurses being asked to re-
use PPE when re-use is not in alignment with manufacturer's
guidelines; face masks that fog up, resulting in various
incidents; nurses being asked to re-use PPE that has been
decontaminated; under-served and rural hospitals being out-bid
by larger health systems, as well as both the State and Federal
Government, exacerbating their difficulty in obtaining
supplies. The list goes on and on.
A major concern from the ANA surveys regards the re-use of
decontaminated N95 respirators. There is limited scientific
data to determine how many times respirators can be
decontaminated without reducing their effectiveness.
As I stated earlier, 59 percent of the nurses say that this
makes them feel unsafe. ANA does not support the use of
decontaminated masks as a standard practice and urges Congress
and the administration to ensure that the country goes back to
best practices for infection control as soon as they are able
to do so.
Understanding that the PPE crisis is the result of multiple
factors such as the shortage of raw material, the global need
for equipment, and the growing PPE needs as the country and
schools reopen, we believe that more must be done by both the
State and Federal Governments to better deploy the protective
equipment.
While States certainly have a role in ensuring access to
care, more needs to be done to enhance the Federal and the
State partnership to ensure transparency and equitable access
to safe and quality protective equipment for health-care
providers.
Nurses want to, and are willing to work. They just need the
protective equipment that will allow them to do their jobs, and
do them effectively. To achieve this goal, the ANA recently
submitted detailed recommendations to Senator Alexander and the
HELP Committee in response to the chairman's white paper.
Our recommendations are outlined in our testimony. I thank
you for the opportunity to speak with you, and I look forward
to answering any questions that you may have.
[The prepared statement of Dr. Grant appears in the
appendix.]
Senator Roberts. Thank you, Dr. Grant. You are obviously a
champion for the American Nurses Association, and all of the
committee thanks you and every nurse in America who has been
working overtime with regards to this pandemic and saving
lives.
I think I will recognize Senator Wyden at this point for
any comments, or any additional questions.
Senator Wyden. Thank you very much, Mr. Chairman. And, Mr.
Chairman, let me begin this way. I believe in the halls of
Congress we are always talking about the heroes. And of course
we are hearing from health-care heroes, because the
extraordinary work they do every day is of such value to
America.
But the fact is, we do not send heroes into battle without
proper equipment. And yet that is what we have heard from all
of these witnesses today. And I know in my home State--and it
is just really hard to get your arms around it--we heard from a
home health-care worker who says that they are so short of
disinfectant wipes that, in Oregon they are having to cut them
into quarters in order to actually make it through the week.
So my first question to you, and maybe we will start with
you, Dr. Grant, is do you believe that forcing State health
departments, hospital systems, and doctors' offices to compete
against each other for medical supplies is a sound national
strategy in a global pandemic? Because that is essentially what
we are dealing with. The Trump administration has walked away
from a strong national leadership role, and so you have these
States and hospitals and offices competing against each other.
I would like to have your assessment first, Dr. Grant. Do
you think that is a sound national strategy for a global
pandemic?
Dr. Grant. Thank you, Senator Wyden. My answer to that is,
no, I do not think that having hospitals, the States, and the
Federal Government competing against each other for access to
PPE is a sound strategy.
Senator Wyden. Now the second question I would like to get
into is that communities of color have just been hit by the
coronavirus like a wrecking ball. And blacks, indigenous, and a
whole host of communities where folks have modest resources
just really have nowhere to turn.
In my opening statement, I referred to a rural Alabama
hospital where PPE is in critically short supply. The CEO there
is Loretta Wilson. She runs Hill Hospital in Sumter County,
where 70 percent of the population is black and 35 percent of
residents live in poverty. There are fewer than 13,000 people
living in the county, and 350 have been infected--and 15 have
died of the coronavirus.
In my home State of Oregon, the Warm Springs Tribe has a
higher rate of coronavirus cases than any other county in
Oregon. The situation is compounded by a water crisis, making
it harder for members to wash their hands and forcing them to
use bottled water. A lot of members of the Finance Committee
have constituents in rural communities, and under-served and
rural hospitals like Ms. Wilson's are having a very difficult
time competing with big buyers seeking out PPE.
I would like to know how this strategy of trying to compete
with the big guys seeking out PPE is not just going to compound
the racial disparities that we are already seeing? Because
those big buyers usually are not anywhere near those
communities of color. They are usually out in the affluent
white suburbs.
So I would be interested in having our witnesses comment on
that, because that is going to be a special focus of the
Finance Committee going forward, including in the coronavirus
package: the racial disparities that are so profound in
American health care. The committee has jurisdiction over
health care. You see it in maternal mortality. You see it of
course in COVID-19. You see it in out-of-pocket expenses.
But I would like to hear our guests tell us how this is not
just going to compound the racial disparity problem, because
these big buyers are the ones that are trying to corner the PPE
market and are likely to be off in the white affluent suburbs.
Can I have a reaction from our panel on this? Dr. Grant,
perhaps you and others could comment on it.
Dr. Grant. Thank you, Senator Wyden. My initial response to
that would be that I would agree with you that the lack of
supply directly affects the ability to provide care, and
therefore it also makes it more difficult for smaller hospitals
such as you described to be able to compete to get the
equipment that they need. And as a result of that, then people
who are utilizing that particular hospital for access to health
care, obviously they are going to suffer disproportionately
because of the fact that they are not getting the quality of
care that they should.
So it just starts a snowball effect. But that would be my
initial response to you, sir, and I can provide some other
information to you after this meeting is over, perhaps, and as
we look up some additional data to support that.
Senator Wyden. I think I am at my time limit, but Chairman
Roberts is being gracious. Would any of our other guests like
to comment on that--Mr. Wiehe or others?
Mr. Wiehe. Certainly I am happy to comment. I do agree with
your comments. UC Health does serve many of the communities
that you mentioned. But what we are trying to do, furthermore,
is we are reaching out and we are partnering with some of our
rural hospitals in the area, trying to help them. They
certainly do not have the resources to bring to bear--and you
mentioned that--to this crisis. They do not have the sourcing
abilities and some of the other things that we can do.
So what we try to do is help them wherever possible to
provide supplies, where we are a bit heavy on stock. We are
trying to provide them with trusted suppliers that we found
through our sourcing activities. But certainly I think your
statement is valid.
Senator Wyden. Thank you. Thank you, Mr. Chairman.
Mr. Johnson. ISEA would also comment on the question, if
the chair would allow the time?
Senator Wyden. Yes, I think Chairman Roberts probably
will----
Senator Roberts. Certainly; certainly. Please proceed.
Senator Wyden. Thank you.
Mr. Johnson. Equipment manufacturers have been very
concerned with the design and provision of safety equipment for
a diversifying American workforce. And certainly the stresses
we have seen on the supply chain during the COVID crisis could
have adverse effects on underserved communities.
We do believe that some of the suggestions that have been
put forward for better data collection from affected
communities of all types across the board can help us alleviate
some of these issues going forward.
Senator Wyden. My time is up, Mr. Chairman. I think that
last point by Mr. Johnson is a very good one. The tragedy is,
after 150,000 deaths, now we are still talking about trying to
collect data. So I thank you for the extra time, Mr. Chairman.
Senator Roberts. Senator Wyden, we do not want to leave
Cathy Denning out, if she would like to comment.
Senator Wyden. Oh, yes.
Ms. Denning. Thank you so much. We serve members from two-
bed hospitals all the way up to the largest academic medical
centers in the country. And so our efforts have been centered
around making sure that, to the greatest degree possible, all
sizes of hospital providers were served.
There is just not enough product, as we have talked about.
In addition to that, we have realized through COVID-19--we have
always recognized that the social indicators of health have
been an issue. But it absolutely has shined a light on the
disparity in the people of color area. And so we actually have
education sessions that we do for member hospitals around this.
It is absolutely something that we need to address. Thank
you.
Senator Wyden. Thank you, Mr. Chairman.
Senator Roberts. In making my comments, I would note for
the record I remember sometime back when we were considering
this kind of a problem, during the Bush administration and at
the very last of the Bush administration--this is Bush 2--the
President indicated he wanted $8 billion from the Congress. He
made an impassioned plea to start the work to address a
possible pandemic.
He said it was not a matter of ``if'' but ``when.'' He was
pressing on that issue. Unfortunately, the Congress did not
respond to his request, although working with the Nunn-Lugar
program back in that day on the Emerging Threat Subcommittee of
the Senate Armed Services Committee, I was able to go to secret
cities in Russia at that particular time--obviously that is not
possible today. I will comment on that later.
But my first question is this. As we have heard from the
testimony, the increasing demand for personal protective
equipment, PPE, caused by the pandemic was unprecedented. And
the strategic national stockpile, which I guess the acronym for
that is SNS, was not intended to fill the need for every
community across the country all at once, even though it was
happening in every community all at once.
So I would like to start with a high-level question. Going
forward, should we expect and plan for this kind of spike in
demand to happen again--I think that is probably obvious--
perhaps during the next pandemic? And then how much of that
demand should SNS plan to cover? Could stockpiling be too much
so as to be counterproductive?
Cathy, why don't you start it off?
Ms. Denning. Yes, we do believe that the strategic national
stockpile needs to be more functional in the future. And so,
one of the things that we have recommended is that there be a
90-day supply of critical products--that does not mean all
products, which you would typically use in a hospital, but
those that certainly you need to get through a pandemic, like
personal protective equipment, ventilators, critical drugs that
you would need.
In addition to that, we believe that it should be limited
to times of disaster and, in those times of disaster, that
there is a way for us to get those products quickly to the
places most in need.
Senator Roberts. I appreciate that. Robert?
Mr. Wiehe. Thank you, Senator. I agree with Cathy's
statement. I do believe that the national stockpile needs to be
increased. I think 90 days is a good start.
I would also say, I think we need the ability of a complete
supply chain from the government. So I think major suppliers,
similar to the pharmaceutical industry, should report out
capabilities, whether that is capacity, whether that is stock
or critical raw materials, so that there is a complete
understanding when there are critical shortages even in times
of non-pandemic--that the government has a full view of that.
I would also roll that down the supply chain, right? There
are possibilities to mandate--potentially to help systems,
maybe as part of the CMS mandate--to have a certain amount of
stock on hand. I do not think that would be completely onerous
on the health system to have that, but I think having this
national stockpile spread out from top to bottom in the supply
chain would be a logical approach, as we look at this.
Senator Roberts. Let's see, we have Charles. Why don't you
proceed?
Mr. Johnson. Thank you, Senator Roberts.
The obvious answer of course is, yes. And I would go
further to say this planning needs to be more comprehensive and
systematic. Building on the previous panel of witnesses, this
90-day concept is gray. I would say, ``of what?'' and ``for
what?''
So previously we have seen provision of the strategic
national stockpile as a sort of one-and-done event. And that
has led to expired product in the inventory and other systemic
problems.
Going forward, we need a planning process that does a
better job of forecasting demand at a much more granular level,
that collects information from many more stakeholders, and that
addresses those issues with a systemic approach that prices
preparedness in to the personal protective equipment industry.
Senator Roberts. I appreciate that, Mister--pardon me,
President Johnson.
Dr. Grant?
Dr. Grant. Yes, sir. I would also agree with the other
members of the panel. And from our perspective, we support that
a report that includes when items are expiring, or when they
need to be replaced, should be included in that stockpile so
that they are on a rotational basis.
As you remember, some of the reports that have come out
earlier when we were accessing the stockpile show that some of
the materials had already expired. But as we keep a rotation of
supplies going in, we can be assured that supplies are within
dates. And as they are approaching their expiration date, then
obviously those that still could serve their clinical use can
be donated to other health-care facilities or under-served
areas, but we want to make sure that the supplies that are in
those stockpiles are within their use dates.
Senator Roberts. I appreciate that. Dr. Grant--pardon me, I
think we have already recognized you. Let me go to the next
question really quickly.
Several manufacturers in Kansas--and I am going to include
South Dakota here, given that good Senator Thune is present and
accounted for--and around the country have altered their
manufacturing lines to help produce PPE. And several more wish
to do so, I am sure, all around the country.
Mr. Johnson, to what extent does getting more domestic
manufacturers to produce PPE solve the supply chain
difficulties? What gaps could these companies fill if lines
were permanent? And do we see any problems along this line?
Please?
Mr. Johnson. Thank you, Senator Roberts. ISEA and our
members produce in the U.S. We source internationally, some of
us, and some of us are international conglomerates.
Our first answer to that question is that increased support
for domestic production can be ``an'' answer to future
preparedness, but it is not ``the'' answer to future
preparedness.
Nothing takes the place of proper preparedness planning and
provisioning in the future. Now with that said, domestic
support and diversification of the supply chain are an obvious
plus for the future. And I would once again highlight that a
systemic approach to domestic support for the industry will be
needed in order to make sure that those producers can stay in
business over the long term.
We have seen in previous pandemics that the incredible
increase during the emergency leads to huge overhangs of
inventory. And those types of strategies that lead to those
large overhangs are a perfect way to put that capacity out of
business so that it is not available in subsequent emergencies.
Senator Roberts. With apologies to Senator Carper, who is
anxiously waiting virtually, I want to finish up what I
mentioned at the first. Back in the day under Nunn-Lugar, I had
the privilege of visiting a secret city in Russia. Those are
closed now, of course. But this was a community, or a
``center,'' if you will, in Obelinsk, where they were--in terms
of going in, we were really trying to help those folks keep
security and keep these scientists onboard back when the Soviet
Union fractured. And there were warehouses full of all sorts of
pathogens designed to attack a nation's food supply.
Now this is an attack, and I guess you could say that, if
you really want to stretch this, you could involve China and
the United States with this, or the rest of the world. But what
worries me is that we had DHS, HHS, and the Department of
Agriculture all involved. We had an exercise in that regard,
and it was with the livestock community with hoof and mouth
disease.
We lost almost every head of cattle in the country. All of
our exports stopped. The shelves of our grocery stores were
empty. Would any of you like to comment? Obviously we would
have a serious problem there, given the fact you would have to
use the military. But have you thought about that kind of a
circumstance which would be sort of an Armageddon with regards
to the situation with a pandemic? And since you answered last,
I think I will ask Charles to respond to that.
Mr. Johnson. Yes, our industry does contemplate abnormal
surge demand in the future and the inventories that are needed
to address it.
I would return to the concept that no matter where
production is located, it will scale itself to the regular
demand of the market that it serves. And so to deal with these
issues of large inventory management that is meant to service
the surge demand of a large-scale emergency, we have to first
have the imagination to contemplate those future emergencies.
And then we have to have a rigorous planning program in place
that quantifies the needs, and then signals those needs to the
manufacturing industry and supports the production of the
materials that are needed to respond, or to serve that
stockpile. And certainly overshoots are possible and
deleterious.
Senator Roberts. I appreciate that very much.
Let's see, we have Senator Carper. Senator, I apologize for
going over time.
Senator Carper. That is quite all right. You are a
chairman. You can go as long as you want.
To our witnesses, especially the ones from the Queen City
of Cincinnati, we welcome you. I am an Ohio State boy, and I am
just glad to have a Buckeye in the house. Thank you all for
joining us from around the----
Senator Roberts. Tom, let me interrupt you. We need to get
sound up, if we can, on behalf of Senator Carper.
Tom, can you speak up a little bit?
Senator Carper. Yes, I can. I want to start by--for my
sound check, I want to quote Einstein. Einstein used to say
that the definition of insanity is to do the same thing over
and over again and expect a different--what?--result. Einstein
also said, ``In adversity lies opportunity.''
We are facing one heck of a lot of adversity here, but
there is also some opportunity as well. And I want us to focus
a little bit on that opportunity.
Now was that--in terms of my sound, was that any better,
Mr. Chairman?
Senator Roberts. I'm sorry, Senator, not at least as far as
I am concerned. We are having some problems.
[Pause.]
Senator Carper. I am going to try--I have a Lavalier mic
on. I am just using that. Is that any better?
Senator Roberts. Senator, pardon me. I asked them to turn
the sound up, so now we have an echo. But at any rate, what is
your specific question? If you want additional time, you can
have it, or if you want to reserve your time, you can have it.
Senator Carper. I want to make sure you can hear me. Can
you hear me?
Senator Roberts. Yes. Yes, we are in good shape right now.
Senator Carper. Thanks so much.
Senator Roberts. Thank you.
Senator Carper. This Lavalier mic has helped. I was quoting
Einstein for part of my sound check, and a couple of Einstein
quotes: the definition of insanity is to do the same thing over
and over again and expect different results. The other Einstein
quote: in adversity lies opportunity.
Given all the adversity we have, there has to be some
opportunity as well. And one of the great things about this
panel is, you can help us to identify some of that opportunity.
We continue to hear from the administration about how good
the response has been to the coronavirus pandemic, yet the U.S.
continues to be the country with less than 5 percent of the
world's population and over 25 percent of the deaths around the
world. And since March, my colleagues and I have been calling
on our President to invoke something called the Defense
Production Act to expedite production of much-needed medical
supplies. And almost 5 months later, the country is still faced
with PPE shortages, and you have shared responses about results
today. And we certainly see that in Delaware as well. But we
thank you for joining us, and I want to thank our chair and
ranking member for bringing us together.
Sometimes when we have a panel like this with really smart
people and a big problem to solve, I will ask, where do you
agree? For each of you, give me one example where you agree.
You heard one another's testimony, things we ought to do more
of, less of. Where do you find there is a consensus in maybe
one area, Ms. Denning, that you would really especially
recommend we take action on, really follow up on? Ms. Denning?
[Pause.]
Dr. Grant. If I may be at liberty to answer the question
first, I believe that more transparency in reporting is needed
to help fix the supply strain that is going on. You know,
obviously the reduction of competition between the State and
Federal Governments, which is also causing problems with
health-care facilities having to bid against larger entities.
That is obviously driving up the cost of the mask, and
sometimes driving it out to where they are not able to make
those purchases.
So I would think that more transparency and being able to
work together so that everyone can get a piece of that.
Senator Carper. Thank you, Dr. Grant. I think that--Cathy
Denning, you are next--I think that was like maybe the first
point that you made. Is that correct?
Ms. Denning. That is correct. We believe that not just
transparency for certain agencies, but for everybody really
around where the product is manufactured, where those raw
materials come from, how you get it through the supply chain.
And really, we ask suppliers to provide us with the time that
it leaves the manufacturer to the dock of that hospital. We
have had a very hard time getting that information.
I think the other things that I would add--transparency is
one part of resilience. But also we need a global supply chain
that is redundant, with an increased domestic footprint.
We do not believe that even if we wanted to, tomorrow we
could add all of our manufacturing back onshore, but we do
believe that there is an opportunity to significantly increase
that. Vizient actually has gone at risk with several domestic
manufacturers guaranteeing the purchase of their product if
they would bring up lines in North America.
We can do more of that. It certainly is a gap filler, but
we have made long-term commitments to those companies, and I
think that is something, echoing Dr. Grant, that we would need
to make sure of, that there is an opportunity for hospitals to
continue to buy products as we are----
Senator Carper. I am going to ask you to hold it right
there, please. We need to have time for these other folks. They
will not be very happy. They will go home sad.
Robert Wiehe from--where are you from? Where are you today,
Mr. Wiehe?
Mr. Wiehe. I am in Cincinnati, OH, Senator.
Senator Carper. Okay, good; a buckeye.
Mr. Wiehe. Thank you for your thought for the Queen City.
Senator Carper. You bet. You bet.
Mr. Wiehe. I think my response would be very similar. Thank
you.
Senator Carper. All right. We are hearing greater
transparency. We are hearing redundancy from two of our
witnesses. Would you agree with that?
Mr. Wiehe. I agree completely. I think, as was stated
previously, there is no wrong answer here, right? I think
transparency is critical. And that transparency is not just
from the supplier base, but from the demand side as well.
We need to be consistent in what we are telling folks is
needed.
Senator Carper. Charles Johnson?
Mr. Johnson. I would echo that last thought. I think that
we are all in violent agreement on this transparency and data
issue. I think that we all----
Senator Carper. I love that term, ``violent agreement.''
That is wonderful.
Mr. Johnson. We see it all from different facets of the
same issue. From the manufacturing side, what we have really
learned through the COVID crisis is that we need a lot more
transparency about the demand signals coming from users.
Because without that, industry is flying blind, and
distributors are flying blind.
And so from our point of view, that transparency applies to
communication up the supply chain from the users, from the
States, and from the various actors that are at the other end
of the supply chain.
Senator Carper. All right. I would ask one more question,
if I could. I think I have some time.
Coordination of the Federal Government--this would be for
you, Mr. Johnson. My staff and I have spent a fair amount of
time--and I am sure other staffs and the members have too--
since this pandemic began, working with the FDA, working with
CBP, and even the State Department, to try to retrieve
shipments of medical supplies and test kits that have been
blocked by Federal Government officials.
During any global pandemic, we ought to expect new
technologies and supply chain backlogs that challenge our
regulatory systems and overload our border checkpoints.
Having said that, I know we can do better. In your view,
what sort of coordination is needed to ensure that delays are
minimized, appropriate treatments and tests are approved, and
regulations are clearly communicated for those attempting to
provide our front-line workers with needed supplies?
Mr. Johnson?
Mr. Johnson. That is a great question, and thank you for
asking the question, Senator.
The ISEA and our members have had a long and productive
partnership with various Federal agencies that manage the
certification of, the approval of, and the regulation of safety
equipment.
Greater coordination between those agencies during the
COVID crisis could help other entities that are policing the
U.S. border--or are surveilling the U.S. market--to carry out
those activities. We have seen unintended consequences during
the COVID outbreak.
We have seen shipments of legitimate product held at the
U.S. border. In some cases, this was because they were
erroneously thought to be classified as medical products by the
FDA and thus would need FDA approval for movement across the
border, when that was not in fact the case.
ISEA has been able to help in those situations, but clearly
the fact that it occurred to begin with points to the fact that
we need better communication about the legitimacy of safety
equipment products and the proper processes for policing those
issues when they do occur.
Senator Carper. Mr. Johnson, I am going to ask you to wrap
it up right there. My time has expired.
Mr. Chairman, thanks so much for your generosity with the
time. My thanks to the witnesses. Great to see you all. Hope to
be able to thank you in person for the great work you are doing
around the country. God bless.
Senator Roberts. Thank you, Senator. And we are going now
to Senator Cassidy, who is going to assume the role of acting
chairman. Senator Cassidy, as I understand it, will be with us
virtually. Senator Cassidy?
Senator Cassidy [presiding]. Senator Roberts, thank you.
And now it is Senator Cardin's turn to ask the questions.
Senator Cardin. Thank you very much, Mr. Chairman. And let
me thank all of our witnesses. This is a very, very important
issue, for us to get the supply chain right.
I am just going to start off by giving one example from one
of our hospital groups in Maryland, and they gave me their
dollar numbers in regards to what is happening with PPE.
Face masks have gone up 20 times. Face shields have gone up
5 times. Respirators have gone up 10 times in cost. Isolation
gowns, 10 times in cost. And gloves, 4 times in cost.
So where their 2019 total expenses for PPE were about
$800,000, so far, in the first 5 months, their costs are $11
million. Now part of that is volume, and part of that is the
extraordinary increase in costs because of the inadequacy of
the supply chain.
I want to concentrate on an issue that some of you have
already touched upon. Senator Wyden brought this up. And that
is, the disparate impact it has on minority communities and
under-served communities.
Senator Menendez and I have introduced legislation to deal
with the COVID response to minority communities, recognizing
that they have suffered more on a population basis from COVID-
19, but also the distribution of PPE and many other issues, the
testing supplies--all that has put these communities at greater
risk.
You all have acknowledged that, but you have not given us a
plan to try to counter that, other than the general issues of
dealing with the supply chain, which I strongly support. But I
can tell you that if we just deal with the supply chain, we
will not be dealing with the unique problems we have in under-
served communities. They still will not get the same quality
and quantity of PPE, and they certainly will not get the same
access to testing and health care.
So can you give me some concrete suggestions on how we
should target our response to deal with the under-served
communities and the minority communities?
I think I will start first with Dr. Grant, if I might. If
you could help me on this, I would appreciate it, because we
are looking for specific ways we can target the help to those
communities that have suffered the most.
Dr. Grant. Thank you, Senator. I would be happy to give you
some suggestions that we feel would be most helpful.
The first is, obviously there needs to be a stronger
investment within the public health sector. I believe that
public health funding has been cut dramatically since, probably
about 2008. So an investment in that would allow for more
nurses to be in the community to promote the help in health
care that is needed.
Obviously investing more in testing, and test follow-up, or
contact tracing follow-up is extremely important as well. And
again, having enough funding for nurses to be able to do that.
And I think the third thing would be--I cannot emphasize
enough--for nurses to be at the table when these decisions are
being made. When you have local committees, or even at the
State level, as they are identifying these communities of high
risk, the nurses know the communities very well and can
identify either potential hot spots or how to access those
communities. So it is extremely important, I believe, that we
take those two things into consideration as we are looking at
ways to invest in the disparate communities.
Senator Cardin. That is very helpful. Let me just point out
another serious challenge we have. We find that minorities have
much higher representation in industries in which they have
essential workers who have worked--we had significant problems
in some of those plants in Maryland. And we found that those
employers either were not in the position, or did not pay
attention to having adequate protective equipment for those
workers.
So let me just drill down as to what role the Federal
Government has, either in requiring or help with financing to
make sure that those vulnerable workers have the protective
equipment they need.
We know we have the health-care workers, and they are not
receiving the adequate supplies. We know we have the nursing
homes, included under the health-care workers, that have been
made vulnerable. But we also have businesses that have been
there providing essential employment, but they have not had the
ready supply of quality equipment for their workers.
And is there a role for the Federal Government to play,
either in regulation or in financing, or both, in order to
provide better protection for these essential workers who may
not quite have the same voice for protection as other workers
have?
Dr. Grant. I would agree with you, Senator, that there is a
role, such as perhaps congressional oversight, as well as
adequate funding to ensure that relevant agencies are able to
stay focused and follow through at the local level to ensure
that the services that need to be offered at the local or
regional level are done to the fullest of their capacities. So
yes, I would wholeheartedly agree with your comments, sir.
Senator Cardin. Thank you. And let me again thank all the
witnesses. And, Mr. Chairman, I will yield back my time. Thank
you.
Senator Cassidy. I have to be here, so I am going to allow
my colleagues to go before me. So, Senator Brown, I will call
upon you now.
Senator Brown. Thank you, Mr. Chairman, and thanks for----
Senator Cassidy. Excuse me, Senator Brown. Can we reset the
clock, please? There you go. Okay, Senator Brown; I am sorry.
Go ahead.
Senator Brown. Thank you. And thanks for your generosity,
Mr. Chairman.
Mr. Wiehe, thank you for the work you do in Cincinnati. We
know the failures, and I hear far too many times people--
whether they are working in hospitals or working in grocery
stores, whether they are bus drivers or custodians or security
workers or food preparers--simply have not gotten the masks and
the other kinds of protective equipment they need due to a
failure of the President when, back in March, we asked the
President to begin to use the Defense Production Act and to
scale up both testing and things like producing cotton swabs
and protective equipment. And the fact that we are still
struggling as this outbreak continues speaks to that.
I wanted to ask you, Mr. Wiehe, as the Federal Government
works to strengthen the strategic national stockpile or
domestic supply chain, what should we prioritize?
Mr. Wiehe. Thank you, Senator Brown. Again, I am going to
sound a bit redundant with my response. I think transparency
and communication have got to be strengthened. And I am going
to elaborate on that a bit more than I have.
While we have received some goods from the strategic
national stockpile, they have been sporadic; they have been
unannounced. For a supply chain leader, when you are not able
to plan because you do not know what is coming, you have to
assume it is not coming, right? So it leads to us procuring all
of our needs versus maybe relying on something else.
I think that leads to competition. So I think the
transparency and good communication about the strategic
national stockpile has to be improved. We have to understand it
a little bit better. We have to understand what is forthcoming,
or how we can rely upon it. I do think, as we have talked about
earlier, that resiliency in bringing some or all of the
production regionally into North America, or into the United
States, is critical because that allows a supply chain a much
faster response time when there is a period of demand that we
have not seen in the past.
I think, lastly, just having the right quantities in the
stockpile, having goods that are not expired--and again, so
that we are not competing with the government and the private
sector for those same goods when a pandemic or another crisis
hits. That is crucial.
Senator Brown. Thank you, Mr. Wiehe. Thank you for that. I
introduced yesterday the Protecting American Heroes Act, which
would increase U.S. production of PPE and other critical items
in the strategic national stockpile. And the legislation would
strengthen the supply chain resiliency and make sure we are
better prepared for a pandemic. So I look forward to working
with you, and UC, and others. So thank you for that.
Dr. Grant, in testimony you submitted to the House Energy
and Commerce Committee hearing earlier this year on health-care
inequality, you urged Congress to identify and address racial
disparities in its Federal response to COVID-19. Thanks for
your dedication to addressing that.
How does Congress ensure future policy decisions--from
those specific to COVID-19 to those designed to eliminate
racial disparities--how do we ensure those decisions are
informed by diverse scholars and experts, including our
Nation's nurses?
Dr. Grant?
Dr. Grant. Thank you for that question, Senator.
I would say that one of the best ways that Congress can
ensure that is, obviously, funding that would ensure that
health disparities are addressed and become a top priority and
not just a sub-tier priority. But particularly illnesses that
affect minority communities, and the disparate communities,
that those issues are addressed, and that we see a change in
the focus of health care--mainly, a focus towards prevention
and education in those particular areas so that better health
and better care can be provided for everyone.
Senator Brown. Thank you, Dr. Grant.
In closing, Senator Cassidy, I would like to briefly
comment on something the President said in a news conference
yesterday afternoon.
He said, and I quote, ``We've replenished the long-
neglected national stockpile. In January, the stockpile had
17,000,095 masks. Today the stockpile has over 50 million
masks. We will be doubling that in a very short period of time.
And then doubling that number again,'' is the President's
quote.
If that is true, the question is--to no one in particular--
but the question is, why on earth are we still forcing our
nurses to use poor quality PPE or to re-use their equipment? I
mean, it again sends the message to workers in this country
that we may call them essential but they really seem
expendable. And Congress needs to do something about that.
Thank you, Mr. Chairman. Thank you, Mr. Wiehe and Dr.
Grant.
Senator Cassidy. Thank you, Senator Brown. The time has
expired. Senator Brown, did you want an answer to that, or can
we go to Senator Cortez Masto?
Senator Brown. No, I was really just putting the question
out there of, what are we doing? So thank you, Mr. Chairman.
Senator Cassidy. Okay, your time has expired. Thank you,
sir. Senator Cortez Masto?
Senator Cortez Masto. Thank you, Mr. Chairman.
Thank you all for participating today. I can tell you, the
conversation we are having today is the same conversation we
are having in the States. And I think every State and every
local government, everybody is competing with one another----
Senator Cassidy. Excuse me, Senator Cortez Masto. Can
somebody start the clock, please? Got it. Okay, I am sorry.
Senator Cortez Masto. You bet. Thank you.
So I am a firm believer that we should have fully invoked
the Defense Production Act, and that would have addressed all
of the concerns we are hearing about right now. So I appreciate
the conversations we are having.
And let me just say for the record as well, in the State of
Nevada, what you are talking about with the lack of
communication from Federal agencies, we are seeing it. We had
to compete to get PPE in the private sector, which was held up
at the border.
And then we, thank goodness, had a good working
relationship with our FEMA regional director who helped us move
it from the border to get it to Nevada. I mean, everything that
you are all saying is absolutely happening in all of our
communities. I cannot thank you enough for using your voices to
really stress this, and why we need to fully invoke the Defense
Production Act, and why we need one single command and control
over all of the supply chain, from the PPE to the tests to
everything else.
We as a country have done it in the past, and that is why
we should be doing it now. So my question to all of you on the
panel is, is it too late? Is it too late for us to fully invoke
the Defense Production Act and address all of the concerns that
we are hearing now?
Let me just open it up. Let me start with Ms. Denning.
Ms. Denning. Thank you, Senator. What I would say is, I am
not familiar with all of the nuances of the Defense Production
Act, but any time that we can increase production and make
available products that are critically needed by the front-line
health-care workers, and the public in general, I would support
that.
I will give you a statistic. I heard you talk about the
N95s. Here at Vizient, we have been tracking what the use is of
N95 masks. So to give you an example, normally our hospitals,
which represent 50 percent of those acute-care centers in the
country, would need 50 million N95 masks in a year.
Most recently, our count for this year alone is up to half
a billion--so, 500 million masks. So when you think about how
staggering that is, that need of the hospital, anything we can
do to meet that need in any way, I would support.
Senator Cortez Masto. Thank you. Let me go to the rest. Mr.
Johnson?
Mr. Johnson. Yes, thank you for that.
I want to stress that our members and our Association have
been active and positive participants in the DPA process that
has been in use, and we stand ready to partner with the Federal
Government if it is invoked further in the future.
And we can say unequivocally that it has helped. And there
is new capacity that is coming online through the use of the
DPA. We would also say, as an industry, that the DPA is not
magic. It cannot stretch back into the past and make production
lines appear out of thin air.
And so I would say that, given what it can do and is doing,
and if there are future solutions that are proposed for the use
of the DPA, we would absolutely want to partner there. But
command and control for capacity that does not exist is not a
solution.
So again, we are positive and active participants in this
process. We want to partner more in the future, and we
absolutely will. But we want to stress that it cannot make
production appear out of thin air.
Senator Cortez Masto. Right. And that is the problem,
right? I mean, that is what we knew going into this from the
very beginning. It was about production. Yes, command and
control is important, but it starts with that production and
that capacity, and controlling it.
I mean, again, we have done it before as a country. We did
it with the Jeep, right? And so what we know is, it is doable,
and that is the whole reason we have this act. But let me move
on here, because I only have so much time.
And let me ask, Dr. Grant, I think we all are so deeply
concerned about the impact that this pandemic is placing on our
health-care workers, our nurses, everybody on the front lines
who are the true heroes.
But let us talk a little bit about the psychological toll
on nurses who are caring for patients through the pandemic.
What can we do to address the mental health needs of nurses and
other health providers that we should be aware of? And what
more can we do? Because we know that, besides being on those
front lines, they are also dealing with emotional issues when
it comes to individuals who are positive for COVID-19.
Dr. Grant. Thank you, Senator. I would like to emphasize
the need for more spending on mental health services for front-
line workers. This pandemic, as you have stated, has placed a
tremendous strain on providers, including the registered nurses
who provide the individual care.
Our foundation has actually recently just completed a
survey, and over 75 percent of the people who responded to that
survey are showing high stress, post-traumatic stress: not
being able to sleep, not being able to eat, or sleeping too
long, short tempers, et cetera.
And what this does is, it leads into the fact that when
they do go to work, they are not able to work as effectively as
they can as a result of this. So definitely more funding is
warranted to address the mental health needs of the people who
are on the front line.
The downside to that, unfortunately, may be that more
people may choose to leave the profession, and Lord knows we
need all the nurses that we have at this particular point in
time. So I am extremely concerned about the mental health needs
of our front-line providers.
Senator Cortez Masto. Thank you. I know my time is up.
Thank you so much.
Senator Cassidy. Thank you. Senator Casey?
[Pause.]
Senator Cassidy. Senator Casey, you are muted.
Senator Casey. Oh. Okay now?
Senator Cassidy. You've got it.
Senator Casey. Thank you, Mr. Chairman. I want to thank the
witnesses for their testimony and their ongoing work on this
issue. And we can recite chapter and verse about the failures
of the last several months, and they are many on PPE.
But we also have to acknowledge that we have not had the
manufacturing capacity in place to meet the demand. So we hear
from, as every Senator does, hospitals and nursing homes and
all kinds of settings. And frankly, we need a whole new
industrial policy when it comes to PPE. We have to stop
thinking about this in terms of months or years. We need to be
building up for decades of PPE.
That is my view of it. But we are hearing a lot about
strengthening the supply chain. We are hearing about stopping
counterfeit products, both of which are critical debates to
have. But we are also hearing a little bit, and frankly not
enough, about investing in the next generation of PPE.
So I am going to start with Mr. Johnson. We have been
considering today the challenges with supply and quality
control as it relates to PPE, and the critical role it plays.
But I want to ask you a question about innovation.
What is the status of PPE innovation right now? If you
could, kind of outline that for us.
Mr. Johnson. That is a wonderful question, and thank you
for that. The PPE industry is always innovating. And even
during the COVID crisis, new solutions and alternatives have
been brought to market. And solutions that were used in other
sectors have been redirected into the COVID crisis response.
And so that innovation is always occurring. And I would
say, proudly, that ISEA members, and U.S.-based personal
protective equipment manufacturers, are world leaders in
innovation in this space. And that is the strength of the U.S.
PPE industry.
So we are already making those investments, and we are
already looking forward into what the next generation of PPE
may look like. We are also working especially for respirators,
which have been so much in discussion during this pandemic. We
are working closely with the regulatory bodies that also carry
out research in that area. And we fully support funding for
those agencies. And I am speaking specifically for the National
Institute for Occupational Safety and Health, and NPPTL, where
respirator certification and research takes place.
Senator Casey. Mr. Johnson, what, if any--and I hope the
answer is there are not--but what, if any, barriers exist to
PPE innovation?
Mr. Johnson. That is also a great question. Barriers do
exist. The certification process for respirators is a process
that we have worked closely with the Federal Government on in
the past. It is a process that has in the past suffered from
long lead times.
I would note that proper funding for the agencies that
carry out that work, so that they can carry out their mission,
so that new and innovative products can be brought to market
faster, would be a great intervention to help innovation in
this space.
Senator Casey. Thanks very much. I want to move in the
remaining time I have to Dr. Grant.
We know from some of the background materials you have
provided that health-care workers are concerned about both
quality and durability of some foreign-made equipment. We have
also been hearing from front-line workers that, as they wear
the PPE over many hours or days, their masks become
uncomfortable and cause long-lasting skin irritations.
What have you heard from nurses about improving the design
of PPE for health-care workers?
Dr. Grant. Thank you, Senator. We have had a couple of
comments from nurses, you know, asking for ways to try to be in
on such a design change, if you will. Obviously, wearing a mask
for up to 12 to 16 hours a day, you are correct in that it does
leave an imprint in the face. It also causes hypersensitivity
reaction to the skin.
And again, you are looking at masks that are just designed
to be used once and thrown away. So the fact that we are re-
using them and, depending on what they may be decontaminated
with, as well as what may be remaining in the material, could
be causing that irritation.
So we would welcome the opportunity to get with the
manufacturers and see if there is something that we could do
that would help to minimize such reactions from occurring.
Senator Casey. Thank you, Doctor. Thank you, Mr. Chairman.
Senator Cassidy. Senator Whitehouse?
Senator Whitehouse. Thank you, Chairman Cassidy, and thank
you to the witnesses who are here.
We had some pretty compelling testimony yesterday about the
state of the PPE market. It was described as being rife with
counterfeiting, with crime, with price gouging. Several
investigative efforts have been stood up to try to deal with
the criminal activity that runs throughout this market.
And I wanted to ask the witnesses--so I will start with Dr.
Grant, if I may--for their view of what this PPE marketplace
looks like. And I will say, by way of introduction, that from
Rhode Island, which has actually handled the COVID crisis
better than most States, we are seeing descriptions of this
marketplace that are chilling.
People refer to it as ``the dark side,'' as ``dog-eat-
dog,'' as ``Lord of the Flies competition.'' And if you would
take a second and think about it, if the market is that toxic,
it does not just affect the demand side--the hospitals that are
thrown into this mess trying to fend for themselves and find
their own equipment--it also affects the supply side. We have a
powerful textile industry in Rhode Island. They are trying to
find their way in. But it is very hard to not know whether you
are qualified, to not know what the standards are, to not be
able to get in touch with somebody who can assure you that your
product will sell, to not know that there will be a market for
it.
My thesis here, from what I have been seeing in Rhode
Island, is that when a market goes toxic--and my belief is that
this one has gone toxic--it not only discourages the demand
side of the market, it discourages the supply side of the
market.
All of this could have been resolved by a more potent,
forceful, and sensible executive branch response, but let us
not get into that. Let us just focus on--to your people, what
does this market look like? And does this ``dark side,'' ``dog-
eat-dog,'' ``Lord of the Flies'' terminology pertain from your
perspective?
Dr. Grant. Thank you for the question, Senator. From the
perspective of the nurses and other front-line workers, this
creates a lot of concern because, obviously if you are getting
equipment that is not in good quality, that does not fit very
well, then of course you are concerned about the possibility
that while you are actively taking care of someone who has a
known case of COVID-19, what is the potential if there is a
break in that seal, if you will, that now you are at increased
risk for that?
Obviously, as there is also more of increased demand or
more people getting in on the black market, then that means
that perhaps less quality equipment is getting there. I also
have been told from staff that a public affairs firm is working
to try to get PPE into the giant box store corporations, and
that is causing a great deal of concern, because I am worried
about the fact that now large box chains will be able to outbid
hospital systems and take more masks away from them or continue
to drive the price up.
So your comments are very well-founded, sir, and it does
cause an extreme concern for me and for those who are on the
front line that not having, not only quality but quantities of
PPE that they need to do their job and do it effectively, is
going to create more psychological impact. And as I stated
earlier, the possibility is that some nurses may choose to
leave the profession, which is of grave concern to me.
Senator Whitehouse. Mr. Chairman, if I could, I would like
to ask the remaining witnesses to take this as a question for
the record and offer a written response, if they would care to,
because my time is running out. But I would point out, in my
last 40 seconds, that in Rhode Island--again, less hard hit
than many places; more successful in dealing with it than many
places--we had PPE trucks from FEMA show up empty.
We had deliveries to our providers of counterfeit and
defective goods. We had people who had to offer payment for
products in order to get in line, and the products never showed
up. The thing was a scam. And then they have had to fight to
get their payments back.
The market, I believe, is toxic. And it is toxic because of
an absence of Federal leadership to oversee a legitimate market
with proper supply and demand.
And with that, I will leave it to the witnesses to provide
the written responses, and I thank the chairman.
[The responses appear in the appendix.]
Senator Cassidy. Thank you very much, Senator Whitehouse.
Senator Hassan?
Senator Hassan. Well, thank you very much, Chairman
Cassidy, and to the ranking member, and to all of the
witnesses. Thank you for participating today.
The challenges we have heard about from our witnesses today
clearly convey the shortcomings of our current supply chain.
And I will add to what my colleagues have already said. It
reinforces the need for this administration to take strong
action to support the acquisition and distribution of medical
supplies, including personal protective equipment.
At any point over the past 5 months, this administration
could have invoked the Defense Production Act. And I will
continue to call on them to take that step, which would provide
support to health-care workers, hospitals, and suppliers and
would address many of the issues that we are hearing about
today.
And I also just want to add that, while we are focused on
the health-care sector today, I spent time this week talking
with my education leaders in New Hampshire, and they are going
to need PPE if we are in fact reopening our schools for
physical attendance this year.
And that again adds a whole other source of demand in an
already highly stressed system. So my first question is to Ms.
Denning.
Given the increase in demand for personal protective
equipment and the challenges facing our supply chain, group
purchasing organizations have had to adjust their allocations
to health-care facilities, which means their customers are
almost universally receiving less than what they order. How are
you prioritizing these allocations to ensure that PPE and other
essential supplies are getting to facilities that are
experiencing shortages or are in the midst of a COVID-19 surge
in their community?
Ms. Denning. Thank you, Senator Hassan. We do not actually
set allocations; the manufacturers and the distributors work
together to do that. What we identified is that, regardless of
historical usage--so your allocation is based on your 3 prior
months of usage--there just is not enough allocation to a
particular health-care facility to meet the demand.
So when we find that a member--we call them members--a
member provider is short on product, they will reach out to us.
We work with the suppliers and those distributors to identify
product that is potentially available and help get that to them
in the most efficient and effective and quickest manner.
Just this week, we had a large hospital system down in
southern Florida that had 3 days' worth of exam gloves left,
and so we worked with a new supplier that we had done a
contract with to get them supply. I will tell you, there just
is not enough supply right now.
Senator Hassan. But let me ask you, then--this is a follow-
up. I am sure it is incredibly difficult to balance all of this
as a purchaser, but is the Federal Government helping you
identify and prioritize facilities that are facing the most
urgent need for supplies? And how has uncertainty impacted your
acquisition costs?
Ms. Denning. Yes. The Federal Government has not stepped in
to help us, but they have stepped in to help different
hospitals. We have heard about FEMA helping them. We have
worked with FDA and Customs and Border Patrol, OSHA, in order
to ensure that information was available and if we had products
that were not getting across the border.
It has impacted us from a cost perspective. I will echo
what everybody has said. The underbelly of the supply area has
come out through this. And so we see people trying to
profiteer. Vizient, though, does not do contracts with those
gray market suppliers.
We work with bona fide, known suppliers and attempt to find
a middle ground to make sure that we continue to have supply
for the increasing and ongoing demand at a fair price for
everybody, given the current market.
