COVID-19, Essential Medical Supplies, PPE and the Medical Supply Chain

Why there is a PPE shortage at the height of the COVID-19 pandemic

Did you know that the U.S. is the largest importer of face masks, eye protective gear and medical gloves in the world?  Because of this, the United States is heavily dependent upon the global supply chain.  When the coronavirus outbreak first occurred in early 2020, the American federal government did not have or order an adequate supply of personal protective equipment including millions of masks.  The Strategic National Stockpile had not been sufficiently funded by multiple previous administrations and lacked the quantity of PPE needed for the pandemic.

Another major contributing factor of the shortage of PPE was the U.S. trade war with China.  By placing tariffs on medical products exported from China, these essential goods became more expensive to import and other countries swooped into the market to increase their respective supplies.  Some, but not all,of the tariffs on medical goods were lifted in the middle of March 2020.

American made PPE was still being exported long after other countries restricted their exports.  The lack of prioritization to U.S. health needs further diminished the American supply of PPE.  The shortage of personal protective gear has persisted from the onset to the current days of the pandemic.  As COVID19 vaccines inch closer to approval, distribution and patient administration, PPE will still be needed for many months to come.  It is impossible to consider that healthcare professionals would be able to achieve and maintain the needed standard of care for patients in healthcare systems and nursing homes without having adequate PPE for infection prevention.

It is important to recognize that the global COVID-19 pandemic is a traumatic experience shared around the globe.  All around the world, from the most far flung, inhospitable climes to rural ranches, farms and urban areas, humans have been struck not only by this devastating illness but also by fear, apprehension, and dread.  At the beginning of the pandemic, this level of debilitating fear resulted in many people rushing to stockpile toilet paper, paper towels, industrial antibacterial and antiviral cleaners and even protective gear and equipment.

What Has Caused a Shortage of PPE and Medical Supplies during the COVID-19 Pandemic?

As with most challenges, it is usually more than one factor that caused a shortage.  Here are some of the primary issues that caused the shortages of PPE and medical supplies:

  • Decisions of federal government not to handle the acquisition, maintenance and distribution of inventory domestically
    • Initially lower PPE and medical supply quantities in the Strategic National Stockpile (SNS)
    • Congressional public health budget cuts across multiple administrations led to a lack of sufficient replenishment of essential medical goods to the Strategic National Stockpile
    • Decision not to leverage the Defense Production Act effectively to produce PPE and medical supplies in adequate amounts domestically to meet the continued U.S. need during the duration of the coronavirus pandemic
    • Lack of investment in domestic manufacturing of PPE and medical supplies
    • Weakened capabilities of CDC to adequately prepare for the pandemic
    • Insufficient widespread testing prevented health officials from having the ability to determine the spread and circulation of the virus. This hampered the ability of health officials to properly apportion supplies to meet community needs.
  • Dysfunctional costing model in hospital operating systems
  • Sudden enormous demand
  • Marketplace panic resulted in depletion of domestic inventories
  • Major supply chain disruptions from issues such as tariffs on exported Chinese produced PPE and medical supplies and manufacturing plant shutdowns
  • Governmental restrictions by China (and other countries which manufacture PPE and medical supplies) on exports of PPE, so that the countries of manufacture could retain goods for internal use
  • Increased demand for PPE and medical supplies by other countries for their populations

The Strategic National Stockpile (SNS)

In 1998, the Consolidated Appropriations Act was passed.  In response to an emergency budget supplement that was requested by President Clinton, this legislation provided $51 million for the stockpiling of vaccines and pharmaceutical activities at the CDC.  Created in the aftermath of the September 11th attack under the George W. Bush administration, the Strategic National Stockpile or SNS is designed to act as a temporary safety net to avert short term threats such as a terrorist attack. It is simply not designed to handle a huge event for a long period of time, i.e., a surging global pandemic. 

