That persistent shortage of medical supplies has made it difficult — and dangerous — for U.S. health-care workers to care for infected patients during the coronavirus pandemic. One health system recently described efforts to obtain essential protective gear that included a legal, but unusual, deal with a Chinese supplier, a covert trip to an industrial warehouse, respiratory masks loaded into trucks labeled as food delivery vehicles, an interaction with federal agents, and the intervention of a congressman to ensure that the shipment arrived at its destination.
The Post’s poll results, let alone a story like this — which sounds more like an action movie plot than the way hospital supply chains usually operate — would have strained credibility a few months ago. But it now sounds painfully familiar to health systems, hospitals and state governments that have tried to secure protective gear for doctors, nurses and other health-care professionals during the pandemic.
The pressure on the health-care supply chain is similar to what other industries have faced during the pandemic — consumers have had a hard time finding basics such as flour and toilet paper. But there’s a striking difference between shortages inside and outside of health care: When demand outpaces supply in health care, people can die.
Generally, health-care supply chains employ strategies similar to those used by other industries. In normal times, medical equipment manufacturers aim to match their supply with the market’s demand. Hospitals and health systems do not stockpile materials (e.g., ventilators or protective gear) for emergency situations, but use “just-in-time” ordering to limit excess inventory. While this results in efficiencies and reduces costs, it also renders manufacturers and customers vulnerable to supply disruptions and shortages when needs surge.
By late January, it was clear that these normal procedures wouldn’t be sufficient to maintain enough medical supplies — a global pandemic was looming. So why didn’t manufacturers increase the production of necessary supplies? Why didn’t hospitals begin stockpiling items they would soon need? And as the scale of the pandemic came into sharper focus, why did we continue to face shortages? And why have these shortages persisted despite calls to increase production?
Manufacturing medical supplies is a low-margin business. To survive, factories prioritize efficiency over adaptability, which limits their ability to boost production quickly. Manufacturers also have little incentive to produce beyond their just-in-time orders — if the surge in demand never materializes, they would be stuck with extra masks, gloves and other items. Most health-care protective equipment used in the United States is imported; making it domestically costs more. But since several of the countries that manufacture protective gear — particularly China, which produces the majority of it — were struck by the virus early in the pandemic, supplies from those manufacturers went to these early hot spots, leaving the United States more reliant on limited sources of domestic manufacturing.
Once shortages became apparent, hospitals and health systems were unable to easily find the existing supply because there’s no national tracking system for protective gear. This meant that purchasers were blind to what was potentially available or where it was, limiting their ability to coordinate distribution of existing supply or anticipate future needs. Regulations that in normal times are necessary created additional barriers. The Food and Drug Administration, with strict protocols for the production of protective gear, has made only a few exceptions during the pandemic, granting emergency use authorizations for certain imported, improvised, decontaminated and alternative items (e.g., the Chinese-made KN95). While the FDA in some cases has issued a few such authorizations for domestically manufactured protective gear, this has been very rare.
Meanwhile, the use rate of protective gear increased exponentially over a few weeks in March. As the demand outpaced supply, prices predictably rose; N95 masks went up by 1,513 percent and isolation gown prices increased by 2,000 percent. Third-party buyers bought some of the supply that otherwise would have been sold to health systems and hospitals and resold it at steep prices, either to the same health-care providers for whom it was originally destined or for nonmedical uses. While price gouging and hoarding of protective gear have been prohibited, and the Justice Department has tried to prevent it, the practice continues. Florida recently tried to purchase N95 masks from one of the stars of “Shark Tank,” at nearly three times the usual price. Although the deal fell through and the seller, Daymond John, was criticized for trying to capitalize on the desperate need to protect health-care workers, it exemplifies how unusual conditions have become.
The market failures we have observed during the pandemic were predictable given current medical supply-chain processes, but they were not inevitable. And it’s not too late to address them. There are several possible short-term solutions, including use of the Defense Production Act, reduction of regulatory barriers, and increased transparency around inventory. The DPA gives the federal government the power to increase production of goods needed during a crisis, such as the pandemic, through contracts, purchase guarantees and protection from liability. Guaranteed purchasing of any excess supply may be the most powerful aspect of the DPA for this moment, because it reduces the risk that manufacturers will be stuck with excess supply if demand falls — which immediately eliminates a barrier to making more protective gear.
Although President Trump has used the act to keep meat-processing plants open during the pandemic, he has been hesitant to use it to increase production of medical equipment, except in rare cases. Trump’s use of the DPA also falls far short of using the full force of the law, which would allow a single federal agency to coordinate the process of purchasing and distributing protective gear to states and hospitals. A temporary reduction in regulatory barriers, such as the issues around N95 masks, is also needed. Finally, mandatory reporting of supplies to a centralized federal authority would allow for equitable, need-based resource allocation.
In the longer term, the government may need to subsidize the market to maintain a more constant supply of the medical supplies needed during a pandemic. That would increase domestic manufacturing so supply chains aren’t as vulnerable to demand in other countries. Subsidies could also be used to replenish and maintain federal and state stockpiles of protective gear, ventilators and other pandemic-related equipment. This might be accompanied by hospital, health-system and state-level mandates around minimum inventory levels for essential equipment. Stockpiles are essential for emergency preparedness, but they’re too expensive to maintain without government help. A more extreme approach, though it’s politically unpalatable to many, would involve permanently federalizing the supply chain for necessary medical equipment, allowing the government to intervene to increase supply.
Any effort to improve the U.S. medical supply chain during a pandemic requires a coordinated federal response. Only the federal government has the power to offer purchasing guarantees, to coordinate federal agencies and to regulate distribution and pricing to prevent third-party buying or distribution to nonmedical providers. So far, the government has failed to do any of that. This has contributed to the observed market instability, medical supply shortages and the public health crisis we face — especially given the potential for subsequent pandemic waves in the future.
States, health systems and hospitals can make some short-term efforts to help stabilize the existing supply chain — for instance, they could work together to collect and report inventory, regionalize resources and coordinate their distribution. But without a strong federal response, we are likely to continue witnessing “Wild West” scenarios as health systems struggle to procure needed supplies. And worse, we will continue to see states and health systems lacking the resources they need to protect patients and health-care workers.