Senator Hassan. Understood. And has that lack of
centralized Federal planning to sourcing and allocating
personal protective equipment impacted your ability to source
products from your traditional suppliers or identify new
suppliers of safe products?
And just quickly, please, because I need to move on to one
other question.
Ms. Denning. Yes. I think we could have done better there.
Senator Hassan. Dr. Grant, I just wanted to add my thanks
to you and the nurses all across the country who are putting
their own health on the line in order to respond on the front
lines to the COVID-19 pandemic. We are very, very grateful for
the work you are doing.
We have certainly been hearing from health-care workers
about how this virus will impact their own health and that of
their families, and how these challenges have been more
difficult in an environment where access to PPE has become less
certain.
We know that there is enormous stress and strain and mental
health challenges as a result on the front-line nursing
workforce, but could you address, sir, just how the uncertainty
about how much personal protective equipment, what kind and
quality of personal protective equipment you are getting, and
the need to re-use it when it is not traditional practice to
re-use it has affected the mental health and the trauma that
your members are experiencing?
Dr. Grant. Thank you, Senator. As I pointed out in my
opening statement, about 59 percent of nurses who responded to
a survey that we did stated that their use, or re-use, of a
mask that has been sterilized makes them feel unsafe.
When they are feeling unsafe, then that is in the back of
their mind, which also may interfere with their ability to
perform their job effectively. There is always that potential
question of, is this the time that perhaps I may catch the
virus, as opposed to knowing that I am using a brand-new mask
to reduce that chance?
So it is very, very stressful for them. And this is why we
are advocating that we increase the supply chain so that nurses
are able to get a new mask every time that they can, as opposed
to sometimes being forced to keep the same mask for up to 10
days to 2 weeks. It is just really unconscionable that it is
being asked of a health-care provider to do that.
We do not send firefighters into fight a fire without the
proper gear. The same thing with nurses: they want to be able
to do their job. They just need the proper equipment to be able
to do that.
Senator Hassan. Thank you. And thank you, Mr. Chairman; I
went over. I appreciate it.
Senator Cassidy. Senator Portman?
Senator Portman. Thank you, Mr. Chairman.
First of all, Rob Wiehe, thank you for coming to testify.
It has been great working with you and Dr. Lofgren and other
folks at the University of Cincinnati over the past few months
to address this unprecedented pandemic.
And I was pleased that we were able to get the great
testing equipment, way back in March. You all contacted me and
said that you had ordered a test, and that you were told by the
folks, at Roche in this case, that they had to take the test
somewhere else at a time when we were desperately needing it in
the southwest Ohio region.
So I am glad we were able to get that test by getting HHS
involved. And I am glad we have great testing in Ohio. We have
now gone from about 8,000 tests a day to about 22,000 tests a
day. I think that was the average the last week, in the space
of about 6 weeks, and that was needed.
The problem is, the people are not getting the results
quickly enough. And I want to talk to you about that. That is
certainly the information I have. Some of it is anecdotal, I
will acknowledge, but it is basically people who say, ``Look, I
can now get a test. I went to the pop-up testing center.'' I am
glad we have those now, and we have used some Federal money for
that, some of the money that came out of the CARES Act, but we
have to know the results more quickly than 6 to 8 days in order
for it to be effective.
Someone told me about their kid who had to take a test in
order to go back to a sports team, but the results came so late
that they had to be re-tested again. And I do not get that. I
mean, we are finally getting the testing up to where we all
want it in our States. I would still like to see even more
testing, because I think that is essential to getting us back
to work safely, and back to school, and back to using health-
care facilities, and in general leading a more normal life. But
I think that not having the ability to get the results quickly
enough really undermines those efforts.
And again, in some cases people have had to test and re-
test, including some of the companies that have asked for
testing, and I am just talking about the diagnostic test here.
I am not even talking about the immunity test, which has other
issues we can talk about in terms of its accuracy.
But one, Rob, if you could just tell me, do you agree with
the information that I am getting with regard to the timing on
tests, how quickly people get results of their tests? Is that
accurate, from your experience and the data that you have?
And then second, if I am right, I want to then dig a little
deeper into why. It is the re-agents; it is having the
technical expertise, having the technicians available. It is
just the machines like the one you have being overwhelmed with
the number of tests, I am told.
But I want to get your perspective on both of those things.
So, Rob, could you give us a little help there?
Mr. Wiehe. Yes. First of all, I would like to say ``thank
you'' again, Senator Portman, for helping us with the Roche
diagnostic equipment. It was much-needed in the region here.
So I do agree, there is a lot of variability with the
timing of getting test results. And what we are seeing--we have
the Roche machine, as well as some other machines, in house. We
are on allocation on most of our testing supplies. And it
presents some difficulties with planning for our lab.
The Roche machine, for example--we have folks on all three
shifts who can run that. It is, as I understand it, a little
easier machine to run than some of our other equipment. But if
we do not know that we can get supplies on that piece of
equipment regularly, planning for that is difficult. So that is
one outlier.
I think you mentioned the pop-up testing sites. We are a
regional site, so we are getting tests sent in from lots of
other facilities. But that unknown demand can trigger on any
day much more than we can handle, or it could be much less, or
a very appropriate amount.
So I think having the correct supplies and the proper
personnel inside the line, aligning that with the demand that
we may see on any given day, does affect the timing of getting
these tests back. And I think that lack of coordination, if you
will, from end to end contributes to the frustration you are
hearing, and the public perception about testing capabilities
and confidence.
Senator Portman. Rob, can you dig a little deeper in terms
of the supplies? Again, I am not trying to make this about your
Roche test. I am asking you more broadly about what you are
experiencing, in your case in southwest Ohio. But I think many
members have the same question. Is it the re-agent that is not
available? And I know that depends on the test and where the
re-agent comes from. I know some comes from foreign places,
Germany or Asia in some cases, but what are you talking about
specifically that is a bottleneck in the system in terms of
supplies? And what could we do to solve that problem?
Mr. Wiehe. We have experienced shortages a little bit early
on, especially on the swabs that are needed. Many of those came
from one region in Europe, and that was one of the hardest hit.
So that certainly created a barrier early, and it continues to
be somewhat of a barrier.
But then the testing----
Senator Portman. Rob, just--we have limited time here, but
on the swabs, I am told that we are now making swabs in this
country. Specifically we are using 3D technology and other
things to try to produce them more rapidly.
Is that accurate? So do you see that problem being solved?
Or is that still an issue?
Mr. Wiehe. So there has been a lot of innovation, and it is
certainly not my area of expertise, per se. However, what I can
tell you is, we have had 3D swabs. We have talked to
laboratories. We have brought them in. As we have tested some
of those innovative solutions internally, we did not feel that
the results were adequate. We could not validate the results in
our labs. So we have chosen not to use some of the solutions
like that.
Some of the other labs, some of the other things that are
being produced for other industries as well--so our lab is
looking at everything. I think again, we are doing better than
we did early in the crisis. Some of those innovative solutions
just have not proven to be something that we at UC Health have
chosen to utilize.
Again, to the solution, we are on allocation from pretty
much everybody. Some of the testing products have had issues in
production. And it was because of plastics or some other
materials they could not get, which has severely limited what
we could get.
As I mentioned earlier, hot spots. Certainly supplies are
being diverted appropriately to those areas as well. So I think
it is a combination of all of those factors, Senator. It is
still making it a little bit of an unknown from day to day, or
week to week.
Senator Portman. So what I am hearing from you is that
supply continues to be an issue. I will give you some homework
here, if you do not mind. If you could get back to us
specifically, maybe talk to some of your colleagues as well
about what are the specific supplies. What could be done? The
3D technology--as we know, the FDA has gone back and forth with
that, and we have to make sure these swabs are safe and that
they work well. But we also have to restore whatever we can.
And if you could help us on this, the fluctuating demand issue,
how could that be addressed--you know, having a bunch of pop-
ups is a great idea, but if you do not have the lab capacity to
get the test results quickly, maybe the pop-ups ought to be
more consistent and not in need of personnel, and I am also
hearing concerns there.
I have more questions for Ms. Denning--and I will get those
to her--about long-term contracts. We have legislation, Ms.
Denning, we are working on to try to get the Department of HHS,
but also DLA--that's the Defense Logistics Agency--to consider
longer-term contracts to provide the incentive for American
companies to make the investments to bring back this PPE. And
we would love to hear your views on that.
Thank you, Mr. Chairman.
Senator Cassidy. Thank you, Rob. My turn now.
Ms. Denning, first, and, Dr. Grant, I am a physician, and I
just want to thank all the nurses in your organization. Believe
me, I just know from first-hand experience what a great service
they provide. So, just thank you. I did all my practice in a
public hospital for the uninsured, inner city hospitals, so
just a real acknowledgment of that.
When you were asked, though, what could be done to improve
the racial disparity, which is an issue we are all concerned
about, you suggested--I think your reply was along the lines of
further funding, research, et cetera, to address those issues.
I guess my question is, NIH has a National Institute of
Minority Health and regularly puts out data and the CDC's and
other Federal agencies' specific RFPs regarding addressing
racial disparity. Was your reply a critique upon that? Or were
you just in general endorsing it? Are you still here, Dr.
Grant? I am not seeing you on the panel.
Dr. Grant. Yes, Senator, I am still here. Yes, my reply was
a little bit of both--you know, endorsing it, but also I guess
you could say that it is time for action, as opposed to giving
reports and having plans or recommendations that are in these
reports; that we actually begin to move forward now and put our
money where our mouth is, so to speak.
Senator Cassidy. So if the research shows a specific
intervention would be effective to actually attempt to
implement the intervention----
Dr. Grant. Correct.
Senator Cassidy. So not much criticizing the amount of
money or effort on the research, but just the need to implement
that research. Got it.
Dr. Grant. Yes, sir.
Senator Cassidy. Ms. Denning, Senator Wyden suggested that
most hospitals are not located where patients are who are of
color, and that is a serious issue if it is true. I noticed in
your self-
description that of one-half of all acute-care hospitals in
your system, 95 percent are academic health centers, et cetera.
And it is my impression that academic health centers are often
in urban areas, because that is where the patients are. And
similarly, when you think of those big hospitals in New York,
they are where the patients are.
Is there that mal-distribution of hospital beds relative to
people who are vulnerable, in poverty, et cetera, as Senator
Wyden seemed to suggest?
Ms. Denning. There are certainly those large academic
medical centers in public hospitals that are in urban areas. If
I remember what his statement was, Senator Cassidy, it was
about the fact that, even though there are racial disparities
in the urban areas, access to care as well as access to
products is easier there than it is in the very rural areas.
Senator Cassidy. Then let me ask you, because that goes
back to your role as a GPO. Obviously GPOs, for those not
familiar with them, are responsible for distributing fairly
across all their members. And so I presume--I am begging the
answer--but is there any preferential treatment that your GPO
gives among your members as to which receive supplies?
Ms. Denning. There is not. And in fact what we have done
is, where there is a surge, because the surges are moving
around the country--first we had----
Senator Cassidy. I have limited time, so I am going to move
on because I just wanted to have that point.
Mr. Wiehe, I have been told that one of the problems with
hospitals being an expanded capacity for testing is that if the
patient is not in your system, there is not a mechanism for the
hospital to bill.
So, yes, if someone has been seen at a University of
Cincinnati-affiliated hospital, or a practice affiliated, you
can do it. But if you were to get a shipment from Covington,
where my brother was born, and that is not part of your system,
there is no billing mechanism for you to perform that service.
And that somewhat limits the ability of hospitals to fill in
the gap for capacity, aside from the reagent supply, et cetera.
Can you comment on that? Is that a true assessment?
Mr. Wiehe. Senator, I am--that is not my area of expertise,
and I would not be able to comment on that today.
Senator Cassidy. Could I ask you to research that?
Mr. Wiehe. Yes.
Senator Cassidy. I would appreciate that.
Mr. Johnson. Mr. Chairman? Thank you, Mr. Chairman; I was
hoping I would be called on. Excuse me.
Senator Cassidy. Yes, Mr. Johnson. I really liked your
comments that the supply chain sizes to the size of the market,
because there have been multiple recommendations to build up
manufacturing capacity, but your point is, if there is no
market for the good once produced, sooner or later it becomes a
stranded, useless asset. And I just want to acknowledge that.
Now with that said, you were about to make a comment
otherwise. What was the comment you were going to make?
Mr. Johnson. Yes, I would like your indulgence to address
this issue of allocation to minority and rural communities.
ISEA----
Senator Cassidy. Again, make it a quick point, because I am
over time.
Mr. Johnson. Very quick. ISEA has bill language that would
address the issue brought up by you and Senators Casey and
Hassan. It would address the issue of minority and rural
communities and the need for coordinated allocation and
distribution by a coordinated response through FEMA and
industry, and we would like to follow up with that post-
hearing. Thank you.
Senator Cassidy. That sounds great. I think Senator Wyden
has an additional question he wished to ask. Is he back online?
He is not. Okay, then----
Senator Wyden. I am, Mr. Chairman----
Senator Cassidy. Ah, Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman. I just want to make
one point, because you asked the question about how in rural
areas folks might acquire PPE. And as you know, I like to work
with you on health-care issues whenever we can in a bipartisan
way. I do not think there is any question that the example you
used is of some value. I am just saying that in rural America,
particularly in communities of color, there are scores and
scores of hospitals and providers falling between the cracks.
And that is why I gave a very real-world example I heard about
from Senator Jones in Alabama.
So let us continue this dialogue, and we can work on it in
a bipartisan way.
Senator Cassidy. Sounds great. By the way, I thought you
were also referencing urban, and that just was not consistent
with my experience. Not to say there are not problems of
access, but it is an important issue to kind of drill down on.
And let me ask one more question to you, Ms. Denning, since
I am the last person. There have been calls for the Federal
Government to take over the distribution of products, as if the
Federal Government would be more efficient in that
distribution.
You are obviously a very large GPO which distributes. Do
you feel as if the supply chain currently run by the private
sector would be able to manage the distribution, presuming that
there was an adequate supply of that which requires
distribution?
Ms. Denning. Thank you, Senator, for the question.
We do not distribute. We have contracts for distribution.
But we do have expertise in distribution, as well as
contracting, for all types of products that a health-care
facility would use.
That being said, I do believe that we could come together,
private sector, public, the Federal Government, and work better
to make sure that that strategic national stockpile is where it
needs to be. And we believe that it should be utilized in times
of disaster.
We do not believe that going to a totally federalized
system is the answer, but we do believe working together and
being able to know when we should assist the hospitals and the
citizens of the United States with the products that they need
to protect themselves and to protect their patients, is
critically important.
Senator Cassidy. Sounds great. Me asking you that question
allowed me to find out if I am supposed to have a script to
close this.
First, thank you all for participating. If members wish to
submit questions for the record, there will be a period of time
in which they may do so. With that, I close the hearing. Thank
you very much.
[Whereupon, at 11:34 a.m., the hearing was concluded.]
A P P E N D I X
Additional Material Submitted for the Record
----------
Prepared Statement of Cathy Denning, R.N., MSN, Group Senior Vice
President, Sourcing Operations, Analytics, and Center of Excellence,
Vizient
Good morning, Chairman Grassley, Ranking Member Wyden, and members
of the committee. Thank you for holding this critically important
hearing and for giving me the opportunity to testify today. My name is
Cathy Denning, and I am the group senior vice president of Sourcing
Operations, Analytics, and the Center of Excellence at Vizient and a
registered nurse. Prior to joining Vizient 20 years ago, I practiced in
the clinical arena working in both the acute care and home care
settings.
Before we get started today, I'd like to tell you a little bit more
about Vizient. Headquartered in Irving, TX--so if I may, I'd like to
say a special ``hello'' to you, Senator Cornyn--Vizient is the Nation's
largest member-owned, member-driven, health-care performance
improvement company.
You'll hear me use the word ``member'' a lot today. When we say
member, we mean the health-care providers that participate in our
organization's services and choose to work with us every day. Vizient
members include more than half of all the acute-care health-care
systems, including pediatric facilities, community hospitals,
integrated health delivery networks and approximately 95 percent of the
Nation's academic medical centers. We also serve approximately 20
percent of the non-acute care market as well.
Most people know us for our supply chain expertise, also known as
group purchasing or ``GPO'' expertise, which is what I will focus on
today. Our group purchasing business is predicated on the idea of
negotiating prices and terms and conditions for drugs, devices, and
other medical products and services on behalf of our member health-care
providers. In other words, we help providers realize savings and
efficiencies by aggregating their purchasing volume and using that to
negotiate discounts and other value, such as clinical and utilization
support, with suppliers, resulting in larger savings and greater value
than individual hospitals can typically negotiate on their own. Our
members purchase approximately $100 billion of goods and services off
of our contracts annually.
Beyond this supply chain support, we also offer an array of
consulting services, collaboration services, analytic tools, and
clinical expertise--all designed to ultimately improve patient outcomes
and lower the cost of health care. We see ourselves as extensions of,
and advocates for, the health-care members we serve. We strive every
day to be their indispensable partner--to help them achieve
efficiencies, lower costs, and improve patient outcomes--with the goal
of improving the health-care system for all.
Important for today's discussion, Vizient holds a unique position
in that we work closely with both health-care providers and suppliers.
We act as a liaison, advocating on behalf of the member providers we
serve and sometimes acting as their lifeline in times of disaster.
That brings us to why we are here today--focusing on the critical
issue of counterfeit PPE, the so-called ``gray market'' of brokers and
supplies, and how at a time of grave need there were, and are,
individuals and organizations looking to exploit health-care providers,
the patients they serve, and the government with their false and often
harmful claims of having appropriate medical supplies to offer.
But before I go into more detail regarding our experience, and our
members' experiences, with counterfeit product, I think it's important
that I provide some context regarding the perfect storm that led to the
current situation.
First--it is my strong belief, having spent my entire career either
working in a health-care setting or for a GPO, that the supply chain is
not ``broken'' as some have claimed. We've certainly seen that there
are ways that the private sector, including Vizient, can work better
with other private and public sector stakeholders to make
improvements--and I'll get to those later--but generally speaking, even
in times of previous disasters like hurricanes, floods, and others--the
health-care supply chain represents a great example of different
stakeholders working together for a common purpose. Previously,
manufacturers, distributors, GPOs, hospitals and others have been able
to quickly put protocols and processes in place to help guide critical
supplies and services to areas most in need. We are proud of the work
we do on a daily basis--but surely in times of crisis.
That said--yes--when COVID-19 hit the United States, everything
seemed to change overnight. And it is important to understand how the
unprecedented nature of this pandemic impacted the supply chain and
made it nearly impossible for anyone to fully prepare.
I realize that word--unprecedented--has been used often in
describing the last several months here in the United States and across
the world. But truly, this pandemic was. As you all know, the health-
care industry has been looking for ways to reduce costs for more than
20 years. Lean practices to streamline clinical processes, just-in-time
inventory, and tightly managing inventories of medical supplies have
become more commonplace in hospitals across the country. Additionally,
more manufacturing has been moved off-shore as suppliers sought to
lower prices and looked for ways to achieve cost savings.
Then COVID-19 hit. No one knew how it was transmitted, where it
came from, or how to treat it--only that it presented with a
complicated mix of symptoms and appeared to be respiratory in nature.
This meant that providers were facing an unknown, highly contagious
infection and the public was panicked here and simultaneously across
the globe. It was the perfect storm.
At the same time, other challenges exacerbated the problem. For
example, here in the U.S. we were coming off of two spikes of influenza
Type A and Type B. We were already facing critical shortages of
surgical gowns due to manufacturing issues in China. Then, when COVID-
19 spread across the globe, suppliers that manufacture in Asia could
not get their PPE out of the country due to the sequester of those
products for in-country use. In addition, although we've known for
quite some time that a lack of a diverse and redundant manufacturing
locations is problematic, it became acutely problematic during this
crisis. To give you a specific example, the EU epicenter for COVID-19
was the Lombardy region in Italy--but that's also exactly where the
overwhelming majority of the nasal swabs needed to test for COVID-19
are manufactured. While manufacturing was increased and deemed an
essential business by the Italian government, it exposed a
vulnerability in the supply of these critical products.
To add to the challenges, virtually overnight, hospitals were using
roughly 10 times their usual amount of PPE products and those in the
hardest hit areas were using 10 to 15 times their usual amount of N95
respirators at the peak of their surge. To provide context, these
products are normally used only for known highly infectious respiratory
illnesses during surgery and procedures that produce aerosol. Now many
members are using these as universal precautions for all patients.
Bottom line--in the pre-COVID-19 environment, there was simply no
way for anyone to have adequately planned for this unprecedented and
ongoing spike in worldwide demand for PPE.
Which brings us to why we are here today--to expose the predatory
practices of those looking to exploit this vulnerability by making
false promises and offering unsafe, exorbitantly priced medical
supplies to healthcare providers throughout the country, and to work
together to collectively find ways to prevent these practices in the
future.
One of the first things we did to help our members respond to the
COVID-19 outbreak was establish a dedicated ``war room'' to ensure
rapid responses to member needs. These dedicated staff began fielding
more than 1,000 member inquiries each week. Some of these inquiries
included requests to vet products that members were considering
purchasing from non-traditional manufacturers or brokers--and to
provide an opinion on whether an offered product was what someone
claimed it was.
The war room staff, along with our sourcing and clinical staff, and
our Quality Assurance and Regulatory Affairs (QARA) professionals,
quickly determined that the best way to assist our members, and have
the biggest impact, would be to focus on the actual manufacturers of
the products. Our QARA team has the expertise to help members
understand the regulatory environment and the registration and approval
requirements for manufacturers--so that is where we focused our
efforts. We did not actually examine or ``touch'' the products
themselves. We emphasized to members that our process was simply a
necessary first step; if they wanted to move forward with purchasing
any of these items, they would need to feel comfortable with the
seller, and review samples of the products themselves to ensure the
products met their internal infection control or other protocols.
Starting in mid-March, as the number of requests to vet products
became more numerous, we realized that many of the requests were
duplicates--either because the same broker had reached out to multiple
end-points, or because multiple brokers were claiming to have product
from the same original manufacturers. For example--we received 38
separate submissions purporting to be from brokers who represented a
product from a single manufacturing site in China. The site is a
legitimate manufacturer of respirators, but brokers were claiming this
manufacturer could supply members with additional products including
surgical masks, gloves and surgical gowns--yet we could not find any
such device listings with the FDA. At least 26 brokers claimed to have
access to this single manufacturer's products. Submissions like these
started in mid-March and continue to be submitted by new brokers as
recently as last week.
Given these complexities, we quickly stood up a workflow management
tool and database to help manage the influx of requests and to help us
track where the duplications were occurring. To give you a better sense
of the sheer volume--from March 29th through July 13th, we received
2,385 total requests to review products with 1,320 of these being
unique requests for a unique manufacturer and product. Ultimately, we
found that only 788 of these products could be validated as potentially
appropriate based on the applicable FDA or NIOSH standards.
It's important to note that this ``vetted'' list has morphed week
after week as guidance from the Federal agencies continues to be
refined. For example--the FDA issued an emergency use authorization (or
EUA) for certain filtering face piece respirators on April 3rd but
then, as part of their continuous quality assessment and working with
the CDC and NIOSH, revised this EUA just over a month later. More than
65 filtering face piece respirators that had previously been authorized
by the original EUA, many of which had appeared on our validated list,
were no longer authorized. This just goes to show how complex and
evolving this situation has been over the last few months--and it
continues to evolve even today.
This vetting and validation process was only one piece of our
overall response efforts to the pandemic. It continues to be
laborious--but critical--and between these bad actors, unsafe products,
demand needs of our provider members and consistent with our dedication
to leaving no stone unturned to get our members what they needed, we
also explored other ways to help bring more supplies to market.
Vizient has partnered with multiple suppliers to expand capacity of
PPE and other vital supplies, including putting our own capital at risk
with some North American suppliers to start or expand PPE manufacturing
lines, thus increasing overall production capacity. Our relationship
with Standard Textile, where we guaranteed purchases if they converted
manufacturing lines, has helped to create more than 2 million reusable
isolation gowns and more than 700,000 reusable surgical masks and face
shields. With the company, Encompass, we helped to reopen their North
American production line to produce 19 million level 3 disposable
isolation gowns. These are just a few specific examples of how we have
helped to source new product. Working with nearly a dozen more
manufacturers we have helped to source Level 2 disposable gowns, nasal
swabs, nitrile gloves, medical masks, and N95 sterilization processors
for our healthcare provider members.
Despite our efforts, as I mentioned, counterfeit product
continued--and continues--to be a problem that our provider members
face. The overwhelming demand that I highlighted earlier has continued
as hospitals are still facing actual or possible surges in COVID-19
cases. Although suppliers, GPOs, and the government have all taken
innovative and big steps forward to meet this demand, we don't expect
that the overall supply will begin to even out until 2021. Bad actors
continue to reach out to providers in need, and our members continue to
try and find whatever safe supplies they can. Unfortunately, it often
times does not end well. I'd like to highlight a few specific examples
of the types of situations our members have found themselves in--and,
as such, bring attention to just one of the many challenges they are
facing throughout this crisis.
First, our member, Yale New Haven Health in Connecticut,
experienced an ongoing issue with N95 respirators. In late March they
became aware that there may be counterfeit Dasheng KN95 respirators.
Combing through donations they had received, they found a significant
number of these counterfeit respirators. Of course, they also had open
orders at the time for these Dasheng KN95s so they immediately canceled
those. Yale later learned that most of the PPE vendors with whom they
had been engaging were not actually dealing directly with factories in
China but, rather, third party distributors or grey market brokers.
Their concern around these counterfeit products led them to cancel
orders they had placed directly with the Dasheng factory. Throughout
this crisis, Yale discovered that many vendors had sent false test
results, prompting Yale to send some of their KN95s out to a third
party testing lab--turns out they were barely 85 percent efficient--
leading Yale to become even more skeptical of these vendors and their
product.
Second, a regional acute-care facility in Florida engaged with a
broker to obtain N95 respirators supposedly manufactured by 3M. The
hospital's internal review process caught that the broker was not
actually licensed to sell those 3M masks so they did not contract for
or end up paying for the products. They did, however, have additional
purchase pending for masks but the shipments were continually delayed.
Their bank got concerned that the activity was fraudulent so although
they did receive some product, they canceled the remaining order and,
thankfully, got their money back. But this hospital ended up losing out
on two different shipments of critically needed product due to
counterfeiting concerns.
Finally, one last example I'll highlight for you--but I'll note
that these three examples are representative of stories we've heard
from many more of our provider members. A large acute-care provider in
the Pacific Northwest is currently in the middle of sorting out a
questionable situation in which they were sent small-sized Halyard-
manufactured N95s from a company that claimed to have sourced them in
South Carolina. However, when they arrived they were in plastic bags
and sealed with a sticker--not the original Halyard boxes, as would
normally be expected. When this provider pressed the third-party
company on this, they were told that they had a process for
``reallocation'' of the respirators--but would not share what this
actually meant with the provider. The company in question is a
sterilizer solutions firm in its normal course of business--so you can
draw your own conclusions on that one--but they have been very
unresponsive since our member began to question them about this
incident.
As I mentioned previously--these are just three stories--there are
countless other stories, and many of our members were reluctant to come
forward with their stories due to reputational concerns, liability
risks, or other issues. At a bare minimum, these counterfeit products
and grey market brokers have taken vital resources away from our
provider members and wasted hundreds of hours of time--time they could
have been spending elsewhere.
In fact, some of the biggest issues our members faced throughout
the country are not necessarily with respect to counterfeit product,
but with gray market third parties seeking to exploit our members'
needs by offering these critical products at excessive prices. Brokers,
and sometimes suppliers, sought to charge hospitals $8.50 for AAMI
Level 2 and 3 non-sterile isolation gowns, when those same gowns
typically go for as low as $0.84 per gown. Similarly, brokers were
trying to sell masks for as much as $11 (with the median price being
$4.50) when they normally sell for approximately $0.80.
Despite the contemptible actions of these bad actors and the
overall challenges presented by COVID-19, I think it's important that I
end my remarks today with a hopeful outlook to the future.
We are learning from our experience going through COVID-19 that
vulnerabilities do exist--and therefore there are opportunities for
improvement. Specifically--our supply chain needs to be more resilient,
through enhanced transparency, redundancy, and diversification. We also
need to take the lessons we learned regarding the strategic national
stockpile and do better to ensure that it truly is a resource to States
and providers.
In order to further build a resilient supply chain, more
transparency is needed. Transparency into the location of
manufacturing, including raw materials, as well as storage locations.
And I don't just mean transparency with the FDA and other government
officials--this information should be shared with private-sector
partners as well so that we can aid in the diversification efforts I'm
going to speak to.
Redundancy, whether it be in the PPE space or in the pharmaceutical
space, where Vizient is also extremely active in helping to source
product for members--we have long advocated that the best way to
achieve availability and cost savings is to encourage competition. But
competition is also necessary to mitigate disruption. It is critical
that we have multiple manufacturers who produce the same products so
that a shutdown or negative impact on one company doesn't ripple
throughout the supply chain broadly.
Regarding diversification of the supply chain--I've touched on this
already--but the fact that so many of our medical supplies are
manufactured overseas is not the singular reason for the problems we
are facing now. Similarly, onshoring all manufacturing would not solve
these problems either. We need a diversified supply chain--one that is
global in nature. By having multiple manufacturing locations spread
across the globe, we mitigate the risk of having all manufacturing of
an essential product in one location wiped out by a single event. That
said, I think we can all agree that more needs to be done to create a
much stronger domestic footprint.
Finally, there has been a lot of discussion regarding the Federal
stockpile--we strongly believe that the stockpile does need to be
bolstered and be accessible to health-care providers in need. We
believe the stockpile should have at least 90 days of supplies for key
items (including the essential medications list that my Vizient
colleagues in pharmacy have put together--drugs without which you would
be unable to provide life-sustaining care). These items, however, need
to be rotated and managed as appropriate. This means that the
government should continue to engage private-sector stakeholders, like
Vizient, manufacturers, health-care systems and others to help provide
feedback on which products should be included, how much, and how they
should be stored and managed. And, again I'll emphasize the importance
of transparency--which is much needed in the stockpile as well. Health-
care systems and States need to be able to quickly access these
products during a disaster and all participants in the supply chain
need to understand the consumption of these products and overall need.
That said--whether it be the Federal or State stockpiles--usage should
be limited to times of emergencies, not as a regular course of
business. Stockpiles are meant to supplement needs and serve a very
specific, and critical purpose.
I would like to close by saying that Vizient has enjoyed a
collaborative working relationship with the Federal Government and
Capitol Hill for many years--but especially over these last few months.
I have been pleased with how officials from FEMA, FDA, CDC, DOD, and
others have been proactive in their outreach to me, our leadership
team, and others throughout Vizient--and especially the outreach and
support to our provider members.
With that, I want to thank you again for the opportunity to testify
today. I appreciate being able to be here to share my, and Vizient's,
experiences regarding counterfeit PPE products and other supply chain
challenges over the last few months. As you can tell, I am passionate
about these issues and strongly believe that we can all do better,
working together, to help health-care providers and the patients they
serve get through this crisis. I would also like to offer my sincere
appreciation for all of the front line health-care workers who have
given of themselves tirelessly throughout the pandemic.
I look forward to your questions.
______
U.S. Department of Homeland Security
Washington, DC 20472
FEMA
Voluntary Agreement
MANUFACTURE AND DISTRIBUTION OF CRITICAL HEALTHCARE RESOURCES NECESSARY
TO RESPOND TO A PANDEMIC
Preface
Pursuant to section 708 of the Defense Production Act of 1950
(DPA), as amended (50 U.S.C. Sec. 4558), the Federal Emergency
Management Agency (FEMA) Administrator (Administrator), after
consultation with the Secretary of the Department of Health and Human
Services (HHS), the Attorney General of the United States (Attorney
General), and the Chairman of the Federal Trade Commission (FTC), has
developed this Voluntary Agreement (Agreement). This Agreement is
intended to maximize the effectiveness of the manufacture and
distribution of Critical Healthcare Resources nationwide to respond to
a pandemic by establishing unity of effort between the Participants and
the Federal Government for integrated coordination, planning,
information sharing with FEMA, allocation and distribution of Critical
Healthcare Resources. The activities contemplated by this Agreement are
limited to those necessary to respond to a Pandemic, at the sole
determination of FEMA. This Agreement affords Participants defenses to
civil and criminal actions brought for violations of antitrust laws
when carrying out this Agreement and an appropriate Plan of Action.
This Agreement is intended to foster a close working relationship among
FEMA, HHS, and the Participants to address national defense needs
through cooperative action under the direction and supervision of FEMA.
This Agreement, when implemented through a Plan of Action, affords
Participants a safe harbor to exchange information, collaborate and
adjust commercial operations as to particular products and services,
when FEMA determines it necessary for the national defense, and only to
the extent necessary for the national defense.
I. Purpose
A pandemic may present conditions that pose a direct threat to the
national defense of the United States or its preparedness programs such
that, pursuant to DPA section 708(c)(1), an agreement to collectively
coordinate, plan and collaborate for the manufacture and distribution
of personal protective equipment (PPE), Pharmaceuticals and other
Critical Healthcare Resources is necessary for the national defense.
This Agreement will maximize the effectiveness of the manufacture and
distribution of Critical Healthcare Resources nationwide to respond to
a pandemic by establishing unity of effort between the Participants and
the Federal Government for integrated coordination, planning,
information sharing with FEMA, allocation and distribution of Critical
Healthcare Resources. The activities included in this Agreement are
limited to those necessary to respond to a Pandemic, at the sole
determination, direction, and supervision of FEMA and implemented
through Plans of Action.
II. Authorities
Section 708, Defense Production Act (50 U.S.C. 4558); sections
402(2) and 501(b), Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121-5207); sections 503(b)(2)(B) and
504(a)(10) and (16) of the Homeland Security Act of 2002 (6 U.S.C.
313(b)(2)(B), 314(a)(10) and (16)); sections 201, 301, National
Emergencies Act (50 U.S.C. 1601 et seq); section 319, Public Health
Service Act (42 U.S.C. 247d); Executive Order (E.O.) 13911, 85 FR 18403
(March 27, 2020); Prioritization and Allocation of Certain Scarce or
Threatened Health and Medical Resources for Domestic Use, 85 FR 20195
(April 10, 2020). Pursuant to DPA section 708(f)(1)(A), the
Administrator certifies that this Agreement is necessary for the
national defense.
III. General Provisions
A. Definitions
Administrator
The FEMA Administrator who, as a Presidentially appointed and
Senate confirmed official, is the Sponsor of this Agreement. Pursuant
to a delegation or redelegation of the functions given to the President
by DPA section 708, the Administrator proposes and provides for the
development and carrying out of this Agreement. The Administrator is
responsible for carrying out all duties and responsibilities required
by 50 U.S.C. 4558 and 44 CFR part 332 and for appointing one or more
Chairpersons to manage and administer the Committee and any Sub-
Committee formed to carry out this Agreement.
Agreement
The Voluntary Agreement. Participants who have been invited to join
and agreed to the terms of this Agreement as described in Section VII
below may join the ``Committee for the Distribution of Healthcare
Resources Necessary to Respond to a Pandemic.''
Attendees
Subject matter experts, invited by the Chairperson to attend
meetings authorized under this Agreement, to provide technical advice
or to represent other government agencies or interested parties.
Attendees are not Members of the Committee.
Chairperson
FEMA senior executive, appointed by the Administrator, to chair the
``Committee for the Distribution of Healthcare Resources Necessary to
Respond to a Pandemic.'' The Chairperson shall be responsible for the
overall management and administration of the Committee, this Agreement,
and Plans of Action developed under this Agreement while remaining
under the supervision of the Administrator; may create one or more
Subcommittees, as approved by the Administrator; shall initiate, or
approve in advance, each meeting held to discuss problems, determine
policies, recommend actions, and make decisions necessary to carry out
this Agreement; and otherwise shall carry out all duties and
responsibilities assigned to him. The Administrator may appoint one or
more co-Chairpersons to chair the Committee and Sub-Committees, as
appropriate.
Committee
Committee for the Distribution of Healthcare Resources Necessary to
Respond to a Pandemic established under this Agreement. Provides
Committee Members a forum to maximize the effectiveness of the
manufacture and distribution of Critical Healthcare Resources
nationwide to respond to a Pandemic through integrated coordination,
planning, and identification and development of Plans of Action needed
to respond to a pandemic, including making recommendations on the
creation of a Plan of Action.
Critical Healthcare Resources
All categories of health and medical resources for which production
and distribution capacity is necessary to respond to a pandemic,
including, but not limited to, PPE, Pharmaceuticals, respiratory
devices, vaccines, raw materials, supplies, and medical devices.
Documents
Any information, on paper or in electronic format, including
written, recorded, and graphic materials of every kind, in the
possession, custody, or control of the Participant.
Members
Collectively the Chairperson, Representatives, and Participants of
the Committee. Jointly responsible for developing all decisions
necessary to carry out this Agreement and to develop and execute Plans
of Action under this Agreement.
Pandemic
A Pandemic is defined as an epidemic that has spread to human
populations across a large geographic area that is subject to one or
more declarations under the National Emergencies Act, the Public Health
Service Act, or the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, or if the Administrator determines that one or more
declarations is likely to occur and the epidemic poses a direct threat
to the national defense or its preparedness programs. For example,
Coronavirus Disease 2019 (COVID-19).
Participant
An individual, partnership, corporation, association, or private
organization, other than a federal agency, that has substantive
capabilities, resources or expertise to carry out the purpose of this
Agreement, that has been specifically invited to participate in this
Agreement by the Chairperson, and that has applied and agreed to the
terms of this Agreement in Section VII below. ``Participant'' includes
a corporate or non-corporate entity entering into this Agreement and
all subsidiaries and affiliates of that entity in which that entity has
50 percent or more control either by stock ownership, board majority,
or otherwise. The Administrator may invite Participants to join this
Agreement at any time during its effective period.
Personal Protective Equipment
Objects that provide measures of safety protection for healthcare
workers, first responders, critical infrastructure personnel and/or the
general public for the response to the Pandemic. These PPE items may
include, but are not limited to, face coverings, filtering facepiece
respirators, face shields, isolation and surgical gowns, examination
and surgical gloves, suits, and foot coverings.
Pharmaceuticals
All drugs defined under the Food, Drug, and Cosmetic Act. 21 U.S.C.
Sec. 321(g), including biological products defined under the Public
Health Service Act. 42 U.S.C. Sec. 262(i).
Plan of Action
A documented method, pursuant to 50 U.S.C. 4558(b)(2), proposed by
FEMA and adopted by invited Participants, to implement this Agreement,
through a Sub-
Committee focused on a particular Critical Healthcare Resource, or
pandemic response workstream or functional area necessary for the
national defense.
Plan of Action Agreement
A separate commitment made by Participants upon invitation and
agreement to participate in a Plan of Action. Completing the Plan of
Action Agreement confers responsibilities on the Participant consistent
with those articulated in the Plan of Action and affords Participants
antitrust protections for actions taken consistent with that Plan of
Action as described in Section IV below.
Point of Care
All categories of medical service providers necessary to respond to
a pandemic, as determined by the Chairperson after consultation with
the Members of the Committee. This may include, but is not limited to,
Acute Care, First Responders, Nursing Homes, Private Hospitals, Public
Hospitals, Veterans Administration Hospitals, Physician Offices, Dental
Offices, Ambulatory Clinics, Pharmacies, Community Health Clinics,
Laboratories, and other acute and non-acute care facilities responsible
for healthcare.
Representatives
The representatives the Administrator identifies and invites to the
Committee from FEMA, HHS, and other federal agencies with equities in
this Agreement, and empowered to speak on behalf of their agencies'
interests. The Attorney General and the Chairman of the FTC, or their
delegates, may also attend any meeting as a Representative.
Sub-Committee
A body formed by the Administrator from select Participants to
implement a Plan of Action.
B. Committee Participation
The Committee established under this Agreement will consist of the
(1) Chairperson, (2) Representatives from FEMA, HHS, DOJ, and other
federal agencies with equities in this Agreement, and (3) Participants
that have substantive capabilities, resources or expertise to carry out
the purpose of this Agreement. Other Attendees--invited by the
Chairperson as subject matter experts to provide technical advice or to
represent the interests of other government agencies or interested
parties--may also participate in Committee meetings. Collectively, the
Chairperson, Representatives and Participants will serve as the Members
of the Committee. Public notice will be provided as each Participant
joins or withdraws from this Agreement. The list of Participants will
be published annually in the Federal Register.
C. Effective Date and Duration of Participation
This Agreement is effective immediately upon the signature of the
Participant or their authorized designees. This Agreement shall remain
in effect until terminated in accordance with 44 CFR 332.4, or in any
case, it shall be effective no more than five (5) years from the date
the requirements of DPA section 708(f)(1) are satisfied as to the
initial Voluntary Agreement regarding the manufacture and distribution
of critical healthcare resources necessary to respond to a Pandemic,
unless otherwise terminated pursuant to DPA section 708(h)(9) and 44
CFR 332.4 or extended as set forth in DPA section 708(f)(2). No action
may take place under this Agreement until it is activated, as described
in Section III(E.), below.
D. Withdrawal
Participants may withdraw from this Agreement at any point, subject
to the fulfillment of obligations incurred under this Agreement prior
to the date this agreement is terminated with regard to such
Participant, by giving written notice to the Administrator at least
fifteen (15) calendar days prior to the effective date of that
Participant's withdrawal. Following receipt of such notice, the
Administrator will inform the other Participants of the date of the
withdrawal. Upon the effective date of the withdrawal, the Participant
must cease all activities under this Agreement.
E. Plan of Action Activation and Deactivation
Upon occurrence of a Pandemic, the Administrator may authorize a
Plan of Action and Sub-Committee for one or more specific Pandemic
response workstreams, functional areas, or Critical Healthcare Resource
national defense needs, e.g., a pharmaceuticals plan of action, or a
PPE distribution plan of action, or a vaccine plan of action. The
Administrator will invite a select group of Participants who are
representative of the segment of the industry for which the Plan of
Action is intended to participate on the Sub-Committee. The Plan of
Action will be activated for each invited Participant when the
Participant executes a Plan of Action Agreement. Actions taken by
Participants to develop a Plan of Action and actions taken after
executing a Plan of Action Agreement to collectively coordinate, plan
and collaborate, pursuant to that Plan of Action and as directed and
supervised by FEMA, will constitute action taken to develop and carry
out this Agreement pursuant to 50 U.S.C. 4558(j).
Sub-Committees will meet only for the purposes specified in this
Agreement and as provided for in writing by the Chairperson. They will
report directly to the Committee regarding all actions taken by them,
and any Plan of Action adopted by a Sub-Committee must be approved
first by the Chairperson. A Plan of Action may not become effective
unless and until the Attorney General (after consultation with the
Chairman of the Federal Trade Commission) finds, in writing, that such
purpose(s) of the Plan of Action may not reasonably be achieved through
a Plan of Action having less anticompetitive effects or without any
Plan of Action and publishes such finding in the Federal Register. The
Chairperson may appoint a Sub-Committee Chairperson to preside over
each Sub-Committee as a delegate of the Chairperson; however, the
Chairperson retains responsibility for all Sub-Committees and for
administerial and record keeping requirements of any meetings held by
such Sub-Committees, including providing public notice as required of
any meetings.
When recommended by the Sub-Committee Chairperson, the
Administrator will provide notice of a Plan of Action Deactivation. Any
actions taken by Participants after the Deactivation date are outside
the scope of Plan of Action Agreement and the Section IV antitrust
defense is not available.
F. Rules and Regulations
Participants acknowledge and agree to comply with all provisions of
DPA section 708, as amended, and regulations related thereto which are
promulgated by FEMA, the Department of Homeland Security, HHS, the
Attorney General, and the FTC. FEMA has promulgated standards and
procedures pertaining to voluntary agreements in 44 CFR part 332. The
Administrator shall inform Participants of new rules and regulations as
they are issued.
G. Modification and Amendment
The Administrator, after consultation with the Attorney General and
the Chairman of the FTC, may terminate or modify, in writing, this
Agreement or a Plan of Action at any time, and may remove Participants
from this Agreement or a Plan of Action at any time. Participants may
propose modifications or amendments to this Agreement at any time. The
Administrator shall inform Participants of modifications or amendments
to this Agreement as they are issued. If a Participant indicates an
intent to withdraw from the Agreement due to a modification or
amendment of the Agreement, the Participant will not be required to
perform actions directed by that modification or amendment.
The Attorney General, after consultation with the Chairman of the
FTC and the Administrator, may terminate or modify, in writing, this
Agreement or a Plan of Action at any time, and may remove Participants
from this Agreement or a Plan of Action at any time. If the Attorney
General decides to use this authority, the Attorney General will notify
the Chairperson as soon as possible, who will in turn notify
Participants.
