Why Was America So Unprepared for the COVID-19 Pandemic?
One answer is a failure to monitor federal contracts effectively.
How was the wealthiest and most powerful country in the world so seemingly unprepared for the Covid-19 pandemic? Undoubtedly, the question will be studied, debated, and analyzed in policy circles for decades. While there are multiple factors leading to the United States’ shortfall in pandemic preparedness, one answer exposes a rarely discussed issue in public policy: the federal government’s inability to monitor federal contracts effectively.
Pandemic preparedness is often thought of as an abstract concept, but in reality, it is a tangible endeavor.
Many aspects of America’s sclerotic response to the Covid-19 pandemic stemmed from multiple unrelated, but aligned, issues at once. Myriad unrelated issues, including foreign medical supply chain dependence, unanticipated coronavirus test kit contaminations from the Centers for Disease Control and Prevention (CDC), and China’s obfuscation of early infection data led to a torpid American response to the Covid-19 pandemic. In fact, even leading experts in global health security found America’s slow response perplexing.
America: From most prepared to highly infected
Three months before Covid-19, leading global health experts believed that America was the most prepared nation in the world for a pandemic.
A collective effort between the Johns Hopkins Center for Health Security, the Nuclear Threat Initiative, and The Economist Intelligence Unit, the Global Health Security Index provided an extensive assessment of pandemic preparedness across 195 countries. The GHS Index created a comprehensive framework of 140 questions organized across six categories, with 34 indicators and 85 sub-indicators evaluating each nation’s pandemic preparedness. In sum, the well-regarded GHS Index composited rankings that do not neatly align with the current Covid-19 narrative, as the top ten most prepared countries were as follows: (1) the United States, (2) the United Kingdom, (3) the Netherlands, (4) Australia, (5) Canada, (6) Thailand, (7) Sweden, (8) Denmark, (9) South Korea, (10) Finland.
What’s more, many of the advisors involved with the GHS Index were alumni of the Obama Administration (such as former Secretary of Energy Ernest Moniz) and leading experts in the field (such as Johns Hopkins University professor Tom Inglesby). The GHS Index garnered support from the Bill and Melinda Gates Foundation and, at the time, offered an authoritative review of the state of global pandemic preparedness. Yet, while specific metrics — such as national vaccination rates, epidemiological workforce capacity, and hospital beds per 100,000 people — seemed fortuitous for developed countries like the United States, it did not fully anticipate the ramifications of shortages arising from mismanaged or stalled years-long federal contracts, as evidenced during COVID-19.
A call for better monitoring of federal contracts
In FREOPP’s A New Strategy for Bringing People Back to Work During COVID-19, we recommend reforming the Strategic National Stockpile (SNS) and federal contracts for future emergency preparedness.
Re-envision management of the Strategic National Stockpile and federal contracts for emergency preparedness. Reporting from ProPublica and the New York Times revealed how myriad missteps and red tape led to a national shortage of ventilators. In 2006, federal officials sought to procure 70,000 private-sector ventilators over ten years; in March 2020, only 12,700 were available for distribution. It will be important for the executive branch to objectively assess these bureaucratic barriers, and facilitate interagency cooperation regarding emergency preparedness contracts.
Admittedly, monitoring federal contracts is not the most riveting subject, but it is an important one. Investigations by ProPublica and the New York Times revealed how multiple federal contracting missteps led to a shortage of ventilators in the SNS. Beginning in 2006, federal officials attempted to procure 70,000 private-sector ventilators, but after numerous production failures and bureaucratic barriers, only 12,700 were available within the SNS for distribution in March 2020. What’s more, not all supplies within the SNS were usable. Alarmingly, 6,000 medical masks sent to Alabama had dry rot, and over 150 ventilators sent to Los Angeles were in disrepair. Moreover, in mid-March, the SNS contained 30 million surgical masks and 12 million higher filtration N95 respirators; by early April, nearly 90 percent of the SNS’ total PPE was depleted. The remaining 10 percent of SNS supplies were kept in reserve for a worst-case public health emergency scenario. The SNS is supplied with life-saving emergency medical equipment is through federal contracts with the private sector. The SNS’ ventilator shortage provides one example of how federal contract mismanagement left America unprepared for the COVID-19 pandemic.
Ventilators: A decade of failed federal contracts yielded zero results
In 2006, the Department of Health and Human Services (HHS) created the Biomedical Advanced Research Development Authority (BARDA), housed within the Office of the Assistant Secretary for Preparedness and Response, to prepare for chemical, nuclear and biological threats — including pandemics. BARDA estimated that the United States needed 70,000 ventilators to combat a moderately-severe pandemic influenza strain in the future. In 2008, BARDA opened federal contract proposals from private sector companies interested in building easy-to-use, low-cost ventilators. BARDA hoped to purchase ventilators costing less than $3,000 each (even as ventilators sold for around $10,000 at the time). Furthermore, BARDA hoped regulators (e.g., the Food and Drug Administration or FDA) would approve the ventilators and be mass-produced by 2011, with tens of thousands added to the national stockpile. Eventually, the Government found a private sector company that specialized in ventilators — Newport Medical Instruments — willing to design low-cost machines to supply the SNS. Newport was awarded $6.1 million in advance, with more payments following after various predetermined production benchmarks. In 2011, the company sent SNS ventilator prototypes to HHS, and government officials testified before Congress in 2012 that a fleet of ventilators was on schedule for delivery by September 2013. Unfortunately, the production fell through.
