Transcript

America’s Medical Supply Crisis

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RACHEL SPRAY:

It hit the whole hospital hard.

RACHEL SPRAY:

Everybody knew Sandy—every lab, X-ray, the respiratory therapist.

RACHEL SPRAY:

She always had a smile for them or a kind word for them. We’re a family, and it was devastating.

LORI RODRIGUEZ:

My sister was the nurse. She would tell us that she was going to go to work with no fear, that she knew that God was with her and he was going to protect her.

NARRATOR:

It was the start of the coronavirus pandemic in California and nurses like Sandy Oldfield were short on masks and gowns and gloves.

RACHEL SPRAY:

It was hard. Our morale was pretty low. We still weren't getting the PPE on our floor, on our unit. It was tough.

LORI RODRIGUEZ:

She didn't feel safe. I even had made a comment to her. I said, "Just don't go to work." She was like, "We have to. We've already—I mean, you don't just not show up." But she said everybody felt the same. They felt that they just were not being protected. She cared for a patient that was asymptomatic. He showed no signs of the virus or anything, and my sister, unfortunately, was exposed. She called me in the morning and said that she was positive.

NURSES [chanting]:

N95! N95!

NARRATOR:

After nine other nurses in the same hospital came down with COVID-19, the nursing staff started protesting.

NURSES [chanting]:

What do we want? PPE!

FEMALE NURSE 1:

We’re all saying the same thing: Give us our PPE.

FEMALE NURSE 2:

The hospital says "safety is the highest priority."

FEMALE NURSE 3:

We are seeing a lot of our health care workers come down with this illness.

NARRATOR:

Inside the hospital, Sandy Oldfield was getting sicker.

LORI RODRIGUEZ:

She told me, "The doctor are going to put me on a ventilator." And I said, "We're going to be right here when you open your eyes." I told her I loved her, and that was the last time I spoke to her. [cries]

FEMALE NEWSREADER:

A somber night in Fresno as nurses mourn the loss of one of their own to COVID-19—

MALE NEWSREADER:

Sandy Oldfield died on Monday after battling the virus for two months.

FEMALE NEWSREADER:

She was very well-liked and had many friends, many of which gathered here tonight—

FEMALE NURSE:

We welcome all of our sisters and brothers here tonight to honor the tragic loss of our first nurse to the coronavirus pandemic here in Fresno County.

LORI RODRIGUEZ:

It just really hurt my heart just to know that my sister wasn't protected. All of this could have been avoided.

RACHEL SPRAY:

In a plane crash situation, you put your mask on first. You need to put your PPE on so that you could take care of them. If you get sick, you can’t help them. You can't help anybody.

LORI RODRIGUEZ:

I feel if she would've had the proper PPE, she would be alive today.

NURSE PROTESTERS [chanting]:

PPE! What do we need? PPE! What do we want? [inaudible] What do we need? PPE!

FEMALE NURSE:

We are demanding PPE so that we can protect ourselves and our families.

NARRATOR:

Sandy Oldfield was one of the countless Americans left unprotected when the coronavirus hit. Left without essentials like gloves, gowns, masks—

FEMALE NEWSREADER:

A major problem amid this crisis: a national shortage of personal protective equipment, or PPE.

NARRATOR:

—forced to reuse personal protective equipment or make their own. Even health care workers, close to a thousand of whom have died on the job.

ERNEST GRANT, Pres., American Nurses Assoc.:

This is deplorable. When you stop and think that we send soldiers into battle with the equipment that they need, yet we were asking nurses to do the exact same thing, but without the equipment that they needed.

There's a failure in the system. I think those who are in position to ensure that the supply chain was being maintained, they failed us big time.

NARRATOR:

For the past seven months, FRONTLINE and Associated Press reporters Juliet Linderman and Martha Mendoza have been examining that failure and the unheeded warnings, interviewing manufacturers and government officials, analyzing records and tracing key medical supplies along a fragile global chain.

MARTHA MENDOZA, The Associated Press:

I did a run of N95 masks—

NARRATOR:

From the earliest days they were tracking a database of medical supply imports.

MARTHA MENDOZA:

Almost all coming from China.

NARRATOR:

Within the numbers, one detail stood out.

MARTHA MEDOZA:

You see this graph?

JULIET LINDERMAN, The Associated Press:

Yeah, yeah.

NARRATOR:

Beginning in March, the usual flow of tons of PPE from China to the U.S. had plummeted.

JULIET LINDERMAN:

What we're seeing here is pretty consistent. Twenty-five shipments. Twenty-two shipments. Twenty- three shipments. And then, just, whoosh. Drops to three shipments in all of March. Complete drop-off.

NARRATOR:

China was dealing with its own outbreak—

MALE NEWSREADER:

China has identified a previously unknown coronavirus—

NARRATOR:

—and the U.S. was left desperately short.

MALE NEWSREADER:

It's thought to have originated in the city of Wuhan.

NARRATOR:

U.S. officials began urging the public to conserve supplies.

ANTHONY FAUCI:

Right now in the United States, people should not be walking around with masks.

MALE REPORTER:

It can lead to a shortage of masks?

ANTHONY FAUCI:

Exactly, that’s the point. It could lead to a shortage of masks for the people who really need it.

