Even as the delta variant drives a new wave of Covid-19 cases, domestic producers of N95s and other personal protective equipment (PPE) are struggling to remain in business—raising concerns about the country's ability to secure a reliable supply chain of PPE for the next crisis, Shira Stein writes for Bloomberg Businessweek.

How Covid-19 will impact the supply chain

U.S manufacturers struggle

At the beginning of the Covid-19 pandemic, the United States struggled to provide health care workers with necessary PPE after supply chains, many of which stretched around the world, were disrupted. Because of these supply shortages, doctors and nurses had to reuse the same face masks for days or weeks or rely on masks not intended for medical use. Some even resorted to using plastic bags instead of protective gowns.

A wave of domestic manufacturers rose to meet the demand for N95 masks and other PPE supplies. But now many are struggling to stay afloat, Stein reports.

Several U.S.-based companies have stopped producing masks, Stein writes, both because demand fell amid improving vaccination rates and because foreign-made PPE—which is generally less costly than U.S.-made products—became available again.

The American Mask Manufacturers Association (AMMA), which represents more than 20 small domestic manufacturers, estimated its member organizations have laid off around 5,000 workers. DemeTech Corp., a mask manufacturer based in Florida, alone has laid off about 1,500 workers, according to Luis Arguello, VP for the company.

Current PPE production and supply

According estimates from the U.S. Government Accountability Office, U.S. production in May exceeded domestic demand for N95s and almost met the demand for surgical masks. However, the demand for surgical gowns and nitrile gloves continues to outpace available production, and U.S. manufacturers' ability to meet mask demand may falter amid factory closures, Stein writes.

Moreover, while there are currently significant PPE reserves available in the Strategic National Stockpile and from the federal government, states, and hospitals, these supplies will eventually expire. If U.S. manufacturers continue to close, Stein writes, the country will once again have to rely heavily on overseas manufacturers.

Megan Ranney, co-founder of Get Us PPE, an organization that supplies communities with needed PPE at no cost, said the U.S. is now "one problem away from being back where we were last spring." She added that it is "incredibly shortsighted to have items of national security importance produced predominantly overseas."

'A sustainable supply chain for the future'

According to Soumi Saha, VP for advocacy at Premier, a hospital supply purchasing group, the federal government and health systems need to commit to purchasing from domestic PPE manufacturers to "create a sustainable supply chain for the future."

Saha said hospitals have been reluctant to switch from foreign-made to U.S.-made supplies because masks made domestically tend to be more expensive—costing around 30% more than imported masks.

As a result, according to Stein, some experts say the federal government may need to push hospitals to buy their supplies from domestic producers. For instance, the government could require hospitals to buy a certain percentage of their PPE from U.S. manufacturers or offer tax incentives for buying supplies produced domestically. Medicare and Medicaid could also potentially offer bonuses to health facilities when they buy U.S.-made products.

The federal government has, however, already made several other efforts to ensure that the U.S. supply chain is prepared for any future crises or pandemics, Stein writes.

For example, President Joe Biden in January issued an executive order calling for federal agencies to inventory current critical health supplies and bulk up the supply chain for the future. He also invoked the Defense Production Act to increase PPE production, and his administration has allocated $424 million to U.S. manufacturers making nitrile gloves and $10 billion from the American Rescue Plan to expand domestic manufacturing of other pandemic-related supplies. So far, HHS has awarded 12 contracts for U.S. manufacturers of N95s, producing an 800-million mask stockpile.

Additionally, the Senate in June passed the U.S. Innovation and Competition Act, which includes a requirement that HHS, the Department of Veterans Affairs, and the Department of Homeland Security issue longer-term contracts for domestically produced PPE when available.

Other organizations and health systems also have shifted toward using domestically manufactured PPE. For instance, Premier and 15 health systems have committed to buying 20% of the mask inventory of Prestige Ameritech, a Texas-based mask manufacturer, over the next five years.

Shaun Clinton—the SVP for supply chain management at Texas Health Resources, which one of the health systems contracted with Prestige Ameritech—said having a manufacturer close by is "an insurance policy." And after what the country has gone through with the pandemic, people should "realize that the insurance policy is worth the money," he said. (Stein, Bloomberg Businessweek, 7/27)