H. Expenses
Participation in this Agreement does not confer funds to
Participants, nor does it limit or prohibit any pre-existing source of
funds. Unless otherwise specified, all expenses, administrative or
otherwise, incurred by Participants associated with participation in
this Agreement shall be borne exclusively by the Participants.
I. Record Keeping
The Chairperson shall have primary responsibility for maintaining
records in accordance with 44 CFR part 332, and shall be the official
custodian of records related to carrying out this Agreement. Each
Participant shall maintain for five years all minutes of meetings,
transcripts, records, documents, and other data, including any
communications with other Participants or with any other member of the
Committee, including drafts, related to the carrying out of this
Agreement or any Plan of Action or incorporating data or information
received in the course of carrying out this Agreement or any Plan of
Action. Each Participant agrees to produce to the Administrator, the
Attorney General, and the Chairman of the FTC upon request any item
that this section requires the Participant to maintain. Any record
maintained in accordance with 44 CFR part 332 shall be available for
public inspection and copying, unless exempted on the grounds specified
in 5 U.S.C. 552(b)(1), (3) or (4) or identified as privileged and
confidential information in accordance with DPA section 705(d), and 44
CFR 332.5.
IV. Antitrust Defense
Under the provisions of DPA subsection 708(j), each Participant in
this Agreement shall have available as a defense to any civil or
criminal action brought for violation of the antitrust laws (or any
similar law of any State) with respect to any action to develop or
carry out this Agreement or a Plan of Action, that such action was
taken by the Participant in the course of developing or carrying out
this Agreement or a Plan of Action, that the Participant complied with
the provisions of DPA section 708 and the rules promulgated thereunder,
and that the Participant acted in accordance with the terms of this
Agreement and any relevant Plan of Action. Except in the case of
actions taken to develop this Agreement or a Plan of Action, this
defense shall be available only to the extent the Participant asserting
the defense demonstrates that the action was specified in, or was
within the scope of, this Agreement or a Plan of Action.
This defense shall not apply to any action occurring after the
termination of this Agreement or a Plan of Action. Immediately upon
modification of this Agreement or a Plan of Action, no antitrust
immunity shall apply to any subsequent action that is beyond the scope
of the modified Agreement or Plan of Action. The Participant asserting
the defense bears the burden of proof to establish the elements of the
defense. The defense shall not be available if the person against whom
the defense is asserted shows that the action was taken for the purpose
of violating the antitrust laws.
V. Terms and Conditions
Each Participant agrees to voluntarily collaborate with all
Committee Members to recommend Plans of Action and Sub-Committees that
will, at the direction of and under the supervision of FEMA, maximize
the effectiveness of the manufacture and distribution of Critical
Healthcare Resources nationwide to respond to a pandemic by
establishing unity of effort between the Participants and the Federal
Government for integrated coordination, planning, information sharing
with FEMA, and allocation and distribution of Critical Healthcare
Resources. These efforts aim to promote efficiency and timeliness to
mitigate shortages of Critical Healthcare Resources to respond to a
Pandemic and to meet the overall demands of the healthcare and other
selected critical infrastructure sectors, along with those demands
necessary to continue all-level-of-government mission-essential
functions.
As the sponsoring agency, FEMA will maintain oversight over
Committee and Sub-Committee activities and direct and supervise actions
taken to carry out this Agreement and subsequent Plans of Action,
including by retaining decision-making authority over actions taken
pursuant to this Agreement and subsequent Plans of Action to ensure
such actions are necessary to address a direct threat to the national
defense. The Department of Justice (DOJ) and the Chairman of the FTC
will monitor activities of the Committee and Subcommittees to ensure
they execute their responsibilities in a manner consistent with this
Agreement having the least anticompetitive effects possible.
A. Plan of Action Execution
Specific Member obligations and actions to be undertaken will only
be provided for in individual Plans of Action, not in the Agreement.
Activities taken to develop a Plan of Action or to implement a Plan of
Action that has been activated pursuant to section III.E. above will
provide Participants the antitrust defense described in section IV.
Each Plan of Action will endeavor to clearly identify the conduct that
Participants will undertake in carrying out the Plan of Action and that
would be subject to the defense described in Section IV.
Each Plan of Action will describe what information Members will
share, as directed by FEMA and under FEMA's supervision. Information
will be used to create a common operating picture in furtherance of the
Plan of Action's purpose and/or to promote overall situational
awareness of Critical Healthcare Resource manufacturing and
distribution activities.
Each Plan of Action, and information gathered pursuant to that
plan, will be used to support one or more of the following objectives:
(1) Facilitate maximum availability of Critical Healthcare
Resources to end-users by deconflicting overlapping requirements for
the collective Participant customer base;
(2) Facilitate maximum availability of Critical Healthcare
Resources to Members by deconflicting overlapping supply chain demands
of Members;
(3) Facilitate efficient distribution of Critical Healthcare
Resources by deconflicting overlapping distribution chain activities of
Members;
(4) Inform where expansion of the manufacture of Critical
Healthcare resources is necessary;
(5) Identify and prioritize Critical Healthcare Resource
requirements;
(6) Validate Critical Healthcare Resource requirements;
(7) Project future demand for Critical Healthcare Resource
requirements.
(8) Execute a collaborative manufacturing strategy to more
efficiently make use of limited resources for key manufacturing lines
of effort for Critical Healthcare Resources;
(9) Collaborate in the voluntary Participant allocation of
Critical Healthcare Resources nationwide;
(10) Cooperate to the fullest extent possible to distribute
Critical Healthcare Resources to locations most in need, as identified
by FEMA;
(11) Explore strategies for increased manufacturing of Critical
Health Resources in or near the United States;
(12) Carry out any other activities as determined and directed by
FEMA necessary to address the Pandemic's direct threat to the national
defense.
B. Information Management and Responsibilities
FEMA will request only that data and information from Participants
that is necessary to meet the objectives of a Plan of Action. Upon
signing a Plan of Action Agreement, participants should endeavor to
cooperate to the greatest extent possible to share data and information
necessary to meet the objectives of the Plan of Action.
The specific data requested, procedures for sharing that data, and
data management and disposition will be tailored for each specific Plan
of Action. Where feasible and to the greatest extent possible, FEMA
will incorporate the following principles regarding data sharing into
each Plan of Action:
In general, Participants will not be asked to share
competitively sensitive information directly with other Participants.
Direct sharing of information among Participants will be requested only
when necessary and will be closely supervised by FEMA, including
requiring appropriate safeguards regarding participant use and
dissemination of other participants' data.
If FEMA needs to share information with parties outside the
Sub-Committee, FEMA will limit the amount and type of information
shared to the greatest extent feasible and permitted by law, while
still furthering the objectives of the Plan of Action.
Prior to distribution within or outside the Sub-Committee,
FEMA will aggregate and anonymize data in such a way that will maximize
the effectiveness of the Plan of Action without compromising
competitively sensitive information.
Pursuant to 5 U.S.C. 552(b)(4) and 44 CFR 332.5, FEMA will
withhold from disclosure under the Freedom of Information Act
Participant trade secrets and commercial or financial information and
will restrict Sub-Committee meeting attendance where necessary to
protect trade secrets and commercial or financial information.
Any party receiving competitively sensitive information
through a Plan of Action shall use such information solely for the
purposes outlined in the Plan of Action and take steps, such as
imposing firewalls or tracking usage, to ensure such information is not
used for any other purpose. Disclosure and use of competitively
sensitive information will be limited to the greatest extent possible.
At the conclusion of a Participant's involvement in a Plan of
Action--due to the deactivation of the Plan of Action or due to the
Participant's withdrawal or removal--each Participant will be requested
to sequester any and all competitively sensitive information received
through participation in the Plan of Action. This sequestration will
include the deletion of all competitively sensitive information unless
required to be kept pursuant to the Record Keeping requirements as
described supra, Section I, 44 CFR part 332, or any other provision of
law.
C. Oversight
The Chairperson is responsible for ensuring the Attorney General,
or suitable delegate(s) from the DOJ, and the FTC Chairman, or suitable
delegate(s) from the FTC, have awareness of activities under this
Agreement, including Plan of Action activation, deactivation, and
scheduling of meetings. The Attorney General, the FTC Chairman, or
their delegates may attend Committee and Sub-Committee meetings and
request to be apprised of any activities taken in accordance with
activities under this Agreement or a Plan of Action. DOJ or FTC
Representatives may request and review any proposed action by the
Committee, Sub-Committee or Participants undertaken pursuant to this
Agreement or Plan of Action, including the provision of data. If any
DOJ or FTC Representative believes any actions proposed or taken are
not consistent with relevant antitrust protections provided by the DPA,
he or she shall provide warning and guidance to the Committee as soon
as the potential issue is identified. If questions arise about the
antitrust protections applicable to any particular action, FEMA may
request DOJ, in consultation with the FTC, provide an opinion on the
legality of the action under relevant DPA antitrust protections.
VI. Establishment of the Committee
There is established a Committee for the Manufacture and
Distribution of Healthcare Resources Necessary to Respond to a Pandemic
(Committee) to provide the Federal Government and the Participants a
forum to maximize the effectiveness of the manufacture and distribution
of Critical Healthcare Resources nationwide to respond to a Pandemic
through integrated coordination, planning, and information sharing with
FEMA. A Chairperson designated by the FEMA Administrator will convene
and preside over the Committee. The Committee will not be used for
widespread or collective exchange of information among members. These
activities, if required, shall be done within individual Sub-
Committees, and in accordance with an established Plan of Action. The
Committee will not be used for contract negotiations or contract
discussions between the Participants and the Federal Government; such
negotiations or discussions will be in accordance with applicable
federal contracting policies and procedures. However, this shall not
limit any discussion within a Sub-Committee about the operational
utilization of existing and potential contracts between the
Participants and Representatives when seeking to align their use with
overall manufacturing and distribution efforts consistent with this
Agreement and a Plan of Action.
The Committee will consist of designated Representatives from FEMA,
HHS, other federal agencies with equities in this Agreement, and each
Participant. The Attorney General and Chairman of the FTC, or their
delegates, may also join the Committee and attend meetings at their
discretion. Attendees may also be invited at the discretion of the
Chairperson as subject matter experts, to provide technical advice, or
to represent other government agencies, but will not be considered part
of the Committee.
To the extent necessary to respond to the Pandemic and at the
explicit direction of the Chairperson, the Committee Members will
provide technical advice to each other as needed, share information
collectively, identify and validate places and resources of the
greatest need, project future manufacturing and distribution demands,
collectively identify and resolve the allocation of scarce resources
amongst all necessary public and private sector domestic needs, and as
necessary, share vendor, manufacturer and distribution information, and
take any other necessary actions to maximize the timely manufacture and
distribution of Critical Healthcare Resources as determined necessary
by FEMA to respond to the Pandemic. The Chairperson or his or her
designee, at the Chairperson's sole discretion, will make decisions on
these issues in order to ensure the maximum coordination, efficiency,
and effectiveness in the use of Member's resources and will create and
execute Plans of Action as needed. All Participants will be invited to
open Committee meetings. For selected Committee meetings, attendance
may be limited to designated Participants to meet specific operational
requirements.
The Committee Chairperson shall notify the Attorney General, the
Chairman of the FTC, Representatives, and Participants of the time,
place, and nature of each meeting and of the proposed agenda of each
meeting to be held to carry out this Agreement. Additionally, the
Chairperson shall provide for publication in the Federal Register of a
notice of the time, place, and nature of each meeting. If a meeting is
open, a Federal Register notice will be published reasonably in advance
of the meeting. The Chairman may restrict attendance at meetings only
on the grounds outlined by 44 CFR 332.5(c)(1)-(3). If a meeting is
closed, a Federal Register notice will be published within 10 days of
the meeting and will include the reasons why the meeting is closed
pursuant to 44 CFR 332.3(c)(2).
The Chairperson shall establish the agenda for each meeting, be
responsible for adherence to the agenda, and provide for a written
summary or other record of each meeting and provide copies of
transcripts or other records to FEMA, the Attorney General, the
Chairman of the FTC, and all Participants. The Chair shall take
necessary actions to protect from public disclosure any data discussed
with or obtained from Participants which a Participant has identified
as a trade secret or as privileged and confidential in accordance with
DPA sections 708(h)(3) and 705(d), or which qualifies for withholding
under 44 CFR 332.5.
The Administrator, in his or her sole discretion and after
consultation with the Committee Members, will create Plans of Action
and Sub-Committees for specific workstreams or functional areas
requiring collective coordination, planning, and collaboration. These
Sub-Committees shall be subject to the same rules, regulations and
requirements of the Committee and any other rules or requirements
deemed necessary by the Chairperson, the Administrator, or the Attorney
General, after consultation with the Chairman of the FTC.
VII. Application and Agreement
The Participant identified below hereby agrees to join in the
Federal Emergency Management Agency sponsored Voluntary Agreement
entitled Committee for the Manufacture and Distribution of Healthcare
Resources Necessary to Respond to a Pandemic (Agreement) and to become
a Participant in this Committee. This Agreement will be published in
the Federal Register. This Agreement is authorized under section 708 of
the Defense Production Act of 1950, as amended. Regulations governing
this Agreement appear at 44 CFR part 332. The applicant, as
Participant, agrees to comply with the provisions of section 708 of the
Defense Production Act of 1950, as amended, the regulations at 44 CFR
part 332, and the terms of this Agreement.
VIII. Assignment
No Participant may assign or transfer this Agreement, in whole or
in part, or any protections, rights or obligations hereunder without
the prior written consent of the Chairperson. When requested, the
Chairperson will respond to written requests for consent within 10
business days of receipt.
Vizient, Inc.
Primary Contact: Steve Downey ([email protected])
Secondary Contact: Shohana Krilow ([email protected])
10/8/2020
______
Questions Submitted for the Record to Cathy Denning, R.N., MSN
Questions Submitted by Hon. Ron Wyden
Question. You noted during your testimony that during a normal
year, 15 million N95 masks are used, and that so far this year, 500
million N95 masks have been used. Please provide data on other
categories of PPE, including but not limited to, surgical masks, face
shields, gloves, isolation gowns, hand sanitizer? Which supply
categories are currently experiencing shortages (please quantify or
provide specific examples), and which categories cause you the most
concern about shortages moving forward?
Answer. First--to clarify a critical point--the 500 million N95
number I provided references the number of masks we estimate our
members ordered, but not necessarily the number that were received or
shipped. This number reflects a significant demand increase but it's
important to clarify that hospitals did not likely receive all of the
items they attempted to purchase. Regarding your question about data on
other categories of PPE, please find a table at the end of the document
that shows the increase in volume of orders received between 2019 and
2020.
With respect to PPE, the market does seem to have softened around
hand sanitizer, surgical masks, face shields and isolation gowns. For
the time being our members seem to be able to obtain adequate products
through their current suppliers for their daily needs. In addition,
many providers have invested in building reserves of these products
where feasible. For some products, like N95s, members report that they
have continued with extended use and reprocessing for these products
and when the supply is completely healthy, they will return to
supplying these daily as needed. This level of having adequate supply
could shift if there is a repeat of supply constraints like earlier in
the year with the two waves of influenza and the emergence of COVID-19.
The exam glove market, however, is experiencing unprecedented
demand increases in both health-care and non-health-care settings. This
increased demand is being driven by stockpile buying (in some cases to
meet State and local government standards), as well as increased buying
from the non-health-care sector and buying from outside of the US. This
increase in demand is exacerbated by a lack of excess capacity or
ability to quickly expand within glove manufacturers, the significant
cost and technological barriers to entry into the glove manufacturing
market, as well as the barring of some large glove manufacturers from
shipping to the U.S.
This, in turn, has led to astronomical pricing increases. Prior to
the pandemic, hospitals were able to purchase gloves at an average cost
of $.03-$.04 per glove; we are now seeing hospitals pay more than $.105
with some manufacturers and distributors predicting $.15 average
pricing in the 4th quarter with further price increases expected in
early 2021.
These price increases have been driven, up until now, primarily by
increased worldwide demand and profit-taking by manufacturers. However,
manufacturers are now reporting a 25-percent increase in raw materials
which will further drive pricing on gloves delivered in November and
December.
As with glove manufacturing, the raw materials companies exist
almost exclusively within China and Southeast Asia. As glove
manufacturers are investing in expansion of production, a significant
question will be whether or not the raw materials makers have the
capacity to supply new manufacturing capabilities.
For hand sanitizers, the market share leaders (GOJO, Ecolab) are
still on distribution allocation (average is 150 percent) but there are
not any issues hitting the allocation.
Question. In a statement for the record, Premier, Inc., which
operates similar businesses to Vizient, called for ``real-time
syndromic surveillance to provide an upstream alternative to
identifying cases before tests can detect them or patients are
hospitalized.'' From your company's point of view how could such a
system augment existing disease surveillance efforts? Similarly, can
PPE demand data be used to inform understanding of where COVID-19
outbreaks are occurring?
Answer. Vizient's approach is upstream to real-time syndromic
surveillance. The challenge with surveillance is that by the time a
person is presenting with symptoms, the infection has likely already
spread. We believe that surveillance can be limited as leading factor.
Based on what we know about the disease, coupled with modeling social
distancing patterns, population density and vulnerable patient
populations, we actually have insights prior a patient presenting to
the health system as symptomatic. Vizient harnesses these factors,
along with previous infection rate patterns, to gain insight into
future COVID-19 burdens prior to any ``real-time'' syndromic
surveillance indications. Vizient has developed statistical forecasts
of COVID infection rates that provide future demand not only at the
individual hospital level, but also at the city, State and national
levels. This can help us and our members assess future
hospitalizations, including ICU utilization, as well as future PPE
demand. Vizient is actively leveraging these insights to proactively
work with our membership to assess and plan for future resource needs.
Question. What, if any, data is or has Vizient been sharing with
the Supply Chain Task Force and/or FEMA?
Answer. Vizient holds regular calls with FEMA and others in the
administration to share information related to demand data, fill rates,
member concerns, and other issues related to the supply chain. This
also includes item lists such as reference information from our product
data including what specific items are within a category (e.g., part
numbers of gowns). We have also shared master reference data such as
catalog data listing--a given item number and what each of the
distributors use as item numbers for those items and their different
units of measure. On the pharmaceutical side, we have shared the
following information, some of which was sent to an organization called
Healthcare Ready for them to share directly with FEMA or other
government officials:
April 4, 2020--Listing of top generic drug manufacturers
contact information sent to Healthcare Ready.
April 7, 2020--FEMA ICU patient drugs--added missing drugs,
amended dosing recommendations and supply size needed for COVID
treatment sent to Healthcare Ready.
April 7, 2020--COVID drug list for FDA--COVID drugs and
corresponding fill rates sent to Healthcare Ready.
April 8, 2020--COVID drug list for FDA--updated with
additional tab providing crosswalk information for each drug being
monitored to assist FEMA sent to Healthcare Ready.
April 22, 2020--Vizient report to FDA and COVID-19 impact upon
ventilator drugs--demand and fill rate for 48 drugs being tracked for
FDA along with a weekly analysis presented in PPT on ventilator drugs
sent to Healthcare Ready.
April 27, 2020--Common COVID ventilator medications--Vizient
fulfilled request for information on common drugs expected to be used
in management of ventilated patients sent to Healthcare Ready.
April 28, 2020--Supply Chain Task Force primary and secondary
medications priorities--Vizient reviewed and provided feedback on a
draft list of priority medications the FEMA Supply Chain Task Force
plans to track sent to Healthcare Ready.
May 1, 2020--Fill rate tracker FEMA--Vizient responded to FEMA
request for fill rates across 15 specific vent meds sent to Healthcare
Ready.
May 2, 2020--Fill rate tracker FEMA--Vizient provided an
update and responded to methodology question supporting detail on how
fill rates are calculated sent to Healthcare Ready.
May 7, 2020--GPO site usage for 15 ventilator medications--
responded to request to expand fill rate to include total utilization
(demand) by month across GPO membership sent to Healthcare Ready.
May 7, 2020--Remdesivir requests--shared additional feedback
with FEMA in response to distribution limitations of Remdesivir across
many of our member hospitals sent to Healthcare Ready--this was done
every business day until a more formal process for Remdesivir
distribution was laid out by HHS.
Question. Please provide copies of any agreements that Vizient has
signed with the task force or FEMA.
Answer. As of October 8, 2020, Vizient has signed a Voluntary
Agreement with FEMA pursuant to the Defense Production Act. A copy of
that agreement is included as a separate attachment (see p. 44).
Question. My State of Oregon relied upon an Emergency Use
Authorization issued by the Food and Drug Administration as a stamp of
quality when it acquired N95 respirators, only to have that decision
reversed after the State imported them from China. The U.S. agency that
actually tests and certifies these respirators--NIOSH--now says that
Chinese manufacturers are telling them some of the respirators they de-
certified were counterfeit. In a recent article, The Wall Street
Journal attempted to quantify the problem that States across the
country faced (``FDA's Shifting Standards for Chinese Face Masks Fuel
Confusion,'' August 3, 2020), reporting that State agencies submitted
orders for more than 180 million KN95 masks that ``are now sitting
unwanted in warehouses due to quality concerns,'' and that ``more than
60 percent of foreign-made masks, nearly all Chinese made, have failed
basic U.S. government quality tests that looked at 220 such brands.''
Please answer the following:
Were counterfeit, fraudulent or otherwise substandard PPE a
significant problem for the U.S. prior to this pandemic?
Answer. No.
Question. Is this primarily driven by the massive surge in demand
for PPE?
Answer. Yes.
Question. Has the FDA's decision to list and delist KN95 masks
complicated efforts to obtain sufficient supplies of respirators?
Answer. Yes. While the various EUAs have been appreciated, the
addition of multiple products labeled as KN95, coupled with these
products being easily counterfeited, created a problem for providers.
Providers subsequently purchased these products before the EUAs were
rescinded which then led to them being ultimately unusable. All of this
complicated the overall efforts to obtain sufficient supply of usable
N95s.
Question. Would your members have benefited from more Federal
leadership throughout this pandemic procuring quality safety equipment?
Answer. We have appreciated working with individuals throughout the
administration on this critical issue. All stakeholders, including the
government, could have improved in their overall response to COVID-19,
and we look forward to continuing to engage as we all work towards the
same goals.
Question. The Trump administration testified in July that it has
used the Defense Production Act ``more than 10 times'' to combat COVID-
19, an extraordinarily narrow use of existing authority that stands in
stark contrast to Federal agencies historical use of DPA. Historically,
the statute's authority has been used to acquire supplies and services
in times of emergency and in day-to-day business. For example, the
Department of Defense places approximately 300,000 rated orders
annually, while the Department of Homeland Security, including FEMA,
placed more than 1,000 rated orders and contracts in 2018. Specific
examples include using priority orders to acquire the Adenovirus
vaccine, expediting construction of floodwater controls in New Orleans,
speeding up the purchase of railroad equipment following Hurricane
Katrina, and obtaining resources needed to house and feed disaster
survivors and first responders, communications equipment and
information technology needs, and other logistical needs supporting
disaster response and recovery efforts. Given the shortages of PPE you
have experienced, shouldn't the administration use the Defense
Production Act to increase the availability of personal protective
equipment and better allocate supplies?
Answer. We have previously stated our support for--and continue to
support--the use of the DPA and other means to increase the supply of
PPE and other critical products.
Question. The Trump administration has relied on the practice of
reusing PPE to make it look like there are adequate supplies at
hospitals and other medical settings, which has been a big safety
concern for workers. The American Nurses Association surveyed 14,000
nurses in May and found that 45 percent worked at facilities with
shortages of PPE, and 79 percent reported having to reuse PPE. In July,
the National Nurses Union released a survey of 21,000 nurses, of which
87 percent reported re-using PPE. My staff heard similar stories from
around the country. One nurse in Houston, where the virus is surging,
told Minority staff that her hospital is cleaning and reusing N95 masks
up to 10 times. Ms. Denning, if your members were not reusing PPE
intended for single use, would there be more severe shortages of
supplies?
Answer. Yes.
______
Question Submitted by Hon. Debbie Stabenow
Question. As we continue to respond to this pandemic, we also know
that influenza season will soon start. You mention in your written
testimony that a spike in influenza cases just prior to the pandemic
had hindered our PPE supply. Do you have similar concerns about the
upcoming flu season?
Answer. Yes.
______
Question Submitted by Hon. Sheldon Whitehouse
Question. Like many States, Rhode Island has had chilling
experiences procuring PPE, including unfulfilled orders, fraudulent
sales, and a competitive race for supplies. This toxic atmosphere
discourages not only buyers, but also suppliers, from entering the PPE
market, as manufacturers face challenges understanding the market,
product standards, and the allocation process. In your experience as
buyers of PPE on behalf of hospitals and health-care providers, what
does the current PPE market look like and how has it been tainted by
the disorganized, toxic procurement process?
Answer. First--to clarify the role of a GPO--we do not take title
to products (or buy products). Our primary role is to leverage the
scale of our membership to negotiate prices on their behalf for goods
and services. That said, as I mentioned in my testimony, there have
been many bad actors who have looked to exploit health-care providers,
patients, and the government by preying on the critical need for PPE
and other products.
Additionally, in recent years, hospitals have been driven to the
lowest cost item and a just-in-time inventory system to keep supply
costs as low as possible. However, because of this approach to managing
a challenging financial environment, many health-care systems found
themselves unprepared for the unprecedented volume of COVID-19
patients.
We believe the PPE market has been adversely impacted in that
traditional, quality suppliers looking to grow their capacity to help
meet the increased needs were, in turn, met with factories in other
countries that saw an opportunity to significantly increase prices and
sell dedicated manufacturing lines to the highest bidder. We also
experienced an emergence of third-party brokers (many questionable)
that were securing product in other countries and didn't have the
expertise to validate the manufacturer, evaluate the product quality or
appreciate the required certifications needed for U.S.-based health-
care providers.
That being said, there have been some positive outcomes that
include increased demand for transparency around origin of
manufacturing and raw materials, PPE innovation and overall
competition. We experienced innovative approaches to a number of PPE
categories including gowns, masks and face shields. We have also seen
new market entrants into the healthcare market.
This experience underscored the importance of the terms and
conditions of GPO contracts that include failure to supply, warranty,
competitive pricing, validated quality as well as governmental
regulations.
______
Question Submitted by Hon. Sherrod Brown
Question. In your testimony, you acknowledged that supply chain
vulnerabilities exist, and in order to improve our supply chain and
make it more resilient we must increase transparency, redundancy, and
diversification. Can you provide specific suggestions for how the U.S.
government, particularly through the strategic national stockpile and
other Federal programs focused on preparedness and response, can
increase transparency, redundancy, and diversification within our PPE
supply chain?
Answer. Location of manufacturing. Require the physical address of
the most significant manufacturing steps to be available to the public,
as well as other manufacturing steps or contract manufacturing.
Location of raw materials. Require the physical address of each raw
material supplier be supplied and available to the public.
Supply capacity. Require manufacturers to disclose capacity of each
manufacturing location, by product sku, with current capacity and
potential expansion capacity.
Share information on demand, stock, and supply. As the government
builds databases about the health of supply chains, through demand, on-
hand inventory and supply information, make that information available
to industry participants, including GPOs.
SNS. As health systems consume product within State/Federal
stockpiles, provide a report to industry stakeholders, including the
GPOs that serve those hospitals, for enhanced visibility. Also inform
GPOs of the products and stock levels within the SNS so we can assess
the risks to supply.
Local supply. Help drive a more resilient supply chain by investing
in domestic supply of manufacturing.
______
Question Submitted by Hon. Chuck Grassley
Question. We've heard from some manufacturers and suppliers that
increased transparency within the supply chain could harm competition
and expose confidential business information. Can you respond to these
concerns? How can the Federal Government increase transparency while
balancing these concerns?
Answer. Yes, we have also heard the argument that increased
transparency of manufacturing information is not possible due to the
risk of disclosing confidential details and/or creating a less
competitive marketplace. In response, we must note that the existing
environment of limited or non-existent information regarding the
manufacturing quality or the origination of source of active
pharmaceutical ingredients and other medication components has failed
to deliver the resilient and safe supply channel that is required to
sustain patient care. For example, in addition to the recent pandemic,
drug shortages cost the U.S. health-care system at least $360 million
annually. The concept of increased disclosure and transparency
regarding manufacturing and quality has been articulated in the Food
and Drug Administration's task force on drug shortages and championed
by numerous other organizations including the American Hospital
Association, the American Medical Association, the United States
Pharmacopeia, the American Society of Health-System Pharmacists, and
Vizient.
The expectation for increased transparency is no longer a
negotiable situation. Too many stakeholders now expect this level of
clarity and are taking steps to gather information to make more
informed sourcing decisions. We would strongly encourage the
pharmaceutical and medical device industries to support this endeavor
and ensure end users have accurate information on which to make their
decisions. Furthermore, we fully anticipate that those companies who
volunteer information and demonstrate a visible and documented
commitment to quality will be even more competitive as compared to
those who resist this transformation. We similarly urge the government,
through congressional or other action, to hold manufacturers
accountable for this level of needed transparency.
FOLLOW-UP FROM QUESTION 1:
2019 vs. 2020 Submitted Invoice Volume
----------------------------------------------------------------------------------------------------------------
2019 Est. U.S. 2020 Est. U.S.
Acute Care Invoice Acute Care Invoice
Volume (Based on Volume (Based on Invoiced
PPE Categories Jan-Jul annualized Jan-Jul annualized Volume Order Volume Increase
Vizient Member Vizient Member Increase
Spend) Spend)
----------------------------------------------------------------------------------------------------------------
Face Shields 331,760 1,191,431 259% 690% at peak
----------------------------------------------------------------------------------------------------------------
Exam Gloves 22,480,253,366 27,338,294,843 22% 260% at peak
----------------------------------------------------------------------------------------------------------------
Isolation Gowns 539,918,064 847,360,528 57% 380% at peak
----------------------------------------------------------------------------------------------------------------
N95 Respirators 29,761,566 121,847,624 309% 4,000% at peak
----------------------------------------------------------------------------------------------------------------
Surgical Masks (tie behind) 145,291,499 239,105,409 65% 650% at peak
----------------------------------------------------------------------------------------------------------------
Procedure Masks (ear loop/ 529,432,461 1,452,702,635 174% 650% at peak
elastic)
----------------------------------------------------------------------------------------------------------------
Shoe Covers 193,979,281 231,508,380 19%
----------------------------------------------------------------------------------------------------------------
Invoiced Volume in Eaches
Assumptions:
Estimated U.S. Acute Care volumes are built on invoice data
shared with Vizient from member hospitals and based on the following:
The data provided represent 80 percent of the total Vizient member
volume
Vizient members represent 50 percent of the U.S. Acute Care market
volume
Invoice volume reflects the actual quantities that were shipped
in comparison to order volumes which can be overstated due to hospital
and distributor ordering practices
Order quantity perspective provided by Owens and Minor to
Vizient
Includes all safety levels
______
Prepared Statement of Ernest Grant, Ph.D., R.N., FAAN,
President, American Nurses Association
Chairman Grassley, Ranking Member Wyden, and members of the
committee, thank you for giving me the opportunity to appear before
you, on behalf of the American Nurses Association (ANA), to discuss the
need to protect the reliability of the United States medical supply
chain during the COVID-19 pandemic. Nurses and other health-care
providers in communities across the country have been on the front
lines of the coronavirus pandemic and have been negatively impacted by
the shortages of Personal Protective Equipment (PPE) caused by the
global impact of COVID-19.
ANA is the premier organization representing the interests of the
Nation's over 4 million registered nurses (RNs), through its State and
constituent member associations, organizational affiliates, and
individual members. ANA members also include the four advanced practice
registered nurse roles (APRNs): nurse practitioners (NPs), clinical
nurse specialists (CNSs), certified nurse-midwives (CNMs) and certified
registered nurse anesthetists (CRNAs). ANA is dedicated to partnering
with health-care consumers to improve practices, policies, delivery
models, outcomes, and access across the health-care continuum.
This is one of the most difficult times nurses have ever faced. At
the beginning of this crisis the United States saw nurses and other
front-line health-care professionals confronting a shortage of personal
protective equipment by making their own masks or using trash bags for
make-shift gowns. Because of the unsafe working conditions, some made
the difficult choice to leave their jobs to protect their families and
themselves. Others developed emotional and psychological issues,
suffered severe physical ailments from the coronavirus and tragically,
all too many, more than 230 nurses died providing care to their
communities. This is unacceptable.
Nurses must be protected and supported so they can continue to care
for patients and educate the public. We must safeguard nurses' and
other front-line providers' well-being and heed their invaluable
insights so that the Nation can recover faster and stronger. It is both
a moral and strategic imperative for our Nation's leaders to do
everything possible to arm and protect nurses and other critical
responders as we work to combat the pandemic and prepare for future
public health crises.
ana surveys on ppe
Despite hopes that strong mitigation and containment actions in our
communities would reduce the severity of the coronavirus outbreak, the
Nation is currently seeing an uptick in COVID-19 cases, causing the
demand for, and pressure on nurses to only grow. At the time of this
testimony, PPE is not being provided in the quantity or quality that is
required for nurses to safely care for patients. To closely and
consistently monitor nurses' access to PPE, ANA has deployed several
PPE-specific surveys, including two that were conducted in March and
May, as well as one that is currently in the field. The findings of
these surveys are outlined below, but the topline takeaway is that
there has been little to no change in our members' access to sufficient
quantities of safe and effective PPE since the beginning of the
pandemic in the United States
ANA's May survey on access to PPE received 14,000 responses. 45
percent of respondents reported PPE shortages in their facility, and 79
percent said they are required, or encouraged, to reuse single-use PPE,
such as N95 masks. More than half of these respondents said they feel
unsafe using decontaminated respirators. ANA does not support the use
of decontamination methods as a standard practice; however, we have
acknowledged this is a crisis capacity strategy. The Association
recommends that Congress engage with the U.S. Food and Drug
Administration regarding the need to expeditiously research the
effectiveness of various decontamination methods for the reuse of PPE
by nurses and other health-care professionals. We also urge additional
oversight to ensure a return to best practices as soon as possible.
stories from the field
ANA has requested nurses from across the country share their
personal stories related to PPE. It is evident from these stories that
the PPE supply chain continues to be strained. While facilities
struggle to supply adequate quantities of PPE, ANA is hearing that the
quality of the PPE is getting worse. Nurses in Oregon reported that a
large hospital system purchased and reported an ample supply of masks.
Unfortunately, likely due to supply issues, the hospital switched
brands, and the current stock of masks are all too large to properly
fit most staff. This can cause safety issues because if the masks are
too large, there is the potential to create an opening in which the
virus may enter, putting healthcare workers at an even greater risk, as
there is not a reliable seal around their face, which is mandated by
the wearing of isolation gear.
Nurses also reported that the quality of the masks was so poor that
the wire that forms around the nose did not fit properly, causing
safety concerns over the tightness of the facial seal. These are not
isolated examples. Congress and the administration, in coordination
with the States, must ensure not only that health-care providers are
stocked with adequate quantities of PPE, but also that it meets
medical, safety, and quality criteria.
The top-line concerns that ANA has received in its surveys are as
follows:
Nurses are being asked to reuse PPE when reuse is out of
alignment with manufacturers' guidelines.
Facemasks fog up resulting in various incidents (needle stick,
inability to accurately take blood pressure, etc.).
Nurses being asked to reuse PPE that cannot be disinfected.
That some personal protective equipment is unsafe. A soft,
pliable face shield may be non-medical grade, warping and fogging
material. The straps cannot be disinfected.
In some locations there is an insufficient supply of PPE.
Nurses are getting small allotments of gloves, disinfectant, surgical
masks and N95s. These do not meet the need of the procedures the nurses
are being ordered to perform.
Underserved and rural hospitals are being outbid by larger
health systems as well as both the State and Federal Government,
exacerbating their difficulty in obtaining supplies.
ANA has also received over 200 personal stories as part of a PPE
survey that is currently out in the field.
strategic national stockpile recommendations
While ANA understands the PPE crisis is the result of multiple
factors, including shortages of raw materials, a global need for
equipment, and growing PPE needs as the country and schools reopen, we
believe that more must be done by both the Federal and State
Governments to better deploy this protective equipment. While States
certainly have a role in ensuring access to care, more needs to be done
to enhance the Federal/State partnership to ensure transparency and
equitable access to safe and quality protective equipment for health-
care providers.
To achieve this goal, ANA recently submitted detailed
recommendations to Chairman Lamar Alexander and the Health, Education,
Labor, and Pensions (HELP) Committee in response to the chairman's
white paper request, which is attached and summarized below.
To make sure health-care providers are never again left with a
PPE shortage, Congress should request an annual report on the state of
the strategic national stockpile (SNS) with respect to PPE, vaccines,
medicines, and other supplies. The report must include when items are
expiring and what items need to be replaced. When items are approaching
expiration, they should be donated to underserved medical facilities
such as federally qualified health centers, rural hospitals, and
clinics based on need.
Health-care facilities should be required to report monthly on
their levels of these items so the agency in charge has up to date
information on where shortages may be most acute in the early stages of
an emergency. A formulary should be developed by National Academy of
Sciences, Engineering, and Medicine on what levels of PPE, vaccines,
and other supplies health-care facilities should have in their own
stockpiles. Manufacturers of these items should also be reporting on
production and capabilities.
The Federal Government must take appropriate steps to plan
coordination efforts. Many States will not have the resources or
expertise to carry out preparations or coordination without Federal
assistance. Hospitals and facilities with more capital will most likely
benefit while rural and underserved areas will suffer. There have been
instances of States and health-care systems in competition with one
another to procure PPE and essential supplies. The Federal Government
needs to help States prepare by taking steps to ensure they are not
pitted against each other when it comes to resources.
The Federal Government needs to do more to incentivize and
prioritize the manufacturing of PPE, medications, and other supplies in
the United States, even if that means carrying out production itself.
We cannot allow our citizens to be put at a health risk because
businesses view manufacturing elsewhere better for their bottom line.
More production in the United States will also help the U.S. economic
recovery.
ana engagement with the federal government regarding ppe
Since the beginning of this pandemic, ANA has called on Federal
officials to increase the supply of PPE. The Association will continue
to do so because nurses, other health-care professionals, and essential
workers must have the proper equipment to protect themselves and take
care of our communities. We have specifically urged the administration
to use the Defense Production Act more aggressively to increase the
domestic production of medical supplies and equipment desperately
needed by front-line health-care personnel. With the rise in cases as
States reopen, the administration and Congress must continue to
increase and incentivize the domestic production of medical supplies
and equipment that meets medical, safety, and quality criteria
desperately needed by front line health-care personnel.
conclusion
ANA stands ready to work with the Finance Committee, the entire
Congress, and the administration to find sustainable solutions to this
PPE crisis in order to protect our Nation's front-line nurses and
ensure that front-line providers will never experience this level of
shortage and unsafe practices again. On behalf of our patients and
their families, the 4 million RNs who care for them, and the hundreds
who have selflessly given their lives to safeguard the health of their
communities, we must do better. Thank you and I look forward to
answering any questions that you may have.
______
Attachments:
ANA response to the Senate HELP Committee white paper titled,
``Preparing for the Next Pandemic,'' https://www.nursingworld.org/
practice-policy/work-environment/health-safety/disaster-preparedness/
coronavirus/june-3-2020-prac-grant/june-26-ana-letter-to-chairman-
alexander/.
ANA May 2020 PPE Survey, https://www.nursingworld.org/practice-policy/
work-environment/health-safety/disaster-preparedness/coronavirus/what-
you-need-to-know/survey-series-results/
#::text=ANA%20Personal%20Protective%20Equipment%
20Survey%20-%20May%202020,situation%20on%20the%20frontlines%20of%20the%
20COVID-19%20pandemic.
ANA May 2020 PPE survey infographic, https://www.nursingworld.org/
49cd40/globalassets/covid19/ppe-infographic-june-5-2020.pdf.
______
Attachment 1
ANA Responds to Questions From Chairman Alexander
Re: Planning for the Next Pandemic
ANA responded to questions from a white paper entitled, ``Preparing for
the Next Pandemic.'' It looks to address future pandemics based on
lessons learned from COVID-19 and the past 20 years of pandemic
planning.
June 26, 2020
The Honorable Lamar Alexander
Committee on Health, Education, Labor, and Pensions
428 Dirksen Office Building
Washington, DC 20510
Re: Pandemic Preparedness White Paper
Dear Chairman Alexander:
In the Pandemic Preparedness White Paper that was issued on June 9,
2020, the Committee requested input on what the United States has
learned from the past twenty years of public health preparedness and
response and how it can better prepare for future pandemics. On behalf
of the American Nurses Association (ANA), I have provided
recommendations for the Committee to consider as its work on COVID-19
and preparedness continues over the next several months.
Stockpiles, Distribution, and Surges--Rebuild and Maintain State and
Federal Stockpiles and Improve Medical Supply Surge
Capacity and Distribution
How can the Strategic National Stockpile be better managed and how can
Congress increase oversight and accountability?
Congress should receive an annual report on the state of the Strategic
National Stockpile (SNS) with respect to personal protective equipment
(PPE), vaccines, medicines, and other supplies. The report must include
when items are expiring and what items need to be replaced. When items
are approaching expiration, they should be donated to underserved
medical facilities such as federally qualified health centers, rural
hospitals, and clinics based on need.
Health care facilities should be required to report monthly on their
levels of these items so the agency in charge has up to date
information on where shortages may be most acute in the early stages of
an emergency. A formulary should be developed by National Academy of
Sciences, Engineering, and Medicine on what levels of PPE, vaccines,
and other supplies health-care facilities should have in their own
stockpiles. Manufacturers of these items should also be reporting on
production and capabilities.
In addition, the federal government needs to do more to incentivize and
prioritize the manufacturing of PPE, medications, and other supplies in
the United States, even if that means carrying out production itself.
We cannot allow our citizens to be put at a health risk because
businesses view manufacturing elsewhere better for their bottom line.
More production in the United States will also help the U.S. economic
recovery.
How can states and hospitals improve their ability to maintain a
reserve of supplies in the future to ensure the Strategic National
Stockpile is the backup and not the first source of supplies during
emergencies?
They should be required to follow and report on the above-referenced
formulary of how much of each item they must always have on hand.
Without an incentive or penalty--financial or otherwise--there is
little incentive to maintain larger reserves.
What steps should be taken to ensure that health-care providers and
first responders have the supplies they need, such as personal
protective equipment?
By following the recommendations above regarding better managing the
SNS and improving how states and hospitals improve their ability to
maintain reserves.
As states and hospitals establish or build their own stockpiles, how
will they know what supplies to stockpile? What guidance should the
federal government provide on what medical supplies are appropriate?
There should be a formulary developed by the Department of Health and
Human Services, Centers for Disease Control and Prevention, National
Academies of Sciences, Engineering, and Medicine, and other appropriate
government agencies, departments, and other stakeholders, to determine
what items are needed for their own stockpiles and what are appropriate
levels of stock for each item.
Could states and hospital systems establish their own vendor managed
inventory programs with manufacturers and distributors? Should the
federal government or states contribute to such hospital stockpiles?
In theory they could, but quality conditions and maintenance will
result in drastically varying consistency. Furthermore, neglect could
occur in some areas due to budget cuts.
Public Health Capabilities--Improve State and Local Capacity to
Respond
What specific changes to our public health infrastructure (hospitals,
health departments, laboratories, etc.) are needed at the federal,
state, and local levels?
A robust public health infrastructure better equips the nation with
preparedness and response measures during times of crisis. This
pandemic is the latest in a long string of emergencies that put a
spotlight on what damage underinvesting in public health can do to a
society. Federal reinvestment in public health infrastructure back to
at least 2008 levels will be important as the nation moves forward.
Additionally, expansion of the public health workforce is a key element
of this needed investment. Our public health workforce, of which public
health nurses are the largest segment, touch every aspect of health
care and community well-being. They play an integral role in narrowing
disparities, improving health outcomes, and reducing disproportionately
high morbidity and mortality rates due to preventable illness.
How can the federal government ensure all states are adequately
prepared without infringing on states' rights and recognizing states
have primary responsibility for response?
It is important for the federal government to take appropriate steps to
plan coordination efforts. Many states will not have the resources or
expertise to carryout preparations or coordination without federal
assistance. Hospitals and facilities with more capital will most likely
benefit while rural and underserved areas will suffer. We have seen
instances of states competing with each other to procure PPE and
essential supplies, and federal government coordination efforts, where
appropriate, wouldn't seem to infringe on state responsibility. The
federal government needs to help states prepare by taking steps to
ensure they aren't pitted against each other when it comes to
resources.
How should the federal government ensure agencies like CDC maintain an
appropriate mission focus on infectious diseases in the periods between
emergencies to strengthen readiness to respond when a new threat
arises?
Congressional oversight as well as adequate funding are vital to ensure
that the CDC and other relevant agencies stay focused and dedicate
resources to improved readiness for future pandemics and public health
emergencies.