NARRATOR:

But then, in late March, there was a sign of relief: Import records showed PPE shipments were slowly starting up again. One of the first was a planeload of N95 masks destined for this warehouse in Santa Barbara, California.

THOMAS TIGHE, Pres. & CEO, Direct Relief:

This is the first shipment that we've got in from China in the past the past two months. These are the N95 masks that are in such high demand right now.

NARRATOR:

The charity, Direct Relief, which normally helps with disasters around the world, had turned its focus on the U.S. to help fill the gap in the mask supply.

THOMAS TIGHE:

It's just such a scramble because of the huge demand and the scary time we're in. So what you're seeing now is a global demand spike. Because of the outbreak in China itself, I think the demand was all gobbled up. That is now just starting to loosen up.

NARRATOR:

Direct Relief planned to distribute these Chinese-made masks to health care workers across the country. Looking at the footage we’d shot, The Associated Press reporters made a surprising discovery.

JULIET LINDERMAN:

Looks like he's inspecting them, right?

MARTHA MENDOZA:

Those are ear loops, not a head strap.

NARRATOR:

The straps on the masks looked different than normal.

MARTHA MENDOZA:

I don't think they're supposed to have an ear loop.

JULIET LINDERMAN:

No, they're definitely not.

NARRATOR:

We sent some of the masks to be tested at an environmental medicine lab at the University of North Carolina.

PHILLIP CLAPP, Univ. of North Carolina at Chapel Hill:

All of these products that arrived, even though they're labeled clearly N95 and they show the lady in the picture as wearing a mask with head straps, that has ear loops. So that's a dead giveaway that it's a counterfeit product. These were all counterfeit that we tested.

NARRATOR:

His tests showed that the counterfeit masks did not meet requirements to filter at least 95% of harmful particles.

Direct Relief never sent out the masks. But around the country, as more shipments began to arrive from China, more counterfeits began turning up—

MALE NEWSREADER:

And now, federal agents say that they are seeing criminals preying on people during the coronavirus pandemic.

NARRATOR:

—just as health officials were reversing course and urging everyone to wear masks.

MALE NEWSREADER:

—masks, hand sanitizers, fake COVID-19 testing kits.

FEMALE NEWSREADER:

Customs inspectors have been seizing fake medical supplies as scammers try to take advantage of the crisis.

NARRATOR:

We wanted to talk to the FBI about the rash of counterfeits. They were part of a task force investigating the problem.

JULIET LINDERMAN:

My colleagues and I were working on a story about a nonprofit organization. They were getting one of the first shipments of medical-grade N95 masks. They opened it up and it turned out that they were all counterfeit masks. How does something like this happen?

STEVEN MERRILL, FBI Section Chief, Financial Crimes:

Under the COVID circumstances, supply and demand changed rapidly, and the demand became so great that it overtook what we really had in our stocks. So that didn't change the fact that the medical professionals and first responders really needed that. There's a lot of money out there and, working for the FBI, it becomes clear on your first day here that when there is an opportunity for a criminal to make money, they will explore that.

JULIET LINDERMAN:

What is the risk of having counterfeit or substandard masks actually make it to front-line medical workers?

STEVEN MERRILL:

When you put on a set of PPE, you assume that it's going to protect you. That's what it's for. And if it's not doing that job, it really is putting the most vulnerable people at risk. So that is something that should scare every one of us.

NARRATOR:

As we continued investigating medical supply shortages, we followed a trail leading back more than a decade to the story of a mask maker in Texas.

DAN REESE, Pres. & CEO, Prestige Ameritech:

The mask capital of the world was Fort Worth, Texas. I was with some amazing companies that did some incredible things. Great products, great company, very innovative, very efficient. We ruled the world on face masks.

NARRATOR:

Dan Reese is one of the last domestic mask manufacturers. He told us a turning point for the industry came in 2001—

MALE NEWSREADER:

China was voted into the World Trade Organization today.

NARRATOR:

—when the World Trade Organization welcomed its newest member.

MALE WTO OFFICIAL:

—the People’s Republic of China.

DAN REESE:

And that was the beginning of the end. There's nothing to stop them. So we're left competing against China.

NARRATOR:

By the late 2000s most of the masks used in the United States were produced outside the country.

DAN REESE:

This is a huge security issue for this country. They can stop it, saying, "We're not going to ship to you because we need it."

NARRATOR:

Reese had officials from the Department of Health and Human Services visit his factory in 2007 and warned them the U.S. risked losing control of its mask supply.

DAN REESE:

The PPE, the things that we have to have in an emergency, we as a country cannot hand this control over to a foreign government, say, "OK, if you're OK with it, send it to us." And that's what we did. That's the security issue.

NARRATOR:

It wasn’t long before his fears were playing out.

MARGARET CHAN, M.D., Director General, WHO:

The world is now at the start of the 2009 influenza pandemic.

FEMALE NEWSREADER:

H1N1 has spread to 46 states. More than 1,000 Americans have died and more than 20,000 have been hospitalized.

NARRATOR:

Amid the H1N1 pandemic, officials believed the U.S. might need as many as 5 billion N95 masks, nearly 50 times what the country had on hand.

FEMALE NEWSREADER:

Public health experts are expressing concern about whether hospitals could handle the onslaught.

