TPM Reader BW flagged something to me from this evening’s White House press conference that strikes me as pretty remarkable. The US has established an airbridge of flights from abroad to bring in supplies of masks, gowns, all the supplies we’re hearing are in short supply. But in answer to a question from Weijia Jiang of CBS News, the Admiral in charge of this effort explained that those supplies mainly are not going to FEMA or the states. They’re going to private sector distributors. And that seems to be one of the big reasons why states are having to fight amongst themselves over them, bidding up the price along the way.
Here’s the video.
This is remarkable. The US has set up an airbridge for PPE & med supplies to the US from abroad. But in answer to question from @cbsnews @weijia the Admiral explains that this is going through private companies, which explains why states are having to bid to get the stuff. pic.twitter.com/eO646wAeNF
— Josh Marshall (@joshtpm) April 3, 2020
Now, I want to be clear that there is some logic to this, at least as far as distribution. It sounds like these are the half dozen or so suppliers who manage medical products to hospitals and institutions in normal times. So they have specific knowledge of the different facilities. They have warehouses in different regions, vehicles to move from airports to warehouses down to individual hospitals and assisted living facilities. That’s a physical capacity and distribution system that isn’t necessarily going to be easy for the military or FEMA to duplicate on the fly. So there is some logic to this from a distribution point of view. Possibly.
But this doesn’t sound like it’s just distribution. The Admiral seems pretty clear that this is being distributed as private sector transactions. As then Admiral put it: “That’s normally how things work, right? I’m not here to disrupt a [commercial] supply chain.”
We’ve heard different governors complaining that it’s like bidding on eBay, with the different governors have to bid against each other to get access to these live saving products that are in desperately short supply. That only doesn’t distribute them according to need. It also makes the price for everyone higher.
Possibly unrelated but maybe not, BW flagged this article from a couple days ago which describes a GOP fundraiser and political operative who abruptly shuttered his business and announced he was opening a new firm (Blue Flame) which is in the COVID medical supply business. “Over the last 14 days I have built another business outside politics and will be focusing my full attention there,” he told colleagues in an email.
There’s no evidence the fundraiser/operative Mike Gula is in the mix with these airbridge flights. But it at least hints at the kind of corruption and profiteering that is possible in such a crisis.
Supplying these private sector distributors seems quite problematic for at least a couple reasons, to put it mildly.
First is that there’s no clear mechanism to allocate these supplies on the basis of need based on a coherent national plan or framework. Secondly, it opens the door to massive profiteering. Even if companies aren’t technically gouging, that’s what bidding is. And you really can’t call this a legitimate private sector market if every state is having to bid with private companies to secure medical supplies during a historic national health emergency. The private sector rationale is also undermined if the US military has taken over a significant part of the fulfillment process.
Perhaps this is operating differently than it sounds from this exchange. Maybe the federal government is dictating distribution or constraining prices. But there’s no clear suggestion that is happening. Quite the contrary. It does not sound good.