ANA is the premier organization representing the interests of the
nation's 4.1 million RNs, through its state and constituent member
associations, organizational affiliates, and individual members. ANA
members also include the four advanced practice registered nurse roles
(APRNs); Nurse practitioners (NPs), clinical nurse specialists (CNSs),
certified nurse-midwives (CNMs) and certified registered nurse
anesthetists (CRNAs). ANA is dedicated to partnering with health-care
consumers to improve practices, policies, delivery models, outcomes,
and access across the health-care continuum.
Thank you for giving nurses this opportunity to provide the federal
government with input on pandemic preparedness and public health. If
you have questions, please contact Ingrida Lusis, Vice President of
Policy and Government Affairs, at (301) 628-5081 or
[email protected].
Sincerely,
Debbie D. Hatmaker, Ph.D., R.N., FAAN
Acting Chief Executive Officer/Chief Nursing Officer
cc: Ernest Grant, Ph.D., R.N., FAAN, ANA President
______
Attachment 2
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Attachment 3
[GRAPHIC] [TIFF OMITTED] T3020.001
______
Questions Submitted for the Record to Ernest Grant, Ph.D., R.N., FAAN
Questions Submitted by Hon. Ron Wyden
Question. During the July 30th hearing, you testified that the
difficulties rural and underserved medical settings have had obtaining
personal protective equipment is leading to a ``snowball effect'' that
exacerbates health disparities experienced by black, indigenous, Latinx
and other communities of color. You noted during your testimony that
you had additional thoughts and data that you could provide to expand
on that point--please use this question to expand your views on the
issue.
Answer. As the COVID-19 pandemic continues to evolve, it is clear
that communities of color are disproportionately impacted. The Kaiser
Family Foundation found that multiple analyses of available data
demonstrate that people of color are not only more likely to contract
the virus but have higher rates of mortality.\1\ This is especially
true in rural and underserved areas of our health care delivery system.
---------------------------------------------------------------------------
\1\ https://www.kff.org/coronavirus-covid-19/issue-brief/covid-19-
racial-disparities-testing-infection-hospitalization-death-analysis-
epic-patient-data/.
Health-care providers need PPE to successfully respond to and
provide care for patients who have contracted COVID-19. Challenges
faced by providers to obtain the necessary PPE hinders their ability to
do so. We know that a medical center in rural Wisconsin had difficulty
in gaining access to needed PPE. The same was true for underserved
---------------------------------------------------------------------------
areas of Chicago--leading to widespread transmission of the virus.
In addition, patients in rural and underserved areas face barriers
to access and needed health-care services--which the pandemic has only
made worse. For example, many vulnerable populations rely on public
transportation systems to be able to get to appointments. Local and
State COVID-19 mitigation plans resulted in the discontinuation or
restriction of public transportation services, which continues to
directly impact the ability of patients to access needed care. The
pandemic also highlighted the need for a highly educated and trained
health-care workforce representative of all residents in every
community is essential to not only treat but prevent outbreaks through
trusted education.
These factors only serve to exacerbate existing health disparities
among people of color and must be addressed. It is critical that
Congress addresses the challenges faced by providers in acquiring
needed, quality PPE as they continue to respond to the COVID-19
pandemic.
Question. Observers have noted that rural hospitals and healthcare
providers faced difficulties obtaining PPE in the early days of the
pandemic in part because it wasn't where the pandemic was centered. Now
the pandemic has progressed there and we have heard anecdotally that
those supply problems persist as smaller operators compete against
larger buyers, States and the Federal Government. In many cases, these
rural providers are providing care to black, indigenous and Latinx and
other communities of color, which as you noted, and the PPE shortages
exacerbate racial health disparities. Assuming that a viable vaccine is
approved, what lessons can be drawn from the experiences with PPE and
testing to ensure health disparities in these communities aren't
further worsened? What steps can the Centers for Medicare and Medicaid
Services take to ensure broad distribution to rural and underserved
communities?
Answer. It cannot be over-stated that all individuals must have
access to the vaccine--especially in rural and underserved areas. It is
critical that education about the need for all individuals to receive
the COVID-19 vaccine begins now. That also means that clinical trials
and post-marketing studies must include pregnant women and individuals
of all ages, races, nationalities and health conditions. Public service
announcements on television and radio can convey factual, science-based
reasoning on the importance of the vaccine. Partnering with community
leaders will allow for further dissemination of information, such as in
places of worship, social service organizations, and local community
centers. Elected officials can help by getting vaccinated themselves
and promoting it to their constituents. As the vaccine becomes
available and is distributed, these channels can be used to provide
additional information on how and where to access the vaccine.
Nurses are a critical component in vaccine education and
distribution. Nurses remain on the front lines of the pandemic, and
their relationships with patients can be leveraged to ensure vaccine
adherence. Nurses can be hired to monitor and ensure patients receive
the full course of the vaccine. They can aid in breaking down
transportation barriers by bringing the vaccine to where patients are
in the community. Other barriers can be simply addressed by allowing
nurses to offer extended hours for vaccine administration and using
school-based settings to ensure entire families are vaccinated.
Furloughed nurses also can be hired to administer vaccines, as well as
nursing students needing to meet clinical hour requirements. These are
just some examples of how nurses can ensure rural and underserved
populations have access to the COVID-19 vaccine.
The Centers for Medicare and Medicaid Services (CMS) must work with
other Federal agencies and community partners to ensure education about
the vaccine is disseminated and that the vaccine is broadly distributed
to ensure patient access--especially, for rural and underserved areas
of the health-care delivery system. Existing community support should
be leveraged to provide the vaccine to communities already faced with
barriers to health-care services. CMS and Medicare Advantage plans must
make clear to Medicare beneficiaries how to access the vaccine and work
with State agencies to ensure the vaccine is available to Medicaid
beneficiaries and children enrolled in the Children's Health Insurance
Program (CHIP).
In addition to administrative action, Congress must provide the
resources needed to ensure broad distribution of the vaccine,
specifically targeting rural and underserved communities. Congress can
also address how uninsured populations can access and receive coverage
for the vaccine, similar to how it addressed testing and treatment of
COVID-19 for uninsured patients. As noted above, the populations in
these communities are disproportionately impacted by the pandemic,
which highlights the challenges stemming from racial health
disparities. Resources to support targeted, intentional distribution of
the vaccine is critical to ensure racial health disparities are not
further exacerbated.
Question. The Trump administration has relied on the practice of
reusing PPE to make it look like there are adequate supplies at
hospitals and other medical settings, which has been a big safety
concern for workers. Your organization surveyed 14,000 nurses in May
and found that 45 percent worked at facilities with shortages of PPE,
and 79 percent reported having to reuse PPE. In July, the National
Nurses Union released a survey of 21,000 nurses, of which 87 percent
reported re-using PPE. My staff heard similar stories from around the
country. One nurse in Houston, where the virus is surging, told
Minority staff that her hospital is cleaning and reusing N95 masks up
to 10 times. Dr. Grant, what concerns do you have regarding the reuse
of PPE that intended for a single use?
Answer. Nurses on the front lines of the COVID-19 response, faced
by continued shortages, continue to have serious concerns about reusing
PPE. In our July 2020 PPE survey of 21,000 nurses, 68 percent of nurses
reported they are required to reuse N95 respirators. Of those who reuse
N95 respirators, 58 percent report reuse for 5 or greater days. 62
percent of nurses feel unsafe with current reuse practices.
The ANA does not support the use of decontamination methods as a
standard practice. However, as we are faced with a crisis, we
acknowledge alternative capacity strategies must be utilized, but this
does not eliminate the need for establishing the appropriate safeguards
and quality control measures.
ANA strongly recommends that Congress engage with the U.S. Food and
Drug Administration to expeditiously research the effectiveness of
various decontamination methods for the reuse of PPE by nurses and
other health-care professionals. We ask that you take into
consideration the current practice of extended use within a single
shift and reuse over multiple days as decontamination practices are
evaluated. A 2012 study cites degradation in form and fit of N95
respirators following 5 don and doff cycles independent of the current
extended use practices over an 8-12 hour or longer shift. Further, we
encourage Congress to examine the need for additional oversight on
supply, distribution, and facility policy and how best to expeditiously
return to best practices.
Question. What steps should the Federal Government take to secure
adequate PPE supplies?
Answer. There are many steps the Federal Government can take to
ensure adequate supply of PPE for health-care providers across the
country. First, the Defense Production Act (DPA) must continue to be
enforced as well as, better management of the strategic national
stockpile (SNS). Congress should receive an annual report on the state
of the SNS with respect to personal protective equipment (PPE),
vaccines, medicines, and other supplies. The report must include when
items are expiring and what items need to be replaced. When items are
approaching expiration, they should be distributed based on need to
underserved medical facilities such as federally qualified health
centers, rural hospitals, and clinics.
Health-care facilities should be required to report monthly on the
inventory of these items to allow for up-to-date information to
determine where shortages may be most acute at any stage of a public
health emergency. Such reporting should include number of staff and
sizing needs to address appropriate fit of PPE. A formulary should be
developed by the National Academy of Sciences, Engineering, and
Medicine on what levels of PPE, vaccines, and other supplies health-
care facilities must have in their own stockpiles. Manufacturers of
these items should also be reporting on production levels and
capabilities.
Currently, the Nation continues to face a pandemic, at the same
time as hurricane season, fire season in the West, and the beginning of
influenza infections. Hurricane season puts more strain on health-care
facilities and providers due to frequent trauma related incidents and
physical damage to facility and employee property. Widespread community
transmission of the flu has the potential to further strain the health-
care delivery system, with infected patients overwhelming facilities
already at capacity. As the Nation looks forward and addresses
readiness and response to the rising incidence of pandemics, Congress
must take steps to ensure that the SNS is the backup and not the first
source of supplies during any public health or other emergency.
Question. The Trump administration testified in July that it has
used the Defense Production Act ``more than 10 times'' to combat COVID-
19, an extraordinarily narrow use of existing authority that stands in
stark contrast to Federal agencies historical use of DPA. Historically,
the statute's authority has been used to acquire supplies and services
in times of emergency and in day-to-day business. For example, the
Department of Defense places approximately 300,000 rated orders
annually, while the Department of Homeland Security, including FEMA,
placed more than 1,000 rated orders and contracts in 2018. Specific
examples include using priority orders to acquire the Adenovirus
vaccine, expediting construction of floodwater controls in New Orleans,
speeding up the purchase of railroad equipment following Hurricane
Katrina, and obtaining resources needed to house and feed disaster
survivors and first responders, communications equipment and
information technology needs, and other logistical needs supporting
disaster response and recovery efforts. Given the shortages of PPE you
have experienced, shouldn't the administration use the Defense
Production Act to increase the availability of personal protective
equipment and better allocate supplies?
Answer. We do not know when this crisis will end or how many
additional waves we will go through. The administration should use the
Defense Production Act (DPA) to increase the availability of PPE. In
March, the ANA, American Medical Association, and the American Hospital
Association sent a letter to President Trump urging the administration
to fully invoke the DPA and ensure that N95 respirators, isolation
gowns, isolation masks, surgical masks, eye protection, intensive care
unit equipment, and diagnostic testing supplies are fully stocked
across the country.
______
Question Submitted by Hon. Maria Cantwell
Question. In my State, health-care workers are reporting a
noticeable decline in the quality of PPE available to them.
I spoke with a cancer care nurse from Swedish Hospital in Seattle
who said that she and her colleagues are forced to reuse the PAPR hoods
in the hospital to the point that they are being held together by duct
tape.
What are your members across the country reporting to you in terms
of the quality and availability of PPE that they are receiving?
Answer. ANA has requested nurses from across the country to share
their personal stories related to PPE. It is evident from these stories
that the PPE supply chain continues to be strained. While facilities
struggle to supply adequate quantities of PPE, ANA is hearing that the
quality of PPE is getting worse.
Nurses in Oregon reported that a large hospital system purchased
and reported an ample supply of masks. Unfortunately, the hospital
switched brands and the current stock of masks are all too large to
properly fit most staff. Nurses also reported that the quality of the
masks was so poor that the wire that forms around the nose did not fit
properly, causing safety concerns over the tightness of the facial
seal. Further, some PPE produced overseas may not meet NIOSH standards,
raising serious concern about the efficacy of the PPE.
In addition to the safety concerns, ill-fitting or low-quality PPE
wastes the limited resources of health-care facilities. The continued
decline of supply and/or quality PPE is especially critical as we begin
influenza season amid the ongoing COVID-19 pandemic. Nurses must be
able to rely on PPE that will protect them and other patients as they
remain on the frontlines of the ongoing public health emergency.
______
Questions Submitted by Hon. Debbie Stabenow
Question. My colleagues raised questions about the impact of the
pandemic on the mental health of nurses and front-line workers, which
we must address with urgency. We also know that the pandemic has
negatively affected the mental health of Americans not serving on the
front lines.
You spoke in your testimony to the mental health effects on nurses.
What resources do you anticipate frontline workers like nurses needing
to respond to increasing mental health emergencies that may result from
the pandemic's effects? Have nurses observed an increase in patients
with mental health challenges that they encounter in their work while
they respond to this pandemic?
Answer. It is imperative that nurses are aware of and have access
to mental health services as they continue to respond to the COVID-19
pandemic. The pandemic has escalated burnout, anxiety, depression, and
fear of stigma among frontline health-care professionals. In a report
by the International Council of Nurses (ICN), 60 percent (20 out of 33)
of responders sometimes or regularly received reports of mental health
distress among nurses during the COVID-19 public health emergency.
In recognition of the need to support nurses during this
unprecedented time, the American Nurses Foundation launched The Well-
Being Initiative. In partnership with the American Nurses Association,
American Association of Critical Care Nurses, American Psychiatric
Nurses Association and the Emergency Nurses Association, this
initiative offers responsive and preventative resources to support all
nurses' mental health and resilience as they continue to serve on the
front lines of this public health emergency. The Initiative includes
virtual support systems, a curated digital toolkit, and expressions of
gratitude.
In addition, it is critical that nurses who are serving on the
front lines are adequately compensated and given time off. While this
does not directly address the mental health effects of the pandemic,
these factors are important to ensure nurses are recognized and
supported. The need for nurses to receive hazard pay cannot be
overstated. Nurses on the front lines not only put their lives at risk,
but are critical in successful response to and mitigation of COVID-19
outbreaks.
Further, the pandemic continues to disrupt the lives of all
Americans. The economic downturn due to the pandemic has led to great
uncertainty--fear of losing one's house or job is a source of great
stress and anxiety. Others have been directly touched by the pandemic,
losing loved ones to the virus without the ability to be by their
bedside or attend funeral services because of COVID-19 mitigation
efforts. For those with existing mental health or substance use
disorder needs, including veterans struggling with post-traumatic
stress disorder, response to the pandemic has exacerbated their
challenges. Patients that relied on in person support meetings now must
rely on virtual support, which poses new challenges as not all patients
have access to stable, adequate Internet. This has resulted in an
increase in patient mental health needs. Nurses are increasingly seeing
patients faced with a mental health or substance use challenges, which
can potentially complicate patient recovery from COVID-19. Just as it
is critical that nurses have knowledge of and access to mental health
services, patients must as well.
Question. Senator Casey mentioned the need to innovate on PPE for
health-care workers as we respond to this pandemic and prepare for the
future, an effort I am proud to work with him on. What are the most
pressing PPE issues facing front-line workers to address in future
innovation?
Answer. Congress needs to do more to incentivize and prioritize the
manufacturing of PPE, medications, and other supplies in the United
States--even if that means carrying out production itself. We cannot
allow our citizens to be put at a health risk because businesses are
profit-motivated to manufacture elsewhere. As this pandemic has clearly
illustrated, it is imperative the United States have stable supply
chains so that the health-care delivery system can respond to any
public health emergency. In addition, increasing domestic production
can also help the Nation recover from the economic downturn resulting
from the COVID-19 pandemic. Domestic production is critical so that our
Nation's health-care providers have access to adequate amounts of
quality PPE to ensure they are safe serving on the front lines.
______
Questions Submitted by Hon. Sherrod Brown
Question. What do you believe is the most important action that
this Congress or administration can take to ensure the safety and
vitality of our Nation's health-care workforce through the remainder of
the COVID-19 pandemic and in anticipation of future public health
threats?
Answer. The COVID-19 pandemic has highlighted the need for Congress
and the administration to examine and address workforce shortages. With
an aging population, a robust health-care workforce is crucial to
ensure patient access to needed services. In addition, we need to
reinvest in our public health workforce and infrastructure. Multiple
years of funding cuts contributed to more than 55,000 lost jobs at
local health departments from 2008-2017.\2\ This could help identify
illness earlier within communities and stop the spread of COVID-19,
reduce other health-related issues, and put our health-care system on a
stronger foundation.
---------------------------------------------------------------------------
\2\ https://www.tfah.org/article/new-tfah-report-persistent-
underfunding-of-americas-public-health-system-makes-the-nation-
vulnerable-and-puts-lives-at-risk/.
In response to the COVID-19 pandemic, the administration was quick
to remove barriers to workforce and licensure requirements that allowed
for full deployment of health-care providers to respond to the public
health emergency. Congress and/or the administration should examine
which barriers should be permanently removed to bolster the vitality of
the Nation's health-care workforce now and for the future. This
includes, but not limited to, full practice authority for nurses,
payment parity for telehealth services, and scholarships and loan
forgiveness programs for clinicians working in areas with workforce or
---------------------------------------------------------------------------
appointment shortages.
Last, as detailed above, health-care providers must have access to
adequate supply of quality PPE for their safety. This has been
especially true for the COVID-19 pandemic. Congress and the
administration must take steps to ensure that providers have the
supplies they need to prepare for and respond to any future public
health threat.
Question. What more should Congress be doing to prepare for the
upcoming flu season and its impact on the ongoing COVID-19 pandemic?
Answer. Congress can ensure that Federal agencies, States, and the
health-care delivery system have the resources and support needed to
prepare for the upcoming influenza season. Congress and Federal
agencies can take similar steps that we detail above for the COVID-19
vaccine to educate about the importance of and ensure access to the
influenza vaccine. Efforts to educate in tandem can reinforce the
importance of both vaccines--which is critical in ensuring the health
care delivery system is not potentially overwhelmed by concurrent
public health emergencies.
______
Prepared Statement of Hon. Chuck Grassley,
a U.S. Senator From Iowa
Good morning. I'd like to welcome everyone to Part 2 of the
committee's hearing on ``Protecting the Reliability of the U.S. Medical
Supply Chain During the COVID-19 Pandemic.'' This is the second hearing
to discuss COVID-19's effect on our Nation's medical supply chain.
Two days ago, we heard from the Department of Homeland Security's
Office of Procurement, U.S. Customs and Border Protection, and U.S.
Immigration and Customs Enforcement's Homeland Security Investigations,
on their efforts to shore up the integrity of our Nation's supply
chain.
Today, we will hear from a panel of industry experts who represent
all corners of the supply chain. These witnesses have an insider's
perspective and will be able to tell us about the challenges our
Nation's health-care industry is facing right now. We will also hear
how the Federal Government is collaborating and communicating with its
industry partners during the pandemic.
Indeed, during our first hearing we heard that DHS is engaged in a
whole-of-
government response to combat the virus and is working with its
Federal, State, local, tribal, and international partners in a unified
effort to ensure the integrity of our Nation's supply chain. For
example, we heard from Homeland Security Investigations on their
efforts to prevent and investigate criminal activity surrounding the
pandemic, and how they seized hundreds of items of fake and faulty
personal protective equipment and returned over $17 million dollars to
victims of COVID-19 fraud. We also heard from DHS's Chief Procurement
Office on their efforts to cut bureaucratic red tape so that FEMA could
easily procure larger volumes of emergency services and supplies.
These are things that front-line workers desperately need, and DHS
answered the call by working with industry to review and vet companies
offering COVID-19 solutions to the Federal Government. I want to
highlight that this continues to be an incredible challenge, as
thousands of unscrupulous sellers claim to be able to produce safe and
legitimate supplies when what they are actually selling is fake and
faulty.
Lastly, we heard from Customs and Border Protection on their
efforts to speed up the delivery of high-demand personal protective
equipment from manufacturers overseas. As a result of CBP's efforts,
over 1.3 billion pieces of personal protective equipment entered
swiftly into the United States.
The list goes on and on, with many of these efforts being initiated
at the beginning of the virus's foothold in the United States. However,
my colleagues on the left aren't telling the public these success
stories. They would rather spread their doom-and-gloom narrative for
the purposes of winning the election.
It's a fact that the Federal Government's approach to emergency
preparedness has always been fraught with challenges. This goes back to
prior administrations and beyond. However, my Democratic colleagues
would make you believe that these problems are specific to this
administration. This is simply not true, and we have several witnesses
before us today who can testify to this very fact, which I will state
simply here and now: the Federal Government has never been prepared to
address a national emergency of this type, or of this scale--period.
In closing, I want to thank the witnesses present today, and all
the medical professionals and first responders who work day after day
to keep Americans safe and healthy. Your dedication to your community
is essential in the days and weeks ahead.
______
Prepared Statement of Charles Johnson, President,
International Safety Equipment Association
Chairman Grassley, Ranking Member Wyden, and members of the
committee, thank you for the opportunity to appear before you today to
discuss the major challenges and potential solutions in protecting the
reliability of the U.S. medical supply chain during the COVID-19
pandemic and beyond.
The International Safety Equipment Association (ISEA) is the
association for safety equipment and technologies--equipment and
systems that enable people to work in hazardous environments. ISEA
member companies are leaders in safety equipment design, manufacturing,
testing, and application. For more than 85 years, ISEA has set the
standard for personal protective equipment (PPE) and technologies,
supporting the interests of its member companies who are united in the
goal of protecting the health and safety of people worldwide.
ISEA is a recognized leader in the development of ANSI-accredited
safety equipment standards, in the U.S. and around the world. The
association and its members work with Congress and government agencies
to consult with policymakers whose decisions affect the industry. Over
the course of ISEA's 85-year history, the industry has stepped forward
to aid the Unites States in the face of various emergencies, from
natural disasters to terrorist attacks, and certainly for public health
emergencies. When these events occur, ISEA members provide the
equipment that protects responders, medical professionals, and the
public.
ISEA's member companies have been challenged on two fronts
throughout the COVID-19 pandemic:
1. First, the safety and efficacy of the PPE used to combat the
COVID-19 pandemic has been compromised by opportunistic market
behavior. The incredible increase our member companies have seen in
counterfeit, fraudulent, and non-performing equipment is of great
concern to the manufacturers of, and more importantly, the users of,
PPE.
2. Second, the overall capability of the US to provide protection
during this pandemic has been sorely tested. We must improve our
overall preparedness to handle the remainder of the COVID-19 pandemic,
but more importantly, there are improvements to preparedness that must
be undertaken so that we can better respond to the next inevitable
emergency.
maintaining the safety and efficacy of ppe supplied
for public emergency response
Standards and Conformity
The safety equipment industry is built on a foundation of
standardization, certification, regulatory compliance, and conformity.
Most PPE products are as much items of intellectual property as they
are physical barriers to injury or sickness. The standardized
performance, the conformity of the product to that standard, and the
accurate communication of that standard and conformity, are central to
the value that PPE provides to the wearer. In many cases, the user
hopes to never see a true test of a PPE product's performance in the
field, yet they rely on that performance to keep them safe. They must
trust the safety performance that has been communicated to them for a
particular type of protection will occur.
Nowhere is this more evident than during the response to a national
emergency, and most especially for new and novel threats such as a
novel virus. When the medical community faces an unknown new pathogen,
the state of the science must evolve quickly, and recommendations for
protective equipment may do so as well. In these cases, the performance
of the safety equipment must be a known, quantified parameter. If the
CDC says a respirator that filters 95 percent of contaminants is
adequate protection, then the respirators sourced by responders must
reliably provide that level of standardized protection.
Opportunistic market behavior in the PPE sector leverages value of
the standardization and conformity of branded, standardized, or
certified safety equipment, and falls into three large categories:
1. Counterfeit products are marked or labeled with a known brand
name and trade on the trust that the brand owner has built in the
market--that their product is standardized and that it conforms to that
standard, and that the user can trust that it provides the level of
protection to which it attests.
2. Fraudulent products make false claims about their
certifications, or the bodies that have provided testing.
3. Non-performing products either intentionally or
unintentionally, do not meet the standards or certifications to which
they attest.
ansi/isea 125-2014: national consensus standard to assure product
legitimacy
ISEA has published a national consensus standard designed to help
end-users and PPE purchasers confirm the products they are purchasing
are legitimate. ANSI/ISEA 125-2014--American National Standard for
Conformity Assessment of Safety and Personal Protective Equipment is an
approved method to encourage manufacturers or importers to attest to
the veracity of their products. The ANSI/ISEA 125-2014 standard creates
three levels of conformity assessment, by which the manufacturer or
importer communicates to others the certainty of conformance to the PPE
manufacturing standard. Level 1 is a self-declaration of conformity.
Level 2 requires identification of accredited test labs that have
tested the product to its relevant standard(s). Level 3 is a full
third-party certification. This is used when product failure will
result in death or severe harm to the wearer.
When ANSI/ISEA 125 is incorporated into another manufacturing
standard, an end-user, procurement officer, or government official can
ask the manufacturer for the product's conformity assessment
declaration. While it is possible for an unscrupulous entity to provide
a fraudulent test report, this standard is to help promote product
legitimacy.
Voluntary product standards are a hallmark of the United States
system of PPE standardization, and have been incorporated into the U.S.
system for PPE use in occupational safety. Some PPE, for instance,
respirators, are separately certified by government entities. In recent
years, increased imports and entry of more and newer actors in the
marketplace have led to both intentional, and possibly unintentional,
abuse of these systems.
ISEA has previously brought these issues to the attention of
various US agencies, including Department of Commerce, Customs and
Border Control, and OSHA, and we will continue to explore solutions. As
discussed below, the industry has seen an increase in false claims tied
to standards during the COVID-19 pandemic. ISEA and its members
continue to explore policy solutions for the issue of nonperforming
PPE, and we recommend that this issue be addressed by future
counterfeiting initiatives recommended below
Counterfeits, Fakes, and Frauds
ISEA welcomes the committee's focus on Protecting the Reliability
of the U.S. Medical Supply Chain During the COVID-19 pandemic. ISEA is
proud to be a member of the National Association of Manufacturers (NAM)
and we would like to associate ourselves its recent call to action,
``Countering Counterfeits: The Real Threat of Fake Products,'' to
battle against counterfeit goods, across the board.\1\
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\1\ https://www.nam.org/wp-content/uploads/2020/07/
CounteringCounterfeits.vF_.pdf.
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role of dhs in preventing harmful imports
First, ISEA applauds Customs and Border Patrol (CBP) and Homeland
Security Investigations (HSI) for the agencies' dedication to stopping
fraudulently marked and counterfeit COVID-19-related products from
entering the U.S. Fakes, frauds, and counterfeits have always plagued
the PPE sector, and these illegal products don't just harm the
financial interest and the brand trust of our members, they put users
at risk of injury, sickness, and death.
The Association understands that while most seizures during the
COVID-19 pandemic are of illicit respirators and surgical masks,
additional types of PPE interdicted by Federal authorities include
clear face shields, safety goggles, protective suits, gloves, medical
gowns, and protective shoe coverings. A wide range of other fraudulent
COVID-19-related items have also been identified and seized. This
process works, but it can work better, as we note below with a few
suggestions.
isea member efforts to prevent illegitimate imports
Supplementing the work of DHS, ISEA members view the import of
fraudulently marked and counterfeited PPE seriously. For example, 3M
Company has: (1) taken down 10,000 false and deceptive social media
posts; (2) removed 7,000 fraudulent e-commerce offerings; (3) removed
more than 140 deceptive Internet addresses; and (4) more.\2\ The
company is also investing in ways to identify fraudulently marked and
counterfeited products. It is not just large companies that are the
victims of this nefarious activity--but the largest companies are able
to devote significant resources to protecting their brands, and the
safety of their products.
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\2\ https://www.3m.com/3M/en_US/worker-health-safety-us/covid19/
covid-fraud/?utm_medi
um=redirect&utm_source=vanity-url&utm_campaign=3m.com/covidfraud.
Small and medium-sized manufacturers are likely to be harmed the
most by the counterfeit market. These companies have fewer resources to
invest in the personnel and technology to monitor illicit activity and
protect their brands. Government enforcement efforts often rely on
information provided by brand owners, and smaller manufacturers are
less able to engage with government entities responsible for enforcing
their IP right and fighting against fraudulently marked products.
Smaller firms are also more at risk to be driven out of business by
counterfeiters. They often offer fewer products than larger
counterparts, which means harm from counterfeits cannot be easily
offset. Smaller firms are less able to absorb the losses that come when
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counterfeiters siphon off their business.
national institute of occupational safety and health, ppe manufacturers
inform end-users of fake or fraudulent respirators
In addition to CBP and HSI, the National Institute for Occupational
Safety and Health (NIOSH) National Personal Protective Technologies Lab
(NPPTL), based in the Pittsburgh area, has identified a large number of
respirators fraudulently marked with the NIOSH moniker and falsely
claiming to be a NIOSH-certified product.\3\ The vast majority of these
are from China. However, there are also several manufacturers based in
China with NIOSH-approved N95 respirators.
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\3\ https://www.cdc.gov/niosh/npptl/usernotices/
counterfeitResp.html.
NIOSH/NPPTL also performed filtration efficiency tests of several
non-NIOSH certified respirators from China. Most exporters claim
conformance to China's GB2626 standard. The results of the filtration
efficiency tests show these devices removed 95-100 percent of the test
particles. However, a few models had filtration performances below 50
percent, and some as low as 30 percent. Those with such low performance
rates could be fraudulently marked as meeting the GB2626 standard. It
was NIOSH's testing of respirators that led the Food and Drug
Administration to cull its list of non-NIOSH respirators from China
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allowed for use in medical workplaces for protection from COVID-19.
Finally, we note that ISEA member companies have stepped in to
combat the issue of nonperforming, or fake, PPE. Free testing provided
by ISEA member companies is available to PPE users when they suspect
the PPE they have sourced is nonperforming or substandard. In one case,
an ISEA member found non-NIOSH certified respirator (KN95) masks to
range from 45 percent-30 percent in efficiency. This catastrophically
inadequate product was marked as FDA approved, making it fake and
illegal. When ISEA member Magid Glove and Safety tested 10 foreign
respirators, eight failed and two passed. The PPE manufacturer and
distributor based out of Romeoville, IL, cited one example in which the
fake respirator was no different that wearing a bandana on the face.
need for strong government-wide coordination
on import protection efforts
With NIOSH's contribution to this area in mind, ISEA would like to
underscore NAM's call for a range of import security reforms.\4\ One
that is applicable here is for creation and funding of a White House
agency that holds primary responsibility for U.S. anti-counterfeiting
efforts, including strategy, policy and enforcement. The new White
House agency should serve as a central point of contact for the private
sector and other stakeholders. This type of coordination center might
allow for NIOSH to train and inform the Nation's import security
professionals. NIOSH does not have enforcement authority. When it finds
a company illegally using the NIOSH logo, the agency's only mechanism
is to send a letter requesting the counterfeiter cease and desist.
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\4\ https://www.nam.org/wp-content/uploads/2020/07/
CounteringCounterfeits.vF_.pdf.
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online retailer responsibility needed
ISEA's largest companies have found Amazon and other online
retailers to be responsive in removing counterfeit products. ISEA
applauds the ecommerce platforms that worked cooperatively with PPE
manufactures and the government to crack down on the sale of these
illicit products. The Association believes all parties can build on
this success and momentum.
ISEA asks Congress for legislation mandating that online sellers
audit their sites for fake, fraudulent and counterfeit PPE and other
products, and remove them. ISEA joins with NAM in calling for
legislation to hold online retailers partially responsible
(contributory liability) for any injuries arising from the use of fake,
fraudulently marked or counterfeited products sold on their platforms.
COVID-19 has led to increased cybercrime and misinformation,
preying upon consumers looking to keep themselves and their families
safe. These criminals require domain names, which can also include
phishing and malware campaigns, selling dangerous counterfeits and
setting up scam sites.\5\ The value of WHOIS data (domain name
registrations) is widely known throughout the cybersecurity community.
But law enforcement and IP holders have effectively been blocked from
accessing this critical data. But access to this data serves the public
interest and contributes to the security of the Internet by providing
contact information to support efforts related to consumer protection,
cybercrime investigation, domain name system (DNS) abuse mitigation,
intellectual property protection, and for appropriate law enforcement
needs. ISEA believes legislation is also needed to allow Federal law
enforcement authorities and IP holders to identify the individuals
behind the websites and electronic front companies offering non-
legitimate products.
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\5\ https://www.sec.gov/news/press-release/2020-97.
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china's efforts to prevent fraudulent exports
China's Ministry of Commerce (MofCom) has helped to some degree in
preventing fraudulently marked protective equipment from leaving the
country. In one case, MofCom officials prevented the export of
protective garments because they did not claim to meet a specific
standard. In China, these products must meet the local performance
standard. But products were destined for the U.S. market, where there
is no government standard. ISEA intervened by explaining that in the
U.S. there is no government standard for these products, and their
arrival at Customs would not cause an issue.
Ensuring the Adequate Supply of PPE During Surge Demand Due to Public
Emergencies
ISEA was an original partner with the Federal Government when the
strategic national stockpile (SNS) was implemented. Our member
companies have participated in successive rounds of preparedness
planning, all of which identified the need for a public policy solution
for the issue of surge demand during large scale public emergencies.
Like all other manufacturers, the safety equipment industry has
adopted just-in-time supply chain and inventory management.
Manufacturers do not have the option to maintain excess production
capacity or product inventories. Competitiveness is directly linked to
logistics efficiencies. Manufacturers are not emergency planners or
emergency response agencies.
These market forces also affect the ability of end user entities
such as large hospital locations from carrying extensive inventories of
the various equipment that would be needed for all public emergency
scenarios.
Public policy solutions will be needed to address future surge
capacity comparable to what we have seen in the first half of 2020, and
ISEA will partner with the agencies tasked with that challenge.
ISEA asks Congress to provide FEMA with authority during a public
health emergency to gather data from State and local governments and
health-care providers regarding the supply, use, and demand for PPE (as
well as similar supply data from raw material suppliers, manufacturers
and distributors). This will ensure optimal distribution decisions can
be made based on real-time data.
Direct and Sustained Support for Domestic Production
The use of the Defense Production Act (DPA) is new for the PPE
industry, as for others. ISEA members have found the use of the DPA to
have positive and negative consequences.
The Federal Emergency Management Agency's (FEMA) quick action to
prevent exports of filtering facemasks respirators, reusable
respirators, and the replacement filters for them will have a long-term
negative impact on U.S. manufacturers of these devices. Foreign
customers will find other sources to supply respirators and the
requisite replacement filters. Once the new products are part of an
end-user's health and safety operation, on which employees are trained,
end-users are not likely to switch back.
In relation to PPE supply for the pandemic, any short-term increase
in supply in the U.S. domestic market would be more than offset by
retaliatory bans from trade partners, not just on PPE products, but
potentially on the supply of materials and components for U.S.
manufacturers.
On the other hand, DoD's use of title III of the DPA resembled the
type of public-private partnership that aids both U.S. manufacturers'
and the Federal Government's ability to provide necessary equipment and
products. As the medical industry stepped up its sourcing of PPE at the
beginning of the outbreak to unprecedented levels, established market
signals that regularly allocate product broke down.
ISEA is aware that large orders for PPE were fulfilled in regions
that were not yet heavily impacted by the outbreak while early heavily
affected areas scrambled for equipment. At the same time, responding
agencies approached the industry with supply data inquiries, but
without data or forecasting for the demand side of the equation. Use of
the DPA model allowed the Federal Government to provide a clear and
concise demand signal to the industry for efficient and accelerated
response.
Recent and well-publicized actions include capital funding for both
3M's personal safety division and Honeywell Safety Products to expand
production of filtering facepiece respirators. Other respiratory
protection manufacturers have also received DPA funding through the
Defense Department for expansion of filtering facepiece respirator
production.
ISEA would like to highlight these successful examples of
government and industry working cooperatively to solve a national
issue.
As Congress and the executive branch continue to focus on public
health emergency response, ISEA asks that legislators focus on direct
and sustained support of domestic PPE production. All too often this
industry has been flooded with orders only to see them disappear after
the public health emergency is fully mitigated.
ISEA asks Congress to recognize medium sized employers do not have
the ability to reshore operations and supply chains. In addition,
medium-sized companies seek steady growth. For these companies, the
effort required to respond to a one-time request for proposal from the
government takes away from managing day-to-day issues, which include
executing on strategic growth plans. ISEA asks that Congress not cut
these companies out of SNS supply opportunities because they have not
fully reshored all operations.
SNS Funding and Mandate
ISEA supports Senator Alexander's recently introduced Preparing for
the Next Pandemic Act, which supports long-term funding for both State
and Federal stockpiles. This type of long-term commitment is needed to
encourage more U.S. companies to enter the U.S. supply market.
In past public health emergencies, PPE manufacturers found that
end-users submitted duplicate orders to multiple providers, which
inflated demand. As soon as the emergency abated, the orders were
canceled. This left many distributors and manufacturers wary about
fully responding to future pandemics. In fact, for COVID-19, many
manufacturers told customers that orders were un-cancelable. In
addition, many medium-sized manufacturers cannot risk reshoring their
operations, which would both be a costly enterprise and increase the
costs of manufacturing, only to find that U.S. public health
stockpiling funding has fallen short for various reasons. A long-term
commitment to maintaining SNS will stimulate an equally long-term
commitment to invest in U.S. by U.S. manufacturers.
ISEA applauds the groundwork laid for future SNS planning that
would include a more comprehensive quantitative planning approach. The
SNS needs a centralized planning process that develops demand
scenarios, prioritizes needs, and then establishes institutionalized
supply solutions to meet those demands.
Tax Credits for PPE
As Americans return to work, they are finding that the occupational
safety landscape has fundamentally shifted. Many job categories that
previously wore some type of respiratory protection, such as dentists,
are returning to a workplace that now requires N95 respirators, and a
large volume of them. Many more broad job types and categories that
were never required to wear any type of protection are now being asked
to wear a new category of protection, cloth face masks, that have not
been widely used in the United States. Employers are installing a vast
array of equipment to isolate workers safely. All of these solutions
add up, and ISEA supports tax credits for employers to provide these
solutions to their workers so that COVID-19 can be stopped in the
workplace.
Non-medical fabric face-coverings are essential in every-day life
during COVID-19. However, these items are not traditional PPE, and they
are not sanitary products. Therefore, ISEA asks that any legislation
allowing for the deductibility of PPE and sanitary products
specifically include non-medical machine-washable fabric face coverings
as an item that would qualify for procurement tax deductions.
As members of the Senate Finance Committee are likely aware, OSHA
has published guidance stating cloth face coverings ``[a]re not
considered personal protective equipment (PPE).''\6\ But, OSHA also
states in a related guidance that ``. . . [e]mployers may choose to use
cloth face coverings as a means of source control. . . .\7\
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\6\ https://www.osha.gov/SLTC/COVID-19-19/COVID-19-19-
faq.html#cloth-face-coverings (accessed July 10, 2020); see third
bullet point. PPE is defined in the OSHA regulations at 29 CFR
1910.132.
\7\ https://www.osha.gov/SLTC/COVID-19-19/COVID-19-19-
faq.html#cloth-face-coverings (accessed July 10, 2020); see second
bullet point.
A specific mention of cloth face masks will make certain employers
can expense the costs of these devices, which limit the spread of SARS-
CoV-2 and COVID-19. At the same time, maintaining that mention of cloth
face masks as a separate item in the legislation, will allow the
regulatory and safety community the time it needs to fully define this
equipment and develop the practices around it that are needed to keep
workers safe.
costs associated with occupational safety and health training
In addition, ISEA asks that the Healthy Workplaces Tax Credit Act
allow tax credits for costs of occupational health and safety training.
As Americans continue to work through COVID-19 and come back to work
during COVID-19, keeping them safe is a national priority. Many
employers are seeking to provide workplace health and safety training
on topics such as: restructuring air flow for optimal safety; how to
properly sanitize a workplace; how to conduct a user seal check on a
respirator; how to take off (doff) gloves and other protective
equipment in a safe manner that does not spread contamination; and
more.
International Trade Agreements
ISEA asks that Congress urge U.S. Trade Representative Lighthizer
to include in his trade discussions with the UK and the EU cooperative
efforts to combat fake, fraudulently marked, and counterfeited
products.
ISEA and members of this committee are no doubt aware the ``China
Export'' mark is substantially similar to the official ``CE'' marking,
which demonstrates a product has met the relevant and strict EU
standards. This marking brings benefit to all in the supply chain and
most notably, the consumer.
The ``China Export'' mark and only means that the product was
manufactured in China. Here are the two markings:
[GRAPHIC] [TIFF OMITTED] T3020.006
add protective gloves and garments into the prep act
The Public Readiness and Emergency Preparedness (PREP \8\) Act
provides liability protection for items identified by the CDC as being
essential to the response and mitigation of a public health emergency.
Even though CDC recommends general-use gloves and garments to keep
workers safe from harmful biological agents, these items are not
included in the PREP Act.
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\8\ The PREP Act is Division C of the Department of Defense,
Emergency Supplemental Appropriations to Address the Hurricanes in the
Gulf of Mexico and Pandemic Influenza Act, 2006 (Pub. L. 109-148).
In an outbreak of a novel infectious agent, such as COVID-19 or
West African Ebola, the route of exposure and dose/response
relationship is usually unknown. Also, in these instances, the Centers
for Disease Control and Prevention (CDC) recommend, and end-users
demand, general-industry personal protective equipment. This puts
manufacturers and distributors at risk: provide the equipment and be
exposed to opportunistic lawsuits or hold off from supplying equipment,
which they wouldn't do because of ethics and commitment to national
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security.
ISEA asks Congress to meet PPE manufacturers and distributors half-
way.
The current definitions in the PREP Act apply only to FDA-related
devices, not the general industry types of gloves and garments often
recommended by the CDC for worker protection during a public health
emergency, including COVID-19. Public emergencies like outbreaks and
pandemics frequently necessitate health care on an industrial scale
that overwhelms the supply chains for normal medical (FDA approved)
products. Most recently, in the COVID-19 pandemic, general industry
gloves and garments are being used by hospital and medical personnel
when ``approved'' supplies and stockpiles were depleted.
Addressing the PREP Act is vital. During the West Africa Ebola
outbreak, CDC and other HHS officials recommended hospital workers use
PPE not usually found in the health-care workplace, namely nitrile
gloves and chemical protective garments. This created a great risk,
because the government recognized these products, such as the types
used in chemical plants, would be both effective and the best way to
keep health-care workers safe. However, because these garments are
designed for and used in environments that do not call for FDA
registration or certifications, Federal authorities were unable to
provide such devices with PREP Act protections due to the current
definitions of what's covered.
ISEA asks Congress to add a clear reference to gloves and garments
directly to the PREP Act to mitigate this risk and make the PREP Act
fair to all. Moving this issue through FDA only adds more regulatory
uncertainty. ISEA would be grateful for your assistance in correcting
this issue.
conclusion
ISEA and its members are honored to be part of the solution that
will see our workforce through the COVID-19 pandemic and better prepare
the country for the next public emergency. We believe that a focus on
the fundamentals of safety and health is the appropriate and necessary
path forward.
We must, as a Nation, plan better and on a larger scale for
future emergencies.
We must ensure that American responders have continued support
from the world's premier emergency response agencies for the selection
and use of PPE.
We must ensure the reliability and quality of the equipment
provided.
We must implement the public policy instruments that will
ensure the supply of future equipment needs.
ISEA thanks the committee for this opportunity to testify.
______
International Safety Equipment Association (ISEA)
1901 North Moore Street
Arlington, VA 22209-1762
703-525-1695
fax 703-528-2148
https://safetyequipment.org/
[email protected]
October 19, 2020
The Hon. Charles Grassley The Hon. Ron Wyden
Chairman Ranking Member
U.S. Senate U.S. Senate
Committee on Finance Committee on Finance
Washington, DC 20510 Washington, DC 20510
Re: Response to questions for the record from ``Part 2: Protecting
the Reliability of the U.S. Medical Supply Chain During the COVID-19
Pandemic''
Dear Senators Grassley and Wyden,
Thank you for inviting ISEA to testify at the Committee's hearing:
``Protecting the Reliability of the U.S. Medical Supply Chain During
the COVID-19 Pandemic'' held on Thursday, July 30th.
Attached please find ISEA's answers to the questions for the record.
Many questions asked for follow-up on ISEA's comments about what can be
done to improve data collection.
There are two answers here:
First, support the Office of the Strategic National Stockpile's
proposed ``Next Gen SNS,'' as described in a June 29, 2020
request for information.\1\
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\1\ https://beta.sam.gov/opp/d262bb77bb014a2cb422c8dc3ed0e636/
view?keywords=75a50120
nextgensns&sort=-relevance&index=opp&is_active=true&page=1.