DAN REESE:

We received a call from the government that says, "Prestige, we have a situation.” So they ask us to ramp up, ramp up hard. Do everything we could do. Save the country. And our response was, "We're small. We're not that big. We don't have huge market share." But what we did, with our own money, our own investment, we went round the clock. We built machines as fast as we could possibly build them. We went from having probably 60 employees to having 260. And we respond as much as we possibly can for the country.

NARRATOR:

With much fanfare, Reese cut the ribbon on a new facility that they called the Global Pandemic Preparedness and Response Center.

DAN REESE:

It was kind of a dream to be this pandemic response center.

REP. MICHAEL BURGESS, (R) Texas:

Fifteen years ago, nine out of 10 masks were made right here in the United States of America. In less than a decade that flipped, where one out of 10 masks is now made in this country. But this company, this company made the commitment to turn that around.

NARRATOR:

Texas Congressman Michael Burgess, who’s also a physician, understood the importance of what was happening.

MICHAEL BURGESS:

It is important that those masks function as required, and the only way to ensure that is to have those masks made by you in the United States of America.

Are we willing to spend a few pennies more for a mask, but have a reliable mask available and the supply of masks that we need? I think that's the question that has to be answered.

JULIET LINDERMAN:

So what happened to that response center?

MICHAEL BURGESS:

The amount of product that was purchased diminished. The pandemic was over, everyone’s attention got diverted to something else, then the monies dried up.

DAN REESE:

One day, America realizes, "We're not going to die from H1N1.”

MALE NEWSREADER:

It looks like swine flu is history.

FEMALE NEWSREADER:

—and the World Health Organization just declared an end to the H1N1 pandemic alert.

NARRATOR:

With the outbreak under control, Prestige Ameritech’s orders weren’t renewed. Hospitals went back to buying cheaper masks from their overseas suppliers. Reese’s business nearly went bankrupt.

DAN REESE:

The people that we had hired, these people that stepped in to save America, they were rewarded by getting in an unemployment line.

MARTHA MENDOZA:

When they asked you to ramp up, didn't the government guarantee anything to help support you?

DAN REESE:

No.

MARTHA MENDOZA:

Nothing?

DAN REESE:

No.

NARRATOR:

Reese showed us letters he and his colleagues wrote to the Obama administration insisting that “America must re-secure its mask supply chain.” They said H1N1 was a wake-up call and warned that in a major pandemic China could stop shipping masks to the U.S.

But in Washington, officials had moved on. Their fallback would be an emergency stockpile meant to cover medical needs in such a crisis.

GREG BUREL, Dir., Strategic National Stockpile, 2007-20:

The stockpile fills a gap. If the Strategic National Stockpile did not exist, we would have very limited or no capability to respond to these types of events.

NARRATOR:

Greg Burel ran the Strategic National Stockpile—the SNS—a series of government-run warehouses filled with medical supplies like ventilators and masks, which were critically important during the H1N1 pandemic.

JULIET LINDERMAN:

The SNS response to H1N1 was the largest deployment of the stockpile. What was your focus during that time?

GREG BUREL:

During H1N1 we sent out personal protective equipment that we had stocked for a pandemic influenza event ahead of a great deal of disease spread, so it was already in place. We showed we could get that material out rapidly and it could be made available.

NARRATOR:

The problem was H1N1 ended up depleting the stockpile. And in the ensuing years, neither Congress nor the White House moved to substantially refill it. One government report found that many of the N95 masks in the stockpile were past their expiration date, some broken, gathering dust and mold.

GREG BUREL:

We bought the N95 masks that are in the stockpile with funds that were appropriated in the early 2000s. They've passed their expiry date. But we didn't have additional funds to buy more, so we made the difficult decision to hold on to those. You can't be prepared if you're not funded to be prepared.

JULIET LINDERMAN:

Why do you think you didn't receive those appropriations?

GREG BUREL:

You'd really have to ask the Congress.

MICHAEL BURGESS:

Congress does bear a significant amount of responsibility. There are always going to be competing budgetary priorities. It's difficult when you talk to the people in the budget committee to say, "These are the dollars we're going to need to purchase N95 masks." I think if we'd had that discussion a year and a half ago, you'd have got a lot of blank stares.

NARRATOR:

But in fact, in those pre-COVID years, we found repeated warnings from inside and outside the government that the country was being left without a safety net, that the government needed to strengthen the supply of PPE.

And it wasn’t just masks: It was ventilators, too.

NICOLE LURIE, M.D., Asst. Sec. for Preparedness and Response, 2009-17:

At that time, the ventilators in the stockpile were pretty old, and we really wanted to set out to modernize the stockpile.

NARRATOR:

Nicole Lurie was in charge of preparedness and response at the Department of Health and Human Services. In the wake of H1N1, she tried to do something about the dire situation.

NICOLE LURIE:

How can we make a better ventilator? How can we make it cheaper? And then how then how can we have enough? And so we contracted with a couple of different companies to make those ventilators.

NARRATOR:

The final contract in 2014 went to a company called Philips Respironics. The plan at the time was that they could deliver 10,000 machines to the stockpile by mid-2019.

NICOLE LURIE:

Ultimately, that ventilator got approved for use by the FDA. It was small. It was nimble. It was not expensive. And there was a contract to procure those for the Strategic National Stockpile.