The medical device industry underwent rapid consolidation in the early 2010s that mirrored concurrent hospital consolidation trends. Newly merged medical device manufacturers advertised themselves as “one-stop shops” for hospital systems’ diverse medical device needs. Newport, with its BARDA-administered federal contract for low-cost ventilators, became acquired in 2012 by Covidien for $100 million. That same year, Covidien acquired a half dozen other medical device companies. Since Covidien’s ventilator sales comprised only a small portion of the company’s overall portfolio, production for the federal contract stalled, and developing inexpensive ventilators became a lower priority. Covidien asked HHS to renegotiate the Newport contract, and the Government obliged with a $1.4 million payment and adjusted timeline.
However, by 2014, the production completely stopped, and the federal contract produced zero ventilators for the national stockpile. Eventually, Covidien executives sought a termination of the contract, with BARDA in mutual agreement. With the 2014 Ebola outbreak in West Africa raging, BARDA’s focus shifted and swiftly awarded a new contract for 13.8 million to the Dutch conglomerate Philips. (Fittingly, in 2015, Covidien was acquired by a larger medical device company, Medtronic, for $42.9 billion.)
BARDA’s 2014 federal contract with Philips mirrored similar struggles seen with Newport and Covidien — and production moved slowly. BARDA believed Philip’s Trilogy Evo Universal would provide a cheap, easy-to-use ventilator to amass the Strategic National Stockpile cache. It wasn’t until five years after signing the federal contract, in September 2019, the FDA approved the Trilogy Evo after myriad delays, and the HHS ordered 10,000 ventilators at the cost of $3,280 per unit.
However, no federally contracted Trilogy Evo units made it to the national stockpile in time for the onset of COVID-19. Nonetheless, two higher-priced commercial versions were made available to states and hospitals from $12,495 to $17,154 each. As the COVID-19 pandemic raged in March and April, the SNS was “still awaiting delivery of the Trilogy Evo”; the FDA had issued a Class 1 Device Recall of the Trilogy Evo devices in February 2020 after a software defect was detected. In sum, the national stockpile’s reserve ventilators distributed during COVID-19 never came from the multiple federal contracts in place to procure them.
The multiple federal contracts in place to procure reserve ventilators for the Strategic National Stockpile yielded none prior to the COVID-19 pandemic.
Prioritizing PPE in the future
Sadly, America faced similar national stockpile distribution shortages regarding personal protective equipment (PPE) as with ventilators. In particular, N95 respirator masks, which are most protective for health care workers, were in short supply at the height of the pandemic in March and April. As a result, price-gouging and hastily-administered federal contracts to procure N95s ensued. In April, the Federal Emergency Management Agency (FEMA) awarded a $55 million contract for N95 respirator masks to a small, private company with no experience in medical supply chains or N95 mask production. The Federal Government typically pays $0.63 per mask with its manufacturer, 3M. FEMA paid the contractor $5.50 per N95 mask, a 773% relative change in pricing. Ironically, these figures are far higher than if a private citizen purchased N95 respirator masks from The Home Depot in May 2020. In May, private citizens could buy a 15-pack of N95 masks for $34.97, or $2.33 per mask — half the rate the Federal Government paid a month earlier. What’s more, the company receiving that multimillion-dollar contract was, at the time, insolvent.
Arguably, the future procurement of sufficient PPE is more critical than ventilator stockpiling; patients requiring ventilators are often at a higher risk of death. In fact, before COVID-19, about 200,000 people developed acute respiratory distress annually, with 60 percent survival. The 40 percent mortality rate for acute respiratory distress (e.g., the buildup of fluid in the alveoli of the lungs caused by pneumonia) may be similar to that of COVID-19 patients requiring ventilators. In a May 26 study in Critical Care Medicine, Emory University researchers found that 35.7 percent of COVID-19 patients that required ventilators died — a discomforting number, but far less than the 80 percent figure estimated in China and Italy. Thus, not only is PPE less expensive, but it can be used by all citizens to prevent the spread of the airborne pathogen, and mitigate the need for critical amounts of ventilators. In the future, the proper management of federal contracts regarding PPE will be essential.
The federal government plays a key role
Pandemic preparedness is often considered an abstract concept, but in reality, it is a tangible endeavor. Emergency medical equipment such as ventilators and PPE are physical items needed to assist doctors and nurses during a pandemic. The federal government plays a chief role in ensuring emergency medical materials are readily available for public use during times of crisis. The proper monitoring of the progress and results of federal contracts, which is often overlooked, allows for the idea of preparation to become a physical response.