Second, a near-term solution is to require the federal
government (FEMA is the likely option given its current role in
the COVID-19 response effort) to collect both PPE needs
assessments of ``emergency response providers'' (as defined in
6 U.S.C. 101) and the amount of PPE such providers have on
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hand. This data must be collected in transparent manner.
When the needs and supplies-on-hand data are shared with
manufacturers and distributors of PPE they can (1) structure
plans to meet the demand and (2) assess level of federal
assistance needed.
Below is proposed language to allow for this type of data collection
and sharing to aid in the on-going COVID-19 response and mitigation
effort. PPE will likely be needed by a number of those who did not need
or use it before the pandemic.
Again, thank you. I can be reached at 703-525-1695 ext. 15 or at
[email protected] if any Committee members or their staff
members have additional questions.
Sincerely,
Charles D. ``Chuck'' Johnson, Jr.
President
______
ISEA AMENDMENT on DATA-GATHERING
New text in italic
Miscellaneous Statutory Provision that Relates to the Stafford Act
6 U.S.C. Sec. 724. Logistics
(a) The Administrator shall develop an efficient, transparent, and
flexible logistics system for procurement and delivery of goods and
services necessary for an effective and timely response to natural
disasters, acts of terrorism, and other man-made disasters and for
realtime visibility of items at each point throughout the logistics
system.
(b) Reporting Requirements for an Emergency Involving Federal Primary
Responsibility--Whenever the President issues a declaration for an
Emergency Involving Federal Primary Responsibility (as defined in 42
U.S.C. 5191(b)) for a pandemic or public health emergency, the
Administrator shall have the authority to collect information from
emergency response providers (as defined in 6 U.S.C. Sec. 101) on the
amount of drugs, biological products (including vaccines), devices
(including respiratory protective devices), and other medical supplies
that are, or may become, critical supplies. To ensure the efficient and
coordinated procurement, delivery, and distribution of such supplies by
Federal agencies, private organizations, and state and local
governments (as provided for in 42 U.S.C. 5192(a)(2)), such information
shall be regularly updated to ensure realtime visibility on the amount
and availability of these critical supplies at the state, local, and
hospital levels.
CROSS-REFERENCED INFORMATION
Highlights below are referenced in the red text above.
6 U.S.C. Sec. 101--Definitions
(6) The term ``emergency response providers'' includes Federal, State,
and local governmental and nongovernmental emergency public safety,
fire, law enforcement, emergency response, emergency medical (including
hospital emergency facilities), and related personnel, agencies, and
authorities.
STAFFORD ACT: TITLE V--Emergency Assistance Programs
Sec. 501. Procedure for Declaration (42 U.S.C. 5191)
(a) Request and Declaration--All requests for a declaration by the
President that an emergency exists shall be made by the Governor of the
affected State. Such a request shall be based on a finding that the
situation is of such severity and magnitude that effective response is
beyond the capabilities of the State and the affected local governments
and that Federal assistance is necessary. As a part of such request,
and as a prerequisite to emergency assistance under this Act, the
Governor shall take appropriate action under State law and direct
execution of the State's emergency plan. The Governor shall furnish
information describing the State and local efforts and resources which
have been or will be used to alleviate the emergency, and will define
the type and extent of Federal aid required. Based upon such Governor's
request, the President may declare that an emergency exists.
(b) Certain Emergencies Involving Federal Primary Responsibility--The
President may exercise any authority vested in him by section 5192 of
this title or section 5193 of this title [Sections 502 or 503] with
respect to an emergency when he determines that an emergency exists for
which the primary responsibility for response rests with the United
States because the emergency involves a subject area for which, under
the Constitution or laws of the United States, the United States
exercises exclusive or preeminent responsibility and authority. In
determining whether or not such an emergency exists, the President
shall consult the Governor of any affected State, if practicable. The
President's determination may be made without regard to subsection (a)
of this section.
(c) Indian Tribal Government Requests--
(1) In General--The Chief Executive of an affected Indian tribal
government may submit a request for a declaration by the President that
an emergency exists consistent with the requirements of subsection (a).
(2) References--In implementing assistance authorized by the
President under this subchapter in response to a request of the Chief
Executive of an affected Indian tribal government for an emergency
declaration, any reference in this subchapter or subchapter III (except
sections 5153 and 5165d of this title [Sections 310 and 326]) to a
State or the Governor of a State is deemed to refer to an affected
Indian tribal government or the Chief Executive of an affected Indian
tribal government, as appropriate.
(3) Savings Provision--Nothing in this subsection shall prohibit
an Indian tribal government from receiving assistance under this
subchapter through a declaration made by the President at the request
of a State under subsection (a) if the President does not make a
declaration under this subsection for the same incident.
Sec. 502. Federal Emergency Assistance (42 U.S.C. 5192)
(a) Specified--In any emergency, the President may
(1) direct any Federal agency, with or without reimbursement, to
utilize its authorities and the resources granted to it under Federal
law (including personnel, equipment, supplies, facilities, and
managerial, technical and advisory services) in support of State and
local emergency assistance efforts to save lives, protect property and
public health and safety, and lessen or avert the threat of a
catastrophe, including precautionary evacuations;
(2) coordinate all disaster relief assistance (including
voluntary assistance) provided by Federal agencies, private
organizations, and State and local governments;
(3) provide technical and advisory assistance to affected State
and local governments for--
(A) the performance of essential community services;
(B) issuance of warnings of risks or hazards;
(C) public health and safety information, including
dissemination of such information;
(D) provision of health and safety measures; and
(E) management, control, and reduction of immediate threats
to public health and safety;
(4) provide emergency assistance through Federal agencies;
(5) remove debris in accordance with the terms and conditions of
section 5173 of this title [Section 407];
(6) provide assistance in accordance with section 5174 of this
title [Section 408];
(7) assist State and local governments in the distribution of
medicine, food, and other consumable supplies, and emergency
assistance; and
(8) provide accelerated Federal assistance and Federal support
where necessary to save lives, prevent human suffering, or mitigate
severe damage, which may be provided in the absence of a specific
request and in which case the President--
(A) shall, to the fullest extent practicable, promptly
notify and coordinate with a State in which such assistance or
support is provided; and
(B) shall not, in notifying and coordinating with a State
under subparagraph (A), delay or impede the rapid deployment,
use, and distribution of critical resources to victims of an
emergency.
(b) General--Whenever the Federal assistance provided under subsection
(a) of this section with respect to an emergency is inadequate, the
President may also provide assistance with respect to efforts to save
lives, protect property and public health and safety, and lessen or
avert the threat of a catastrophe, including precautionary evacuations.
(c) Guidelines--The President shall promulgate and maintain guidelines
to assist Governors in requesting the declaration of an emergency in
advance of a natural or man-made disaster (including for the purpose of
seeking assistance with special needs and other evacuation efforts)
under this section by defining the types of assistance available to
affected States and the circumstances under which such requests are
likely to be approved.
______
Questions Submitted for the Record to Charles Johnson
Questions Submitted by Hon. John Thune
Question. In your written testimony you mention how sellers of
counterfeit products have leveraged online platforms like Amazon to
gain access to unsuspecting consumers. I recently introduced the
bipartisan Platform Accountability and Consumer Transparency Act, or
PACT Act, which would help ensure that online platforms are liable if
they do not remove content or stop activity that a court order found to
be unlawful. Do you believe this could help incentivize action by tech
companies to stop the sale of illegal PPE on their sites?
Answer. The PACT Act's provisions to: (1) require technology
platforms to have an individual, who can be reached to hear complaints
about fake and fraudulent products being offered on the particular
technology platform and (2) remove from the 1934 Communications Act's
liability protections if quick action is not taken would seem to
incentivize online platforms to take quick action on legitimate
complaints and could provide incentive for platforms to take preemptive
actions and consider the legitimacy of products before they are
accepted on to the platform.
Question. You and other witnesses testified regarding the ``just-
in-time'' approach to supply procurement. As I understand it, health
systems have optimized inventory management to keep costs low. I expect
the same is true for the manufacturers you represent in terms of the
need to find efficiencies. As we are looking for ways to improve
preparedness for future emergencies, how do we ensure we are investing
in domestic manufacturing capabilities prudently given the need to also
be cost-
competitive?
Answer. There are multiple ways to ensure we are investing in
domestic manufacturing capabilities prudently which take into account
the need to also be cost-
competitive. One is for HHS to have its own grant making authority,
similar to title III of the DPA that could be used to prepare when the
Nation is not under a declared emergency order. Recent reports show
that DoD has contracted with companies that have not been able to
deliver needed products. HHS is familiar with the products used by
healthcare professionals and the known and trusted suppliers of these
products. A second option is a revolving stockpile model. This would
allow manufacturers and their distributors to work cooperatively with
end-users. In this situation, the distributor is authorized to sell a
certain percentage of the product that manufacturer will then
replenish. This type of vendor-managed inventory has been discussed,
but we have not seen this type of contractual arrangement yet for
personal protective equipment (PPE) for a public health emergency.
Both options, and other possible inventory and stockpile solutions,
should be implemented in a manner to fully price in emergency
preparedness to the existing PPE supply chain. Just-in-time supply
provision guarantees that the size and capability of manufacturing and
distribution will adjust to the existing market. Emergency preparedness
must, in the future, be a known, quantified and resourced part of that
market.
______
Questions Submitted by Hon. Ron Wyden
Question. During your testimony, you stated that additional data
collection is needed to improve the distribution of personal protective
equipment to medical facilities in rural and underserved communities,
including black, indigenous, Latinx, and communities of color. Please
be as specific as possible about the types of data the Federal
government should be collecting and disseminating to facilitate the
distribution of PPE? How would the industry use this data to improve
distribution of PPE to these communities?
Answer. The types of data the Federal Government should be
collecting from emergency response providers, as defined in 6 U.S.C.
Sec. 101 (see citation below), and in turn disseminating to
manufacturers and suppliers of general use and medical PPE includes:
(1) the amount on-hand of drugs, biological products (including
vaccines), devices (including respiratory protective devices), and
other medical supplies that are, or may become, critical supplies; and
(2) 30-, 60-, and 90-day demand projections these critical materials.
ISEA believes that WITH such information, for which the association
has been calling on the Federal Government, manufacturers and
distributors can provide needed PPE where and when it is needed,
including to underserved communities.
6 U.S.C. Sec. 101
(6) The term ``emergency response providers'' includes Federal,
State, and local governmental and nongovernmental emergency public
safety, fire, law enforcement, emergency response, emergency medical
(including hospital emergency facilities), and related personnel,
agencies, and authorities.
Question. The Trump administration has relied on the practice of
reusing PPE to make it look like there are adequate supplies at
hospitals and other medical settings, which has been a big safety
concern for workers. The American Nurses Association surveyed 14,000
nurses in May and found that 45 percent worked at facilities with
shortages of PPE, and 79 percent reported having to reuse PPE. In July,
the National Nurses Union released a survey of 21,000 nurses, of which
87 percent reported re-using PPE. My staff heard similar stories from
around the country. One nurse in Houston, where the virus is surging,
told minority staff that her hospital is cleaning and reusing N95 masks
up to 10 times. When PPE like N95 respirators or surgical masks are
manufactured, are they intended to be used a single time?
Answer. Filtering facepiece respirators, including N95s, are
designed, certified, and manufactured as disposable products. However,
it does not mean that during an emergency they cannot be re-used. But
still, it is not considered a best practice. Even before the Severe
Acute Respiratory Syndrome (SARS), the National Institute for
Occupational Safety and Health (NIOSH) had in place recommendations for
re-use of disposable respirators in emergency situations. These
recommendations can be found here.\1\
---------------------------------------------------------------------------
\1\ https://www.cdc.gov/niosh/topics/hcwcontrols/
recommendedguidanceextuse.html.
Question. What steps should the Federal Government take to secure
---------------------------------------------------------------------------
adequate PPE supplies?
Answer. There are multiple ways to secure adequate PPE supplies.
One is for HHS to have its own grant making authority. (Recent news
stories show DOD has contracted with companies that have not been able
to deliver needed products.) HHS is familiar with the products used by
healthcare professionals and the known and trusted suppliers of these
products. A second option could be a combined program with
manufacturers and their distributors whereby a long-term Federal
contract allows a distributor maintain PPE supplies for the Federal
Government but still able to sell a certain percentage of the product
(first in, first out) that a manufacturer will then replenish. This
type of vendor-managed inventory has been discussed, but we have not
seen this type of contractual arrangement yet for personal protective
equipment (PPE) for a public health emergency.
These and other programs must continue to be a focus of Federal
policy and allocation even after the COVID-19 pandemic has passed. The
best emergency response can be hampered by a lack of preparedness, and
history has shown the best preparedness programs are only as effective
as their funding levels allow.
Question. The Trump administration testified in July that it has
used the Defense Production Act ``more than 10 times'' to combat COVID-
19, an extraordinarily narrow use of existing authority that stands in
stark contrast to Federal agencies historical use of DPA. Historically,
the statute has been used to acquire supplies and services in times of
emergency and in day-to-day business. For example, the Department of
Defense places approximately 300,000 rated orders annually, while the
Department of Homeland Security, including FEMA, placed more than 1,000
rated orders and contracts in 2018. Specific examples include using
priority orders to acquire the Adenovirus vaccine, expediting
construction of floodwater controls in New Orleans, speeding up the
purchase of railroad equipment following Hurricane Katrina, and
obtaining resources needed to house and feed disaster survivors and
first responders, communications equipment and information technology
needs, and other logistical needs supporting disaster response and
recovery efforts. Given the shortages of PPE you have experienced,
shouldn't the administration use the Defense Production Act to increase
the availability of personal protective equipment and better allocate
supplies?
Answer. ISEA is pleased to see attention to allocating supplies. As
noted in our answer to your first question, a structured, uniformly
implemented data gathering program will allow for optimal allocation of
PPE and other critical supplies for public health emergency response.
Regarding the first part of the question, the government did use the
Defense Production Act with industry in 35 instances.\2\ The DPA is
most effective when used cooperatively with industry. ISEA stresses the
cooperative aspect of this because in one case, the DPA was used to
help an automotive company build powered air purifying respirators
(PAPRs), but that action flowed down, which meant an existing PAPR
manufacturer was no longer able to get a critical component for its
PAPR. ISEA understands the issue was resolved, but not without delay in
production of this important COVID-19 product.
---------------------------------------------------------------------------
\2\ https://www.whitehouse.gov/wp-content/uploads/2020/08/OTMP-DPA-
Report-FINAL-8.13.20.pdf.
In addition, FEMA, which in April was given authority to use powers
under DPA, is now using title VII of the Act to structure voluntary
agreements to allow a wide array of Federal agencies, companies and
associations to share detailed data to optimize public health emergency
---------------------------------------------------------------------------
response
Question. The CARES Act included funding for title III of the
Defense Production Act. How much of that funding has been allocated to
members of your industry? What projects has it been used for? How many
applications do your members have pending? Would your members have an
appetite for additional title III funds in future legislation?
Answer. Certainly, ISEA members would welcome additional DPA funds
for pandemic response PPE. The DPA agreements are one tool the
government can employ to price preparedness into the supply chain. By
entering onto long term contracts for PPE supplies, the government can
work cooperatively with the private sector to prepare for future
events. These agreements would be maximally efficient when used to help
existing PPE manufacturers increase capacity. Finally, the association
believes that an HHS-funded grant-making program that can continue the
DPA's mission once the public health emergency declaration is lifted
can serve to help fill Federal, State, and local emergency pandemic
stockpiles.
As noted above, ISEA members welcome a cooperative approach to use
of the DPA. In addition, as noted in the answer to Question 3, ISEA
understands other legislation may be introduced to provide HHS with
similar grantmaking authority. Because HHS has greater familiarly with
the end-users and manufacturers of PPE used by healthcare workers, this
agency may be in a better position to make grants for acquisitions of
PPE.
______
Question Submitted by Hon. Maria Cantwell
Question. In my State, health-care workers are reporting a
noticeable decline in the quality of PPE available to them.
I spoke with a cancer care nurse from Swedish Hospital in Seattle
who said that she and her colleagues are forced to reuse the PAPR hoods
in the hospital to the point that they are being held together by duct
tape.
Is it safe for our nurses and doctors who are on the front lines
responding to a global pandemic to be reusing PAPR hoods until they are
falling apart?
Answer. Powered Air Purifying Respirators (PAPRs) are key aspect of
public health emergency response, and should be part of the strategic
national stockpile. This way, health-care providers that use these
could be supported the by SNS.
Like other types of personal protective equipment (PPE), safety
managers should follow manufacturers instruction on use. Generally,
these calls for inspection of the product before and after each use.
More generally, one of ISEA's core mission objectives is to ensure
the safety and function of PPE that is marketed in the United States.
This includes support for the proper use of PPE. In that regard, we
support PPE standardization and conformity, use in accordance with
manufacturers' guidance and labeling, and adherence to the
recommendations of public health and safety agencies.
______
Question Submitted by Hon. Debbie Stabenow
Question. Senator Casey mentioned the need to innovate on PPE for
health-care workers as we respond to this pandemic and prepare for the
future, an effort I am proud to work with him on.
What innovations do you see as the most critical to be able to
better respond to pandemics in the future, and how can Congress and the
administration encourage and support such innovation?
Answer. Safety equipment manufacturers are constantly working to
design new, improved safety products that are easy to use and
comfortable to wear. NIOSH's certification level of 95-percent
filtration efficiency is a backstop for worker safety and not a
regulatory barrier.
Most innovation in respiratory protection is in reusable
respirators. Congress might consider a program, where healthcare
providers are incentivized to use reusable respirators in addition to
disposable respirators. In these respirator classes, there are many new
designs, technologies and features. A grant program to help speed up
these technological advances could be considered.
Congress should consider a mandate to NIOSH to update its standard
test protocols (STPs), which act as unofficial regulations. NIOSH has
voluntarily begun working with manufacturers to update the STPs,
removing unneeded and redundant tests and requirements. The STPs are
equal to NIOSH regulations in the certification process. A benefit to
the structure of the STPs is that if a new test technology becomes
available, it is easier to add that to the STPs than it would be to add
such a new testing technology to a regulation if the STPs were
codified.
Congress should provide funding for NIOSH. This agency has served a
critical role for the Nation during the pandemic. The National Personal
Protective Technologies Lab, which certifies respirators, is based in
Bruceton, PA, at an old Bureau of Mines facility. Funding is needed for
both buildings and to modernize the facility's test labs (some test
labs on the NPPTL site are located in corrugated steel structures), and
to increase in the Lab's personnel count. Both would help speed-up the
certification process and boost the Nation's ability to respond to and
mitigate future public health emergencies.
______
Question Submitted by Hon. Sheldon Whitehouse
Question. Like many states, Rhode Island has had chilling
experiences procuring PPE, including unfulfilled orders, fraudulent
sales, and a competitive race for supplies. This toxic atmosphere
discourages not only buyers, but also suppliers, from entering the PPE
market, as manufacturers face challenges understanding the market,
product standards, and the allocation process. In your experience as
buyers of PPE on behalf of hospitals and health-care providers, what
does the current PPE market look like and how has it been tainted by
the disorganized, toxic procurement process?
Answer. While ISEA does not buy PPE for hospitals, the
disorganized, toxic procurement process has two impacts on legitimate
PPE manufacturers: (1) respirator, protective garment, and glove
manufacturers have had to increase their awareness of their brands and
company identity being ripped off; and (2) these PPE manufacturers have
had to inform and educate end-users about how to be aware of fake
websites.
NIOSH has provided a useful service of testing the filtration
efficiency of non-NIOSH foreign made respiratory protective devices.
This allowed some large, institutional buyers to know that (1) a
foreign company was legitimate if it was willing to send samples for
testing in the U.S. by a Federal agency and (2) the results helped
purchasers make informed decisions.
As we have noted in responses to other questions from members of
the Senate Finance Committee, use of the Defense Production Act, or in
the future, of grant making program at HHS or other Federal agencies,
would aid in availability of product.
The current leadership and staff members of the office of the
strategic national stockpile proposed in June, their ``Next Gen SNS.''
ISEA believes this proposal will bring rationality, complete data
awareness and optimization for future public health emergency response
activities. ISEA also offers suggestions to bring rational, data-driven
decision making to public health emergency response in our answer to
Senator Wyden's first question.
One complicating factor has been rated orders. Given the Federal
contracting process, a number of small firms presented significant
orders to manufacturers. Understanding which orders were legitimate and
which were not took time to figure out.
______
Questions Submitted by Hon. Catherine Cortez Masto
Question. In your testimony, you noted that investments made under
title III of the Defense Production Act are helpful to increasing
supply. What kind of investment would Congress need to make in title
III DPA authorities in order to ensure that there is sufficient supply
of PPE to meet demand?
Answer. ISEA believes the data gathering discussed above, where by
the Federal Government assesses what emergency response providers
(again, as defined at 6 U.S.C. Sec. 101: Federal, State, and local
governmental and nongovernmental emergency public safety, fire, law
enforcement, emergency response, emergency medical (including hospital
emergency facilities), and related personnel, agencies, and
authorities) have on hand and will need in the foreseeable future,
combined with data from DoD's use of the DPA for PPE, will provide the
answer.
Question. Several of the witnesses on the panel discussed the
importance of greater transparency in the supply chain to make sure
that manufacturers have an accurate picture of need, and providers know
what they're getting and when they're getting it. What should Congress
be doing at the Federal level to facilitate that? What entity should be
charged with producing and making available the information that you
need?
Answer. Congress can provide FEMA with the immediate authority and
congressional mandate to collect in a transparent manner data from
``emergency response providers'' as defined in 6 U.S.C. 101. This data
should be shared with manufacturers of products needed to mitigate and
respond to the pandemic, who can use that to help plan on-going
production. ISEA asks this because there is immediate need for this
data, which will likely continue over the next few years.
______
Prepared Statement of Robert J. Wiehe, Senior Vice President and
Chief Supply Chain and Logistics Officer, UC Health
Chairman Grassley, Ranking Member Wyden, and distinguished members
of the committee, thank you for the opportunity to speak with you today
on a matter of utmost importance to the country: protecting the
reliability of the U.S. medical supply chain.
As the senior vice president and chief supply chain and logistics
officer for UC Health, my responsibilities include strategy and
oversight for sourcing, acquiring, and distributing all supplies and
capital equipment within our health system. UC Health is an integrated
health-care system serving the southwest Ohio and northern Kentucky
region, and one of 125 academic medical systems in the country. In
partnership with the University of Cincinnati, UC Health combines
clinical expertise and compassion with research and teaching--a
combination that provides patients with options for even the most
complex situations.
The challenges that have emerged from the COVID-19 pandemic are
unlike anything we have encountered in our lifetimes. The health-care
sector has been one of the hardest hit by this pandemic. Coronavirus-
related disruptions to supply chains, combined with dramatic increases
in global demand, are among one of the many challenges that hospitals
and systems are facing in today's environment.
Our president and CEO, Dr. Rick Lofgren, is one of three health
executives in Ohio serving in an advisory capacity to Governor DeWine
on Ohio's response to the COVID-19 pandemic. With leadership from State
executives and the Ohio Hospital Association, the State created
geographic regions in order to have a coordinated, regional approach to
the pandemic. This geographic coordination, that includes active
participation and engagement from regional and local leaders and public
health experts, has created an environment of partnership and
cooperation oftentimes not seen between hospitals or between hospitals
sand public health. Through these communication pathways, we have been
able to quickly identify and resolve barriers and challenges--
oftentimes using unique and innovative solutions.
One such innovative solution is the ``Virtual Stockpile,'' created
by the Ohio Hospital Association in partnership with Governor DeWine,
to guarantee that the hospital industry would contribute supplies to
congregate living facilities, rural hospitals, health clinics, etc. so
that Ohio's economy could open, and remain open. The Ohio Hospital
Association coordinates this effort on behalf of their membership and,
while it is in its infancy, shows the promise of what true
collaboration could look like during any disruption to the medical
supply chain.
In my role, I have participated in State-level conversations about
the reliability of the supply chain, partnered with other academic and
community hospitals to leverage the supply chain on State, regional and
local levels, and coordinated an aggressive internal strategy to access
supplies directly for our care teams and patients.
Today, I will provide a brief overview and background on health-
care supply chains. I will also highlight challenges, lessons learned
and potential resulting strategies for moving forward post COVID-19.
For each of these areas, I will segment my comments by focusing on
perspectives from both the Demand side and Supply side. Lastly, I will
provide a summary of the impact that COVID-19 has had on out health-
care system and provide potential areas of improvement to the committee
based on my insights and experiences in over 30 years in Operations and
Supply Chain Management.
health-care supply chain background and overview
Traditional health-care supply chains were typically transactional-
based departments which were focused on purchasing and distributing
materials within the hospital or system. In recent years, as
reimbursement models have shifted towards value based, patient centered
care the hospital supply chain has shifted its focus and become more
strategic and integrated with its clinical partners. Supplies are often
the second largest expense within a health-care system, accounting for
anywhere from 25 percent to 35 percent of total expenses--labor is the
only category that is larger than supply expense. Value based
reimbursement systems reward providers who decrease costs while
improving quality and outcomes, creating an improved and more cost-
effective system.
This change has shifted the focus of supply chain executives from
transactional to an integrated model with a laser focus on Cost,
Quality and Outcomes (CQO). This focus has forced better alignment with
internal customers and led to improvements in cost, quality and
outcomes through efforts such as product standardization. These efforts
required improvements in infrastructure and systems that integrate pure
purchasing data such as quantities and price with quality, outcomes and
utilization patterns. Improved data capabilities have enabled
physicians, clinicians and supply chain to start align purchasing
decisions thereby driving improvements in CQO. Not all health-care
systems are fully integrated, but the vast majority are moving in this
direction in order to more deeply understand demand, reduce waste,
improve outcomes, and lower the overall cost of health care.
Hospital supply chains differ from their industry counterparts in
that they are much more reliant on Group Purchasing Organizations
(GPOs) and Prime Distributors to assist with day-to-day activities.
Even with the most rigorous standardization efforts, many systems still
have thousands of parts they are trying to contract, purchase,
inventory and distribute. The sheer magnitude of this number of
products often necessitate the use of these strategic third party
partners to assist with contracting, purchasing and distributing of
materials for health systems. In fact, many systems are looking towards
these strategic partners to help drive costs out of the internal health
care supply chain. Examples of this include the utilization of GPO
price contracts to eliminate the need for local contracting and
utilizing prime distributors and converting to a just-in-time (JIT)
delivery model which eliminates the need for bulk warehousing and
storage onsite.
While health-care supply chains have become increasingly efficient
in helping to drive out cost and inefficiencies, they have also become
heavily inward focused. The use of strategic vendors to perform
critical functions can be a very cost-effective approach, however, it
adds another layer or touchpoint within the overall supply chain and
can lead to neglect and a lack of understanding into where there may be
supply risks upstream. The lack of integrated systems or tools to help
track utilization and forecast demand also impacts the overall supply
chain and its ability to quickly react to changes.
health-care supply chain challenges
Demand
1. The increased demand spike for COVID-19-related medical
supplies was unprecedented. Demand for supplies such as PPE, testing
equipment, testing supplies, ventilators, physical plant resources
(monitors, beds), and ventilator-related drugs started to climb in
March.
2. Low-volume products, such as PPE, became high-volume
overnight. Allocations from prime distributors were based on
historically low usage of these supplies, thus allocated supply was
inadequate to meet health-care system needs.
3. Unknown usage and shifting usage patterns caused anxiety and
stockpiling of supplies as they were available.
4. The increase in demand spike for certain essential drugs with
increased off label use stressed areas within the pharmaceutical supply
chain.
5. An increase in demand from non-traditional customers such as
first responders, nursing homes and others contributed to the rapid
increase in demand for PPE products worldwide.
Supply
1. A large percentage of manufacturing capabilities for both raw
materials and manufacturing are located in the Asia-Pacific region.
This includes both PPE and a large number of Active Pharmaceutical
Ingredients (API's) required for many medicines and drugs.
2. Existing manufacturing facilities around the world were
disrupted due to closures and lockdowns to prevent the spread of COVID-
19.
3. Export restrictions were imposed by many countries to protect
domestic supplies during the height of the crisis.
4. Distribution and logistics capacity constraints were affected
by workforce issues. Sickness and travel bans have had an effect on
commercial air and ocean freight carriers. Many suppliers were
chartering private planes to help expedite shipments.
5. There was a significant increase in counterfeit PPE products
and gray market suppliers.
6. A lack of transparency and communication across the medical
supply chain network slowed and confused responses from health systems.
7. The global impact of COVID-19 was unparalleled. In a more
typical disaster, such as a hurricane, supply chains can redirect
resources from one geography to another. The global impact of this
pandemic did not allow for shifting of resources--all areas were hit
equally throughout the world.
health-care supply chain lessons learned and responding strategies
Demand
1. Implementing preservation and reuse policies, to protect and
preserve limited supply resources, were a necessity. A great deal of
effort went into preservation policies with strong collaboration
between health-care providers, infection control and supply chain
leaders. All efforts were coordinated to ensure health-care workers
were protected while trying to preserve supplies in the face of
scarcity.
2. New businesses were created to assist with the shortage of
supplies. Decontamination efforts for N95 masks were fast tracked.
Battelle in Columbus, OH was granted the approval by the FDA and
awarded a contract by HHS and FEMA and funded up to $400 million to
assist health-care facilities with decontamination of masks.
3. Innovation labs were mobilized quickly at universities like
the University of Cincinnati to research and look for alternative
solutions to supply issues. 3D printing of masks, swabs, and
respirators were among the first innovations that were presented to
health-care systems. Additionally, innovative solutions to re-tool and
re-use non-standard equipment was also at the forefront of innovation.
4. Data collection and reporting on daily PPE usage (by
department and site) was critical to monitor demand spikes and to
ensure that preservation efforts were being followed.
5. Local and State organizations (e.g., Ohio Hospital
Association) mobilized and helped to facilitate dialogue and solution
sharing among members.
6. Strong collaboration and communication networks between
health systems has become commonplace. Sharing of ideas and supplies
has become standard practice as everyone is learning and adapting to
this pandemic.
Supply
1. Production expansion with existing traditional manufacturers
quickly increased but was also insufficient to meet increased demand.
Companies such as 3M and Medline quickly ramped up production worldwide
at existing manufacturing facilities.
2. Modification of existing production lines to run additional
or new product was also enabled as quickly as possible to increase
output of much needed supplies.
3. Extended hours of operation and overtime was used wherever
possible to increase output in existing manufacturing facilities.
4. Nontraditional manufacturers entered the space quickly to
assist the country with the need for PPE. Athletic and apparel
companies were among many who quickly pivoted operations to assist with
products like protective eyewear and simple masks. Procter and Gamble
is an example of a Cincinnati company who quickly pivoted operations to
manufacture critical supplies and donate to local and regional health
systems.
5. In addition to the university 3D printing efforts, industry
3D printing leaders also quickly looked for ways to partner with
universities to find expedited solutions that worked for the medical
community.
6. Many companies also pivoted to make ventilators, however,
retooling manufacturing lines in addition to longer lead times for this
type of manufactured equipment did not provide immediate relief.
7. Sourcing expansion of both raw materials and finished
products happened quickly from both the supplier and customer side of
the equation. Suppliers were looking for alternative solutions to meet
the increased need while end users were looking to source product from
non-standard suppliers in order to secure product as quickly as
possible.
8. Supply Chain transparency platforms have been created to
assist with communication across entire supply chains. Vizient and One
Network Enterprises are a great example of this much needed improvement
in the U.S. medical supply chain.
9. Logistics providers partnered with both the private sector
and the government to expedite shipments and increase logistics service
capacity.
10. Supply allocation was quickly put in place by domestic
manufacturers and distributors alike, thus ensuring that products were
available for ``hotspots'' that were hit the hardest.
11. From a global perspective, export restrictions were put in
place to keep scarce medical resources in the United States.
uc health--fiscal impact
The unanticipated health-care supply chain costs due to COVID-19
have been staggering; the long-term impact to the U.S. health-care
system remains to be seen. With the prohibition on elective procedures,
the impact of COVID-19 from a fiscal perspective was a loss of
approximately $110 million in April/May. This represents a 5-6 percent
loss of total annual revenue over this 2-month period. Expenses during
this same period increased by approximately $10 million largely due to
buildup of inventories for PPE.
While hospitals are no longer prohibited from providing elective
procedures for patients, FY21-22 will continue to see an increase in
expenses and overall reduced revenue for the system. Expenses will
continue to be larger than historical levels due to many new
developments as a result of COVID-19. A few examples include increased
utilization of supplies, new expenses such as screening stations at
hospital entrances, increased lab testing, and investment in additional
infrastructure such as telehealth. This increased utilization of
supplies is coupled with higher than normal pricing. The chart below
provides data on a small sample of UC Health PPE utilization and
pricing (Pre-COVID and current):
----------------------------------------------------------------------------------------------------------------
Pre-COVID-19 COVID-19 Average Price
-----------------------------------------------------------------------------
Avg. Daily Avg. Price Avg. Daily Max. Price
Usage (ea.) Usage (ea.) April May June
----------------------------------------------------------------------------------------------------------------
Exam Glove 9,405 $0.06 47,876 $0.06 $0.06 $0.06 $0.06
----------------------------------------------------------------------------------------------------------------
Impervious Plastic Gown 2,886 $0.27 5,996 $2.34 $1.20 $2.30 $0.32
----------------------------------------------------------------------------------------------------------------
Level 1 Mask 2,280 $0.11 8,343 $1.95 $1.12 $0.06 $0.07
----------------------------------------------------------------------------------------------------------------
N95 Mask 159 $0.64 382 $6.50 $3.21 $1.69 $1.50
----------------------------------------------------------------------------------------------------------------
Face Shield 52 $0.96 128 $6.00 $3.65 $0.96 $0.96
----------------------------------------------------------------------------------------------------------------
uc health--supply chain impact and experiences
Demand
While southwest Ohio was not an initial hotspot, and that allowed
us the benefit of learning from others, it also meant that the region
was not prioritized in terms of obtaining limited resources. As
resources were distributed to national hotspot areas, we often needed
to engage our elected leaders to intervene on our behalf with Federal
leaders and/or the manufacturer in order to obtain the items we needed
to provide a stable and ongoing COVID-19 response in southwest Ohio.
We view the current medical supply chain (from PPE to testing
supplies to machinery) as ``comfortable, not confident,'' and we
continue to advocate for a national and State distribution strategy
(public and private) that allows resources to be distributed to all
geographic areas.
As a standing member of our Incident Command Center, collaboration
between clinical leaders, infection control and supply chain was vital
to developing a plan and understanding what future demand for critical
supplies would look like. Broad communication of appropriate PPE use,
re-use and storage was a critical component that helped supply chain to
better understand and develop a strategy for sourcing these scarce
resources. Collaborative planning helped to provide appropriate
protection to UC Health employees while ensuring that usage data was
collected and monitored on a daily basis. Daily reports from Supply
Chain helped to alleviate clinical concerns about the supply of PPE for
the system. All sourcing decisions and activities were centralized and
supplies were strategically placed in work areas with nursing leaders
playing a vital role in monitoring and dispensing as appropriate. These
interventions did not happen overnight, but constant communication
between all parties helped facilitate a better understanding and less
fear among all stakeholders.
Supply
With critical supply on allocation from our prime distributor due
to their inability to meet demand, UC Health had to quickly pivot and
source PPE from non-standard suppliers. This change in activity was
dramatic and shifted from a supply that was on automatic replenishment
with one vendor to reaching out and making over 500 new sourcing
inquiries in a 30-45 day period to vendors we had no prior experience
with. This presented a unique challenge with respect to balancing the
urgent need for product and the inherent risk in dealing with unknown
third parties. UC Health relied on a strong network of contacts and
collaboration with peer academic medical centers across the country to
work with credible vendors and weed out bad actors.
UC Health's strategy was to focus on known or existing vendors and,
if at all possible, to steer clear of new vendors entering the market.
We mitigated risk by spreading multiple smaller orders through various
vendors versus trying to rely on singular large purchases to cover all
of our needs. The vendors we utilized were already in the business of
supplying either the health-care industry in another capacity or a
different industry in a similar capacity. For example, we used a vendor
who had previously focused on supplying material handling bins to the
health-care industry, but was able to utilize their network of
logistics and suppliers to quickly enter the PPE space. Another vendor
we found supplied PPE into a different industry than health care but
was able to pivot and start selling industrial respirators into health
care as the CDC and NIOSH released expanded lists of approved N95
masks. As UC Health and others started to have success with non-
standard vendors, we quickly shared successes with our counterparts to
build an alternative supply network.
In southwest Ohio, there was tremendous cooperation among health
systems and even some attempts to combine our purchasing power and look
for large scale opportunities to purchase simple masks and N95 masks.
While I believe there eventually was some limited success with this
approach, we learned that there were many scams and promises of large
quantities of supplies coming in from outside the United States. These
scams involved large sums of money being placed in escrow or cash in
advance purchases for goods that did not materialize. UC Health relied
on our internal legal team to vet potential sellers and was fortunate
that we did not lose any money despite our involvement, albeit limited,
with some of these transactions. UC Health quickly moved away from this
approach and continued to place smaller orders with more reliable
vendors.
Product Vetting
A majority of the product we successfully sourced came from China
or other Asian-Pacific countries. A great deal of time and resources
were spent vetting these products before we moved forward with
purchasing. Our standard approach required a potential vendor to submit
material specification sheets, FDA Certificates of Approval, Third
Party Testing Certification and samples that were reviewed by our
infection control team. A significant percentage of the information we
reviewed did not prove to be authentic. FDA certificates were submitted
that did not match what we could find online at the FDA website and
third-party testing certificates were submitted that could not be
verified. If a product made it past these initial checkpoints, our team
then tested the product to ensure that all materials received matched
specification sheets. Using the methodology described above, UC Health
was fortunate that we did not purchase or receive any non-standard or
counterfeit products.
Supplier Communications
During the initial months of the pandemic, UC Health had several
shipments delayed and our suppliers communicated to us that this was
due to the supplies being either purchased or seized by the Federal
Government. Shipments were often delayed for 2-4 weeks until another
shipment arrived from overseas. In order to circumvent product being
held or seized at the port of entry, our suppliers communicated that
they were labeling packages as ``not for medical use.'' We received
product labeled as such and they met all specifications and testing
criteria. We were not direct recipients of this communication from the
manufacturer and can only attest to what we were told by our suppliers.
Another frequent communication from our suppliers in the first 4-6
weeks of the pandemic was the inability to get shipments into the
country due to the lack of available capacity with commercial air
freight companies. Suppliers used multiple methods of transport to
overcome this constraint including private charters, smaller and more
numerous shipments on Fed Ex or UPS, and ocean freight, which delayed
availability by 2-4 weeks.
Regional and Strategic National Stockpile Assistance
Starting in February, the Ohio Department of Health (ODH) surveyed
hospitals in order to ascertain our PPE levels and to prepare for
statewide stockpile resource allocation. In partnership with the ODH,
the Ohio Hospital Association and the Regional Healthcare Coordinators,
we monitored ongoing PPE needs and inventories in order to inform
distribution allocations. Additionally, this network of communication
allowed for sharing of guidelines and recommendations for PPE
conservation, and regional and State cache limitations due to expired
or destroyed supplies. Hospitals were asked to utilize the limited
regional and State cache prior to the strategic national stockpile
(SNS) as they continued to distribute PPE from our regional cache to
health-care providers, EMS, law enforcement and hospitals through EMA
request processes.
In early March, UC Health received our first supplies from our
regional cache and in late March we received our first shipment of PPE
from SNS. We continued to receive shipments of supplies in the months
of April and May.
opportunities for improvement
I would like to go on record that the cooperation I have witnessed
both internally and externally to UC Health has been in a word--
remarkable. This includes but is not limited to government officials,
health-care leaders, and industry leaders from the non-health-care
sector, physicians, nursing, and supply chain. Supply chain disruptions
continue to be more frequent as geopolitical events, weather events,
and other outside forces continue to impact all industries. If we can
continue to have an open dialogue and learn from our collective
experiences and other industries, we will be in a much better position
when the next supply disruption happens.
Specific to the health-care industry, I would offer the following
specific examples of areas that can continue to be strengthened and
improved:
1. Communication and transparency along the entire supply chain
must be improved. Genuine transparency from demand forecasting to
supply and raw material availability is crucial and builds trust along
the supply network. Improved data capabilities and infrastructure
should be adopted across the health-care supply chain to help
facilitate these efforts.
2. Create a more diverse and possibly regionalized approach for
critical supplies. Supply chain resiliency should be favored over low
cost for critical supply items.
3. Require manufacturers of critical supplies to report raw
materials and manufacturing capacities to the government to provide
insight into the most important supply chains. This would be similar to
how pharmaceutical manufacturers are required to report to the
government.
4. Require health systems or hospitals to carry a minimum days
on hand supply of critical supplies. This would be similar to the CMS
requirement for facilities to maintain enough fuel, potable water, etc.
to operate for a minimum of 96 hrs. My suggestion would be to mandate a
minimum of 30 days inventory on critical PPE for all health systems.
5. Improve transparency and communication on the national
stockpile. This would include details on the supplies and quantities
that are being stockpiled and how these will be allocated during a time
of need.
6. Build a larger national stockpile of critical supplies. This
would eliminate the competition for supplies when and if a crisis
strikes again. We should avoid scenarios where government and industry
are trying to secure the same resources and competing against one
another.
7. Improve domestic capabilities and capacities for the
manufacturing of critical raw materials and supplies. On February 26th,
U.S. Health and Human Services (HHS) Secretary Alex Azar told the House
Appropriations Committee that the country had a stockpile of 12 million
N95 masks, but according to HHS estimates, it needs 300 million to
cover an emergency. The estimated annual production capacity in the
U.S. and Mexico is 65 million masks.
conclusion
Thank you for the opportunity to share my insights on this very
important subject. COVID-19 has provided yet another example of the
vulnerability of critical health-care supply networks and the need to
look for new creative solutions to overcome these disruptions. I
believe we have already learned many valuable lessons that can be used
to improve our health-care supply chain resiliency and ultimately
improve outcomes during future supply disruptions. I look forward to
working with the committee and others to offer my thoughts and help to
strengthen our health-care supply chain from end to end and create
greater transparency and resiliency in the process.
I am happy to answer any questions from the committee.
______
Prepared Statement of Hon. Ron Wyden,
a U.S. Senator From Oregon
The Finance Committee is focusing this week on issues dealing with
the lack of high-quality PPE and other equipment during the pandemic.
I know that the other side would like this to be all about China,
China, China, and I agree that counterfeiting is a problem. But if
you're focused entirely on that aspect of the issue, you're skipping
right past the bigger story, which is the Trump administration's casual
disinterest in leadership when it comes to getting PPE and making sure
our health-care heroes are equipped. It goes back even before the
pandemic began.
In 2019, the Federal Government conducted a pandemic war game
called ``Crimson Contagion.'' In it, a hypothetical airborne virus
originated in China and made its way to the U.S., infecting 110 million
people and killing nearly 600,000. The exercise concluded the U.S.
would need 3.5 billion N95 masks to fight a large-scale pandemic. The
Trump administration took no action to acquire them. The coronavirus
arrived just a few months later.
On March 19, 2020, with coronavirus cases beginning to go skyward,
the President said the following when asked about buying and
distributing PPE: ``The Federal Government's not supposed to be out
there buying vast amounts of items and then shipping . . . Governors
are supposed to be doing it.''
On March 29th, he accused nurses and doctors of stealing PPE:
``Something is going on, and you ought to look into it as reporters.
Where are the masks going? Are they going out the back door?''
In mid-April, he called reports of PPE shortages ``fake news.''
On May 6th, a nurse told reporters gathered in the Oval Office that
the availability of PPE was ``sporadic.'' Trump responded, quote,
``Sporadic for you, but not sporadic for a lot of other people. . . . I
have heard we have a tremendous supply to almost all places.''
Just last week, he said, ``My administration currently has zero
unfilled requests for equipment or anything else that they need from
the Governors . . . frankly we are stocked up and ready to go.''
Wrong, wrong, wrong.
Just in the last few days, Democratic Finance Committee staff have
gathered direct accounts from health-care workers about PPE shortages
that are devastating communities, given the recent spikes in cases. The
committee heard from nurses in Dallas, TX, where COVID cases are
surging, who recently began buying their own surgical masks since their
hospital was requiring staff to reuse old ones for days at a time.
The committee heard from an administrator of a 33-bed hospital in
rural Alabama, serving a majority black community, who told the
committee her hospital is so low on PPE that she keeps an emergency
supply stashed in her office for safekeeping.
One Oregon home health-care nurse, who didn't want to provide their
name for fear of retribution from their employer, told the committee
they have so few disinfectant wipes that they are cutting them in
quarters to last through the week.
Finance Committee Democrats want to make sure these important
stories are still being heard. So I encourage doctors and nurses and
first responders and nursing home staff dealing with shortages and
defective equipment to submit personal stories for the hearing record
at [email protected]. If we've learned one thing, it's
that getting these stories into public view and in front of Senators
can make a lot of difference.