JULIET LINDERMAN:

So Philips delivered on their contract?

NICOLE LURIE:

No.

NARRATOR:

HHS didn’t actually order the ventilators until September 2019, and then gave Philips more time to deliver. The delays have sparked questions in light of the coronavirus pandemic. When we spoke to Congressman Raja Krishnamoorthi this past summer, he was leading an investigation into the Philips deal.

REP. RAJA KRISHNAMOORTHI, (D) Illinois:

Although Philips had been contracted to deliver them by this time, they’re nowhere to be seen.

JULIET LINDERMAN:

Is that surprising?

RAJA KRISHNAMOORTHI:

It is surprising, given how much money that the federal government and the taxpayers have put into this project of developing these ventilators. The fact that I don't believe we have even one of these is not only surprising, it's shocking. That's all the more an indication of failure on the part of the government.

NARRATOR:

Philips would not agree to an interview but in answers to our written questions said it had recently delivered 1,700 ventilators. The company said the delays were due to “software development issues discovered during testing” and “FDA clearance, which took longer than anticipated.”

As a result of the delays, at the end of the Obama administration there were only about 18,000 ventilators in the national stockpile, a fraction of what health officials said would be needed in a full-blown pandemic.

And when it came to N95 masks, the reserves were thin, too.

NICOLE LURIE:

So in all of this you say, "Well, what's likely to happen?" People are going to get sick. Health care workers are going to need to take care of them. You need to protect health care workers almost as a first-priority population because you need to keep the health care system running to take care of people who are sick.

NARRATOR:

With these shortages in mind, Nicole Lurie and other outgoing health officials tried to warn the incoming Trump administration about the dangers that might lie ahead.

NICOLE LURIE:

There was a brief afternoon with the incoming team that played through a pandemic scenario and walked through with the incoming cabinet what roles and responsibilities were and the things that they needed to have on their radar screen.

JULIET LINDERMAN:

Did they mention specifically shortages?

NICOLE LURIE:

We always talked about shortages.

JULIET LINDERMAN:

Do you remember kind of the big takeaways from that?

NICOLE LURIE:

The big takeaways from that were that there was not a lot of traction on the part of most people who were participating. One didn't have the sense coming in that this was going to be high on the priority list.

FEMALE NEWSREADER:

The World Health Organization declaring the outbreak of COVID-19 a global pandemic.

MALE NEWSREADER:

Leading tonight with new developments in the coronavirus emergency.

MALE NEWSREADER:

—much of America shutting down.

FEMALE NEWSREADER:

Every day you hear about a new shortage.

NARRATOR:

In the spring of 2020, it was impossible to ignore the warnings any longer.

FEMALE NEWSREADER:

All kinds of companies producing things they don’t normally produce.

NARRATOR:

Furniture makers switched to making masks

FEMALE NEWSREADER:

We’re seeing a lot of hands on deck approach.

NARRATOR:

Factories retooled to make face shields. Distilleries were producing hand sanitizer.

We went to one hospital group on Long Island—

TODD GOLDSTEIN, Dir., 3D Design, Northwell Health:

Hello.

JULIET LINDERMAN:

Hi.

TODD GOLDSTEIN:

Welcome.

NARRATOR:

—that was trying to make its own swabs for coronavirus tests.

TODD GOLDSTEIN:

By no means are we going into the swab business forever. This is a way to keep us operating at 100% as more and more people came into the hospital.

NARRATOR:

They were using 3D printing technology.

TODD GOLDSTEIN:

This is the final swab here.

We need these swabs from everyone. Producing it by manufacturing capacity is not there. So we need everyone firing at all cylinders in order to combat this, so we can get ourselves back to normal. We wanted to ensure that the testing supplies were not limited by something as simple as a nasal swab.

NARRATOR:

With such widespread shortages, the Trump administration had to look abroad for help.

REAR ADM. JOHN POLOWCZYK, FEMA Supply Chain Stabilization Task Force:

We did not make any significant volume of supplies in the United States. I realized that I was going to have to fly material here, accelerating volume from overseas to the U.S.

NARRATOR:

Rear Adm. John Polowczyk was put in charge of a program called Project Airbridge that attempted to procure supplies from China and elsewhere and distribute them in the U.S.

But from the start it didn’t go well. States continued to struggle to get supplies. Some governors took matters into their own hands, cutting their own foreign deals.

FEMALE NEWSREADER:

In New Hampshire today, an airplane carrying over 91,000 pounds of personal protective equipment landed in the Granite State.

FEMALE NEWSREADER:

Maryland’s governor brokered a deal to buy half a million coronavirus tests.

REP. DIANA DeGETTE, (D) Colorado:

Governors were forced to find private businesspeople who had connections around the world to try to somehow get a hold of just basic things like masks.

MALE NEWSREADER:

This is the first of several flights to the front lines in Illinois, an effort the governor's office frankly calls "comparable to the wild, wild West."

DIANA DeGETTE:

There's 50 states and so it was everybody against everybody else. It was just a free-for-all.

FEMALE NEWSREADER:

The single largest shipment the state's received of personal protective equipment, or PPE, is being delivered today. Gov. Ned Lamont—

JULIET LINDERMAN:

Do you have a sense of where and how supplies are distributed?

