Distributors Lead The Nation In Finding Solutions To PPE Needs

When demand for personal protective equipment outstripped supply, the nation’s medical products logistics experts stepped up to offer their expertise

Personal protective equipment, or PPE, became part of the national vernacular this year as U.S. healthcare providers faced a shortage of gowns, gloves, and respirator masks needed to effectively combat the spread of COVID-19.

The pandemic spurred a surge in PPE demand by mid-March 2020. It’s expected that the global healthcare industry’s spend on PPE will nearly triple from $12.9 billion in 2019 to $33.4 billion in 2027.

As the pandemic spread around the globe, it spurred an increased demand for PPE worldwide while it hampered overseas manufacturing capacity. The epidemic started in China – a key manufacturing hub for PPE. As COVID arrived in the U.S., demand for PPE increased significantly in a short period of time, in many cases outstripping supplies which already were constrained due to the manufacturing disruption.

In the midst of the supply and demand imbalance, distributors worked diligently with existing manufacturer partners, non-traditional suppliers and government agencies to speed shipments and increase capacity. They also implemented well-known strategies to conserve existing PPE inventory through policies designed to prevent hoarding and reduce waste.

The Difference Between Distributors And Brokers

The skyrocketing demand for PPE attracted a new player to the marketplace – opportunistic brokers with no previous healthcare experience. These brokers should not be confused with legitimate commercial distributors working to ensure a reliable flow of high-quality medical products to providers.

Vetting Offers For PPE From Unknown Sources

With personal protective equipment (PPE) in short supply, hundreds of offers from unknown sources are filling inboxes across the supply chain. Following is a guide to determining if an offer is from a legitimate source who can deliver. For more resources, visit HIDA.org/coronavirus.

What are the risks associated with using an unfamiliar PPE source? 
The primary risks are losing money, not getting what you ordered, and wasting staff time. Providers report having received incorrect product, poor quality items, or counterfeits.

These offers sound too good to be true. What are others in the industry experiencing? 
Too often the experience with these sellers ends in a waste of staff time with no product to show for it. Healthcare organizations are finding that after due diligence is performed, these companies do not have the product or the quantities offered. The Wall Street Journal reports that FEMA has had similar experience. After vetting 1,000 of these offers, only a handful had something they could purchase.

What can I do to minimize these risks? 
The best way to minimize risk is to use known vendors. If considering an unfamiliar source, do basic due diligence such as getting references, checking web sites, getting a sample, and asking for photo evidence of the inventory. Payment required in advance can be a red flag; consider an escrow account to protect yourself. Organizations will have to use a considerable amount of judgment if the supplier claims the goods are not yet produced.

How can I vet PPE offers from sources I don’t know?
Here are several resources that can help.

  • Office of Inspector General Exclusions Program identifies federally excluded organizations and individuals

  • System for Award Management tracks whether an organization is able to do business with the federal government

  • FDA Establishment Registration & Device Listing is a searchable database of 510(k) clearances

  • Counterfeit Respirators/Misrepresentation of NIOSH Approval resource page describes how to spot counterfeit product

  • Better Business Bureau Scam TrackerSM tracks potential scams and includes a keyword search to narrow results

What should a legitimate seller be able to provide?

  • Company’s W-9 and/or business license

  • Financial snapshot, including a recent income statement

  • Proof of 510(k) clearance

  • Product cut sheets

  • Current inventory levels and locations

What risks are associated with a brokered transaction? 
This transaction type is ripe for price gouging, especially in times of high demand. Brokered deals force buyers to bid against buyers, pushing prices up and driving goods to the highest bidder without consideration to where product is most needed. Forbes reports that smaller buyers are often pitted against foreign governments. Additionally, because a broker never accepts title to products, industry acceptable transportation controls are not guaranteed. This creates an increased risk for shipments being lost or damaged in transit.

What is my distributor doing to vet new sources of PPE? 
Distributors are working diligently to identify new PPE sources by leveraging the sourcing techniques described in this FAQ. Additionally, some distributors have international  employees or agents who can evaluate inventory at overseas sites.

Executive Briefing | July/August 2020

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