Congress later passed the Public Health Security and Bioterrorism Preparedness and Response Act in 2002.  This helped to provide more framework, emphasizing working group consultation, coordination of stakeholders and the establishment of the role of the HHS Secretary to ensure the appropriate accounting, inventory, and security of the stockpile.  This legislation was designed to help ensure consultation between the federal, state, and local official partners with respect to special needs and events.  The consultation was to extend to periodically review and revise the contents of the stockpile as needs would be anticipated to change.  Congress has taken an active interest in not only policy concerns regarding the stockpile but also in such matters as biosecurity strategy to meet national security needs, transparency requirements involved with the annual revision of the stockpile especially as it concerns specific items of inventory, item expiration and replacement and replenishment costs.

As the years progressed and the threat of terrorism waned on homeland soil, the sense of urgency to maintain the SNS also waned.  Because of the diminished sense of urgency, the SNS became a low government priority in terms of funding and attention.  In fact, using the SNS to respond to national health emergencies became such a low priority that the strategic plan for responding to national health emergencies was not renewed after 2017.  The funding for replenishing the stockpile of goods was cut repeatedly.

Budget cuts and designation as a lower priority meant that the SNS team was reduced and repositioned within the enormous bureaucracy within the U.S. Department of Health and Human Services (DHHS), an area of the federal government specifically devoted to health and medical areas rather than predicting supply chain risks or planning for supply chain disruption due to disasters.  With respect to the coronavirus pandemic, although SNS managers did warn about the potential for supply chain shutdowns, their admonitions were not heeded.  The SNS managers were especially concerned because Wuhan, China, the reported origin of COVID-19 is a hotbed of manufacturing activity, known for its production of personal protective equipment including masks.

Now well into the height of the coronavirus pandemic, the U.S. is still experiencing shortages of test kit reagents, ICU medications, PPE, and medical supplies. At the start of the COVID-19 pandemic, there was considerable outcry and worry about the projected need for ventilators.  Over time, this abated as more ventilators were secured and the issue changed. With new therapies and strategies for treatment, ventilators are not used quite as frequently, so a shortage of the equipment has not been an issue.

The U.S. federal government has leveraged its Supply Chain Task Force to help identify, clarify, and address supply chain problems.  So far, deficiencies in the supply chains appear to be solvable if the Strategic National Stockpile agency is provided with the needed authority and expertise as well as access to better information and technology.  For example, the inventory management system used by the SNS has not been upgraded since the founding of the SNS in 2004.  It is considerably outdated, requiring manual data entry, workarounds etc. that tend to generate errors and inefficiencies.

Here are some of the recommendations of the SNS Supply Chain Task Force:

  • Integrate the visibility and interoperability with other agencies that would benefit from the SNS including, but not limited to:
    1. The Department of Defense
    2. FDA
    3. CDC
    4. Biomedical Advanced Research and Development Authority
    5. National Institute for Occupational Safety and Health
    6. FEMA
  • Permanently increase funding to SNS
  • Elevate the SNS profile, influence, and authority
  • Enable greater real time informational access and visibility using a leading-edge warehouse management system WMS technology
  • Permanently close the gaps in SNS expertise and make sure there are experts in global supply chain, sourcing and procurement, supply and demand, as well as in the pharmaceutical/life sciences industry and health care.

How Does the Hospital Costing Model Impact the Supply of PPE and Medical Supplies?

Hospital operating systems budget in a way that tends to incentivize hospitals to minimize costs instead of to maintain adequate supplies of PPE.  Here is how it works.

The U.S. Occupational Safety and Health Administration (OSHA) mandates that employers provide employees with PPE free of charge.  In actuality, this is an unfunded mandate.  This puts the responsibility of procuring, paying for and maintaining an adequate supply of PPE on the employer.  Nurses’ unions historically have had to push state and federal governmental agencies to establish protective standards to safeguard the health and safety of its members.  This is due to their lengthy experience with American hospitals’ resistance to secure and maintain high standards of protection without mandates from the respective regulatory authorities. 

Unlike medical supplies, the cost of which is passed along as these items are required to treat patients, PPE is a capital expense cost for employers.  When hospital finance departments need to reduce costs, they frequently decrease capital expenditures in the short run to reduce their costs.  This can mean cutting PPE.  Currently there is no financial incentive for hospitals to encourage employees to use or maintain large stockpiles of PPE, make frequent replacement to PPE inventories or even to hold an adequate amount of stock.  Other medical supplies including medications, bed pans, catheters, etc. used in patient treatment are directly billed either to the patient or to the insurer.