DIANA DeGETTE:

Well, that's one of the questions we've asked them in our many letters is what are the standards and what are the protocols?

Project Airbridge is like many of these projects with the federal government. It's a little unclear how much that's actually worked to bring equipment here. And the original idea I think was to get equipment here, but I haven't seen much of a response.

JULIET LINDERMAN:

Why hasn't there been better coordination?

JOHN POLOWCZYK:

I think there's been a lot of coordination. I've had several series of sit-downs with every state emergency manager, every state health officer, what they're buying, how they're trying to buy, where they're going. So from where I sit, I see lots of coordination.

JULIET LINDERMAN:

Both houses of Congress have investigated Project Airbridge, and among the issues they've raised is concerns about secrecy, lack of transparency. What's your response to those criticisms?

JOHN POLOWCZYK:

Unfounded.

JULIET LINDERMAN:

Unfounded?

JOHN POLOWCZYK:

The governors have as much visibility as I do to where supplies are going. So the secrecy and the lack of transparency is absolutely unfounded. The volumes of masks, gowns, thermometers, face shields, those supplies went to first—front-line health care workers.

NARRATOR:

In Fort Worth, Dan Reese was watching from the sidelines, dismayed once again by the shortages and the continued reliance on products from China.

DAN REESE:

The minute I heard that this was the coronavirus in China, we started reaching out to the government to try to get help, because we're thinking that this could be the big one that we've been talking about.

NARRATOR:

Reese offered to ramp up mask production, but the company wanted a guarantee that the government would commit to buying from them even after the emergency was over.

DAN REESE:

It's the same Catch-22 we had on H1N1, when they would come back to us and say, "Well, yeah, and we'll give you a contract for the next nine months." From a business standpoint, we said, "We can't do that when we don't know that there's going to be a tomorrow."

NARRATOR:

At the time, there were mounting calls to tap into U.S. companies like Reese’s. Associations representing hospitals, physicians and nurses appealed directly to the president to increase domestic production of PPE and other supplies.

JULIET LINDERMAN:

You had a chance to go to the Oval Office and actually talk to the president. What did you tell him?

ERNEST GRANT:

We did have a brief discussion about the PPEs.

March 27, 2020

PRESIDENT DONALD TRUMP:

When you look at the job we’ve done on everything—on supplies, on everything—the gowns, the gloves, the masks.

ERNEST GRANT:

They’re seeing death probably three to four times the average than what they normally would.

DONALD TRUMP:

A lot of death.

ERNEST GRANT:

Yes.

DONALD TRUMP:

There's no question about it. And by the way, while we're at it, can you pass these pens around, OK?

ERNEST GRANT:

He was insisting that anyone who needed to get the equipment, it was there.

DONALD TRUMP:

I’ve heard that they are loaded up with gowns now. I’ve heard we have tremendous supply to almost all places. Tremendous supply.

ERNEST GRANT:

I don't believe that that's the case.

JULIET LINDERMAN:

Do you think that this administration has done what it needs to do to protect health care workers?

ERNEST GRANT:

I think a lot more could be done.

JULIET LINDERMAN:

What should have happened?

ERNEST GRANT:

Well, ANA advocated for the president to open up the Defense Production Act so that companies within the United States could begin to quickly manufacture the equipment that we needed, not only the masks, but even ventilators and etc.

NARRATOR:

Trump had been resisting such calls to use the Defense Production Act—the DPA—which compels private American companies to produce needed supplies.

DONALD TRUMP:

Defense Production Act is a wonderful thing, but I just haven’t had to use it.

But remember, we're really a second line of attack. The first line of attack is supposed to be the hospitals and the local government and the states, the states themselves.

We’re a country not based on nationalizing our business. Call a person over in Venezuela, ask them how did nationalization of their businesses work out. Not too well.

NARRATOR:

Eventually, as the pandemic worsened, he relented, tweeting at automakers “start making ventilators, now!”

DONALD TRUMP:

This afternoon I invoked the Defense Production Act to compel General Motors to accept, perform and prioritize federal contracts for ventilators.

NARRATOR:

We spoke to the head of the ventilator company that was working with GM about the president’s order.

CHRIS KIPLE, CEO, Ventec Life Systems:

We were doing everything we could to move as fast as possible with General Motors. I think Trump was expressing what so many Americans were feeling: “We need ventilators now. We need to solve this problem now.”

MARTHA MENDOZA:

President Trump said the Defense Production Act, he was invoking it in order to get this going. Is that what got you and your company working with GM in Kokomo to start making ventilators, or were you already making ventilators at that point?

CHRIS KIPLE:

We were already in the process of making ventilators and the Defense Production Act didn't get us to move faster and it didn't create the partnership. The DPA did help in terms of supply lines and getting parts here on time. You can get a tweet from the president or you could have a phone call with a front-line hospital worker and hear their voice shaking, talking about trying to make a decision of who gets a ventilator and who doesn't. It's those phone calls from the real heroes that you'll never forget.

NARRATOR:

In August we met with President Trump’s trade adviser, Peter Navarro, who oversees the Defense Production Act.

JULIET LINDERMAN:

A common refrain from critics has been that the DPA hasn't been used enough and that it wasn't used soon enough.