This week, the National Nurses Union released a survey of 21,000
hospital nurses. Eighty-seven percent reported having to reuse PPE
that's designed for a single use. According to CDC data, hundreds of
nursing homes didn't have PPE in mid-July, and thousands more had less
than a week's supply. States like Oregon, cities, and health-care
providers have been forced to compete against each other and pay
ransoms for equipment on the open market. That has opened the door to
junk sold by scam artists and incompetent vendors.
A group of health systems was so concerned about losing access to
PPE that it recently bought a minority stake in a big PPE manufacturer
to keep the pipeline open. What about the smaller hospitals and
independent doctor's offices and nursing homes that can't afford to buy
their own manufacturers?
The Trump administration has touted Jared Kushner's Project Air
Bridge as a PPE game changer, but Project Air Bridge brought in just
4.5 million N95 masks over the course of 3 months this spring. HHS's
own estimates said the U.S. needed 300 million N95 respirators every
month.
The fact is these shortages of PPE have put our doctors, nurses,
and caregivers in grave danger. An ongoing study by Kaiser Health News
and The Guardian has identified at least 851 deaths among front-line
health-care workers likely due to COVID-19.
From sea to shining sea, Americans are desperately hoping there are
safe and successful vaccines on the market in the coming months. They
need to be distributed in a fair, methodical, and medically sound way.
Unfortunately, the country's experience over the past 5 months raises
serious concerns about whether or not Americans can have any confidence
this will be the case.
______
July 28, 2020
The Honorable Chuck Grassley
Chairman
The Honorable Ron Wyden
Ranking Member
U.S. Senate
Committee on Finance
219 Dirksen Senate Office Building
Washington, DC 20510
Senators Wyden and Grassley,
As Administrator of Hill Hospital, located in rural Sumter County, one
of Alabama's poorest counties, I am proud of our response to COVID-19
despite the unprecedented challenges we faced due to the limited amount
of personal protection equipment (PPE) at the onset of the COVID-19
pandemic.
I recall when Sumter County got its first case in March, our staff
began to panic. Our doctors, nurses, and office staff questioned,
``What are we going to do?'' ``How can our patients be protected? How
can we be protected?'' With very little PPE in-house, our small 27-bed
and 4-emergency room facility began preparing for the worse.
We had a mere three weeks of PPE, so we immediately reached out to
increase our stock; but we quickly ran into difficulty when we learned
that our primary suppliers, Cardinal Health and Medline, had everything
on back order. As our stock began to dwindle, our maintenance director
of 40 years remembered that the hospital had a stockpile of PPE
resulting from previous emergency preparedness efforts. That discovery
would be our saving grace through March and April.
However grateful for this discovery, we again experienced a decline in
PPE in May and June due to an increase in emergency room patients.
Within two months, we had more than 300 patients presenting to the ER
with COVID-19 symptoms, confirming 15 of them to be positive. By then,
we were managing our PPE by keeping a small par level in each
department, utilizing a sign-in sign-out system, and requiring nurses
to reuse N95 masks for up to 5 days when they were not soiled or torn.
Doctors and nurses expressed their concerns as many have comorbidities
and are over 60. They were afraid of putting their lives at-risk. To
ensure safety, we began screening patients outside in a tent, which
helped prevent an influx of patients and required minimum use of PPE.
The high demand for PPE has caused small rural hospitals like ours to
question the integrity of our suppliers. While supplies from the State
distribution center and other businesses have allowed for our continued
day-to-day operation, the scarcity of resources from our usual
suppliers is worrisome. Orders that were placed with these vendors in
March still have not been filled. As a result, I am having to store PPE
in my office to prevent exhaustion of our current supply.
PPE continues to be a serious a concern for Hill Hospital. Without
continuous access to these critical items, safety for both patients and
our front-line providers is greatly jeopardized. Currently there are
354 confirmed cases with 15 deaths in Sumter County, according the
Alabama Department of Public Health. We are fearful of not being able
to adequately service our community due to lack of PPE as COVID-19
continues to spread and the cold and flu season approaches.
Funding from the CARES Act has helped address some of our PPE shortage,
allowing us to purchase supplies, although at much higher prices, from
suppliers outside our normal purchasing group and to purchase at levels
above our historical volume. Additionally, we have utilized this
funding to create a safer environment for patient care by converting
multiple isolation rooms with negative pressure.
Every day when I enter the halls of Hill Hospital, I am met with the
faces of employees who are depending on me to ensure we maintain during
and after COVID-19. I want to deliver; however, I need the appropriate
resources to do so.
To this end, I am recommending that Congress consider the following:
Guarantee that small rural hospitals have access to affordable
PPE through private vendors, regardless of the volume of our orders;
Continue to ensure that the State of Alabama receives the
resources needed to help with the supply of PPE to the rural hospitals
in our state; and
Continue to fund rural hospitals post COVID-19 to prevent
closure.
Over the past 6 years, Hill Hospital has had to make drastic changes to
remain financially viable. Among other measures, we have decreased the
hours and salaries of our staff and eliminated non-essential services.
Just as we were experiencing a turn-a-round, a beacon of light, COVID-
19 happened. I am fearful, that our small hospital will not be able to
withstand the unprecedented financial pressure placed on us by COVID-19
without assistance from the federal government.
Again, I am very proud of the professionalism and commitment of the
doctors, nurses, and staff of Hill Hospital, and I remain dedicated to
ensuring the safety of these employees who put their health on the line
every day to ensure that the residents of Sumter County receive the
high level of care that they deserve.
Sincerely,
Loretta Webb Wilson, MBA/HCA
Administrator
Hill Hospital of Sumter County
______
From: Irene Agostini
To: Gartrell, Peter (Finance)
Cc: Michael E Richards; Kate Becker; Chamiza Pacheco de
Alas; Nathan David Bush; Jessica Kelly; Barbara I Damron; Misty P Salaz
Subject: UNM PPE--from Irene Agostini MD
Date: Tuesday, July 28, 2020 5:22:06 PM
_______________________________________________________________________
Peter,
This is my story. I have approval from our government relations
officers and senior leaders to share this. Please reach out if you have
any questions or concerns.
PPE experience at University of New Mexico Hospitals
I have been in health care for more than 30 years and have
never even given a minute of my time to PPE until this year. As
a physician and now a Chief Medical officer at the only level
one trauma center, the only safety net hospital and the only
academic medical center in New Mexico, I deal with a myriad of
issues. In my wildest nightmare, I would never have thought
that I and many senior leaders would spend hundreds, if not
thousands, of hours worrying about PPE.
In early February we began planning; by mid-March we were in
full disaster mode at the University of NM Hospital. We
realized that despite years of creating stores of PPE, we would
quickly run out of PPE (especially N95s) if we did not create a
conservation strategy. We formed a PPE committee consisting of
senior physician leaders, nursing leaders, logistics,
infectious disease experts, front line nursing staff and other
staff. We still meet 5 days a week and have produced over a
hundred guidelines about proper PPE usage and conservation
methods. We began recycling PPE masks using aerosolized
hydrogen peroxide. Our logistics team vetted hundreds of
vendors--only one in ten was found to be reliable. Many asked
for cash up front.
Our front-line staff needed enormous emotional support to care
for a new disease that we all knew very little about. This was
much more difficult with the need to conserve PPE in a way that
was unthinkable in the US until this pandemic. Our ICU nurses
had one N95 for a 12 hour shift--we knew that was safe but
certainly not preferred. Our doctors stored their N95s in
Tupperware so they could reuse them for up to 3 days since they
were not in patients' rooms as much as the nurses. Our students
were removed from the clinical setting because we needed to
conserve the PPE for our staff. Due to the enormous efforts of
our logistics team, with the support of NM's governor and our
New Mexico Congressional Delegation, we were able to continue
to procure PPE. We never had to suffer the nightmare of running
out of PPE because of the enormous time and energy spent to
conserve, as well as procure PPE. We have worked tirelessly to
create trust amongst staff by meeting with all essential
workers from our physicians to our environmental staff. We had
hundreds of meetings, some with Spanish translators, so all of
our staff could hear about our efforts to keep them safe
despite the PPE shortage.
The emotional toll on our front-line health-care workers has
been tremendous and the added fear of conserving PPE, so as not
to run out, is egregious and seemingly unthinkable in the most
expensive health-care system in the world.
Irene Agostini M.D.
UNM Hospitals
Chief Medical Officer
Assistant--Deb Gallegos
[email protected]
______
From: Krause, Erica (Brown)
To: PPEshortages
Subject: Toledo Ohio PPE Shortages
Date: Thursday, August 6, 2020 3:48:11 PM
_______________________________________________________________________
Good Afternoon,
Below is an account of issues with PPE from Zepf Center in Toledo Ohio.
They gave me permission to share their issues. Zepf is one of the
largest mental health and addition services providers in Northwest
Ohio.
Thanks,
Erica
Erica Krause
Northwest Ohio Regional Representative
Office of U.S. Senator Sherrod Brown
[email protected]
Date Wed, 5 Aug 2020 16:26:01 +0000
From Stephanie Kinsman
To ``[email protected]''
Cc Peter Areddy , Adam Nutt
, Andrea Powell
Subject RE: Request from Senator Brown's Office
Good Afternoon Erica,
I am reaching out in response to Caryn's email below. As a Behavioral
Health non-profit, we are seeing major disruptions in the normal supply
chain. Below are some of the issues we have encountered.
1. Items on back order for months and then canceled right before
they are supposed to finally be in stock, tying up needed funds for PPE
that could have been allocated elsewhere.
2. Items commandeered at Customs for several weeks, even over a
month in some instances.
3. Price increases on standard cleaning supplies that are in
stock.
4. Zero availability on cleaning items from our standard vendors,
requiring us to utilize resources online from companies we are not
familiar with, putting us at risk for buying sub-par items.
5. An overwhelming amount of ``KN95'' masks available for purchase
turn out to be counterfeit upon further research. We are having to go
through rigorous hoops to ensure the products we receive are legitimate
KN95s and the sites we purchase from are legitimate companies.
6. N95 masks are still very difficult to find at a reasonable
price.
Additionally, because demand exceeds supply, costs of essential
products will be unsustainable for nonprofits like Zepf without any
additional assistance.
Sincerely,
Stephanie Kinsman
Financial Operations Analyst
Zepf Center
2005 Ashland Ave.
Toledo, Ohio 43620
[email protected]
419-841-7701 ext. 6045
Erica Krause
Northwest Ohio Regional Representative
Office of U.S. Senator Sherrod Brown
[email protected]
______
From: Sarah Delgado
To: PPEshortages
Subject: Responding to the call for information about PPE
Shortages
Date: Friday, August 28, 2020 9:03:48 AM
_______________________________________________________________________
To the Senate Finance Committee,
Thank you for putting out this call for frontline health-care workers
to share their experiences with deficits of personal protective
equipment (PPE). As the largest specialty nursing organization,
representing the interests of the more than 500,000 acute and critical
care nurses, we have followed this issue closely. Of note, because of
ubiquitous and ongoing implementation of contingency strategies, we are
now seeing normalized deviance in the use of PPE. Our members view
extended use and reuse of equipment intended for single use as a normal
practice. For instance, we have members say they have access to PPE,
and in further discussion, note that they use the same single use N95
mask for a week or longer. This, along with recent research
demonstrating the effectiveness of properly used PPE in protecting
health-care workers from SARS-CoV-2 infection, makes current and future
deficits an urgent problem.
Attached is our most recent letter to Congressional leaders describing
priorities that must be included in Coronavirus Relief legislation. In
addition, I've attached a list with summaries of 5 recent research
studies published in peer-reviewed journals that demonstrate the
mitigating impact of PPE on SARS-CoV-2 infection rates among health-
care professionals. Thank you for your continued efforts to address
access to PPE for front-line health-care workers and specifically, your
support of acute and critical care nurses.
- -
Sarah A. Delgado, MSN RN ACNP
Clinical Practice Specialist, Strategic Advocacy
American Association of Critical-Care Nurses
P: 949-448-7347
______
From: Kim Zimmerman
To: PPEshortages
Subject: PPE
Date: Thursday, August 13, 2020 12:25:58 PM
_______________________________________________________________________
I'm sharing this story from one of AHCA's members.
Thank you,
Kim Zimmerman
American Health Care Association
202-294-8981
Dear Senator Wyden:
Village Health Care is 106-bed independently owned nursing facility in
Gresham, Oregon. The community was hit with an outbreak around March 20
with 16 staff cases and 20 cases in their resident population. My
facility was well-prepared with a large stockpile of personal
protective equipment (PPE) available onsite. However, given the burn
rate associated with taking care of vulnerable populations during a
pandemic, we ran through that stockpile within the first 10 days of
their outbreak. We also had long-term, established relationships with
several suppliers and had never experienced a supply chain disruption
previously. After placing orders for more PPE, the suppliers would
later inform us that they could not be filled.
From then on, we tried every option available to keep PPE on-hand and
keep the residents and staff safe including:
Immediately began following federal and state guidelines on how to
conserve and ration PPE, in order to keep some supply on hand;
Worked with state and local partners, but ultimately there was no
consistent supply to be found;
Received deliveries from the National Guard that were helpful but
not even close to adequate in the long term; and
Tried a variety of unconventional routes to find PPE, including
working with an individual in our IT department who had established
business relationships in China to source PPE directly.
While the supply chain has recovered somewhat from the early days of
the crisis, Village Health Care, like many communities across the
country, is still unable to rely on traditional suppliers or know if
adequate supplies of all PPE items will continue to be available. PPE
costs have also skyrocketed, just as care providers are requiring
unprecedented amounts of PPE to deal with the COVID-19 pandemic.
Village Health Care has been COVID-19 free since May 31st but still
faces supply challenges in our efforts to keep COVID-19 out of their
community.
Prior to COVID-19, a case of 100 gowns would cost $75. After the crisis
began, we now pay $495 for the same 100 gowns--a 560% increase. The
burn rate of PPE is extraordinary. Due to the 14 day-quarantine period
necessary for new admissions and acuity of some of those residents, the
community uses 400 gowns per day serving just 8 residents in a new
admissions wing. That's nearly $2000 in gowns alone daily, and that's
only one small part of the community. We still care for others with
non-COVID-19 infectious diseases--so there is a constant burn of PPE
there as well.
As an independent community, Village Health Care has very few staff not
engaged in direct caregiving and is unable to rely on a corporate
office to manage supply chains.
We would appreciate any help Congress can provide to help on the PPE
supply issues. With massively increased costs across the board, we
relied on a PPP loan as a critical lifeline, as well some funds from
the Provider Relief Fund. Federal support will be crucial for the
duration of this crisis.
Sincerely,
Gregory Madson, Administrator
[email protected]
Village Health Care
3955 SE 182nd Ave.
Gresham, OR 97030
Main: 503-665-0183
Direct: 503-676-3005
https://villagehc.com/
______
From: Jarone Lee
To: PPEshortages
Subject: PPE Story
Date: Friday, August 21, 2020 9:04:24 AM
_______________________________________________________________________
Dear Senate Finance Committee:
I am a practicing emergency medicine and critical care physician on the
frontlines of COVID-19 in one of our hot spot areas in the United
States. I have cared for and continue to care for many COVID-19
patients.. As such, I have witnessed the full range of devastating
stories related to our patients and their families. Not all stories
were sad. Many patients made remarkable recoveries despite prolonged
critical-illness. However, none of the survivors would have made it
without our frontline nurses, respiratory therapists, janitorial staff
and physicians and their required PPE. My colleagues and I regularly
talk about the burden of not only patient care, but also worrying about
adequate PPE--will there be enough PPE tomorrow? Many bought their own
PPE, some self-made. Others continue to need to use old and repurposed
N95s. A lot of us wonder if the chemical smell from repurposing PPE is
worse than COVID-19 itself.
All of this would not be an issue if we had adequate PPE so that we can
safely and adequately do our jobs and treat our patients. We will
continue to show up as front-line workers, not because we are heroes,
but because we must and no one else can. We can only do so until we get
sick. Please remember that us front-line health-care workers are highly
trained and specialized for what we do. As more and more of us get sick
from lack of PPE, there will be less and less of us to take care of
America.
Jarone Lee, MD
Emergency Medicine/Critical Care Physician
______
From: Williams, Christa (Christa)
To: PPEshortages
Subject: PPE shortages
Date: Monday, August 17, 2020 5:00:21 PM
_______________________________________________________________________
I am a family physician faculty at a large public teaching hospital. We
are still in a place of recycling our N95 masks. As you likely know,
these masks were not meant to be re-used, especially not repeatedly.
When our institution did receive a shipment of N95 masks from FEMA--
they were too old to be safely used and all had to be discarded. This
was infuriating, because we all know that whoever packaged those
20,000+ masks up for shipping, knew they were expired. We have 1 PAPR
for our entire labor floor (50 beds, probably 300 staff+) which is
necessary for anyone with facial hair or who fails fit testing. We have
managed to be OK w/ gowns. We wipe down and reuse our masks. Our
pharmacy manufactured hand sanitizer, which was incredibly helpful. But
Oxyvir shortage is an ongoing issue--we have to use spray and paper
towels.
It is so frustrating that months into this situation, front-line
workers are reusing N95s.
Thank you,
Christa Williams, MD
______
From: Kristina Haley
To: PPEshortages
Subject: PPE Shortages
Date: Monday, August 3, 2020 1:09:44 PM
_______________________________________________________________________
Good morning,
I am writing regarding PPE shortages. My name is Kristina Haley, and I
am a pediatric hematologist/oncologist in Portland, OR. I take care of
children with bleeding and clotting disorders, deficiency or
dysfunction of various blood cells like red cells and platelets,
children with cancer, and children who are undergoing or who have
undergone bone marrow transplants. These are some of the most
vulnerable patients in our children's hospital. During normal cold and
flu season, we have strict guidelines regarding our interactions with
these patients--we are required to sign in to each clinical space in
order to declare ourselves fever and symptom free and we utilize the
required protective equipment--changing gowns, gloves, and masks for
every patient interaction. For my entire career, it has been explicitly
told to me that I must change my PPE between every single patient. This
provides them with the most protection. I have watched patients in our
unit require ICU admission, require mechanical ventilation, and die
from viruses that typically cause regular cold symptoms in otherwise
healthy individuals.
In addition to caring for some of our most vulnerable patients, I too
am on an immune modulating agent for a myeloproliferative neoplasm. I
am unsure if my medication or my disease put me at higher risk for
infection or at higher risk for severe infection. But, I have to assume
they do. I live in a state that has not seen the extraordinary strain
on resources that other states have seen. I am not trying to utilize
garbage bags as isolation gowns as I have heard other health-care
workers have had to utilize. I am being told to re-use my face mask as
long as possible--to keep using it between patients in order to
minimize the number of masks I ultimately use. This goes against
everything I have been told prior to the COVID-19 pandemic regarding
optimal utilization of PPE. In addition, my patients are in home-made
masks that do not fit correctly and are not made of adequate materials.
The Oregon Health Authority recommended that patients wear surgical
masks but we do not have the supplies for this. I fear I am putting my
patients and myself at risk. I go into each patient encounter with
anxiety for myself and for them.
I am not a hero. I am a well-trained and well-educated resource. I want
to take the best care of my patients, but I also must continue to
protect myself so that I can continue to take the best care of my
patients going forward. Sending healthcare workers as well as other
people who interact with the public on a daily basis without adequate
protection is not heroism. It is irresponsible. It is unethical. It is
dangerous.
Please get us the supplies we need to do the jobs we are trained to do.
Stop calling us heroes--it doesn't make us feel better. Call us well-
equipped professionals who can manage crises and get us the PPE we need
to do the jobs we are well-trained to do.
Thank you,
Kristina
Kristina Haley, DO
Associate Professor
Oregon Health and Science University
______
From: Petee, Barb
To: PPEshortages
Subject: PPE Shortages/a story from frontlines/ProMedica
Date: Monday, August 31, 2020 5:18:24
_______________________________________________________________________
The following is sent on behalf of Nicole Justus, MSN, RN, Hospital
Incident Management Team/Logistics Section Chief, ProMedica
ProMedica is a health system based in Toledo, Ohio. Please do not
hesitate to let me know if you need additional information of have any
questions.
To the Senators of the Finance Committee:
I am a nurse. Though I am not working directly with patients at this
time, I do serve nurses and other healthcare workers who work directly
with patients. I would like to tell you the story from my own ``front
line.'' When the COVID-19 pandemic struck, my organization, ProMedica,
quickly followed the Hospital Incident Command System (HICS) and
assembled a team. I was asked to coordinate the Logistics section of
the HICS, and our Supply Chain division immediately began trying to
source, purchase and distribute PPE. We knew the need for it would be
greater than anything we had experienced before.
From the start, we encountered obstacles. Our normal suppliers were
unable to meet the new, increased demand, not just from us, but from
their customers nationwide. We put the word out to our community--
businesses, organizations and individuals responded generously,
donating everything they had: a paint shop sent us all the masks they
had on hand, a local nursing school sent us their isolation gowns, hair
salons and tattoo parlors sent us their last boxes of gloves. And
although this generosity rescued us in the beginning, we knew it
wouldn't--couldn't--last and we would need to get creative.
We investigated every non-traditional supplier of PPE we could think of
(for instance, food and beverage industry suppliers). We worked with
local engineers to use 3D printers to make some of our equipment. And
ultimately, with CDC guidelines in place while assuring patient and
staff safety, we had to change the way we practiced. As I'm sure you
are aware, almost all PPE is typically only used once and then
discarded. This includes gowns, gloves, masks, and respirators. But in
this crisis, we needed to consider re-using our PPE. We asked
ourselves: how can we protect our staff AND still take care of
patients? We were determined to not have to choose between the two.
Fortunately, we never had to make that decision, but it felt like we
came close. Thanks to devoted infection preventionists, we established
protocols that would allow for the safe re-use of our PPE. It wasn't
optimal, it wasn't what we would have chosen if we had alternatives,
but it's what we had to do in this unprecedented situation. We knew,
though, that these unavoidable changes in practice were not ideal and
ran counter to our employees' years of experience. Our leaders care
deeply about the safety of patients and staff, and I witnessed members
of our leadership team in tears because we had to make the difficult
decision to reuse and reprocess supplies.
Let me discuss one piece of personal protective equipment in
particular--the N95 respirator. An N95 respirator is pivotal in the
prevention of the spread of COVID-19. Of all the PPE we attempted to
source, this one proved, and continues to prove, the most difficult. We
went to extraordinary lengths to obtain PPE: we paid higher than list
price; we chartered a plane to pick up PPE out of state; we entered
into collaborative agreements to increase our purchasing power. But
also, we ordered, and paid for, a shipment of N95s that never made it
to our organization; we ordered, and paid for, a shipment of N95s that
turned out to be counterfeit. We were so hopeful that we could finally
relieve some of the burden of reprocessing, but it was not to be.
Despite the fact that reprocessing has been given an EUA by the FDA,
and that we're all doing it, and it seems to have relieved some of the
pressure, make no mistake--this is not an ideal situation for our staff
or our patients. Until we return to normal, we are stressing an already
precarious situation.
We continue to experience difficulties. Special gowns for staff who
provide chemotherapy are unable to be ordered. We recently nearly
exhausted our supply of medium gloves, the size worn by most of our
staff. We moved to an industrial (instead of medical) supplier of
gloves to fill in the gaps while we waited for our regular suppliers to
continue shipments. And we are still reprocessing N95s. Our staff are
still using them more than once. If adequate amounts of N95s exist from
suppliers that aren't going to price-gouge us into bankruptcy, they are
not making it to the hospitals that need them. We are not confident
that the supply chain will remain stable and be able to fulfill our
needs if we resume ``traditional'' use of PPE. We fear every day that
we may run out.
Our staff are the real heroes--working under these conditions is
stressful and scary. We will continue to do everything we can,
everything we must, but we could really use your help. Any boost to the
PPE supply chain, especially N95s, would be appreciated more than you
could know.
Respectfully submitted,
Nicole Justus, MSN, RN
ProMedica
Hospital Incident Management Team--Logistics Section Chief
_______________________________________________________________________
Please direct questions or inquiries to:
Barbara J. Petee
Chief Advocacy and Government Relations Officer
ProMedica
MSC-S39000
100 Madison Avenue
Toledo, Ohio 43604
419-260-2800
(Cell) 567-585-3894
[email protected]
______
From: Allison Edwards
To: PPEshortages
Subject: Lack of PPE
Date: Thursday, August 20, 2020 3:17:23 PM
_______________________________________________________________________
Senator Wyden:
I run a small primary care clinic in Kansas City, Kansas.
We have had--and continue to have--difficulty in purchasing PPE. We've
had to get creative with gloves, masks, gowns and have been sourcing
our hand sanitizer from local shops (since medical suppliers are out).
We're largely re-using PPE that under normal circumstances we'd use
once and toss.
I think the hardest part is not knowing when/if 1) the Pandemic will
end and 2) when the PPE shortage will end.
So in the mean time, we're doing the best we can with what we've got.
(And on a bright note, we were able to contribute to a bulk buy
faciliated by weneedppe.org and were able to get 100 gowns for the
practice so that we could continue to provide COVID testing!)
Happy to elaborate more, but I fear my story is the same as almost
anyone else's who is trying to run a small clinic.
- - - - - - - - - - - - - - - - - - - - - - -
Allison Edwards, MD
[email protected]
Founder and Medical Director
Kansas City Direct Primary Care
@KansasCityDPC
[email protected]
www.kansascitydirectprimarycare.com
______
From: Yuet Mui Kong
To: Rodriguez, Isabel (Hirono)
Cc: PPEshortages; Luna, Nicholas (Hirono)
Subject: Hawaii's PPE Shortages--Share Your Experience with
Senator Hirono
Date: Monday, August 31, 2020 10:41:01 PM
_______________________________________________________________________
Aloha Senator Hirono,
I would like to share my experience. Hawaii's PPE shortages have
started in February, 2020. My workplace's suppliers/vendors have not
been able to provide us stable supplies. Most of the time, items are on
back order. Hence, I signed up as many as PPE donation websites and PPE
purchase groups as possible--official and unofficial (via social
media), nationally and internationally.
Since then, many vendors have approached me. However, they either take
bulk order only, e.g., minimum order of 10,000 masks each time, or
cannot provide proof of quality. I have been spending a lot of time to
verify the ``certificates'' they send me, and counter check with the
NIOSH list and FDA/CDC list. In addition, I also need to keep up with
the news in case the manufacturers drop out of the lists or lose
government contracts, e.g., following the news about BYD in California.
Being on the official lists does not mean the masks are not
counterfeit. If I am lucky to get some samples, I will need to check if
the quality meets standards, if the design is the same as the photos on
the manufacturer's official website, and if the address printed on the
box is the same as address listed on their website, etc. Fortunately, I
am able to read Chinese to verify the information. When masks are made
in the other countries, I need to contact my friends and relatives in
those countries to verify the information. It is very time consuming.
Needless to say, the price for surgical/procedural masks has increased
from $15/box of 50 to over $55 per box of 50!
In my experience, a lot of surgical/procedural masks I tested cannot
protect our frontline staff from COVID-19. Some masks are not even
waterproof which means they cannot block any droplets. Some masks'
filter layer is almost see-through. The staff would be at risk if they
used those masks.
When I thought I found a reliable, genuine N95 source to replace the
most popular brand's N95s, the Federal contracted sterilization
facility only sterilizes the ``common'' N95 masks that meet its
criteria. Which means I need to start the process over again to find my
co-workers another affordable masks with reliable quality and meet its
sterilization requirements. In addition, most of the medical staff in
Hawaii only passes the fit testing with N95 size small. Most of our
staff cannot pass the test if they use size regular or universal. So,
it is almost like mission impossible.
We don't know how much longer we need to face the shortage and at the
same time, to keep ourselves safe to continue to serve our patients and
community.
Thank you for your kind attention.
Aloha,
Yuet ``Mui'' Kong
Chief Operations Officer
Kokua Kalihi Valley Comprehensive Family Services
2229 N. School Street
Honolulu, HI 96819
Tel: 808-791-9413
Fax: 808-848-0979
______
From: Krause, Erica (Brown)
To: PPEshortages
Subject: Elara Caring--Home Health NW OH/MI
Date: Friday, August 7, 2020 9:10:46 AM
_______________________________________________________________________
Good Morning,
Below is an email I received from Elara Home Health regarding their
issues obtaining necessary PPE. They have faced significant challenges
because prior to COVID they did not routinely need medical grade N95
masks. Trying to enter that market during the pandemic has proved
nearly impossible. Ms. Brewer would be happy to talk further with the
committee.
Thanks,
Erica
Email from Rebecca Brewer, RN--Area VP Midwest-East Michigan/Ohio--
Elara Caring
``We have been unable to secure N95 masks from medical supply companies
due to allocations. This is not an item as a skilled home care provider
we used often prior to March. Never more than a dozen or so a year, if
that. Because of this there is no allowable allocations for us to order
them from supply companies. Companies like 3M are, from what I
understand, directed to provide these to hospitals and maybe government
supplies stocks instead of providers like Elara? I am not well versed
on the situation producers are in other than being told we are not able
to get them directly from the factory. We are especially in need of
small size N95 masks. Dave Cook our VP of Procurement recently told me
on his last call to 3M he was informed that 3M is on a 4 billion mask
backlog right now and not making small sizes. The standard sizes often
do not provide a proper fit on our primarily female work force. 95% of
what we have secured and used since March are N95 masks that were
donated by construction companies that are primarily larger males. This
has left us in the situation of only having a small number of staff
that were able to pass a fit test to see patients. In many of these
cases the staff member is still using the same single mask they were
fitted into 4 months ago. This is very concerning as we head in to what
looks to be a very stressful winter for front line workers. Hospitals
are leaning on companies like Elara Caring to keep patients home where
the risk of nosocomial infection is marginal and saving inpatient space
for COVID-19 patients. Without additional supplies this is going to
become extremely difficult. Some of the other very basic items that
continue to be available in limited supply (if at all) due to
allocations: Fit testing kits for protective N95 and above masks (I
have still not been able to secure a kit since March--luckily we had a
few of these on hand); Fit testing solution; Alcohol Swabs;
Thermometers; Basic wound care/dressing supplies; Gloves--all sizes and
materials; Gowns; Procedure/surgical masks of all types; Surgical caps;
Shoe covers; Catheters, drainage bags and insertion supplies. I would
be happy to get on a call and discuss our experiences further or
participate anyway that would be helpful. I have been a nurse for 23
years and have never experienced anything close to what the last few
months have brought to the table. Thank you for advocating for our
staff. Thank you for reaching out to us for input!''
Best,
Rebecca Brewer, RN | Area Vice President Midwest--East
Michigan/Ohio
c 517-581-8896 | f 800-379-1600 | [email protected]
Erica Krause
Northwest Ohio Regional Representative
Office of U.S. Senator Sherrod Brown
[email protected]
______
Communications
----------
Center for Fiscal Equity
14448 Parkvale Road, #6
Rockville, Maryland 20853
[email protected]
Statement of Michael G. Bindner
Chairman Grassley and the Ranking Member Wyden, thank you for the
opportunity to submit these comments for the record. Excepts were also
sent to the Ways and Means Trade Subcommittee from last week. The next
three paragraphs, however, are new to this hearing.
I also omitted my comments about Hyperstagflation. I see from the
Senate version of the draft bill that our views and those of the
majority are the same, although $100 is a bit too low. May I suggest
$350, which is a good halfway point and leaves worker with $800 a week
total. Rent will get paid and food will be bought.
The irony is that I tested positive for PAN-SARS yesterday, although I
had the severe version of the virus. We shall see if this is a false
positive or, worse, it can be extreme twice. May I suggest a panel of
COVID patients to relate their experiences. This is also relevant
because it goes to the quality of testing. If the false positive rate
for tests is too high, we may have less documented cases than we know,
at the same time that we have a much greater number of real cases, like
mine, where medical attention was not sought because there were no
serious SARS symptoms. Many have had only the cold, the latent
contagious stage and the non-
contagious fatigue stage where we manufacture immunity (which my blood
test yesterday did not detect).
More to the point, many manufacturing workers, including those in the
medical supply system, have likely tested positive but may not have
actually been sick, while others are never tested but are among the
walking wounded--although, as I say below--no one can work with extreme
fatigue symptoms, which is a concern as to the welfare of undocumented
workers who likely don't have the luxury of sick leave benefits. This
worker illness and the related shutdown will impact medical suppliers
in the United States in areas where the virus is active, which means
the entire South and West, with the Midwest being the next on deck.
Repeated material follows.
This testimony relies on my experience as a member of the Cost
Management Systems project of what was then called Computer-Aided
Manufacturing--International, now the Consortium for Advanced
Management--International. The project produced Cost Management for
Today's Advanced Manufacturing. I created a handbook based on the
project, the U.S. Air Force Orientation Guide to Advanced Cost
Management.
One of the topics addressed is the manufacturing environment known as
Process Simplification, which features Just in Time supply chains. This
model works for Walmart, which is massively integrated, and for defense
production. Parts arrive with little holding time and go right out the
door. If everyone is working in the supply chain, it works beautifully.
Commercially, it is essentially a rationalized production line from
resource extraction to delivery.
As long as the line is not stopped, it minimizes waste and non-value-
added cost. It doubles down on traditional manufacturing's stance of
labor being a cog in the machine. Unionization is not compatible with
it unless they have incentives to keep things moving (like in the
defense sector, which requires cleared and more specialized workers).
Recent reported experience on Midwest food production has workers being
made to work sick, or after exposure. The CDC model has been flawed,
but they have finally added a runny nose to the list of symptoms (as I
predicted they must, having had the virus myself). The virus has not
been contained, not through lack of correct distancing but because the
economy was closed in areas where it had not arrived, which meant
reopening just as it has gone from early exposure to full-on illness.
Because nasal symptoms were discounted, people likely transmitted in
private settings, with transmitters not knowing their sneezes were
potentially deadly and not hay fever.
Testing positive for exposure means someone sneezed. Not knowing that
this is the trigger means workers were idled (or not idled) at the
wrong time. There is no danger that workers with SARS or fatigue
symptoms will keep working. It is impossible to do so. If they do not
have sick leave, the results could be tragic. Undocumented workers have
even more dire consequences in their personal supply chain, which
includes remittances and cramped living conditions that ensure virus
transmission. The attached table shows how states will be affected
under current policy.
At this stage of the pandemic, the assembly line is about to crash. A
new round of mandated closings is inevitable unless mandate quarantine
to the period from the first sniffle to three weeks after they stop for
everyone in the household. Unless there is significant cross training
already in place, the supply of goods will begin to diminish.
There is simply no stock of inventory to rely on in this model. Farmers
will again be overwhelmed with unsold food that they will not able to
move. It will be worse in this round unless courageous action is taken
on personal quarantine and in the CDC's understanding and guidance of
how the virus spreads and does not spread. I doubt that the medical
hierarchy has it in them.
Please see the attached table, which predicts that there will be at
least 400,000 US deaths if national mortality rates are even 80% of
those in New York.
Thank you for the opportunity to address the committee. We are, of
course, available for direct testimony or to answer questions by
members and staff.
------------------------------------------------------------------------
Population Projected
State (millions) deaths @0.12%
------------------------------------------------------------------------
Alabama 4.9 5,880
------------------------------------------------------------------------
Alaska 0.73 876
------------------------------------------------------------------------
Arizona 7.28 8,736
------------------------------------------------------------------------
Arkansas 3.02 3,624
------------------------------------------------------------------------
California 39.51 47,412
------------------------------------------------------------------------
Colorado 5.76 6,912
------------------------------------------------------------------------
Connecticut 3.57 4,284
------------------------------------------------------------------------
Delaware 0.97 1,164
------------------------------------------------------------------------
District of Columbia 0.71 852
------------------------------------------------------------------------
Florida 21.48 25,776
------------------------------------------------------------------------
Georgia 10.62 12,744
------------------------------------------------------------------------
Hawaii 1.42 1,704
------------------------------------------------------------------------
Idaho 1.79 2,148
------------------------------------------------------------------------
Illinois 12.67 15,204
------------------------------------------------------------------------
Indiana 6.73 8,076
------------------------------------------------------------------------
Iowa 3.16 3,792
------------------------------------------------------------------------
Kansas 2.91 3,492
------------------------------------------------------------------------
Kentucky 4.47 5,364
------------------------------------------------------------------------
Louisiana 4.65 5,580
------------------------------------------------------------------------
Maine 1.34 1,608
------------------------------------------------------------------------
Maryland 6.05 7,260
------------------------------------------------------------------------
Massachusetts 6.89 8,268
------------------------------------------------------------------------
Michigan 9.99 11,988
------------------------------------------------------------------------
Minnesota 5.64 6,768
------------------------------------------------------------------------
Mississippi 2.98 3,576
------------------------------------------------------------------------
Missouri 6.14 7,368
------------------------------------------------------------------------
Montana 1.07 1,284
------------------------------------------------------------------------
Nebraska 1.93 2,316
------------------------------------------------------------------------
Nevada 3.08 3,696
------------------------------------------------------------------------
New Hampshire 1.36 1,632
------------------------------------------------------------------------
New Jersey 8.88 10,656
------------------------------------------------------------------------
New Mexico 2.1 2,520
------------------------------------------------------------------------
New York 19.45 23,340
------------------------------------------------------------------------
North Carolina 10.49 12,588
------------------------------------------------------------------------
North Dakota 0.76 912
------------------------------------------------------------------------
Ohio 11.69 14,028
------------------------------------------------------------------------
Oklahoma 3.96 4,752
------------------------------------------------------------------------
Oregon 4.22 5,064
------------------------------------------------------------------------
Pennsylvania 12.8 15,360
------------------------------------------------------------------------
Rhode Island 1.06 1,272
------------------------------------------------------------------------
South Carolina 5.15 6,180
------------------------------------------------------------------------
South Dakota 0.88 1,056
------------------------------------------------------------------------
Tennessee 6.83 8,196
------------------------------------------------------------------------
Texas 29 34,800
------------------------------------------------------------------------
Utah 3.21 3,852
------------------------------------------------------------------------
Vermont 0.62 744
------------------------------------------------------------------------
Virginia 8.54 10,248
------------------------------------------------------------------------
Washington 7.61 9,132
------------------------------------------------------------------------
West Virginia 1.79 2,148
------------------------------------------------------------------------
Wisconsin 5.82 6,984
------------------------------------------------------------------------
Wyoming 0.58 696
------------------------------------------------------------------------
393,912
------------------------------------------------------------------------
______
Healthcare Leadership Council
750 9th Street, NW #500
Washington, DC 20001
202-452-8700
July 30, 2020
The Honorable Chuck Grassley, Chairman
The Honorable Ron Wyden, Ranking Member
U.S. Senate Committee on Finance
219 Dirksen Senate Building
Washington, DC 20510
Dear Chairman Grassley and Ranking Member Wyden:
The Healthcare Leadership Council (HLC) commends the Senate Committee
on Finance for holding its hearing on, ``Part 2: Protecting the
Reliability of the U.S. Medical Supply Chain During the COVID-19
Pandemic.'' We applaud the promptness with which you and your
colleagues in the U.S. Senate and House of Representatives have
addressed policies and priorities related to disaster preparedness
under these extraordinary circumstances.
The HLC is a coalition of chief executives from all disciplines within
American healthcare. It is the exclusive forum for the nation's
healthcare leaders to jointly develop policies, plans, and programs to
achieve their vision of a 21st century healthcare system that makes
affordable high-quality care accessible to all Americans. Members of
HLC--hospitals, academic health centers, health plans, pharmaceutical
companies, medical device manufacturers, laboratories, biotech firms,
health product distributors, post-acute care providers, home care
providers, and information technology companies--advocate for measures
to increase the quality and efficiency of healthcare through a patient-
centered approach. We are uniquely positioned to address disaster
preparedness comprehensively from all perspectives in the healthcare
industry.
HLC members are pleased to announce that we are working with the Duke-
Margolis Center for Health Policy on an initiative aimed at
strengthening the public-private partnership that is essential to
disaster preparedness and response. As part of this initiative, as we
are also working with the Deloitte consulting firm to bring its
expertise to our endeavor.
Like you, we believe there is much to be learned from the collective
response thus far to the COVID-19 pandemic. In the summer and fall of
2020, we will be bringing together the expertise of the Duke-Margolis
Center, the multisector perspectives of the HLC membership, and ideas
from key individuals and organizations--from the public sector as well
as the Administration and Congress--involved in the current pandemic
response to assemble a set of innovative, integrated solutions that
will, one, determine what is working well in the current COVID-19
response and needs to be maintained and even strengthened and, two,
what aspects of our disaster preparedness and response require fresh
thinking and new approaches.
Our work will be concentrated in three primary areas:
Supply chain readiness. Particularly in the early stages of the
COVID-19 pandemic, we witnessed difficulties and disruptions in the
distribution of critical goods and supplies including personal
protective equipment and testing supplies. It is essential that we call
upon the expertise of the private sector to build a disaster-ready
supply chain that can work with government at all levels to ensure that
our nation's needs are met and that future treatments and vaccines can
be delivered safely and expeditiously.
Care delivery. We have learned a great deal during the current
pandemic about how to expand healthcare reach to meet extraordinary
escalations in patient demands. It is essential to translate those
lessons into a systemic approach that incorporates components such as
telehealth, workforce mobility, adequacy and resiliency, and financial
stability for healthcare providers during periods when normal revenue
streams are disrupted.
Data and evidence generation. Our ability to respond to a
nationwide health crisis relies heavily on the ability to access and
analyze data rapidly and effectively. This must involve well-
coordinated public-private cooperation to gather data and utilize it to
improve patient care, strengthen public health surveillance, and
accelerate biomedical innovation while protecting the privacy of
individuals.
Through this initiative, contributions from the nation's premier
experts in both healthcare and disaster preparedness will be coalesced
into a set of specific recommendations and commitments that will
strengthen our nation's preparedness and response for future health
crises. We will be sharing ideas with your committee as this initiative
progresses.
Legislative Priorities
In addition to the broad-based policy initiative mentioned above, HLC
members also urge your committee and others in Congress to address a
set of legislative actions that will help reduce barriers to disaster
preparedness and response. These legislative priorities are outlined
below.
Workforce
Implement a federal waiver of state licensure and allow for
practice at the top of the scope of license for physicians, nurses,
pharmacists, pharmacy technicians and other healthcare professionals in
times of disaster. This should also allow nurses to work in centralized
locations to provide services, including remote patient monitoring
across state lines.
Allow license portability for non-physician providers for
Medical Disability Exam vendors with the Veterans Administration (VA)
in parity with what is allowed for providers who work within the VA
health systems. Specifically, license portability is needed for Medical
Disability Exam vendors for providers such as nurse practitioners,
physician assistants, audiologists, psychologists, and more.
Enable swift allowance of temporary visas for nurses,
physicians, pharmacists, and healthcare professionals (especially those
who have already completed clearances) to address need in times of
disaster.
Continue to encourage states to temporarily waive in-state nurse
licensing and scope of practice requirements for the duration of the
COVID-19 pandemic, allowing nurses to work in a centralized location to
provide services, including remote patient monitoring across state
lines.
Direct the Department of Homeland Security to take the following
actions to increase the supply of physicians during the national
emergency:
Temporarily suspend the enforcement of the 2 year
home residency requirement for any J-1 medical resident or fellow who
is willing to work full time in a Health Professional Shortage Area
(HPSA) or Medically Underserved Areas and Populations (MUA/Ps) or in a
medical field that is directly treating COVID patients or assisting in
the battle against COVID. This should not be restricted to just the
Conrad 30 Waiver program. There are many other Interested Government
Agency (IGA) Waivers including Appalachian Regional Commission (ARC),
Delta Regional Authority (DRA) VA Waivers, and Health and Human
Services (HHS) Waivers.
Temporarily make exempt from the annual H-1B cap
any physician, or healthcare worker (as long as they are H-1B
classifiable positions) involved in direct patient care who may be
called upon to join the fight against COVID-19.
Temporarily extend the status and work
authorization of any H-1B physician beyond the normal 6-year limit for
the duration of the COVID-19 crisis or at least 1 year.
Require U.S. Citizenship and Immigration Services
to reinstate premium processing for any H-1B filed for a physician,
physician assistant, registered nurse, nurse practitioner, and any
other critical healthcare professional for the purpose of fighting
COVID-19.
Temporarily suspend the VisaScreen Certificate or
equivalent requirement for healthcare professionals.
Temporarily grant current J-1 medical residents
and fellows the ability to engage in COVID patient care even if that is
not a part of their formal training program.
Permanently expand waivers to permit pharmacists to diagnose and
prescribe testing and treatment for COVID-19 and related influenza-like
illnesses (in accordance with FDA approvals and treatment guidelines)
in times of an emergency declaration. Additionally, recognize
pharmacists as Medicare providers so that they may be reimbursed for
these services.
