US seeking industry cooperation on future medical supplies

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(medical supplies)

WASHINGTON (AP) — U.S. officials are invoking a rarely used provision of American law that would shield companies from antitrust regulations to help the country from again running out of medical supplies in a pandemic.

The government began formal discussions Thursday with private industry representatives on a cooperative five-year agreement to ensure supplies of protective materials, medical equipment, medicine and vaccines.

The agreement would involve a provision of the Defense Production Act that has been used only twice before to enable competitive businesses and the government to discuss issues of price and supply without running afoul of antitrust regulations, said Joel Doolin, a senior official with the Federal Emergency Management Agency.

“Clearly it could have applications to what’s happening now, but because it’s a five-year look it’s intended so we can set up this relationship with industry, have those conversations and plan for the future,” said Doolin. He has a lead role in the effort as FEMA’s associate administrator for policy, program analysis and international affairs.

There was widespread recognition that U.S. supplies of critical equipment, much of which is now manufactured overseas, were insufficient at the outset of the COVID-19 outbreak.

U.S. hospitals as well as many private companies and even government agencies such as the Department of Veterans Affairs and states themselves struggled to acquire protective masks, gowns, face shields and other gear, often bidding against each other and driving up prices amid the shortage.

FEMA worked with businesses and other agencies to acquire tens of millions of N95 respirators, masks and other pieces of equipment from around the world and distribute them across the United States while President Donald Trump invoked a separate provision of the Korean War-era law to boost private-sector production of ventilators and other equipment.

But COVID-19 resulted in simultaneous disaster declarations in all states and territories as well as the District of Columbia, and the pandemic presented an unprecedented strain on emergency supplies. Doolin said the voluntary agreement under discussion is intended to streamline the effort in the future.

“Given the scale of that I don’t think it’s surprising that we are trying to be proactive and see how we would be able to plan even better for the next time,” he said in an interview with The Associated Press before the meeting with industry representatives.

It is not the only initiative to improve pandemic response.

Navy Rear Adm. John Polowczyk, who was appointed to run a White House supply chain task force in response to the outbreak, told reporters last week that the government is expanding the emergency stockpile of critical supplies and medicines managed by the Department of Health and Human Services.

Legislation in Congress would require the Department of Homeland Security to increase the amount of personal protective equipment it buys from American companies. The aim is to create incentives to build domestic production.

“The shortage in personal protective equipment during this pandemic underscores the urgent need to shore up our domestic supply chain in case of national emergencies,” said Sen. Jeanne Shaheen, D-N.H., one of the bill’s authors. “The COVID-19 outbreak has exposed severe inadequacies in our PPE supply chain which need to be addressed immediately.”

Under the voluntary agreement, the government would work out a plan for future large-scale acquisitions with suppliers, manufacturers and distributors. Some may be reluctant to participate given concerns about sharing pricing and cost data or other proprietary information.

Industry representatives at the meeting, held by video teleconference, raised issues such as how confidential information will be shared and managed among participants and whether companies based overseas will be able to take part in the agreement.

FEMA officials did not answer questions posed and planned further discussions before the agreement is finalized.

Approval from the Justice Department and the Federal Trade Commission is required to avoid violating antitrust law. This provision of the DPA was used to maintain shipping in 1950 during the Korean War and in 1997 in the Persian Gulf, Doolin said.

FEMA Administrator Peter Gaynor said at the meeting that the goal was to create a “transparent organizing mechanism” to manufacture and distribute supplies in a pandemic.

“Participant manufacturers, distributors and other key private sector partners will be able to work with the federal government, and with each other, on supply chain challenges in a way that would not otherwise be possible,” Gaynor said.

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