PETER NAVARRO, White House Trade Adviser:

So on the soon enough, that's counterfactual. If you look at the executive orders, they begin in March quite aggressively. So we had six executive orders and four presidential memorandum where we were using it. So that's when that began. And in terms of aggressive enough, this again is counterfactual, and I think it reflects a misunderstanding of what the DPA actually can and should do. Our strategy has been, basically, to go in and use it forcefully when we've had to and then let the rest of corporate America understand that if they don't do what they should do, we're coming after them. And that's been very effective.

NARRATOR:

Navarro was one of the earliest officials to warn President Trump about the pandemic and has long expressed concerns about critical supplies like PPE being manufactured overseas.

PETER NAVARRO:

We're dangerously dependent on the Chinese Communist Party for all sorts of masks, equipment, and we know that they, in terms of times of crisis, will hoard that stuff.

JULIET LINDERMAN:

You have been talking about the potential dangers of U.S. manufacturing moving offshore for a very long time. Is this the type of scenario you were worried about?

PETER NAVARRO:

No, this is what I was worried about on steroids. This pandemic has shone a bright light on the dangers because something like over 80 countries during this pandemic has put some form of export restrictions on what we need as a country to protect our public health.

NARRATOR:

Using the Defense Production Act was supposed to help address this problem and invigorate U.S. manufacturing. But when we looked at the White House's report on DPA contracts, it showed that the largest ones had been earmarked not for PPE but for ventilators, which the U.S. produces a lot of already. And one contract stood out: $646 million to Philips Respironics, the same company whose earlier deal to deliver ventilators to the national stockpile has been plagued by delays.

JULIET LINDERMAN:

If this company didn't deliver on their first contract, how do you get a second contract?

RAJA KRISHNAMOORTHI:

That is something we're trying to figure out. For Philips to essentially fail on its first contract and then to be awarded a more lucrative contract is puzzling to say the least.

NARRATOR:

The new contract would pay Philips nearly five times as much per ventilator as the previous contract.

The company told us the original machines had been priced “exceptionally low” and that the new ones had “functional differences” and a higher cost for "expedited delivery."

We showed the specs for both models to experts in respiratory care and medical device engineering. They said the two devices appeared to be similar and found nothing to account for the price difference.

A congressional investigation came to the same conclusion and laid some of the blame on the man who negotiated the contract, Peter Navarro.

JULIET LINDERMAN:

The criticism has been that this administration is allowing taxpayers to pay five times more for what is functionally the same ventilator as the previous—

PETER NAVARRO:

See, that's—

JULIET LINDERMAN:

—and this is coming from a congressional report.

PETER NAVARRO:

Oh course, it's a Democratic congressional report. Let me tell you about ventilators. All ventilators are not created equal. You can't compare the price of this ventilator with that ventilator without controlling for their functionality, OK?

JULIET LINDERMAN:

So you're saying they're very different?

PETER NAVARRO:

They're very different. You're dwelling on something that's tiny in the scheme of things and that's why I always worry about these kind of interviews because if the American people really want to know what's happening, it's not what may or may not be happening with a single contract with Philips, OK? Because that's just pure political BS, OK? That's all you're doing here. If you want to play that game and put it on the air, fine, but put this on the air: That's just BS.

NARRATOR:

Shortly after we spoke to Navarro, the Department of Health and Human Services terminated the contract with Philips. HHS declined to comment on why but canceled other ventilator deals, too, saying the national stockpile had enough.

Our months of reporting on the supply chain problems led not just to China or the White House, but to the way hospitals themselves operate in the United States. To places like this, the procurement warehouse for Northwell Health, the New York hospital group that had scrambled for swabs in the early days of the pandemic.

JULIET LINDERMAN:

So Paul, what's going on the truck?

PAUL SPODEK, Asst. VP, Northwell Health:

These two carts are PPE supplies for a COVID unit.

NARRATOR:

Paul Spodek oversees medical supply distribution here. He explained to us that the way the business works is based on a concept known as “just in time,” which is designed to keep costs low.

PAUL SPODEK:

A hospital will submit an order today, get their delivery tomorrow just for that day. And they receive it in "just in time" instead of stockpiling material on site and using up valuable space and also labor.

JULIET LINDERMAN:

So it's a space issue. Not wanting to order a lot more product than you think you'll need in the immediate short-term.

PAUL SPODEK:

Correct. It's a space issue, but it's also making sure you get the right product. If you're not utilizing a just-in-time system, you will order too much product that you do not need and not enough product that you really do need.

NARRATOR:

But when the pandemic first hit, most hospitals didn’t have enough on hand or a way to stockpile because of the just-in-time system. Even a chain as big as Northwell, with its 85,000-square-foot warehouse, struggled.

JULIET LINDERMAN:

How close did you get to running out?

PAUL SPODEK:

Isolation gowns was very close. This building looks large, but as we found out in this pandemic, large wasn't enough.

JULIET LINDERMAN:

Did you experience any shortages that were surprising to you?

PAUL SPODEK:

Well, you know, we'd never thought we'd run out of mortuary kits, also called body bags. It was something that you'd never think of, that we'd always have enough. It still gives me goose bumps thinking about it.

