New York is paying 15 times the normal price for necessary equipment to care for patients who test positive for coronavirus and need to be hospitalized.
New York State paying 15x more for medical equipment than normal
April 06, 2020
by John R. Fischer, Senior Reporter
With more than 100,000 cases, New York State has resorted to paying 15 times the regular price for medical equipment and supplies, according to ProPublica.
The shortage of medical supplies has forced the empire state into a bidding war with other states for ventilators and personal protection equipment at excessive prices — a practice known as price gouging. It recently paid $248,841 for a portable X-ray machine that typically costs between $30,000 and $80,000, and estimates that the total cost for supplies will cost $15 billion in spending and lost revenue.
“It’s like being on eBay with 50 other states bidding on a ventilator,” Cuomo told reporters in a press conference on Tuesday, reported on by ProPublica. “And then, FEMA gets involved and FEMA starts bidding! And now FEMA is bidding on top of the 50! So FEMA is driving up the price. What sense does this make?”
Price gouging is normally not considered a crime in most states unless a declared state of emergency is in effect. While many states have made it illegal throughout the pandemic, most laws around the practice only apply to the sale of consumer goods and services, not those made by states or by private or nonprofit businesses.
As the epicenter for the virus, New York has allowed anyone with needed supplies to sell to the state instead of just its approved vendors. This enables sellers to charge any price, with the state now paying $7.50 each for masks, about 15 times the usual price.
Other areas face the same dilemma, with Houston recently losing a bid of $4 per N95 masks — which usually cost 50 cents each. It has since placed a bid with a different private company for $2 million with the cost per mask at $5.56, according to Click2Houston.com.
At the same time, large national distributors are hesitant to sell more equipment to states with the most coronavirus cases, for fear of being accused of favoritism or collusion. Many are selling to customers on the same "allocation" or based on each one’s purchase history, to prevent stockpiling.
Vendors who have run through their inventories are also passing on higher prices from their suppliers, with some indicating that they would need to increase their own prices to cover rising import costs. “In some cases the cost is 15 to 20 times higher,” CEO Joe Kastner of New Jersey-based Shield Line LLC, a New York state vendor, told ProPublica.
Distributors are calling on the federal government to adjust allocations based on need, and several cities have even written to the federal government for a designated “medical equipment czar” who can buy all supplies and fulfill requests from local jurisdictions. Chaun Powell, vice president for strategic supplier engagement at the national health care consultant Premier Inc., says states and hospitals will have to continue paying higher prices than normal if the federal government does not intervene.
“The more COVID patients they get, the more masks they’re going to burn,” Powell told ProPublica. “They’re getting desperate because they’re running out faster, so they’re willing to pay.”
No federal or state laws provide guidance on situations in which government agencies on every level are competing with one another for the same goods. President Donald J. Trump recently announced that he will extend the Defense Production Act to allow the head of the Department of Health and Human Services to assist six manufacturers in obtaining supplies to develop ventilators, reported The Hill.
The president, however, has at times blamed states for their pandemic problems and recently rejected Cuomo’s claim that the state was in need of tens of thousands of ventilators.
“I don’t believe you need 40,000 or 30,000 ventilators,” he told Sean Hannity in a Fox News interview. “You go into major hospitals sometimes, and they’ll have two ventilators. And now, all of a sudden, they’re saying, ‘Can we order 30,000 ventilators?’”
Dr. Anthony Fauci, an immunologist and director of the National Institute of Allergy and Infectious Diseases, said on CNN’s “State of the Union” on Sunday that he agrees with Cuomo’s estimate, according to the New York Post. “One way or another, he needs the ventilators that he needs and hopefully we will get him the ventilators that he needs ... Bottom line, he’s got to have the ventilators. Period.”
The shortage of medical supplies has forced the empire state into a bidding war with other states for ventilators and personal protection equipment at excessive prices — a practice known as price gouging. It recently paid $248,841 for a portable X-ray machine that typically costs between $30,000 and $80,000, and estimates that the total cost for supplies will cost $15 billion in spending and lost revenue.
“It’s like being on eBay with 50 other states bidding on a ventilator,” Cuomo told reporters in a press conference on Tuesday, reported on by ProPublica. “And then, FEMA gets involved and FEMA starts bidding! And now FEMA is bidding on top of the 50! So FEMA is driving up the price. What sense does this make?”
Price gouging is normally not considered a crime in most states unless a declared state of emergency is in effect. While many states have made it illegal throughout the pandemic, most laws around the practice only apply to the sale of consumer goods and services, not those made by states or by private or nonprofit businesses.
As the epicenter for the virus, New York has allowed anyone with needed supplies to sell to the state instead of just its approved vendors. This enables sellers to charge any price, with the state now paying $7.50 each for masks, about 15 times the usual price.
Other areas face the same dilemma, with Houston recently losing a bid of $4 per N95 masks — which usually cost 50 cents each. It has since placed a bid with a different private company for $2 million with the cost per mask at $5.56, according to Click2Houston.com.
At the same time, large national distributors are hesitant to sell more equipment to states with the most coronavirus cases, for fear of being accused of favoritism or collusion. Many are selling to customers on the same "allocation" or based on each one’s purchase history, to prevent stockpiling.
Vendors who have run through their inventories are also passing on higher prices from their suppliers, with some indicating that they would need to increase their own prices to cover rising import costs. “In some cases the cost is 15 to 20 times higher,” CEO Joe Kastner of New Jersey-based Shield Line LLC, a New York state vendor, told ProPublica.
Distributors are calling on the federal government to adjust allocations based on need, and several cities have even written to the federal government for a designated “medical equipment czar” who can buy all supplies and fulfill requests from local jurisdictions. Chaun Powell, vice president for strategic supplier engagement at the national health care consultant Premier Inc., says states and hospitals will have to continue paying higher prices than normal if the federal government does not intervene.
“The more COVID patients they get, the more masks they’re going to burn,” Powell told ProPublica. “They’re getting desperate because they’re running out faster, so they’re willing to pay.”
No federal or state laws provide guidance on situations in which government agencies on every level are competing with one another for the same goods. President Donald J. Trump recently announced that he will extend the Defense Production Act to allow the head of the Department of Health and Human Services to assist six manufacturers in obtaining supplies to develop ventilators, reported The Hill.
The president, however, has at times blamed states for their pandemic problems and recently rejected Cuomo’s claim that the state was in need of tens of thousands of ventilators.
“I don’t believe you need 40,000 or 30,000 ventilators,” he told Sean Hannity in a Fox News interview. “You go into major hospitals sometimes, and they’ll have two ventilators. And now, all of a sudden, they’re saying, ‘Can we order 30,000 ventilators?’”
Dr. Anthony Fauci, an immunologist and director of the National Institute of Allergy and Infectious Diseases, said on CNN’s “State of the Union” on Sunday that he agrees with Cuomo’s estimate, according to the New York Post. “One way or another, he needs the ventilators that he needs and hopefully we will get him the ventilators that he needs ... Bottom line, he’s got to have the ventilators. Period.”