Healthcare Coverage and Costs
Provide federal premium subsidies for group continuation
coverage (COBRA and state continuation that goes beyond COBRA) of at
least 90 percent, preferably 100 percent, to people who lose health
coverage because of COVID-19.
Support temporary federal risk mitigation programs to support
the financial stability of insurers and self-insured employers during
the duration of COVID-19.
Waive cost sharing for COVID-19, and COVID-19 mutations,
testing, vaccine administration and treatment.
Expand the payroll tax credit provided under the Coronavirus Aid
Relief and Economic Security (CARES) Act for providing group health
coverage for tax years 2020 and 2021, from 50 percent up to 100 percent
of payroll taxes. Or, Congress should establish a direct grant program
to fund employers that wish to continue their group health coverage
during the pandemic.
Establish a special enrollment period, allowing uninsured
Americans to purchase coverage on the exchanges.
Enhance the individual market tax credits (APTC) to reduce
premiums for individuals, for individuals between 400 percent and 600
percent of the federal poverty level, because premium costs for those
individuals often far exceeds 10 percent of income.
Implement continuous eligibility for current Medicaid
beneficiaries during the public health emergency.
Provide additional FMAP, in line with National Association of
Medicaid Directors' requested percentage, for states to address
Medicaid program growth and high-acuity beneficiaries.
Require CMS to compare MA plans 2020 Star Ratings and 2021 Star
Ratings and use the higher scores to hold plans harmless due to data
collection challenges during the crisis. In addition, CMS should
provide plans having a 3.5 or 3 Star Ratings with the opportunity to
earn a Quality Bonus Payment (QBP) for contract years 2022 and 2023
(2021 and 2022 Star Ratings) of at least 3.5 percent to improve program
stability and the stability of benefit offerings for beneficiaries'
given the COVID-19 public health emergency.
While CMS recently provided additional guidance enabling
Medicare Advantage organizations to submit diagnosis for risk
adjustment payment from telehealth visits, plans need certainty that
this policy will continue to be implemented moving forward. Therefore,
Congress should codify that starting in 2020, CMS must adjust MA plan
enrollee's risk scores to consider diagnosis data obtained through
telehealth services covered by the plan.
Bolster mental/behavioral health and social determinants of
health support to address the COVID-19 ramifications.
Provider Support
The CARES Act that included over $100 billion for providers is a
welcome step, but it has proved insufficient for many providers.
Congress must further support healthcare providers who are losing
revenue during the COVID-19 pandemic and help them ramp back up
efficiently when the system is ready to return to more normal business.
While aid based on historic Medicare fee-for-
service (FFS) payments may be the easiest and quickest way to provide
support, as noted by CMS, it fails to meet all needs, including:
Providers who have moved to value-based care,
such as Medicare Advantage and other Medicare-sponsored value-based
programs;
Providers with a large Medicaid or other non-
Medicare FFS population;
Providers with a significant number of COVID-19
patients; and
Providers located in rural areas serving a
predominantly rural population.
Help expand the public health infrastructure to support better
bi-directional electronic information exchange between public health
disease registries, labs, and electronic health records.
Allow healthcare providers a 0% interest rate as part of the
Accelerated and Advanced Payments provision under the CARES Act.
Allow a temporary increase in Medicare and Medicaid
disproportionate share (DSH) allotments during public health
emergencies.
Enable hospitals, health systems and other providers to be
compensated for costs associated with remote patient monitoring, which
otherwise meets evidence-based guidelines and appropriate patient data
security and privacy standards, through direct federal funds that
explicitly includes Registered Nurse-
supported COVID-19 remote patient screening and monitoring solutions,
creation of new reimbursement mechanisms, or a waiver of existing
billing requirements.
Provide additional financial support for in-home personal care
attendants/
caregivers.
Provide support for mobile phlebotomy to eliminate delays in
cancer diagnostic testing and mitigate risks associated with clinic and
hospital visits for immune-compromised patients.
Provide liability protections for healthcare providers should
they be placed in a position of making resource allocation and
treatment decision trade-offs.
Provide immediate relief to teaching hospitals by temporarily
doubling Indirect Medical Education (IME) payments.
Extend by two years the Graduate Medical Education (GME) cap
building period for new teaching hospitals that are currently within
the five-year period that determines GME reimbursement caps.
Impose a two-year moratorium on finalizing the Medicaid Fiscal
Accountability Regulation (MFAR), as states and healthcare providers
will not be able to implement the proposal during or in the aftermath
of the pandemic or absorb the financial impact.
Provide leniency and/or immunity under Occupational Safety and
Health Administration (OSHA) rules for issues related to PPE shortages
unless gross negligence can be proven.
Provide essential support to the fitness center industry to
ensure the continuation of employee and senior wellness programs. These
programs provide invaluable services to millions of Americans during
times of economic insecurity and uncertainty. Maintaining wellness
program access for seniors will promote health and well-being,
preventing an escalation in long-term healthcare costs. There are
multiple options for providing this support: inclusion of the fitness
center industry in the SBA PPP program, providing business interruption
insurance, offering lease relief, or creating a 9/11-style recovery
fund.
Regulatory Relief
Expand on CMS' allowance for Medicare Part B drugs to be
administered in a home setting, in times of an emergency declaration if
the patient and the patient's physician believe it is critical to help
protect the patient's safety and health, by allowing the home
administration supplier to be able to directly bill CMS for the items
and services provided. However, we acknowledge that this additional
flexibility may not be appropriate for oncology drugs unless HHS,
working with the oncology community, deems it safe and appropriate.
For those interventions that otherwise meet evidence-based
guidelines and appropriate patient data security and privacy standards,
waive strict application of remote patient monitoring coding
requirements, such as the minimum time standards, which may limit
providers' ability to use them and pose an undue documentation burden
during the public health crisis.
Grant a one-year extension of the implementation date of the CMS
and ONC Interoperability and Information Blocking Final Rules to
January 1, 2022 since the healthcare sector as a whole does not have
time, personnel or funding to implement the rules during the pandemic.
Amend Section 1135(b) of the Social Security Act by giving the
Secretary authority to adjust benefits and administrative procedures
for Medicare Advantage plans to match changes made in Medicare FFS.
Amend Section 1135(b) of the Social Security Act to clarify the
authority to waive certain HIPAA requirements for the duration of a
public health emergency, rather than only for 72 hours.
Enact the National Telehealth Strategy and Data Advancement Act
(H.R. 5763) to ensure coordination of telehealth activities.
Allow expansion of tools that can be used to determine
disability (VASR-D) and that can be used as part of a mobile
examination, particularly serving veterans in remote or medically
underserved areas or in homeless communities, during this time of
national emergency.
Allow for partial completion of the Document-Based Questions
(DBQs) when determining disability ratings through the Veterans
Administration. DBQs that are only partially completed but meet the
requirements of the VASR-D for rating of the claimed disability should
be deemed sufficient for rating purposes and should not adversely
affect the quality ratings of either the VA personnel utilizing the
DBQs or the vendor completing and delivering the DBQ.
Innovation
Enact the Developing an Innovative Strategy for Antimicrobial
Resistant Microorganisms (DISARM) Act (H.R. 4100) to encourage
innovation of new antibiotics to fight antimicrobial resistant (AMR)
infections by providing additional reimbursement to hospitals that need
to use these high-need antibiotics. These antibiotics incur significant
cost to develop and while they are often the most appropriate therapy
to treat AMR infections, the structure of the DRG mechanism creates a
financial disincentive for their use. These drugs need to be made
readily available and appropriately reimbursed for hospitals especially
during the COVID-19 pandemic.
Create public incentives to ensure private investment in
improved vaccine technologies to address this and future pandemics.
As the committee moves forward on issues related to disaster
preparedness, we stand ready to be a trusted resource that encompasses
the perspective of all stakeholders in the private sector committed to
working in collaboration to be better prepared should another pandemic
occur. Thank you for your efforts to gather information to ensure our
country remains vigilant. HLC looks forward to continuing to
collaborate with you on our shared priorities. Should you have any
questions, please do not hesitate to contact Debbie Witchey at
[email protected] or Tina Olson Grande at [email protected]
Sincerely,
Mary R. Grealy
President
______
National Association of Manufacturers
733 10th Street, NW, Suite 700
Washington, DC 20001
P 202-637-3144
F 202-637-3182
https://www.nam.org/
July 30, 2020
The Honorable Charles Grassley
Chairman
U.S. Senate
Committee on Finance
Washington, DC 20510
The Honorable Ron Wyden
Ranking Member
U.S. Senate
Committee on Finance
Washington, DC 20510
Dear Chairman Grassley and Ranking Member Wyden:
On behalf of the National Association of Manufacturers, I write to
thank you for holding today's hearing, ``Part 2: Protecting the
Reliability of the U.S. Medical Supply Chain During the COVID-19
Pandemic.'' The NAM is the nation's largest industrial trade
association, representing small and large manufacturers in every
industrial sector and in all 50 states. Manufacturers are concerned
about the rise in fake and counterfeit products, which cost the U.S.
economy nearly$131 billion and more than 325,000 jobs in 2019 alone.
The COVID-19 pandemic has brought new urgency to the fight against
counterfeits. Fake goods not only reduce U.S. jobs and infringe on
creators' intellectual property rights, but also threaten consumer
health and safety. Counterfeit test kits and unsafe PPE peddled to
unwitting consumers can exacerbate the public health crisis that our
nation faces.
Manufacturers have developed several policy proposals to combat
counterfeits, which are detailed in the attached report. In brief, we
urge policymakers to (1) require e-commerce platforms to reduce the
availability of counterfeits; (2) modernize enforcement laws and
tactics to keep pace with counterfeiting technology; (3) streamline
government coordination to tackle counterfeit items; and (4) empower
consumers to avoid counterfeit goods. In addition, we recognize that
any lasting solution will require stronger collaboration among all
private sector stakeholders.
On behalf of the millions of men and women who make things in America,
thank you for your attention to this important issue.
Sincerely,
Chris Netram
Vice President, Tax and Domestic Economic Policy
______
Countering Counterfeits:
The Real Threat of Fake Products
How Fake Products Harm Manufacturers, Consumers, and Public Health--and
How to Solve This Problem
Amid an unprecedented global health crisis, manufacturers have stepped
up and taken the lead, working together and with national, state and
local governments to fight the spread of COVID-19. Manufacturers
deliver day-to-day necessities, lifesaving medical innovations and
products that improve people's lives in countless ways. While the
pandemic has demonstrated anew the importance of American innovation
and ingenuity, it has also revealed a serious threat: counterfeit
products that put lives and livelihoods at risk.
Counterfeiting is not a new problem; it has harmed manufacturers,
American workers and consumers for years. But the problem is getting
worse, and the COVID-19 pandemic has shown just how dangerous inaction
can be. As part of the nation's critical response effort, manufacturers
have been supplying health-care workers and other Americans on the
front lines of this crisis with vital goods, including personal
protective equipment, hospital beds, ventilators, hand sanitizers,
cleaning supplies and other critical health-care and safety products.
But while manufacturing men and women work long hours to ramp up
production of desperately needed products to fight the spread of this
deadly illness, counterfeiters have exploited the crisis to peddle fake
tests, dangerous vaccines and ineffective protective gear. These
counterfeits are harming American citizens and hindering manufacturers'
efforts to protect their workers and communities.
The prevalence of counterfeits in the COVID-19 response has brought new
urgency to this long-simmering issue. So the National Association of
Manufacturers is leading the charge against fake and counterfeit goods,
bringing together diverse stakeholders and driving innovative policy
solutions to address these issues once and for all and to ensure the
long-term success of our sector and the safety and security of the
people who rely on our products.
Jay Timmons
President and CEO
National Association of Manufacturers
______
I. Counterfeits and the Threat to Manufacturers
Counterfeit goods are a threat to manufacturers and to the consumers
they serve. Fake products have infiltrated everyday avenues of
commerce, making their way into supply chains and consumers' homes. The
problem is not limited to specific sectors: it affects a broad range of
manufactured goods, from automotive parts and children's toys to
medical devices and pharmaceuticals. The rise of counterfeits threatens
manufacturers' competitiveness, undermines consumer confidence and
poses a threat to individuals' health and safety.
By one estimate, global trade in counterfeit and pirated goods exceeded
$500 billion in 2016, which amounts to 3.3% of all global trade.\1\
Even this number likely fails to capture the full scope of the problem.
Attempts to understand the scale of counterfeit goods are tied to the
data on counterfeit goods seized by officials at Customs and Border
Protection. It is estimated that authorities in the United States catch
less than 2.3% of the total volume of counterfeit goods.\2\
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\1\ Trade in fake goods is now 3.3% of world trade and rising,
Organization for Cooperation and Development (March 18, 2019), https://
www.oecd.org/newsroom/trade-in-fake-goods-is-now-33-of-world-trade-and-
rising.htm.
\2\ Commission on the Theft of American Intellectual Property, the
Theft of American Intellectual Property: Reassessments of the Challenge
and United States Policy, Update to the IP Commission Report 9 (2017),
http://ipcommission.org/report/IP_Commission
_Report_Update_2017.pdf.
[GRAPHIC] [TIFF OMITTED] T3020.007
China is the top global hub for counterfeiting. In 2019, more than 8 of
every 10 counterfeit products seized at U.S. borders came from China or
Hong Kong, dwarfing the volume of counterfeits from any other country
or region.\3\ Chinese counterfeits challenge U.S. manufacturers not
only in China and in the United States, but also in markets across
Asia, Africa and the Americas. Tackling these problems requires working
more closely with trading partners to enhance enforcement, capacity
building and joint advocacy.
---------------------------------------------------------------------------
\3\ U.S. Customs and Border Protection Office of Trade,
Intellectual Property Rights Seizure Statistics: FY 2019 14 (2020),
https://www.cbp.gov/sites/default/files/assets/documents/2020-May/
FY%202019%20IPR%20Seizure%20Powerpoint%20FINAL%20PBRB%20AP
PROVED_0.pdf.
[GRAPHIC] [TIFF OMITTED] T3020.008
E-Commerce: Captive to Counterfeits?
Counterfeiters have gained strength due to the growth of e-commerce
platforms, which have transformed how companies connect with customers
and changed the marketplace for selling goods. E-commerce sales now
make up 10% of all retail spending, up from 3% of total sales in
2009.\4\ Pre-COVID-19 estimates predicted that global e-commerce sales
would exceed $4 trillion in 2020,\5\ with U.S. e-commerce spending to
exceed $1 trillion by 2025, doubling the volume from 2018.\6\ The spike
in e-commerce during the COVID-19 pandemic has only pushed these
numbers higher.\7\
---------------------------------------------------------------------------
\4\ Joe Kaziukenas, U.S. E-Commerce Posts Fastest Growth in Seven
Years, Marketplace Pulse (November 20, 2019), https://
www.marketplacepulse.com/articles/us-e-commerce-posts-fastest-growth-
in-seven-years.
\5\ U.S. Government Accountability Office, GAO-18-216, Intellectual
Property: Agencies Can Improve Efforts to Address Risks Posed by
Changing Counterfeit Market 12 (2018), https://www.gao.gov/assets/690/
689713.pdf [hereinafter GAO-18-216].
\6\ Kaziukenas, supra note 4.
\7\ April Berthene, Shoppers Buy More Online Compared To Before the
Pandemic, Digital Commerce 360 (June 8, 2020), https://
www.digitalcommerce360.com/article/coronavirus-impact-online-retail/.
While these platforms have created opportunities for manufacturers to
sell their products and provided new conveniences for consumers, they
have also created a pipeline directly to customers that bad actors can
exploit. Millions of third-party sellers can easily access these
platforms without providing basic information about their identity or
location, and the platforms themselves exert little oversight over
these sellers. Counterfeiters are therefore better able to pose as
legitimate sellers to profit off of fake goods. Because bad actors are
often able to hide their identities, it is difficult for the government
and the private sector to hold them accountable even after they are
---------------------------------------------------------------------------
discovered.
A surge in counterfeits accompanies a growth in e-commerce. E-
commerce sales have grown and are expected to exceed $4
trillion by 2020.\8\
---------------------------------------------------------------------------
\8\ GAO-18-216, supra note 5, at 12.
Online platforms present unique challenges for manufacturers who must
devote ever-increasing resources and time to monitoring search engine
results, e-commerce channels, social media postings, payment providers
and others who may all play a role in driving online traffic to
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counterfeit products.
Bosch like other manufacturers faces the dilemma in effectively
dealing with counterfeiters present in online marketplaces.
There are several key challenges to dealing with online
counterfeits. Counterfeiters are able to market goods that
appear to be legitimate, often using the brand owner's own
online content, making it difficult to identify counterfeits
without a purchase. The sheer volume of listings can also pose
a challenge to enforcement. Finally, the counterfeiters are
able to effectively hide the true person or entity hidden
behind the digital curtain separating them from the consumers
in the online marketplaces. Even though some online
marketplaces have tools to report sellers, the brand owner is
unable to take measurable actions against the infringing seller
without more knowledge of the seller's identity. In the current
environment, the brand owner's ability to thoroughly defend its
intellectual property is hampered.
- Clayton Lindgren, Senior Manager, Country Approval and Brand
Protection, Robert Bosch LLC
During the COVID-19 pandemic, counterfeiters--who have long preyed on
vulnerable consumers to make a profit--have taken advantage of
consumers' increased anxiety and fear, the high demand for certain
goods and the substantial increase in e-commerce necessitated by social
distancing measures.\9\ COVID-19 has required manufacturers to adapt to
new demands and innovate new products at record speeds, further
complicating the challenges of fighting counterfeits.
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\9\ See, e.g., Jay Kennedy, Buyer Beware: Counterfeit markets can
flourish during a public health crisis, The Conversation (March 26,
2020), https://theconversation.com/buyer-beware-counterfeit-markets-
can-flourish-during-a-public-health-crisis-134492; Europol, How
Criminals Profit From the Covid-19 Pandemic (March 27, 2020), https://
www.europol.europa.eu/newsroom/news/how-criminals-profit-covid-19-
pandemic; Daniel Bennett, Covid-19 and Counterfeiting: How the Pandemic
Is Reshaping Brand Protection--Part 1 (April 2, 2020), https://
www.corsearch.com/covid-19-counterfeiting-how-pandemic-reshaping-brand-
protection/.
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Peddling Fakes During a Pandemic:
Counterfeit products have seriously complicated COVID-19
response efforts, with increasing reports of untested test
kits, counterfeit pharmaceuticals and fake respirator masks. As
legitimate manufacturers worked to develop and manufacture
critical COVID-19 tests and test supplies, unscrupulous actors
used the uncertainty to sell dangerous knockoffs. In April
2020, the Department of Homeland Security announced it ``worked
alongside U.S. Customs and Border Protection to seize over 225
shipments of mislabeled, fraudulent, unauthorized or prohibited
COVID-19 test kits, treatment kits, homeopathic remedies,
purported anti-viral products and personal protective equipment
(PPE).''\10\ As CBP seized thousands of test kits entering the
United States through International Mail Facilities, the U.S.
Food and Drug Administration warned consumers about the
fraudulent tests being sold online.\11\ Amazon announced that
it blocked or removed more than 1 million products that
contained suspect claims about COVID-19 treatments and
applications.\12\
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\10\ ICE HSI Launches Operation Stolen Promise, U.S. Immigration
and Customs Enforcement (April 15, 2020), https://www.ice.gov/news/
releases/ice-hsi-launches-operation-stolen-promise.
\11\ 1,147 Prohibited Test Kits Seized by Chicago CBP in 45 Days,
U.S. Customs and Border Protection (May 1, 2020), https://www.cbp.gov/
newsroom/local-media-release/1147-prohibited-test-kits-seized-chicago-
cbp-45-days; Beware of Fraudulent Coronavirus Tests, Vaccines and
Treatments, U.S. Food and Drug Administration (April 29, 2020), https:/
/www.fda.gov/consumers/consumer-updates/beware-fraudulent-coronavirus-
tests-vaccines-and-treatments.
\12\ See, e.g., Catherine Thorbecke, Amazon removes 1 million
products for misleading claims, price gouging amid coronavirus outbreak
(March 3, 2020), https://abcnews.go.com/Business/amazon-cracks-million-
misleading-price-gouged-products-amid/story?id=69357582.
Counterfeiters operating as third-party sellers on popular e-commerce
platforms can undercut legitimate manufacturers' sales because they are
not subject to the same rules and standards. They can sell products for
a fraction of the price because they have not invested in the research
and development to create new products. The products they are shipping
have not gone through the same safety tests or been built to the same
stringent standards as products made by the manufacturers who follow
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the rules.
E-commerce platforms unfortunately benefit from counterfeit products as
well, making a profit from third-party sales of counterfeits just as
they do from legitimate sales. Amazon made $53.76 billion in revenue
from third-party sales in 2019, up from $42.75 billion in 2018.\13\
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\13\ J. Clement, Third-party seller share of Amazon platform 2007-
2020, Statista (May 4, 2020), https://www.statista.com/statistics/
259782/third-party-seller-share-of-amazon-platform/.
Without a level playing field, manufacturers face challenges competing
and maintaining their technological edge. Without products subject to
testing and standards, consumers face real threats to their health and
safety.
Impact on Manufacturers: The Cost of Counterfeits
Counterfeits threaten manufacturers' investments in innovation and
violate manufacturers' intellectual property rights. Manufacturers in
the United States perform nearly two-thirds of all private-sector
research and development, totaling $271 billion in 2018.\14\
Safeguarding manufacturers' intellectual property rights is critical to
manufacturers' continued ability to grow and innovate. Counterfeiting
can slow economic growth and lead to job loss in IP-intensive
industries.\15\
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\14\ National Associating of Manufacturers, Facts About
Manufacturing: Top 18 Facts You Need to Know, https://www.nam.org/
facts-about-manufacturing/ (last visited June 16, 2020).
\15\ Congressional Research Service, RL34292, Intellectual Property
Rights and International Trade (May 12, 2020), https://fas.org/sgp/crs/
row/RL34292.pdf.
The Economic Costs:
With counterfeits making up 3.3% of total merchandise trade,
the U.S. economic impacts are staggering. For 2019,
counterfeiting would have subtracted nearly $131 billion from
the U.S. economy, including direct, indirect and induced
economic impacts. That means $22.3 billion of lost labor
income, 325,542 fewer jobs,$5.6 billion of lost federal tax
revenues and nearly $4 trillion less in state and local tax
collections.\16\
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\16\ Data from NAM Chief Economist Chad Moutray running global
counterfeit totals through IMPLAN (on file with author).
In addition to misappropriating manufacturers' valuable IP,
counterfeiters undermine the brand names and business reputations that
manufacturers invested money and time to establish. Counterfeiters
infringe on trademarks and confuse consumers as to the quality and
origin of products and services. They undermine the confidence and
quality that trademark laws are intended to support.\17\
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\17\ J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition, Sec. 2:5 (4th ed. 2015).
Counterfeits force manufacturers to divert resources away from critical
business operations and focus on policing platforms and protecting
their brands. Companies spend huge sums to employ global networks of
investigators, retain brand-protection experts and pursue enforcement
against counterfeiters.\18\ Eachdollar spent to fight counterfeits is a
dollar not spent to improve products, develop new technologies, grow
employee wages or create new American jobs.
---------------------------------------------------------------------------
\18\ GAO-18-216, supra note 5, at 18-19.
Small and medium-sized manufacturers are likely to be harmed the most
by the counterfeit market. These companies have fewer resources to
invest in the personnel and technology to monitor illicit activity and
protect their brands. Government enforcement efforts often rely on
information provided by brand owners, and smaller manufacturers are
less able to engage with government entities responsible for enforcing
their IP rights. Smaller firms are also more at risk to be driven out
of business by counterfeiters. They often offer fewer products than
their larger counterparts, which means that harm from counterfeits
cannot be easily offset.Smaller firms are less able to absorb the
losses that come when counterfeiters siphon off their business.
Impact on Consumers: The Dangers of Counterfeits
Consumers come in direct contact with some of the most common types of
counterfeit products, including cosmetics, toys and pharmaceuticals.
Many can pose real dangers to their health and safety. According to
CBP, 16% of the 31,560 shipments of counterfeit goods they seized in
2016 contained products posing threats to consumer health and
safety.\19\
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\19\ Id. at 2.
The threats to individuals can be severe. Counterfeit products
integrated into electronics such as chargers and hoverboards have
caused fires and physical harm. Faulty components that make their way
into critical auto safety products like airbags can undermine these
lifesaving mechanisms. Items like helmets falsely claiming to meet
government-approved safety standards have failed to perform their
functions and resulted in deaths.\20\
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\20\ Alexandra Berzon, et al., Amazon Has Ceded Control of Its
Site. The Result: Thousands of Banned, Unsafe or Mislabeled, The Wall
Street Journal (August 23, 2019), https://www.wsj.com/articles/amazon-
has-ceded-control-of-its-site-the-result-thousands-of-banned-unsafe-or-
mislabeled-products-11566564990?mod=article_inline.
The COVID-19 pandemic has made the threat to consumers even more
obvious. The appearance of fake testing kits, unsafe pharmaceuticals
and counterfeit masks has caused confusion among anxious consumers and
exacerbated public health risks in the current crisis.\21\ As families
are staying home more often, they are going online to purchase toys to
keep children entertained, desks and chairs to set up home offices,
outdoor power equipment to tend to their homes and recreational
equipment to stay in shape. Manufacturers of all these products have
reported high levels of counterfeits that create serious, even fatal,
risks to consumers.
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\21\ See, e.g., Jay Kennedy, Buyer Beware: Counterfeit markets can
flourish during a public health crisis, The Conversation (March 26,
2020); How Criminals Profit From the Covid-19 Pandemic, Europol (March
27, 2020).
As the current COVID-19 pandemic has unfortunately illustrated,
health-care products will continue to be one of the most
commonly targeted industries for counterfeiters. We are likely
to continue to see illicit medical devices, drugs and personal
care products entering legitimate supply chains. This is a
problem that impacts patients and consumers in the U.S. and
across the globe. At Johnson & Johnson, we invest significant
resources to aggressively pursue this illegal activity but we
believe businesses must join together and partner with
governments to become a greater force in fighting the growing
threat of counterfeits. Our ultimate goal always is to keep
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patients and consumers safe but we cannot do it alone.
- Rich Kaeser, Vice President of Global Brand Protection,
Johnson & Johnson
The Need for Action Now
The threats to manufacturers and consumers underscore the need for
swift action against counterfeits. There is no silver bullet for
tackling the diverse set of factors that have allowed counterfeits to
proliferate. But the COVID-19 environment demonstrates the need for
action and presents a new opportunity for the government to tackle this
long-standing problem.
Counterfeiting is a complex problem that requires unwavering
commitment from the private and public sectors to solve. UL's
Project Centurion, an effort to reduce counterfeit products in
the marketplace by leveraging a global safety network, led to
over 270,000 counterfeit UL Marked products seized globally in
2019, valued at $23 million. UL's Anti-Counterfeiting
Innovation Center combines expertise from law enforcement,
retailers, e-commerce platforms, government officials and
others to address complex counterfeiting challenges, reframe
problems and implement innovative solutions. The Center aims to
lead in anti-counterfeiting innovations that drive globally
relevant, cost-effective solutions that advance public safety
and build capacity within law enforcement and private sector
organizations to combat IP crime.
- Brian H. Monks, Vice President and Chief Security Officer, UL
II. Policy Solutions and Call to Action
REQUIRE E-COMMERCE PLATFORMS TO REDUCE THE AVAILABILITY OF
COUNTERFEITS
THE CHALLENGE
To reduce the harm caused by counterfeits, stakeholders must work to
eliminate the availability of counterfeit goods for purchase. Fewer
counterfeits on the market mean fewer consumers harmed by fake goods
and fewer financial incentives for counterfeiters to operate. The
challenge today is identifying and advancing policies and programs that
policymakers, retailers, e-commerce platforms and brand owners can
collectively adopt to limit the availability of as many counterfeit
goods as possible.
Several key market factors drive counterfeiting, including the ability
of counterfeiters to turn a profit, their access to global markets and
a lack of accountability for bad actors.\22\ The most important of
these, however, is profit. Indeed, the higher potential profitability
of counterfeiting itself--based on their ability to free-ride with
respect to research, development and marketing costs while accessing
cheaper production processes and materials--creates the incentive for
entities to engage in counterfeiting over legitimate production.\23\ By
using e-commerce platforms and selling directly to consumers,
counterfeiters can cut out the middleman and further increase their
profit margins.\24\
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\22\ Although limited, research shows that counterfeiting and
piracy are driven by both demand- and supply-side factors embedded in
institutional, behavioral and cultural environments. However, for
purposes of limiting the availability of counterfeits, this paper
focuses on the supply-side only. See Seung-Hee Lee and Boonghee Yoo, A
Review of the Determinants of Counterfeiting and Piracy and the
Proposition for Future Research, 24 Korean Journal of Policy Studies 1,
6 (2009), https://pdfs.semanticscholar.org/ad71/
3f727bc224ab79ffc8b999bdede50b0e8a26.pdf.
\23\ See id. at 19.
\24\ See Jon Emont, Amazon's Heavy Recruitment of Chinese Sellers
Puts Consumers at Risk, The Wall Street Journal (November 11, 2019),
https://www.wsj.com/articles/amazons-heavy-recruitment-of-chinese-
sellers-puts-consumers-at-risk-11573489075?mod=cx_picks&cx_nav
Source=cx_picks&cx_tag=collabctx&cx_artPos=1#cxrecs_s.
The Internet and e-commerce platforms have provided counterfeiters with
access to global markets through easily accessible sales and
distribution channels. A factory in China can quickly create an online
account with a platform and begin selling directly to consumers around
the world. These same channels also allow counterfeiters to avoid
liability for the harm caused by counterfeit goods and continue to
pursue their illicit operation. Counterfeiters can use false identities
and addresses and then vanish at the first sign of trouble.\25\
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\25\ See, e.g., id. at 21 (citing Organisation for Economic Co-
operation and Development, The Economic Impact of Counterfeiting--
Counterfeiting and Piracy Overall Assessment (2006)); Daniel Chow,
Alibaba, Amazon, and Counterfeiting in the Age of the Internet,
Northwesten Journal of International Law and Business, Forthcoming
(August 22, 2019); Ohio State Pub. L. Working Paper No. 497 (2019),
https://ssrn.com/abstract=3441110.
E-commerce platforms have democratized retail sales and enabled small,
often remote, legitimate manufacturers to compete in the global
marketplace. Tackling the problem of counterfeiters on e-commerce
platforms should be done in a way that does not undermine the value
these platforms provide to legitimate manufacturers, many of whom
operate as good-faith, third-party sellers on these online
marketplaces. Solutions should be crafted to target the parts of the
system that counterfeiters can exploit, and they should increase the
cost for counterfeiters by ensuring accountability for bad actors.
THE SOLUTIONS
Congress should enact legislation to require e-commerce
platforms to strengthen upfront screening of potential vendors.
Congress should require e-commerce platforms to take the following key
steps or face contributory liability for infringement due to vendor
activities on their platforms:
Collect and verify key information (such as representative
identity, address and contact information and bank account information)
prior to vendor listing.
Require potential vendors to attest, with appropriate proof,
that the goods sold on the platform are authentic and authorized and
have appropriate legal documentation required for sale in the United
States where necessary.\26\
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\26\ Such information could include a chain of title or license (to
demonstrate that their product sales are authorized), legal
certifications such as a Children's Product Certificate (to meet
requirements by U.S. safety certification bodies) or other
demonstrations of conformity with appropriate U.S. standards.
Maintain a current, verified set of the information referenced
above for each vendor (through ongoing audits and reverification) or
face the risk of contributory liability in the event of counterfeiting
---------------------------------------------------------------------------
enforcement.
Require a vendor to attest that it is only using images on its
product listing sites that it is authorized to use and that accurately
depict the goods being sold, and require it to conduct due diligence on
submitted images to ensure that they appear to be accurate.
Conduct due diligence, including use of appropriate technology,
to screen for counterfeit products prior to offering the seller's goods
for sale.
Screen potential vendors and products prior to approval to
ensure that previously terminated vendors, or previously delisted
products, do not reappear on platforms under a different vendor or a
different alias.
Congress should enact legislation that requires e-commerce
platforms to share information relevant for consumers to understand the
risk of purchasing counterfeits and for brand owners to pursue
effective enforcement actions against counterfeiters. Congress should
require platforms to take the following key steps or face contributory
liability for infringement due to vendor activities on their platforms:
Provide to the public the full name and contact information of
the vendor.
Provide to the public information about whether the listed
vendor is the manufacturer, importer, reseller and/or retailer of the
product.
Notify the consumer prior to purchase of any given product if
the vendor supplying a product is different from the vendor named on
the product listing page.
Congress should enact legislation that requires e-commerce
platforms to remove promptly counterfeit vendors and products from
their platforms. Congress should require e-commerce platforms to take
the following key steps or face contributory liability for infringement
due to vendor activities on their platforms:
Develop and use technology solutions to routinely screen for,
and proactively remove, counterfeit products.
Implement a timely, accessible takedown process for removing
listings of counterfeit goods.
Terminate sellers that have sold counterfeit goods on the
platform.
Congress should appropriate emergency funds to boost enforcement
against fake and counterfeit versions of products urgently needed for
COVID-19 treatment and care such as test kits, medicines, personal
protective equipment and other health supplies:
Those funds should be routed through the National Intellectual
Property Rights Coordination Center to ensure interagency sharing of
real-time intelligence and coordinated ramp-up of enforcement efforts.
The FDA should play a key role in providing up-to-date information to
both consumers and government agencies on products requiring FDA
approval and the status of approvals to ensure appropriate border
enforcement against counterfeit products.
Congress should strengthen the ability of key government
agencies to protect American consumers from fake medical products by
ensuring the FDA has full and clear statutory authority to destroy
counterfeit medical products.
MODERNIZE ENFORCEMENT LAWS AND TACTICS TO KEEP PACE WITH
COUNTERFEITING TECHNOLOGY
THE CHALLENGE
Fighting counterfeits requires a legal framework and robust enforcement
to hold bad actors accountable. This means the government, brand owners
and e-commerce platforms must work together to enforce IP, trade and
consumer protection laws, which collectively protect brands from unfair
competition and consumers from harm.\27\
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\27\ Esther A. Zuccaro, Gucci v. Alibaba: A Balanced Approach to
Secondary Liability for E-
Commerce Platforms, 17 North Carolina Journal of Law and Technology On.
144, 159 (2016) (citing J. Thomas McCarthy, McCarthy on Trademarks and
Unfair Competition, Sec. 2:2 (4th ed. 2015)).
Despite the resources expended by these stakeholders to fight them,
counterfeits continue to enter the U.S. marketplace at an increasing
rate.\28\ This problem has only been exacerbated as criminals look to
capitalize on the need for essential items to address the COVID-19
health crisis.\29\ The ineffectiveness of enforcement efforts against
counterfeits is not due to a lack of effort \30\ but to multiple
factors combining to give counterfeiters a decided advantage against
enforcement efforts.
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\28\ A recent report by the Organisation for Co-operation and
Development and the European Union Intellectual Property Office, for
example, shows that global trade in counterfeit and pirated goods has
exploded in recent years, with the value of imported fake goods
increasing from $461 billion in 2013 (2.5% of world trade) to $509
billion in 2016 (3.3% of all global trade). OECD, supra note 1.
\29\ See, e.g., Jay Kennedy, Buyer Beware: Counterfeit markets can
flourish during a public health crisis, The Conversation (March 26,
2020), https://theconversation.com/buyer-beware-counterfeit-markets-
can-flourish-during-a-public-health-crisis-134492; Europol, How
Criminals Profit From the Covid-19 Pandemic (March 27, 2020), https://
www.europol.europa.eu/newsroom/news/how-criminals-profit-covid-19-
pandemic.
\30\ As noted by the coheads of Venable's Copyright and Trademark
Litigation Practice, ``While rights holders scour online marketplaces
and investigate and report counterfeits to the marketplaces, and some
marketplaces have stepped up proactive enforcement, the sheer volume of
listings and ease with which sellers can enter the e-commerce market
mean that counterfeiters have the advantage.'' Meaghan H. Kent and
Nicholas W. Jordan, Congress Acknowledges Dramatic Shift Toward E-
commerce with Bipartisan Bills Aimed at Reducing Counterfeits, Venable
(May 8, 2020), https://www.venable.com/insights/publications/2020/05/
congress-acknowledges
-dramatic-shift-toward.
Current U.S. law fails to appropriately hold e-commerce platforms
accountable for their role in the rise of counterfeits, despite the
evidence that fake goods have proliferated on the Internet. By allowing
counterfeiters unparalleled access to consumers worldwide and the
ability to vanish into cyberspace at the first sign of trouble, e-
commerce platforms offer counterfeiters the perfect avenue for selling
fakes while avoiding liability.\31\ The immense revenue generated from
third-party sales coupled with various gaps and safe harbors in U.S.
laws have empowered e-commerce platforms to dispense with basic
oversight responsibilities that would prevent counterfeits from being
sold on them.
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\31\ As the Third Circuit recently recognized, the inability for
customers to contact third-party sellers directly ``enables third-party
vendors to conceal themselves from the customer, leaving customers
injured by defective products with no direct recourse to the third-
party vendor.'' Oberdorf v. Amazon.com Inc., 930 F.3d 136, 145 (3d.
Cir. 2019). See also GAO-18-216, supra note 5, at 2.
Gaps in current U.S. statutes and a lack of case law have enabled e-
commerce platforms to avoid being held liable for contributory
trademark liability, even where they fail to take sufficient actions to
address counterfeits. Under the legal concept of contributory trademark
liability, an entity may be held liable for selling counterfeits even
though they do not actually engage in the actual counterfeiting
activity.\32\ This is a legal concept created through the courts \33\
and lacks the clear standards necessary for courts to adequately apply
it to new and emerging situations or technologies--such as what legal
obligations e-commerce platforms should have in preventing the sales of
counterfeits on their platforms.\34\ Without a clear legal standard or
legislation that would offer clarity in such cases, courts are left
struggling to clearly define when an e-commerce platform may be held
liable for its role in the sale of counterfeits.
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\32\ Contributory trademark liability is a means by which an entity
may be held liable for selling counterfeits even though they do not
actually engage in infringing activities in certain instances, such as
where ``it knows or has reason to know'' the product was fake. Inwood
Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 847-850
(1982); see also 35 U.S.C. Sec. 271(c).
\33\ Tiffany Inc. v. eBay, Inc., 600 F.3d 93, 103 (2d Cir. 2010)
(``Contributory trademark infringement is a judicially created doctrine
that derives from the common law of torts.'').
\34\ See Eric Goldman, eBay Mostly Beats Tiffany in the Second
Circuit, but False Advertising Claims Remanded, Technology and
Marketing Law Blog (April 1, 2010), https://blog.ericgoldman.org/
archives/2010/04/ebay_mostly_bea.htm (``In a subtle opinion with
potentially significant implications, eBay has preserved most of its
big 2008 district court victory in the long-running Tiffany v. eBay
case. However, as seems to be the norm with federal appellate opinions,
the opinion intentionally sidesteps some key open doctrinal questions
squarely raised by the case--such as if the Second Circuit recognizes
the nominative use defense, or the Second Circuit's standards for
contributory trademark infringement. As a result, we don't get the
clean and decisive doctrinal standards that help make a case truly
precedent-setting . . .'').
Because e-commerce and its role in the proliferation of counterfeits
are relatively new, whether and to what extent contributory trademark
liability applies in this context is unclear. As such, courts often
sidestep the issue or parties are likely to settle out of court.\35\ In
other cases where courts do attempt to address the issue, laws that
were not intended to protect e-commerce platforms from selling
dangerous products are interpreted as providing them a legal safe
harbor.\36\ Both Congress and the administration have explicitly
highlighted the need to assess liability for e-commerce under both
contributory trademark infringement and product liability law to combat
counterfeits,\37\ steps that manufacturers generally support.\38\ Such
clarity is especially important to ensure courts can hold e-commerce
platforms accountable when they are willfully blind and allow fake
products to be falsely advertised as genuine.\39\
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\35\ See Paul Mazur, In Fight Against Fakes, Alibaba and Owner of
Gucci Go From Adversaries to Partners, The New York Times (August 3,
2017), https://www.nytimes.com/2017/08/03/business/alibaba-kering-
fakes-luxury.html.
\36\ One such statute is Section 230 of the Communications Decency
Act, which as intended to shield online platforms for communication on
their platform, but not the sale of dangerous harmful goods. However,
while Section 230 should not be interpreted to protect the sale of
harmful goods, manufacturers still support its application to protect
online social platforms from the speech of third parties. See, e.g., 47
U.S.C. Sec. 230(c)(1); Green v. American Online, 318 F.3d 465,471 (3d
Cir. 2003) (providing that Section 230 of the CDA ``precludes courts
from entertaining claims that would place a computer service provider
in a publisher's role, and therefore bars lawsuits seeking to hold a
service provider liable for its exercise of a publisher's traditional
editorial functions--such as deciding whether to publish, withdraw,
postpone, or alter content.''); Beatrice Martinet and Reinhard J.
Oertli, Liability of E-Commerce Platforms for Copyright and Trademark
Infringement: A World Tour, American Bar Association (2015). See also
Oberdorf, 930 F.3d at 152.
\37\ See U.S. Department of Homeland Security, Combating
Trafficking in Counterfeit and Pirated Goods Report to the President of
the United States 33 (2020), https://www.dhs.gov/sites/default/files/
publications/20_0124_plcy_counterfeit-pirated-goods-report_01.pdf; see
also Kent and Jordan, supra note 30 (noting recently introduced
legislation that would ``amend the Trademark Act of 1946 to provide for
contributory liability for e-commerce platforms for use of a
counterfeit mark by a third-party seller unless the platforms satisfy
certain statutory requirements.'').
\38\ While manufacturers support the need for legislation to ensure
that e-commerce platforms cannot evade liability for the sale of
counterfeits over their platform by being willfully blind, such
legislation must be careful not to prescribe overly rigid requirements
that may prevent e-commerce platforms from developing and utilizing
innovative solutions to prevent the sale of counterfeits and assist in
locating counterfeiters.
\39\ See Tiffany Inc., 600 F.3d at 109 (holding that, with regard
to eBay's potential contributory liability for ``facilitating'' third
parties' infringing sales, the relevant standard to assess eBay's
liability was the Inwood test, which only required the court to
determine whether eBay continued to supply its services to sellers when
it knew or had reason to know they were engaging in trademark
infringement, rather than whether it could have prevented it. In doing
so, the court enabled e-commerce platforms to continue to avoid
liability by being willfully ignorant).
Our law enforcement bodies lack modern legal authorities, resources and
tools that are effective against counterfeiters. Policymakers have
failed to update enforcement tools to keep pace with the increasingly
sophisticated technologies and practices used by counterfeiters.\40\
The effective enforcement against counterfeiters is throttled due to
gaps in current U.S. counterfeiting laws, which define
``counterfeiting'' too narrowly,\41\ fail to account for the likelihood
the counterfeit product may contribute to or cause death or physical
injury and fail to appropriately assign liability and award remedies
based on counterfeits' potential harm.\42\ As a result, a glaring
disparity exists between the moral culpability and actual harm caused
by counterfeiters and the penalties and remedies that arise from
it.\43\
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\40\ See Christo Hall, The need for sophisticated anti-counterfeit
technology is ever-growing as the practices of counterfeiters become
increasingly advanced, Pathogens and Global Health (May 2012), https://
www.ncbi.nlm.nih.gov/pmc/articles/PMC4001489/ (``Overt visible markers
on a drug's packaging have been commonly used to identify the genuine
from the fake. but the holograms and distinguishing markers applied to
the blister foil, film or paper substrates of the packaging are
mimicked and imitated to a high level of accuracy. To the untrained
eye, the genuine and fake examples can look identical.'').
\41\ Under both civil and criminal U.S. law, a ``counterfeit''
trademark is defined as a ``spurious mark'' that is ``identical with,
or substantially distinguishable from a registered mark,'' and whose
use is ``likely to cause confusion.'' 15 U.S.C. Sec. 1127. In practice,
courts are also often reluctant to label a product a counterfeit unless
the infringing defendant's is a clear copy of the registered trademark.
See Sandra L. Rierson, Pharmaceutical Counterfeiting and the Puzzle of
Remedies, 8 Wake Forest Intellectual Property Law Journal 433, 434
(2008) (citing Colgate-Palmolive Co. v. J.M.D. All-Star Import and
Export, Inc., 486 F. Supp. 2d 286, 291 (S.D.N.Y. 2007)).
\42\ See Rierson, Pharmaceutical Counterfeiting, at 445-448, 454
(noting that neither the Lanham Act nor the 1984 Trademark
Counterfeiting Ac--the two main federal statutes that create civil and
criminal liability for trademark infringement--``explicitly considers
the nature of the defendant's counterfeiting--e.g., the type of goods
being passed off [or the risk of harm posed by such good]--in
fashioning his punishment or the extent of his liability'').
