Distribution of Personal Protection Equipment and Pharmaceuticals

From Woodstock’s Susan Handelsman:

Wondering how are shortages of hospital supplies and common pharmaceuticals possible?

First, know that this is nothing new, and medical professionals have long been pleading with government to do something about it.

Obviously, government finds lobbyists more persuasive.

Read the following section from policy statement of the group Physiciansagainstdrugshortages.com 

“There is extensive documentation on these questionable practices, focusing largely on the role of GPOs in undermining competition and innovation in the medical device industry in the years leading up to the drug shortage crisis. This material includes four hearings before the Senate Antitrust Subcommittee; investigations by the Government Accountability Office (GAO), the Office of the Inspector General of the Department of Health & Human Services, and the Connecticut Attorney General’s office; media reports, including a prize-winning 2002 investigative series in The New York Times entitled “Medicine’s Middlemen”; numerous successful antitrust lawsuits filed by entrepreneurial medical device firms against GPOs and/or their dominant supplier partners; independent academic research, and even a book entitled “Group Purchasing Organizations: An Undisclosed Scandal in the U. S. Healthcare Industry.” Many of these documents appear on www.physiciansagainstdrugshortages.com

“These anticompetitive practices include, but are not limited to: 

  • Exclusionary, sole source, long-term contracts awarded to vendors in return for huge but undisclosed administrative, marketing, advance and other fees (a/k/a kickbacks) as well as prebates and rebates; 
  • Tying and bundling of product lines to give the advantage to large incumbent suppliers and discourage competition from smaller, entrepreneurial companies with fewer products; 
  • Forced compliance programs that impose stiff penalties on hospitals and wholesalers if the volume of their purchases from manufacturers on contract drops below 95%, in many cases, for a particular product or product line; ​
  • A Byzantine system of manufacturers’ rebates to large, favored distributors that ensures that only those distributors can sell to GPO-member hospitals.”


Distribution of Personal Protection Equipment and Pharmaceuticals — 10 Comments

  1. Give it a rest “Cindy”.

    This Andrew Coffey video you linked of him driving around McCormick Place on a Sunday, looking for trucks like was used in a movie was at best premature. The McCormick Place plan was only announced on Saturday, and the shots WLS-TV shot whenever are the same ones Coffey shot on Sunday of an empty McCormick Place.

    The article says the plan was to convert McCormick Place into a 3,000-bed hospital, not that the work had started.


  2. An associated practice primarily developed by the Japanese for manufacturing process is called “Just In Time” whereby materials needed to manufacture or assemble a product are delivered from suppliers shortly before they are needed. This practice cut down on keeping LARGE inventories on premises along with the associated costs. Hospitals adopted Just In Time to cut costs, reduce need for floor space for inventory and associated these costs.

    You have to wonder why hospital administrators should not take some responsibility for not foreseeing a “what-if” situation of an epidemic, pandemic or other medical crisis that would strain whatever stock piles they have OR their supply chain. Was there any hospital in the U.S. or elsewhere that built up a gigantic supply of PPE? Of course that would have been costly and the costs would have been passed along to hospital customers.

    Per: https://www.hida.org/App_Themes/Member/docs/Hospital_Procurement.pdf

    Facing rapidly increasing financial pressures, hospitals continue to seek more cost- and time-saving methods to acquire supplies. One area of increasing interest is the hospital or healthcare system’s supply chain model, in particular, whether greater efficiencies are possible by maximizing the share of spending through a commercial distributor, or by increasing the share of purchases directly from manufacturers.

    This study compared the activities and related costs associated with these two categories of purchasing. The results point to greater efficiencies through distributor purchases, particularly in the areas of product ordering and receiving.

    While some high-dollar products do not fit well with the most common cost models for commercial distribution, increasing the share of commodity products purchased through a prime vendor distributor makes sense for most facilities, and many could benefit from investigating a low-unit-of-measure model that transfers additional activities to the distributor.

    Highlights from the study include:
    • Hospitals use EDI – a time and cost saver – more prevalently with distributor orders than manufacturer direct orders.
    • Hospitals working with distributors more frequently use automation to create purchase orders, another time saver.
    • Hospital receiving time is reduced when using distributors.

    • “Just-in-time” programs streamline inventory management functions often resulting in savings that eclipse the cost of implementing such programs.

    Study Overview

    This study compared hospitals’ internal process costs for goods purchased directly from a manufacturer to those associated with purchases using a distributor. All participating hospitals utilized a commercial distributor in some way. For the purpose of the study, costs are those related to supply chain staff activities for purchasing and receiving functions, not the monetary value (price) of items purchased.

    The study was conducted in two parts:

    1. An in-depth analysis and interview process of eight hospitals.
    2. A procurement/receiving survey completed by an additional 24 hospitals.In some cases additional market information was utilized to suppliment the study. However, observa-tions and conclusions in this report are based strictly on study results.For purposes of this study, “med-surg” items are defined as commodity products used throughout a hospital and repetitively ordered, such as bandages, syringes, etc. Physician preference items (PPI) are products specific to a clinical service line (urology, neurology, etc.) typically with a higher unit cost.

  3. Cal and John Lopez should look into the possibility of a software mod to this site whereby a regular viewer/commenter on this blog could use a “filter” to permanently filter out and never see any one or more commenter names that appear on his/her computer screen visit to the blog.

  4. I’m super glad that Cindy feels the need to spam every blog post with the same silly youtube video that is meaningless.

    One, it is very possible that the work hasn’t yet started.

    It takes time to figure out the logistics.

    But two, this brilliant dude on youtube wasn’t even in the correct places to see where equipment and workers would be coming into McCormick Place.

    They don’t bring in 3,000 hospital beds through the front doors.

  5. Bred.w study was purchased by the distributor association.

    Of course Just In Time is the model, as it is for most manufacturing and distribution in the world now.

    Of course nobody stores enough resources for a pandemic.

    That misses the point of the article.

    The point of the article is that protection of monopoly rights–in life and death circumstances such as hospital care provision–

    What sophistry to suggest that competition to a monopoly would cost more because the software for purchasing wouldn’t be compatible!

    Think about that for a minute: the sole source middleman claims that his proprietary purchase order system saves money for hospitals…because…no other purchasing management software exists or could ever exist to save time and money for large purchasers?

    The Hospital Procurement Study was conducted by PricewaterhouseCoopers (PwC) for the Health Industry Distributors Association.

    Copyright 2012 PwC. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without prior
    written consent

  6. Where is the current state of illness report, Syndromic Surveillance Report, for Illinois or Chicago.

    I saw one for Illinois but it was last updated in 2016.


  7. Another point of this data is:

    Who gets what and how much of it is in the hands of these FOIA-proof middlemen GPOs .

    We civilians have no way to find out if, say, the flyover country ration of short supply hospital commodities got re-routed to Chuck Schumer’s district.

  8. Call 3M and let’s hear what they say about this !?

    since they are the main mfg. of N95 masks here in the USA.

    Let’s get the CEO on the phone and have a chat shall we?

  9. PPE, or is it sitting in sea hag’s basement just to piss off Trump!

    while Nads and Schifty and Sores’s sell them to the Cartel , again to make Trump look bad and cause him more grief then they already have this is all of their last stand as the first 3 attempts did not work…

    so let’s go for broke..

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