Cutthroat suppliers, shady middlemen, phantom shipments, prices soaring by the hour.
What sounds like an organized-crime thriller is actually the new world of government purchasing amid the coronavirus pandemic.
Increasingly in recent days, governors across the U.S. have described in unbelievable terms the dog-eat-dog global marketplace they have had to navigate for the protective gear doctors, nurses and other front-line medical workers need as they brace for an expected wave of patients afflicted with severe cases of the new coronavirus.
They are competing against other states, countries and even their own federal government. And here’s what they find: Ventilators quickly doubling in cost. Face masks going for 10 times their original price.
That has led many governors to call on the Trump administration to centralize the purchases, so far to no avail.
“It is the greatest frustration,” said Maryland Gov. Larry Hogan, a Republican who heads the National Governors Association. “We have states out competing on the open markets with totally uneven distribution of these things, and now the federal government competing with us — and other countries competing against us — and then a very limited supply of all of these things and no real coordination of where it’s going.”
Hogan said there has been progress from the Federal Emergency Management Agency distributing supplies from the nation’s dwindling stockpile, but he described it as a “tiny percentage” of what is needed.”
“We’ve been buying up everything that we can possibly get our hands on in the open market all over — not just domestically, but all over the world, from places like Korea and China and other places,” he said.
It’s not just governments competing with each other for the precious and ever-pricier supplies. States also sometimes compete with their own hospital systems, which are trying to get direct shipments so they can quickly resupply their medical workers.
It’s happening in Hogan’s own state. Hospital employees like Dr. Daniel Durand, a physician for a hospital system in Maryland, now have a role they never imagined overseeing purchases in a market gone haywire.
As just one example of what states and hospitals face, Durand said coveted N95 face masks that used to cost less than a dollar each can’t be found for less than $3.70. And that’s a bargain: Plenty of buyers are willing to pay much more — up to $10 apiece.
He said some middlemen threaten to take their products to another hospital when he starts asking basic questions.
“And then what I’m hearing is that people are paying millions for shipments and nothing’s showing up,” said Durand, who is the chairman of radiology for LifeBridge Health’s five hospitals. “So, there are just totally people scamming hospitals. It hasn’t happened to us yet, but it can happen to anybody in this type of scenario.”
Virginia Secretary of Finance Aubrey Layne vets suppliers for that state’s medical gear and said they have to deal with people with questionable qualifications, and with little time to determine whether they are qualified or trustworthy.
“Everybody knows somebody who knows somebody in China,” he said.
Earlier this week, President Donald Trump acknowledged that the federal stockpile is nearly depleted, signaling that states will remain largely on their own just as the death toll begins to spike. Many governors have been complaining for weeks that they have not received the shipments they requested from the nation’s supply, part of the reason they have been trying to acquire the equipment on their own and have been thrust into a brutal competition for scarce supplies.
Middlemen and suppliers are taking advantage of their desperation: Smaller ventilators that had been selling for $11,000 to $14,000 are now going for $20,000 to $30,000, said Christian Mitchell, deputy governor in Democratic Illinois Gov. J.B. Pritzker’s administration. More deluxe models that had topped out at $45,000 now cost $20,000 more.
Mitchell says the states have no choice but to pay it.
“We’ve all been left to our own devices,” he said. “Your choices are between, ‘Do I get enough of the stuff that I need to protect my front-line health care workers, do I get enough ventilators to make sure that more people get to stay alive. Or do people die?’”
Big states like California have an advantage because their sheer size gives them massive purchasing power that others lack. California Gov. Gavin Newsom says he doesn’t want that leverage to hurt smaller states and has reached out to Washington, Illinois, New Jersey and others about creating a partnership to centralize their purchases.
“Much of what you’re hearing is true in terms of it being the Wild Wild West out there,” Newsom said.
Small states, like New Hampshire, are at a disadvantage.
“We are competing as a state with other states in the market, and I’m sorry, New Hampshire does not have the scale to compete with the state of New York, with the state of Illinois,” said Brendan Williams, president of the New Hampshire Health Care Association, which represents the state’s nursing homes.
“If it’s just going to be this sort of Darwinian free-for-all, like ‘Lord of the Flies’ … I don’t know what to say. It’s absolutely unconscionable. It’s unimaginable that this is where we are at right now.”
Some states are working with private manufacturers to convert buildings so they can produce their own medical equipment. Maryland is among them, said Ellington Churchill, who oversees the state’s Department of General Services.
“You look to provide it for yourself,” he said.
LifeBridge Health is among those taking matters into its own hands.
It converted a building in the Baltimore suburbs into a factory to produce masks. LifeBridge’s head of oncology, who sews, trained 40 staff members how to make the masks, said Durand, the radiologist.
“It’s like a half sewing factory, half surgery suite,” he said.