How PPE Protects from Coronavirus Infections

Personal protective equipment, commonly referred to as PPE is protective gear such as clothing or suits, goggles and other forms of eye protection, respirators, gloves, helmets, facial shields and N95 masks which are specifically designed to protect the wearer from infection or injury.  In the medical industry, health care professionals and others serving within the healthcare industry wear personal protective equipment to reduce the risk of exposure to biologic, chemical and other hazards by providing a physical barrier between the wearer and the patient and environment.

By wearing gloves, facial masks and shields and other items of protective clothing, pathogens are not able to reach the skin of the PPE wearer, a critical element of protecting against infection.

If hospitals were permitted to pass along the cost of PPE to patients and insurers, it is likely that hospitals would recognize this as a financial incentive to encourage use of PPE and would stockpile it accordingly.  Doing this, however, may pit healthcare practitioners against patients as they would bear the direct expense of the PPE and be less likely to encourage effective safety practices.  After due consideration, it has been established that both healthcare practitioners and patients should share one common goal:  working together to improve the health, safety, and well-being of the patients.

Keeping healthcare practitioners healthy and safe is in the best interest of all patients as well as for the proper functioning of the hospital which is totally dependent upon a safe, healthy workforce.

Hospitals, private healthcare clinics and other medical establishments tend to be run as profit making business ventures.  To make a profit, costs must be kept under control.  Hospitals often order adequate supplies of PPE and other goods on an add needed basis, relying on just-in-time manufacturing to avoid maintaining a substantial inventory of these goods.

While this normally works, in the case of the coronavirus pandemic, just-in-time manufacturing was doomed from the start as PPE and many medical supplies and goods are made in China.  Wuhan, China, the center of the coronavirus outbreak, was one of the first areas of the world to go on lockdown to help prevent the spread of the coronavirus.

Manufacturers Need Certainty

With the spread of the COVID-19 outbreak, more PPE and medical supplies were needed, all around the world.  The U.S. government advocated for more onshoring of manufacturing of these goods, but this is a process that takes patience, strategic investment, oversight, and change.  For American manufacturers producing PPE and medical supplies, scaling up production is not as simple as flipping a switch.

To ramp up production, it may be necessary to add more workers to the payroll, invest in technology and/or purchase more equipment.  This can be difficult for manufacturers when it is not known how long the extra quantities of goods will need to be produced.  In the manufacturing industry, the manufacturer does not receive payment for goods until they are delivered.  This means that the manufacturer would be obligated to incur all the expenses of the new equipment, technology and workforce before any revenue is received.

To help solve this problem, it is important to know that the federal government has the authority to offer guaranteed loans to companies that want to produce needed goods, such as N95 masks.  The federal government can also guarantee the purchase of these goods at a rate higher than the traditional rate. The strategy could be to estimate the number of masks that are needed for the length of time estimated and then guarantee purchase of more than that quantity for a longer period of time.  Any excess supply of required goods could then be added to the Strategic National Stockpile to help prepare for future crises.

What is the Defense Production Act?

  • A United States federal law established in 1950, the Defense Production Act provides the authority for the President of the United States to mandate that businesses accept and prioritize contracts for materials established as necessary for the purpose of national defense, even if the business must incur a loss.
  • The President can legally require an industry to take actions such as:
    • Expand production and the supply of basic resources
    • Settle labor disputes
    • Have control over consumer and real estate credit
    • Prioritize contracts
    • Allocate raw materials towards national defense

Leveraging the Defense Production Act

Did you know that the President can issue specific kinds of liability waivers to companies that are engaged in emergency production?  At a time of critical shortages of goods needed to safeguard human lives and health, such as a global pandemic, the Defense Production Act provides for some relaxation of requirements.  Here are some examples:

  • Instead of time consuming, intensive factory certifications, random inspections of products that ship can be substituted.
  • Rather than mandating PPE product testing at the National Personal Protective Technology Laboratory, private and university labs which use the required equipment can substitute.