\43\ Id.
Under both U.S. civil and criminal law, for a court to find a product
to be a ``counterfeit'' and impose the severe penalties such a
designation carries with it, the product must be a clear copy of a
registered trademark.\44\ But products that are almost identical and
contain trademarks that differ by only a couple of letters are merely
``infringing marks,''\45\ which carries no threat of jail time or even
monetary penalties. This means that a defendant selling unverified,
fake COVID-19 test kits, for example, would not be considered a
``counterfeiter'' and would face no risk to penalty under IP laws
because no patent exists for such test kits yet. Similarly, a defendant
found guilty of selling fake, but generically labeled, pharmaceuticals
will face no risk of prison or fines despite thefake drugs imperiling
human life,\46\ while a defendant guilty of counterfeiting identical
fake handbags ``may be required to pay thousands, if not millions, of
dollars in damages and/or fines, and may be sent to prison.''\47\
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\44\ While injunctive relief, rather than damages, is all that is
available in the form of relief in trademark infringement cases, when a
defendant crosses into counterfeiting, courts ``shall'' award treble
damages, or at the plaintiff's election, statutory damages of up to
$100,000 per mark and $1 million per mark if it is willful. 15 U.S.C.
Sec. 1117. In addition to these civil remedies, the Federal Trademark
Counterfeiting Act of 1984 established criminal penalties for anyone
who ``traffics in'' counterfeit goods intentionally, imposing a $2
million fine and up to 10 years in jail for deliberate trademark
counterfeiting and authorizing fines of up to $5 million for repeat
offenders. 18 U.S.C. Sec. Sec. 2318-2320.
\45\ 15 U.S.C. Sec. 1114(1)(a) (defining trademark infringement as
the unauthorized use of a trademark in connection with goods and/or
services in a manner that is likely to cause consumer confusion about
the source of the goods or services).
\46\ Id.
\47\ Rierson, supra note 41, at 454.
Finally, brand owners are left to fight counterfeiters alone since
consumers who ingest fake drugs or buy lead-ridden toys, for example,
are afforded no special avenue for relief under federal law,\48\
despite the fact that the consumer is often the primary victim of
counterfeiting and, in some instances, suffers serious physical
injury.\49\
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\48\ Congress did pass the Anti-counterfeiting Consumer Protection
Act of 1996, but the law provided no remedies for consumers directly
and only gave law enforcement agencies and trademark owners greater
weapons. See Pub. L. No. 104-153, 110 Stat. 1386 (codified as amended
in scattered sections of 18 U.S.C.).
\49\ Counterfeiters' increasingly sophisticated manufacturing
techniques have enabled them to use falsified markings on counterfeit
medicines in connection with genuine medicine, which makes it almost
impossible for the average consumer to differentiate between genuine
and counterfeit medicine. Most alarming, these counterfeit
pharmaceuticals and food products are not regulated, thus providing no
certainty that the medicine contains the essential ingredients
necessary to fight illness or even that its safe for human consumption.
These products pose a significant threat to consumer health at both the
individual and community levels, potentially resulting in critical
treatment failure and community-wide increases in microbial resistance.
See Counterfeit Pharmaceutical Inter-Agency Working Group Report to the
Vice President of the United States and to Congress (2011), https://
www.whitehouse.gov/sites/whitehouse.gov/files/omb/IPEC/
Pharma_Report_Final.pdf.
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THE SOLUTIONS
To address these issues and simultaneously strengthen effective
enforcement efforts while minimizing ineffective enforcement efforts,
manufacturers call for the following solutions:
Congress should clarify the legal doctrine of contributory
liability for trademark infringement by unambiguously defining the
doctrine and its parameters by statute, including setting forth
judicial review standards that encourage courts to develop critical
fact-specific case law.
Congress should update current laws to improve the definition of
counterfeits and fill statutory gaps that prevent effective enforcement
against counterfeiters. U.S. law must better recognize that the
determination of whether a product is a ``counterfeit'' for purposes of
liability should be based on more factors than simply whether the mark
is ``substantially indistinguishable'' from a registered trademark.\50\
Counterfeiters, for example, should not be able to avoid liability
simply by changing a letter in a word or slightly altering a symbol,
given the potential harm to consumers and brand owners.\51\ Necessary
updates include the following:
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\50\ 15 U.S.C. Sec. 1127.
\51\ ``Another common scenario occurs when infringers register a
similar mark and manufacture goods under this brand. The cost of
registration is relatively low and such counterfeiting is rampant.''
How to combat counterfeiting, World Trademark Review (May 1, 2017),
https://www.worldtrademarkreview.com/anti-counterfeiting/how-combat-
counterfeiting.
Broadening the definition of a ``counterfeit mark'' to include
not just those that are ``identical'' or ``substantially
indistinguishable,'' but also those whose use is ``likely to cause
confusion, or to cause mistake, or to deceive'' in relation to a
registered trademark and where the infringing party ``knowingly or
willfully engaged in the action.'' That broader definition would make
statutory damages, not just actual damages, available to a wider range
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of counterfeiting victims.
Encouraging courts handling counterfeiting cases to consider
additional factors beyond just similarity of marks, such as a
defendant's intent and risk of harm to consumers in determining whether
a mark is a counterfeit and determining damages. Courts almost
uniformly consider a defendant's intent when determining whether a
likelihood of confusion exists in the context of broader trademark
infringement cases. Consideration of a defendant's intent seems even
more appropriate when determining whether to subject a defendant to the
severe penalties associated with counterfeiting.
Adjusting available penalties and remedies according to type of
counterfeit and nature and degree of deception to better reflect the
danger to the public and degree of moral culpability associated with
such conduct.
Providing consumers with an avenue for relief under federal law
when, as is the case in many scenarios, the consumer is the primary
victim of counterfeiting activity and suffers severe injury as a
result.
Congress and relevant federal agencies should hold e-commerce
platforms to the same standards as brick and mortar retailers. Online
virtual shelves should not escape regulators' scrutiny for failing to
closely monitor for fake and untested goods, while physical shelves
face intense scrutiny and, in some instances, steep penalties. For
example, Congress should revise the definition of ``retailer'' under
consumer product safety laws to ensure e-commerce platforms are
required to fulfill the same legal obligations as brick and mortar
retailers, including having to report known product-related injuries to
the Consumer Product Safety Commission.\52\
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\52\ Congress should revise the definition of ``retailer'' under
the CPSA (15 U.S.C. Sec. 2052(a)(13)) to explicitly include e-commerce
platforms.
Congress and Customs and Border Protection should ensure full
implementation and enforcement of the STOP Act of 2018, including
requirements for the U.S. Postal Service to collect advanced electronic
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data for 100% of packages to track counterfeits.
The State Department and the U.S. Ambassador to the United
Nations should ensure that low terminal dues for foreign countries do
not continue to allow counterfeiters to cheaply ship goods to consumers
through the U.S. Postal Service.\53\ They should closely monitor global
implementation of the September 2019 agreement by parties to the
Universal Postal Union to allow countries to self-declare postal rates
and work with the White House on further actions to take if that
implementation is insufficient.
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\53\ ``Terminal dues is the system that posts use to pay one
another for international deliveries of letters and small packages. The
global terminal dues system, updated every four years by the Universal
Postal Union (UPU), does not fully reflect actual domestic processing
and delivery costs.'' U.S. Postal Service Office of Inspector General,
Terminal Dues in the Age of E-Commerce (December 14, 2015), https://
www.uspsoig.gov/sites/default/files/document-library-files/2015/RARC-
WP-16-003.pdf.
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IMPROVE GOVERNMENT COORDINATION TO TACKLE COUNTERFEITS
No single federal government agency is primarily focused on, or
primarily responsible for, addressing counterfeiting.
More than 20 federal agencies and numerous additional state and local
government agencies have jurisdiction over some aspect of
counterfeiting.\54\ These agencies do not fully coordinate their
activities, resulting in duplicative efforts, wasted resources and gaps
that counterfeit products can slip through.
---------------------------------------------------------------------------
\54\ See Fake Imports Entering the U.S.: List of federal government
agencies working to prevent the entry and distribution of counterfeit
and pirated goods in the United States, International Trade
Administration (last visited June 17, 2020), https://www.stopfakes.gov/
Fake-Imports-Entering-the-US.
NIPRCC and the White House Intellectual Property Enforcement
Coordinator are important players in attempts to better coordinate
these efforts, but gaps persist. Counterfeiters have been able to probe
weak spots in certain agencies--such as government procurement
---------------------------------------------------------------------------
channels--to spread counterfeit goods.
Those government agencies also do not always effectively coordinate
with industry. In a 2018 report, the U.S. Government Accountability
Office identified coordination and information sharing between
government enforcement agencies and private sector entities as critical
to fighting counterfeits.\55\ Manufacturers continue to see gaps in the
ability and willingness of government entities to share enforcement
intelligence with private sector actors.\56\ Additionally, many
manufacturers, particularly small and medium-sized firms, have not
taken advantage of opportunities to train or partner with government
agencies in order to more effectively block counterfeits. In some
cases, they are unable to do so because of limited time and resources.
---------------------------------------------------------------------------
\55\ See, e.g., GAO-18-216, supra note 5, at 40 (recommending that
``CBP, in consultation with ICE, should assess what, if any, additional
information would be beneficial to share with the private sector and,
as appropriate, take action to enhance information sharing'').
\56\ For example, despite language in the Trade Facilitation and
Trade Enforcement Act of 2015 granting U.S. Customs and Border
Protection (CBP) with explicit authority to share certain information
with the private sector, CBP has not taken the necessary steps to
implement that authority. See id. Similarly, CBP does not consistently
share information with online platforms about counterfeit products
seized at the border that are bound for the platform-run fulfillment
centers or that may have been sold via their platforms. See Brian
Huseman, VP, Public Policy, Amazon, Comment Letter to Department of
Commerce re Report on the State of Counterfeit and Pirated Goods
Trafficking and Recommendations (Docket No. DOC 2019 0003) (July 29,
2019), https://www.regulations.gov/document?D=DOC-2019-0003-0083.
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THE SOLUTIONS
To address these issues, manufacturers urge the U.S. government to take
a number of key steps:
Congress should establish and fund a new White House agency that
holds primary responsibility for U.S. anti-counterfeiting efforts,
including strategy, policy and enforcement. The new White House agency
should serve as a central point of contact for the private sector and
other stakeholders, and should:
Have a permanent staff to support its operations and dedicated
funding for its operations, as well as to allow grants to other U.S.
government agencies for anti-counterfeiting activities and programs.
Assume anti-counterfeiting responsibilities currently tackled
by existing White House offices, including the Intellectual Property
Enforcement Coordinator.
Have the authority to work with the director of the Office of
Management and Budget and the heads of departments and agencies to
identify programs that contribute to anti-counterfeiting efforts. It
should advise OMB as to whether agency budgets for anti-counterfeiting
activities are sufficient to meaningfully address the issues.
Head a newly created interagency task force consisting of
representatives at the deputy secretary or deputy director level from
key Cabinet agencies and independent agencies (such as the Federal
Trade Commission and the CPSC). The task force should also include
subgroups focused on anti-counterfeiting strategy, policy and
enforcement.
U.S. government agencies, at the direction and under the
oversight of the new White House agency, should expand informational
resources to help manufacturers battle counterfeiting, equipping
manufacturers and other private sector actors with better information
on bad-faith actors as well as on trusted importers. These should
include databases and tools to facilitate the exchange of risk
assessment information and lists of known violators between government
agencies, private sector actors and the general public. Specific
efforts should include the following:
CBP development of a database and resource library on importers
that CBP has vetted and deemed to be ``trusted.''\57\
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\57\ Such a database was promised under Objective 4.2 (Explore
technology options to increase the exchange of e-commerce information)
in CBP's 2018 strategy on e-commerce. See U.S. Customs and Border
Protection, E-Commerce Strategy 9 (2018), https://www.cbp.gov/sites/
default/files/assets/documents/2018-Mar/CBP-E-Commerce-Strategic-
Plan_0.pdf.
CPSC use of its National Electronic Injury Surveillance System
to identify product injuries and deaths from counterfeit products and
---------------------------------------------------------------------------
report those trends to enforcement agencies.
CPSC establishment of a substantial product hazard list, as
permitted under the Consumer Product Safety Improvement Act, that could
provide critical tools to battle fake and counterfeit products that
have spiked during the COVID-19 crisis.
U.S. government agencies, at the direction and under the
oversight of the new White House agency, should eliminate structural
and practical barriers that limit government-industry information
sharing:
CBP should fully and promptly implement the authorities granted
to CBP under the Trade Facilitation and Trade Enforcement Act of 2015
to share information consistently with private sector actors on
suspected counterfeit goods that have been seized or abandoned.
CBP should take steps to expand the level of information
consistently shared with the private sector, such as more limited
redaction of photographs of suspected seizures to better allow
identification of counterfeit products.
CBP should revise internal procedures to make it easier for
border agents to provide brand owners with samples of seized products.
This would allow brand owners to more quickly take action and work with
authorities to get the counterfeits out of circulation.\58\
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\58\ Under current law, CBP will only release seized product
samples to brand owners after they provide CBP with a cash bond
intended to insulate CBP from liability. The CBP port director
determines the value of the bond on a case-by-case basis. To expedite
the process, CBP should streamline the process and allow brand owners
to pay through alternative means, such as by credit card. See Bruce
Leeds, U.S. Customs and Border Protection Enforcement of Trademarks,
BrauMiller Law Group (October 7, 2018), https://www.braumillerlaw.com/
u-s-customs-border-protection-enforcement-of-trademarks/.
CBP and other U.S. government agencies should promote,
facilitate and provide financial incentives for companies, particularly
small and medium-sized companies, to share information with Customs
---------------------------------------------------------------------------
officials on how to identify genuine manufactured products.
CPSC should improve procedures to improve the speed and
effectiveness of processes to quickly share reliable counterfeit-
related consumer safety incidents with CBP and other relevant agencies.
CPSC should also prioritize hiring necessary staff in support of these
efforts, which should improve the U.S. government's ability to
identify, track and ultimately seize counterfeit consumer goods.\59\
---------------------------------------------------------------------------
\59\ Section 6(b) of the Consumer Product Safety Act requires the
Commission to ``take reasonable steps to assure, prior to its public
disclosure thereof, that information from which the identity of such
manufacturer or private labeler may be readily ascertained is accurate,
and that such disclosure is fair in the circumstances and reasonably
related to effectuating the purposes'' of the CPSA. 15 U.S.C.
2055(b)(1). Manufacturers rely on the safeguards provided by section
6(b) and the Commission's current information disclosure rules to
ensure that information disclosed publicly is accurate and fair.
Reasons for the public disclosure of information by the Commission
include, but are not restricted to, responses to Freedom of Information
Act and media requests. The CPSC also may seek to disclose information
on its own.
Congress should establish a fund, at the direction and with
oversight of the new White House agency, to support development of new
technologies, products and best practices to detect and block
counterfeit versions of products needed for responding to COVID-19 and
future pandemics.
IMPROVE PRIVATE SECTOR COLLABORATION IN THE FIGHT AGAINST COUNTERFEITS
THE CHALLENGE
Private sector actors, including brand owners, online marketplaces,
third-party search providers, shippers, customs brokers and payment
providers, bear the brunt of the impact of counterfeiting activity. It
is manufacturers' brands that are infringed, e-commerce platforms that
are hijacked to support illicit activity and payment platforms that are
misused to facilitate payments. While there is an important role for
government entities to take action against counterfeiting, the private
sector can also drive effective solutions to this growing challenge.
Despite the obvious need for robust private sector cooperation,
multiple factors have made collective efforts to find solutions more
challenging. Global counterfeiting has grown faster than the resources
ofindividual private sector stakeholders, and new counterfeiting
tactics have challenged the ability of individual stakeholders to adapt
and develop new, common approaches to the problem.
A lack of information sharing among private sector entities,
particularly brand owners and e-commerce platforms, has weakened the
ability of all stakeholders to monitor and fight against fake products
and detect bad-faith vendors that hide their real identity or move from
platform to platform.
No single company or sector can fight counterfeiting alone. Legitimate
manufacturers hold the information necessary to distinguish their
products from the fakes on the market. E-commerce platforms hold
information about the third-party sellers dealing in fake products.
Search providers have a broad view of how actors can move across
different platforms. Payment providers are a critical piece of tracing
illicit gains to counterfeiters and cutting off their access. Input
from each of these sources is necessary to allow both the government
and private sector to have full insight into the paths of counterfeit
goods and to track those responsible.
Manufacturers must collaborate with other legitimate companies to fight
counterfeiting, seeking common approaches and sharing best practices.
All private sector stakeholders must develop concrete mechanisms,
including new standards, databases and programs, to share information
directly and regularly about counterfeit products and bad-faith
vendors. They must use that information to limit the supply of
counterfeit products and to continually improve their strategies and
mechanisms.
[GRAPHIC] [TIFF OMITTED] T3020.009
THE SOLUTIONS
To address these issues, manufacturers urge private sector
stakeholders to take a number of key collaborative steps to better
fight counterfeiting:
Private sector actors should develop new mechanisms for
collaborative information sharing on counterfeiting activity. These
mechanisms should include data on counterfeiting activity and specific
actors that can be used by platforms to improve vendor vetting and by
legitimate manufacturers to pursue enforcement action against bad
actors. Such mechanisms could take the form of databases, exchanges or
dialogues, and they should make it easy for all stakeholders to share
information, based on a common set of information, and to make that
information fully searchable and accessible.
Private sector actors should work collectively to improve
platform brand protection programs, expanding the scale, accessibility
and scope of action for these programs. In particular, the following
actions are needed:
Improve the accessibility of existing brand protection programs
for all manufacturers by expanding their scope and ensuring that the
terms and conditions for participation do not effectively block out any
group of brand owners, including small and medium-sized manufacturers.
Create new programs or certifications, such as ``official'' or
``verified'' product listings, and mark products and vendors that have
fully verified that they are not counterfeit. For example, use of
specific domain names such as the pharmacy domain, can distinguish
legitimate e-commerce sources from fraudulent sources and provide
consumers with access to verified online pharmacies.
Strengthen and streamline direct communication channels between
platform providers and manufacturers, including by establishing
consistent, easy-to-
access contacts engaged with and knowledgeable of key industries.
Expand the scope of activity for these programs to include
joint enforcement activities between platforms and brand owners.
EMPOWER CONSUMERS TO AVOID COUNTERFEITS
THE CHALLENGE
In addition to new enforcement tools and brand protection programs,
addressing the fundamental challenge of counterfeits requires all
parties to equip consumers with the tools to avoid purchasing them in
the first place.
Consumers are not sufficiently aware or concerned about the direct
danger that counterfeit products can pose-not just to businesses, but
directly to themselves. Even when customers are aware of the negative
impacts of counterfeiting, they may not associate them with a direct
personal risk to themselves and those around them.
[GRAPHIC] [TIFF OMITTED] T3020.010
Even consumers aware of the risk of counterfeit products can fall
victim to counterfeiting by unwittingly purchasing fake products
online. Surveys indicate that consumers are more aware of, and
concerned with, counterfeit products being sold online but are
nonetheless worried about their ability to spot counterfeit products.
---------------------------------------------------------------------------
\60\ Danielle Commisso, Men and High-Earners Are More Likely to Buy
Counterfeit Goods, CivicScience (August 13, 2019), https://
civicscience.com/men-and-high-earners-are-more-likely-to-buy-
counterfeit-goods/.
\61\ CPC Strategy, The 2019 Amazon Consumer Shopping Study: How
Shoppers Browse and Buy on Amazon 14 (2019), https://
learn.cpcstrategy.com/rs/006-GWW-889/images/2019-Amazon-Shopper-
Srvuey.pdf.
That task is only getting harder as counterfeiters get smarter. Not
only are counterfeiters continuing to produce fake products that are
closer matches to the original version, but they are also increasingly
savvy in utilizing the online environment to make consumers believe
they are buying genuine products. For example, a counterfeiter may
advertise with pictures of the genuine product while shipping customers
the fakes. Counterfeiters have also gotten smarter at removing ``red
flags'' that consumers may use to tell a real from a fake product,
including pricing discrepancies, online reviews or suspect language
---------------------------------------------------------------------------
used to describe the product.
With a crowded media environment, increasing sophistication among
counterfeiters and the rapid growth in e-commerce, the traditional
playbook is not enough. Consumers expect everyone, including
manufacturers, online marketplaces and social media platforms, to do
more to protect them against the danger of fake products.\62\
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\62\ For example, 63% of respondents in a private-sector survey of
more than 2,600 global online shoppers indicated that they ``didn't
think enough was being done by brands, social media platforms and
online marketplaces to protect them from counterfeiters, fraud and
cybercrime.'' See MarkMonitor, Social Media: Insights Into Consumer
Shopping Behavior 12 (2019), https://markmonitor.com/wp-content/
uploads/dlm_uploads/2019/09/Global-Online-Protection
-Business-Survey-Q3-2019.pdf.
Legitimate manufacturers and platforms alike must invest in new
campaigns, technologies and tools to inform consumers about the direct
harm that counterfeit products can have. They must not only educate
consumers about the real and direct harm that counterfeits can cause
but also provide practical tools to help consumers differentiate
between real and fake products. They must increase and improve
communication with consumers if they have purchased known or possible
counterfeit products and warn potential buyers away from sellers or
websites with a track record of selling or facilitating counterfeits.
THE SOLUTIONS
To lower demand for counterfeits, Congress should take action to help
manufacturers and other stakeholders address these needs:
Congress should pass legislation requiring platforms to notify
online shoppers about actual or potential purchases of counterfeit
goods. If they do not take such steps, they could face contributory
liability for infringement due to vendor activities on their platforms.
To avoid such liability, platforms should develop specific protocols
based on consultation with private sector stakeholders. They should
communicate directly with customers that have purchased known or
suspected counterfeit products and develop specific warning signals to
flag when directing customers to sellers or websites previously engaged
in, or reasonably suspected to be engaging in, counterfeit activity.
Congress should appropriate emergency funds to the Department of
Health and Human Services to oversee a public campaign to educate
consumers of the dangers of fake and counterfeit versions of products
used for the treatment or prevention of COVID-19:
The campaign, run either directly by government agencies or
through grants to private sector groups, should develop and disseminate
content that is clear, focused, easily digestible and tailored to the
online environment to reach those most likely to purchase fake COVID-19
products through online platforms and social media websites.
The campaign should include a dedicated, continually updated
COVID-19 anti-counterfeiting resource developed in consultation with e-
commerce platforms, brand owners and law enforcement agencies. This
resource would rapidly inform consumers about the dangers of
counterfeit products and how to identify, report and protect against
fake products during the health crisis, and inform U.S. government
responses to future health crises.
III. Conclusion
The current COVID-19 pandemic and the countless headlines about fake
test kits, counterfeit face masks and fake drugs underscore the
counterfeiting challenge. But this problem extends beyond health
products. It also affects manufactured products that American
households use every day, from auto parts to clothing to toys.
Counterfeit versions of many products are widely available to American
consumers, particularly through e-commerce platforms. These counterfeit
goods pose a triple threat: harming the safety and well-being of
consumers, limiting the competitiveness of manufacturers of all sizes
and undermining American innovation.
Manufacturers need real, actionable, innovative policy solutions that
reverse the rising tide of counterfeit products. This report provides a
series of clear, decisive actions that all stakeholders can take, in
government and in the private sector, to stop counterfeiters in their
tracks.
The time is now. The solutions are clear. We must act.
______
Premier Inc.
444 North Capitol Street, NW, Suite 625
Washington, DC 20001
T 202-393-0860
F 202-393-6499
https://www.premierinc.com/
The Premier healthcare alliance appreciates the opportunity to submit a
statement for the record on the Senate Finance Committee's hearing
titled ``Part 2: Protecting the Reliability of the U.S. Medical Supply
Chain During the COVID-19 Pandemic'' scheduled for July 30, 2020. We
applaud the leadership of Chairman Grassley, Ranking Member Wyden and
members of the Committee for holding this hearing to examine the
integrity of our nation's medical supply chain.
Background on Premier
Premier Inc. is a leading healthcare improvement company, uniting an
alliance of more than 4,000 U.S. hospitals and health systems and
approximately 175,000 non-acute providers to transform healthcare. With
integrated data and analytics, collaboratives, supply chain solutions,
and consulting and other services, Premier enables better care and
outcomes at a lower cost.
Premier works around the clock with the nation's hospitals and other
healthcare providers, suppliers, distributors and federal and state
agencies to ensure products get into the right hands so every patient
gets the care they need. Given Premier's unique position in the supply
chain as an extension of America's healthcare providers, we understand
firsthand the impact to patient care when hospitals and health systems
do not have access to the drugs and medical supplies needed to treat
patients. The coronavirus outbreak underscores what Premier has been
advocating for the better part of a decade--that the U.S. must be more
forward-looking and strategic about our supply chain. When the system
works, no one thinks about it, but in an outbreak, vulnerabilities are
on display.
Premier has been a longstanding advocate for supply chain diversity and
resiliency, taking lessons learned from disasters and past outbreaks
such as Ebola and H1N1. Creating permanent solutions to ensure a
reliable supply of critical medical supplies and drugs has been the
mission of Premier since day one. We need, however, policy changes for
us to continue to succeed in our work. It is critical that Congress act
now to proactively address known supply chain vulnerabilities.
Premier's Leadership in COVID-19 Response Efforts
From the beginning of the COVID-19 pandemic, Premier has been at the
forefront of response efforts working around the clock to identify and
implement innovative solutions that ensure hospitals, health systems,
and alternate site providers across the country had access to the
necessary PPE, medical supplies and pharmaceuticals to treat COVID-19
patients. To meet the unprecedented demand, Premier
Used our global sourcing arm, S2S Global, to identify new
sourcing of manufacturing capacity, ultimately contracting with seven
different PPE factories across the globe to secure 36 million masks and
respirators and 16 million gowns.
Arranged cargo carriers and major airlines to expedite
transportation of products so they could be onshore in hours, rather
than months.
Coordinated and allocated 2 million donated masks.
Added 40 new manufacturers of COVID-19 related supplies to our
national contracts using an expedited review process to rapidly
increase options.
Worked with non-traditional and adjacent industries such as
distilleries, textile manufacturers, and automobile manufacturers to
fill supply gaps for essentials such as hand sanitizer, isolation gowns
and surgical caps.
Created an online exchange for health systems, Resilinc, to
trade PPE supplies among one another, dynamically moving specific
supplies to the neediest hot spots.
Partnered with 15 health systems to acquire a minority stake the
nation's largest domestic supplier of PPE, Prestige Ameritech, such as
masks and N95s.
Leveraged our existing drug shortage program, ProvideGx, to
secure additional safety stock and dedicated supplies, thereby avoiding
shortages for many critical products.
In addition, Premier also worked closely with the Administration to
provide data on surge demand, clinical utilization, and barriers to
providing care and improving healthcare delivery during the pandemic.
This work resulted in numerous waivers, regulatory flexibilities, and
guidance documents that were critical during the public health
emergency to prevent infection, avoid unnecessary hospitalizations for
ambulatory conditions, increase availability of PPE and medical
supplies, and more.
Finally, Premier played the leading role in the creation of the COVID-
19 Private Sector Supply Chain Coalition, which was established to
coordinate an integrated, public/private supply chain response to the
challenges created by the COVID-19 pandemic. The Coalition serves as a
single coordination point to share non-competitive, non-pricing
information, best practices and strategies among key parties in the
healthcare supply chain to promote the efficient management of supply
and distribution during the COVID-19 pandemic. The Coalition's primary
goals are to promote public and private sector cooperation, strengthen
the healthcare supply chain, and speed answers to urgent supply
challenges across hospitals and other U.S. healthcare providers.
Premier's Reflections and Learnings From COVID-19 Response Efforts
Premier has spent significant time reflecting on the experience of the
healthcare industry during COVID-19 response efforts to determine
elements that worked well as well as areas for improvement for the
future. Premier's reflections have found that:
Elements that Have Worked Well:
Nimbleness and ingenuity of the private sector to
anticipate and identify needs as well as respond quickly to fill gaps.
Formation of the Private Sector Supply Chain
Coalition to provide a coordinated and collaborative response to the
government and in the market.
Sharing of supply chain data that accounted for
both supply and demand from neutral, vendor agnostic, and value
orientated entities.
Regulatory flexibilities and waivers from FDA,
CMS, HRSA, and CDC that were delivered rapidly.
Timely and regular access to government leaders
and openness to input.
Elements that Led to the Current Situation:
In spite of efforts by Premier and others to
counter the trend, a focus for the past 20+ years to move manufacturing
offshore as a means to reduce costs to offset decreasing healthcare
reimbursement. This is because emerging economies:
Are more willing to take greater environmental
regulatory risks.
Have large populations of low-cost labor.
Have incentives to move manufacturing to their
markets.
Lack of centralized upstream visibility into
supply chain to determine source of raw materials and finished goods.
This resulted in a lack of understanding of vulnerabilities, foreign
reliance on manufacturing, and impact as export bans and manufacturing
shutdowns were announced.
Unprecedented demand both globally and nationally
that led to an imbalance in the supply vs demand, e.g., 17X increase in
surge demand for N95 masks.
Export bans and manufacturing shutdowns globally.
Insufficient supplies in the SNS and cumbersome
process for accessing supplies in the stockpile.
More reactive approach vs a proactive approach by
the government at the outset. Product was not allocated to the ``hot
spots'' because there was not clear identification of them until late.
Fragmented approach to securing supply (private
sector vs federal vs states) led to increase in prices as multiple
entities competed for the same inventory and out-bid one another.
Lack of clear visibility of distributor
fulfillment lead to uncertainty on where products where delivered. This
continued uncertainty left providers with dwindling confidence in the
normal supply chain and proliferated more maverick and forward buying,
as well as hoarding. This also led to a rampant gray market and many
entities purchasing counterfeit products.
Insufficient national strategy and plan for
addressing global pandemics, including confusion regarding which
federal agency was responsible.
Existence of patent restrictions that impeded
access to ancillary products needed for care such as viral swabs.
Strengthening the Healthcare Supply Chain to Address Future Pandemics
To strengthen the supply chain to address future global pandemics,
Premier has robust recommendations on how the existing private sector
supply chain can be further enabled and augmented. Premier's guiding
principles include:
Augment the existing private sector supply chain to better
respond to global pandemics through diversification and transparency.
The private sector supply chain is highly functioning and should be
further enabled, not disrupted.
Develop a cohesive and holistic national strategy for addressing
global pandemics and stabilizing the U.S. supply chain to respond to
surge demand for critical medical supplies and drugs.
Identify critical medical supplies and drugs needed to treat a
global pandemic and associated comorbidities. This identification
should occur via a public-
private advisory council that includes representatives from
manufacturers, GPOs, distributors, physicians, pharmacists,
laboratorians, nursing homes, and others.
Create upstream visibility into the supply chain to understand
sources of raw materials and manufacturing facilities. This information
is critical to assess vulnerabilities and prioritize what critical
medical supplies and drugs should be focused on initially.
Design stockpiles to create coordination rather than competition
between state, local and national stockpiles. Stockpiles should be
customized to meet the unique needs of various healthcare sectors, such
as nursing homes.
Leverage supply and demand data from GPOs, who serve as neutral,
vendor agnostic, and value orientated entities to drive transparency in
the supply chain and forecast demand needs.
Develop a real-time national syndromic surveillance system that
also includes real-time supply chain demand data so that there is a
means to identify a disease threat as early as possible as well as its
implications on healthcare resources.
Advance payment and delivery system reforms that hold providers
accountable for the health of a population, budgets and transparent
outcomes. This will incent improving the health of a population, which
will both improve patients' comorbidities and attention to care
management to sick patients. Acting within a budget helps reduce long-
term financial pressure from rising healthcare costs.
Maintaining Supply Chain Integrity
During the pandemic, unfortunately a lack of clear visibility of
distributor fulfillment lead to uncertainty on where products where
delivered. This continued uncertainty left providers with dwindling
confidence in the normal supply chain and proliferated more maverick
and forward buying, as well as hoarding. This also led to a rampant
gray market and many entities purchasing counterfeit products thereby
challenging the integrity of the medical supply chain.
Premier divides the gray market into two categories:
Alternative suppliers Legitimate product but not
acquired through traditional entity in the supply chain at an elevated
price. For example, N95 masks being sold at $3-$5 per piece whereas
they normally cost $0.30-$0.40 per piece.
Black market Fraudulent, adulterated or counterfeit
products at an elevated price. For example, quantities of product being
offered that are physically unable to be legitimate such as an offer
for 2 billion medical grade N95 masks that would normally require 10+
years to manufacture.
The emergence and continued presence of the gray market is directly
related to supply chain stresses adding complexity and confusion for
supply chain experts and clinicians questioning if their PPE is
adequate to protect them, their patients, and their families. In the
past month, Premier has noted in increase in gray market actors with
increasingly sophisticated plans rendering themselves nearly
undetectable.
Throughout the pandemic response, Premier has been diligent in warning
health-
care providers of the risks associated with gray market purchases and
has been prudent in our response which includes vetting over 2000 gray
market solicitations through (1) review of submitted documentation to
evaluate business and clinical certifications; (2) clinical evaluation
of the product including raw materials, production facilities, and
documented integrity of their supply chain; and (3) evaluation of the
business itself. To date, less than 15% of gray market solicitations
have passed Premier's stringent vetting process and were considered
legitimate alternate suppliers.
To help strengthen and maintain the integrity of the supply chain
during this and future pandemics, Premier recommends the creation of a
centralized clearing house to vet gray market offers and test products
to ensure integrity. The clearing house should:
Hold all payments in escrow until testing is validated;
Test lot samples through a certification process;
If the product is validated, it should be permitted for sale;
If the product is not validated; it should be confiscated, and
appropriate action be taken against the gray market actor.
Revamping the Strategic National Stockpile (SNS)
Premier strongly supports the vision of the Administration to augment
the SNS to better respond to global pandemics by enabling public-
private partnerships. However, to develop a truly cohesive and holistic
national strategy for addressing future global pandemics and
stabilizing the U.S. supply chain to respond to surge demand for
essential medical supplies and drugs, Premier believes that it is
critical to take a slightly broader approach to creating a true end-to-
end supply chain solution that is transparent, diverse, and reliable.
In addition, it is critical to not only focus on the quantity on hand
for critical supplies, but also focus on the time to inventory and
ensuring the U.S. has contractual relationships established, including
contingency and redundancy plans, to ramp up production expeditiously
and efficiently upon identification of need.
The SNS is the supply chain of last resort for health systems,
alternate site providers, and first responders. Therefore, the SNS must
be built by providers for providers. The SNS must also leverage
analytics and insights to assist providers in the delivery of care
during global pandemics that is in the best interest of patients and
ensure access to the right supplies at the right time.
Premier's vision for the next generation SNS includes the following
elements that can be accomplished via a public-private partnership:
The SNS should maintain a minimum of a 90-day supply of critical
medical supplies and drugs based upon surge demand from hot spots such
as New York, Washington, Detroit, etc.
The current process for accessing the SNS is cumbersome and
state specific. Working alongside private sector partners, the
Administration should create a streamlined and efficient process for
accessing drugs from the SNS.
The SNS should work proactively with GPOs to forecast demand and
increase capacity/supply to avoid shortages.
The SNS should work with GPOs to rotate soon-to-expire stock out
of the SNS and into health systems at a discounted rate. This rotation
is supposed to occur, but GPOs can make this happen and will ensure the
SNS is continuously stocked with in-date products and allow the SNS to
recoup some of their expenses associated with purchase of these
products.
The SNS should be transparent regarding distribution of supplies
and drugs from the SNS. The SNS should provide, at minimum, a detailed
monthly report of what supplies were distributed to where and in what
quantities. During a public health emergency, reporting should occur
weekly.
The SNS, as well as state and local stockpiles, should be
encouraged to purchase off GPO contracts to help aggregate purchasing
volume and keep prices competitive.
The SNS should work to ensure that critical medical supplies and
drugs are located as close to the delivery of care as possible. This
includes exploring opportunities to leverage health system warehouses
in major metropolitan areas or in rural areas.
Create a customized stockpile for nursing homes with appropriate
supplies, drugs and other needs.
Include health systems or regional buying groups as potential
stockpile operators. These organizations would be responsible for
managing the stockpile for the providers in a region. This would allow
an efficient means to rotate inventory and assure accountability for
the stockpile.
Incentivizing Domestic Manufacturing
To increase domestic manufacturing of critical medical supplies and
drugs, there are five major barriers that policy proposals must
address. These barriers include: (1) capacity; (2) environmental
regulations; (3) labor costs; (4) availability of raw materials, and
(5) historical policy decisions that advantaged offshoring. To
incentivize domestic manufacturing, Premier recommends Congress
consider the following policy proposals:
Section 3101 of the CARES Act requires a report by the National
Academies of Medicine (NAM) on the foreign reliance on manufacturing
for critical healthcare supplies, the risk to national security, and
recommendations for improving the resiliency of the supply chain.
However, these recommendations are not expected to be available in the
near future and, therefore, Congress should accelerate the development
of this report to strengthen domestic manufacturing in the long-term.
Offer 0% interest loans to manufacturers of critical medical
supplies and drugs to incentivize increasing domestic manufacturing
capacity. (for example--investing in automation to offset labor costs).
Offer tax incentives to manufacturers of critical medical
supplies and drugs to incentivize increasing domestic manufacturing
capacity, similar to incentives provided during the 1980s and 1990s to
incentivize manufacturing in Puerto Rico.
Ensure there is at least:
One domestic supplier of the final form,
ancillary products and raw materials for critical medical supplies and
drugs.
Three global suppliers of the final form,
ancillary products and raw materials for critical medical supplies and
drugs. Global suppliers should be from geographically diverse regions.
Incentivize the domestic farming/cultivation of raw materials
needed for critical medical supplies and drugs.
For example: cotton for PPE and swabs, pigs for
Heparin, poppy for sedatives, etc.
Expanding Disease Surveillance to Detect, Identify, Model, and Track
Emerging Infectious Diseases
COVID-19 has exposed one of healthcare's fundamental weaknesses: the
fragmented and siloed nature of care delivery and the lack of
centralized coordination when it comes to managing and preventing
disease spread. The public health system continues to rely on flawed
data and obsolete technology that consistently fails to accurately
identify and track current cases, monitor disease progression, or
predict future surges. Not only do these blind spots create
opportunities for the disease to spread, they also undermine the
ability to safely plan for economic recovery and re-opening of the
country. Unfortunately, issues related to underfunding of and
improvements to the public health infrastructure are not
new.\1\, \2\, \3\
---------------------------------------------------------------------------
\1\ Institute of Medicine 2012. For the Public's Health: Investing
in a Healthier Future. Washington, DC: The National Academies Press.
https://doi.org/10.17226/13268.
\2\ DeSalvo KB, Wang YC, Harris A, Auerbach J, Koo D, O'Carroll P.
Public Health 3.0: A Call to Action for Public Health to Meet the
Challenges of the 21st Century. Preventing Chronic Disease
2017;14:170017. DOI: http://dx.doi.org/10.5888/pcd14.170017.
\3\ https://www.astho.org/Programs/Preparedness/Public-Health-
Emergency-Law/Public-Health-and-Information-Sharing-Toolkit/Collection-
Use-Sharing-and-Protection-Issue-Brief/.
There is a limited ability to nationally track symptoms of the
pandemic, which would provide lifesaving insights as many as seven days
before a patient is hospitalized with COVID-19. This inability to
detect and respond is a critical missing ``gating step'' called for in
the ``Opening of America'' to re-starting the economy and keeping it
open. Instead, the preference has been to rely on testing, which has
significant limitations. Americans need confidence that there is a
means to identify a new COVID-19 surge as early as possible to allow
effective containment and mitigation without adding billions in costs
to national, state, and local budgets. The COVID-19 emergency
underscores the need for real-time syndromic surveillance, providing an
upstream alternative to identifying cases before tests can detect them
or patients are hospitalized.
Conclusion
In closing, the Premier healthcare alliance appreciates the opportunity
to submit a statement for the record on the Senate Finance Committee
hearing on the integrity of the medical supply chain. As an established
leader in the healthcare supply chain, Premier is available as a
resource and looks forward to working with Congress as it considers
policy options to continue to address this very important issue.
If you have any questions regarding our comments or need more
information, please contact Soumi Saha, Senior Director of Advocacy, at
[email protected] or 732-266-5472.
______
City of York Healthcare Authority
Operating Hill Hospital of Sumter County
751 Derby Drive, York, Alabama * 205-392-5263 * 205-490-2300 (fax)
_______________________________________________________________________
Loretta W. Wilson, Administrator/
CEO Shirley Byrd, Chairman
Hill Hospital of Sumter County Healthcare Authority Board
[email protected] Tommie Armistead
205-376-6400 Renee Pringle
July 28, 2020
Honorable Chuck Grassley
Chairman
The Honorable Ron Wyden
Ranking Member
Committee on Finance United States Senate
219 Dirksen Senate Office Building
Washington, DC 20510
Dear Senators Wyden and Grassley,
As Administrator of Hill Hospital, located in rural Sumter County, one
of Alabama's poorest counties, I am proud of our response to COVID-19
despite the unprecedented challenges we faced due to the limited amount
of personal protection equipment (PPE) at the onset of the COVID 19
pandemic.
I recall when Sumter County got its first case in March, our staff
began to panic. Our doctors, nurses, and office staff questioned,
``What are we going to do?'' ``How can our patients be protected? How
can we be protected?'' With very little PPE in-house, our small 27-bed
and 4-emergency room facility began preparing for the worse.
We had a mere three weeks of PPE, so we immediately reached out to
increase our stock; but we quickly ran into difficulty when we learned
that our primary suppliers, Cardinal Health and Medline, had everything
on back order. As our stock began to dwindle, our maintenance director
of 40 years remembered that the hospital had a stockpile of PPE
resulting from previous emergency preparedness efforts. That discovery
would be our saving grace through March and April.
However grateful for this discovery, we again experienced a decline in
PPE in May and June due to an increase in emergency room patients.
Within two months, we had more than 300 patients presenting to the ER
with COVID-19 symptoms, confirming 15 of them to be positive.
By then, we were managing our PPE by keeping a small par level in each
department, utilizing a sign-in-sign out system, and requiring nurses
to reuse N95 masks for up to 5 days when they were not soiled or torn.
Doctors and nurses expressed their concerns as many have comorbidities
and are over 60. They were afraid of putting their lives at risk. To
ensure safety, we began screening patients outside in a tent, which
helped prevent an influx of patients and required minimum use of PPE.
The high demand for PPE has caused small rural hospitals like ours to
question the integrity of our suppliers. While supplies from the State
distribution center and other businesses have allowed for our continued
day-to-day operation, the scarcity of resources from our usual
suppliers is worrisome. Orders that were placed with these vendors in
March still have not been filled. As a result, I am having to store PPE
in my office to prevent exhaustion of our current supply.
PPE continues to be a serious a concern for Hill Hospital. Without
continuous access to these critical items, safety for both patients and
our front-line providers is greatly jeopardized. Currently there are
354 confirmed cases with 15 deaths in Sumter County, according the
Alabama Department of Public Health. We are fearful of not being able
to adequately service our community due to lack of PPE as COVID 19
continues to spread and the cold and flu season approaches.
Funding from the CARES Act has helped address some of our PPE shortage,
allowing us to purchase supplies, although at much higher prices, from
suppliers outside our normal purchasing group and to purchase at levels
above our historical volume. Additionally, we have utilized this
funding to create a safer environment for patient care by converting
multiple isolation rooms with negative pressure.
Every day when I enter the halls of Hill Hospital, I am met with the
faces of employees who are depending on me to ensure we maintain during
and after COVID-19. I want to deliver; however, I need the appropriate
resources to do so.
To this end, I am recommending that Congress consider the following:
Guarantee that small rural hospitals have access to affordable
PPE through private vendors, regardless of the volume of our orders;
Continue to ensure that the State of Alabama receives the
resources needed to help with the supply of PPE to the rural hospitals
in our state; and
Continue to fund rural hospitals post COVID-19 to prevent
closure.
Over the past 6 years, Hill Hospital has had to make drastic changes to
remain financially viable. Among other measures, we have decreased the
hours and salaries of our staff and eliminated non-essential services.
Just as we were experiencing a turnaround, a beacon of light, COVID-19
happened. I am fearful, that our small hospital will not be able to
withstand the unprecedented financial pressure placed on us by COVID-19
without assistance from the federal government.
Again, I am very proud of the professionalism and commitment of the
doctors, nurses, and staff of Hill Hospital, and I remain dedicated to
ensuring the safety of these employees who put their health on the line
every day to ensure that the residents of Sumter County receive the
high level of care that they deserve.
If you have questions or need additional information, please feel free
to contact me at 205-376-6400 or by email at [email protected].
Sincerely,
Loretta Wilson, MBA/HCA
Administrator/CEO
Hill Hospital of Sumter County
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