NARRATOR:

Some of Northwell’s supplies come by way of a company called Premier, a group purchasing organization, or GPO, which works with more than 4,000 hospitals around the country to get medical supplies. It's another way of keeping costs low.

MICHAEL ALKIRE, Pres., Premier, Inc.:

We don't distribute products, so we contract for products. There are health care systems that said, "We're going to go do this on our own." Well, you're going to be spending a lot of money on holding cost, carrying cost.

MARTHA MENDOZA:

If you have a lower cost, does that mean you have less surge capacity?

MICHAEL ALKIRE:

No. It's interesting. If you have a lower cost—I think what we did—and again not we, Premier, but we, the industry, did—by creating this narrow supply chain of products, I think we didn't keep redundancies along the way. I think that there are ways that we can still create products at reasonable prices. It may not be the lowest price, but reasonable prices.

NARRATOR:

But we found studies and reports going back years raising concerns that GPOs could be anti-competitive and disrupt the supply chain.

MARTHA MENDOZA:

Is there some risk that GPOs slow down that procurement?

MICHAEL ALKIRE:

Slow down the procurement. You know, it's interesting. I don't think so. So I would actually argue it's the exact other way. We're this independent arbiter that helps grease the skids and tries to always try to create healthier markets.

ERNEST GRANT:

Their role is to obviously be able to buy more in bulk at a cheaper rate. And as a result of that, you're saving money down the line. But in this case, when there's the increased demand, the system seemed to have failed somewhere along the way.

NARRATOR:

That is exactly what happened to Premier when the pandemic hit and one of its overseas factories shut off supplies.

MICHAEL ALKIRE:

The factory in Taiwan said, "We're no longer going to be able to ship to the U.S. We're going to ship all this product to mainland China." The lesson learned on behalf of the industry is we've got to create more resiliency and we don't ever want to find ourselves in this situation again.

NARRATOR:

So in May, Premier bought a minority stake in one of the only domestic mask makers—Dan Reese’s company, Prestige Ameritech.

DAN REESE:

So it was a huge thing for our company, it was very good. The key thing is not so much just the dollar infusion in cash, it's the commitment of these members. The members are stepping in, saying, "Hey, we're going to buy 500,000 respirators a month for the next three years." See, that's what we need.

NARRATOR:

While Reese’s masks cost more than ones from China, Premier was willing to pay the extra—at least for now.

MARTHA MENDOZA:

This is one of your Prestige Ameritech N95 masks for under a dollar. Here's a N95 mask made in China for 30 cents. How did you compete with that?

DAN REESE:

Well, that's really the issue. The bottom line is China can sell masks into the U.S. market in my territory for cheaper than my raw material costs are. So you're not going to be able to successfully compete there.

NARRATOR:

That’s the same thing we heard talking to people who do business in China.

Cameron Johnson helps U.S. hospitals buy PPE from China and has been based in Shanghai for 20 years.

MARTHA MENDOZA:

One thing that I keep hearing here in the United States is we are going to have to shift manufacturing here. And we're going to have to be producing a domestic supply of N95s and gowns and gloves and test kits. Is that realistic?

CAMERON JOHNSON, Mgmt. consultant, Tidal Wave Solutions:

The challenge really is that China has 50% of the world's production capacity, particularly for masks. So are we going to move an entire supply chain over? It's just not going to happen. Manufacturing, as we know it, is never going to return.

NARRATOR:

Thousands of companies in China are dedicated to making PPE, and many others, like this plastics manufacturer Johnson took our camera crew to see, quickly pivoted during the pandemic under government orders.

CAMERON JOHNSON:

The factory we visited, historically that company produced plastics and then had to shift to producing PPEs. Part of this change for them was required by the local government at the time in March. So this is why they shifted so quickly into producing these products. In China, you have an ecosystem of various companies, whether they provide ingredients, raw materials, production capacity, and that currently doesn't exist in the U.S.

NARRATOR:

To the Trump administration, this all speaks to what they say is an unfair playing field that China continues to exploit.

PETER NAVARRO:

The N95 face masks, China put export restrictions on those masks and then nationalized—

NARRATOR:

For Peter Navarro, a case in point is what happened in late February at the Shanghai subsidiary of American mask maker 3M.

PETER NAVARRO:

The next thing they did was nationalize, effectively, 3M, our company, in China to prevent them from sending us any stuff.

DENISE RUTHERFORD, Sr. VP, Corporate Affairs, 3M:

The masks we produce in China are sold in China for the most part. That is a large industrial country now.

MARTHA MENDOZA:

The White House trade adviser Peter Navarro at one point said China had nationalized 3M's manufacturing there. Did that—is that accurate?

DENISE RUTHERFORD:

When the demand increased in China, we produce respirators in Shanghai area. And what did happen is the Shanghai municipal government came to 3M and requested preference and a higher degree of engagement in addressing the orders for everything that we were shipping out of the Shanghai facility. They were prioritizing the shipping locations because they understood, even better than we did, or even our own distributors, where the needs were greatest in China.

MARTHA MENDOZA:

So that doesn't really sound like the government nationalized it.

DENISE RUTHERFORD:

Right. We continued to run the plant, the operations, our workers, but they were there with us every day as we produced respirators, and they were very closely involved in deciding where those shipments were going.