Using the Defense Production Act to Provide Essential PPE and Medical Supplies

In times of national crises and threats to the defense of the United States, the President is empowered through invocation of the Defense Production Act (DPA) with considerable power and authority.  This mandate requires companies to come to the aid of the country by accepting contracts and ensuring that the work is prioritized.  In times of need, by calling on the Defense Production Act, the President has the authority to provide incentives for industries to produce critically needed materials. 

In addition, governmental authority over private industry is provided to enable that action is taken on matters that may interfere with or threaten national security, such as stopping foreign corporate mergers.

In the case of the COVID-19 outbreak, the need for PPE, medical equipment and medical supplies was both critical and long lasting during the extent of the pandemic, leading to spread of the coronavirus across the country. 

Here is how President Trump chose to leverage the DPA to require companies to manufacture items in short supply:

  • General Motors: ordered the production of ventilators
  • General Electric: ordered to increase production of equipment including ventilators, patient monitors, CTs and mobile x-ray devices
  • Hill-Rom: ordered to ramp up production of non-invasive ventilators and hospital beds
  • Medtronic: ordered to produce ventilators
  • ResMed: ordered to produce ventilators
  • Royal Philips: increased production of ventilators as well as specific critical care products and solutions used for diagnosis of COVID-19
  • Vyaire Medical: ordered to produce ventilators, face masks, oxygen blenders, resuscitation devices and other respiratory medical equipment
  • 3M: ordered to stop exporting N-95 respirators it manufactured in the United States to the Canadian and Latin American markets

How Can the Shortage of PPE and Medical Supplies be Remedied?

1. U.S. government can guarantee loans and purchase of PPE and medical supplies at higher than market rates

2. U.S. government can mandate that U.S. hospitals purchase PPE from American manufacturers. Because hospitals are operating on requirements to reduce operating costs, having a U.S. mandate to buy PPE and medical supplies that are American made is critical in keeping hospitals from buying cut rate goods and new U.S. PPE manufacturers would be unable to compete and stay in business.

3. Remove the profit motive for purchasing PPE in hospital costing models and replace it with strategic industrial policy will aid in decreasing American dependence on foreign made PPE.

4. Increase production of PPE and medical supplies in the U.S. to decrease dependence on global supply chain

5. Facilitate new regulations and recommendations to help reduce workplace fatigue and stress.

6. Enhance the enforcement of OSHA regulations dealing with PPE.

7. Leverage the Federal Emergency Management Agency to create new supply chains.

Conclusion

One does not have to be a member of the American Medical Association or employed by the Centers for Disease Control to know that there is still a prevalent shortage of PPE and medical supplies.  Despite calls to wash our hands in hot soapy water or use hand sanitizer, cover our nose and mouths with fabric masks and social distance, from nursing homes to restaurant patrons, it seems we all are worried about the lack of PPE, especially for healthcare and essential workers.

Critical medical supplies and PPE including eye protection, medical gloves, N-95 masks and respirators and other forms of personal protective equipment (PPE) remain in short supply.  Health care workers are worn out angels of mercy who long for the days when simple pieces of fabric meant for a single use do not have to be worn over-and-over again.  In the war of caring for patients against such an insidious adversary, our ability to impact disease control and prevention often seems to rely on some flimsy pieces of fabric that severe shortages make very hard to find.

Since the onset of the coronavirus pandemic, the global supply chain seems to have been almost in a state of shock.  Yes, purifying respirators, clinical care hospital beds, surgical masks and gowns and other PPE and medical equipment can be found, eventually-for enough money and time.  The problem is that now we seem to be in an uphill battle, a steep climb to the apex of another seemingly endless round of the isolating, terrifying coronavirus pandemic.  PPE is not optional.  It is needed now, everywhere. 

As millions took part in this year’s Thanksgiving travel rush, more than ever before, we need the means of infection prevention-adequate PPE.  For the good of health care workers, essential and frontline workers, and public health, access to PPE is not an option or a privilege but rather one of the only things safeguarding against infectious diseases.

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