JULIET LINDERMAN:

We spoke to 3M and they completely disagree that it was nationalization. They said that the Chinese government "requested preference and a higher degree of engagement in addressing the orders for everything we were shipping out of the Shanghai facility."

PETER NAVARRO:

[laughs] Memo to FRONTLINE here. This is why we had to do the DPA order on them. They are the slipperiest people that I dealt with in this White House in terms of getting to "yes" on things, so if they're spinning it that way, they can go ahead and spin it, but I'm telling you flat out that the Chinese Communist Party, both at the federal level and at the local level, I think it was in Shanghai, was prohibiting those masks from leaving China.

JULIET LINDERMAN:

But—

PETER NAVARRO:

Now, we had—no. We had to deal with that diplomatically and we had to deal with it with the DPA, and I'm telling you, I don't care what 3M says, that's what happened.

JULIET LINDERMAN:

But is that different than the functions of the DPA that say that we can block exports of masks from our country?

PETER NAVARRO:

What that does is it underscores with an exclamation point why we have to have this production here, why we have to have it here.

NARRATOR:

In recent weeks, President Trump and former Vice President Joe Biden have both made returning medical supply manufacturing to the U.S. part of their campaigns.

DONALD TRUMP:

We’re taking our business out of China. We are bringing it home.

JOE BIDEN:

We'll make the medical supplies that our country needs.

DONALD TRUMP:

Bring home our medical supply chains.

DAN REESE:

It's easy to, as a politician, to stand at the podium and say, "America is the most competitive country in the world. We have the best workers.” The truth is we are not that competitive.

JOE BIDEN:

We'll never again be at the mercy of China or other foreign countries in order—

CAMERON JOHNSON:

Oftentimes we hear “anywhere but China. ABC. Anywhere but China.” OK. But what's your plan? Manufacturing is not going to come back to the U.S. either because the ecosystems don't exist or the technology basis doesn't exist or government support doesn't exist. Take your pick.

FEMALE NEWSREADER:

Here we are again. It's harder to get anything.

FEMALE NEWSREADER:

Nurses worry there won't be enough personal protective equipment to go around.

NARRATOR:

Seven months into the pandemic, the medical supply chain remains fragile.

JULIET LINDERMAN:

We're months into this pandemic, and we are looking around the country, and nurses and doctors still don't have enough personal protective equipment. So I want to ask you, why do you think that is?

JOHN POLOWCZYK:

I'm going to have to disagree with you. As I look across the nation and the data that I have from supply chain—from the commercial supply chain, from hospital reporting, nursing home reporting, there's a lot of supplies in the nation. I can't answer your question why nurses are still saying that they don't have supplies, because that's not the picture I have.

NARRATOR:

But a recent survey of nurses around the country found that two-thirds of them were still reusing N95 masks, more than half of them for five days or more.

NICOLE LURIE:

It didn't need to be this way. This is an administration that had policies, procedures, tools, plans, checklists, advance warning—all of those things. And it appears to have used almost none of it.

NARRATOR:

Former HHS official Nicole Lurie, who recently began advising the Biden campaign, has watched with alarm.

NICOLE LURIE:

And I'm sure that there are people working very, very hard. And I know there are. And I know there are people who are really frustrated. But this is such a historical failure on so many levels.

MALE NEWSREADER:

There is new vaccine help this morning—

NARRATOR:

And now there are new concerns about the supply chain.

MALE NEWSREADER:

This morning, a major milestone in the battle against COVID-19.

NARRATOR:

As the country races for a vaccine—

FEMALE NEWSREADER:

COVID-19 vaccine contenders are now producing their vaccine.

NARRATOR:

—will there be enough syringes?

FEMALE NEWSREADER:

—has asked states to prepare for—

DIANE DeGETTE:

Given the abject failure, frankly, of the administration to provide materials for testing and PPE, we do worry if we'll have enough of the vials and enough of the syringes and so on.

NARRATOR:

The Trump administration says it's been ramping up and has given contracts to several U.S. companies to boost the supply of syringes.

JULIET LINDERMAN:

In June you mentioned that we were on the path to have 400 million needles and syringes. Can you just tell me if you think we're going to meet it?

JOHN POLOWCZYK:

We've used the Defense Production Act with a few U.S. producers. I believe they're on track. I think some of these vaccines might be a double dose, so we'll need twice the number of 300-some odd million Americans, and I believe they have syringes on that order of magnitude, vials, syringes, on order.

NARRATOR:

HHS would not discuss its syringe deals or tell us how many had been delivered to date, but we found some troubling signs. The largest contract is with a company that says it doesn't yet have FDA clearance. Another company has experienced supply chain delays. And the CEO of one supplier told us he has doubts about the country's ability to ramp up.

Back in Fresno, California, nurses like Rachel Spray, still reeling from the death of her colleague Sandy Oldfield, are worried.

RACHEL SPRAY:

We're still reusing masks, shields. We've been short on gloves, short on gowns. We feel disposable. If they're saying that there's enough, why can't we get it? It costs money. It costs money to bring it here and make it here. It's cheaper to just import it. All that capitalism and corporate greed.

MARTHA MENDOZA:

At what cost?

RACHEL SPRAY:

The cost of human life—nurses, patients, health care workers. Sandy.

54m
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September 15, 2020