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Healthcare workers say they’re not receiving a proper supply of quality protective equipment to ensure their safety as well as the safety of patients. MEGAN JELINGER/Getty Images
  • Healthcare workers say personal protective equipment (PPE) is still in short supply, endangering the safety of employees and patients.
  • Experts say corruption, greed, and mismanagement are part of the reason why PPE supply isn’t meeting demand.
  • Several companies are trying to fill the gap by mass-producing PPE and having it delivered at minimal cost worldwide.

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Arnold Thorstad is a global entrepreneur who’s cofounded several successful brands and developed major supply chains in the coconut, tea, acai, and salmon industries.

Working with farmers and factories on several continents, Thorstad and his partners at Invico Worldwide employ thousands in seven countries.

His work has taken him to locales such as the Amazon rainforest, India, Indonesia, and Thailand.

But for all his travels and success, Thorstad couldn’t ignore the opportunity to help healthcare workers affected by the COVID-19 pandemic in Chicago, the city where he was born and raised.

In March, soon after the coronavirus hit the United States, Thorstad delved into the personal protective equipment (PPE) arena headfirst.

His motivation?

To protect the doctors, nurses, and other personnel at the suburban Chicago hospital where his mother works as a surgical technician by providing them with quality PPE.

“She told me the hospital was in shortage of protective respirators and that she and fellow healthcare workers were needing to reuse masks at the hospital,” Thorstad told Healthline.

Thorstad knew that to enter the industry, he’d have to develop a brand that delivered quality, consistency, and credibility.

The brand, which he named MediViCo, was born in early March with immediate donations of respirators and masks to the state of Illinois, St. Jude Children’s Research Hospital in Tennessee, and Advocate Health Care.

That marked the beginning of a journey through the PPE landscape that for Thorstad has been both rewarding and at times frustrating.

“With limited supply and huge demand worldwide, in an industry that only accepts the highest quality, and with a race to deliver goods yesterday, we are in a constant state of stress to execute,” he said.

Healthline interviewed more than a dozen people who work or have worked in the PPE industry.

The unanimous conclusion?

The sale and purchase of masks, gloves, and gowns for healthcare workers, teachers, and other essential workers worldwide has become entangled in complexity, red tape, and at times greed.

Thorstad said there are few factories around the world that actually have medical-quality certifications, and most of them have minimal capacities and only accept cash.

“International and domestic logistics are constrained, and hospitals and government institutions are weary of suppliers because of poor quality and scams,” he said.

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Arnold Thorstad formed a company in March to deliver respirators, masks, and other equipment to medical facilities. Photography courtesy of Arnold Thorstad

Achieving credibility in times identified by desperation and greed can be difficult, Thorstad said.

But he’s managed to do just that.

Thorstad’s experience in qualifying products and factories, along with his vast network, have enabled his company to put feet on the ground to monitor orders.

“It’s allowed me to confidently supply PPE in a business environment with tremendous risk,” he said.

Two weeks ago, two Houston-area men were charged for attempting to fraudulently sell 50 million nonexistent N95 face masks to a foreign government, according to the U.S. Attorney’s Office for the Southern District of Texas.

Paschal Ngozi Eleanya, 46, and Arael Doolittle, 55, are accused in a scheme to sell 50 million 3M model 1860 N95 respirator masks they didn’t possess to a foreign government.

The indictment alleges the pair defrauded a foreign government out of more than $317 million, the total purchase price of the masks.

It’s an industry that, especially since this global pandemic began, has attracted many humanitarians as well as some unethical players.

“I have seen both,” said Thorstad, who’s used to working in countries where there’s entrenched bureaucracy and corruption in the day-to-day commerce.

In places like Brazil, for example, where he has many friends and family, Thorstad said normal trade rules don’t always apply, and the competition can be fierce and even ruthless.

But Thorstad has found ways to navigate the terrain.

“I’ve been burned before, but I’ve learned how to minimize risk by learning who to avoid and who to count on,” he said.

The search for PPE involves the navigation of a complicated and sometimes wayward chain of supply and demand.

And sometimes the product that was purchased never shows up at all.

A suburban Chicago business owner was charged last month with fraud for reportedly swindling more than $2.6 million from two prominent Midwest hospitals seeking PPE, according to the U.S. Attorney’s Office for the Northern District of Illinois.

Dennis Haggerty, president of the Illinois-based At Diagnostics Inc., was charged with one count of wire fraud.

The criminal complaint alleges that Haggerty and two business partners formed At Diagnostics in March 2020 to sell PPE.

University of Iowa Hospitals and Clinics and Northwestern Memorial Healthcare ordered a total of 1 million N95 face masks from the company.

The hospitals deposited more than $3 million into a bank account that Haggerty said was an At Diagnostics account, but what authorities said was actually a personal account.

Authorities allege Haggerty spent part of the hospitals’ funds on two Maserati automobiles and a Land Rover sport utility vehicle.

The charge against Haggerty is punishable by up to 20 years in prison.

On the other end of the PPE spectrum are people like Jack Yuan, a 19-year-old student at Stanford University in California who is studying artificial intelligence and cognitive science.

In March, Yuan responded to the early days of the COVID-19 pandemic by creating an international PPE supply chain from scratch.

The company, which he named Tianchi Med, has generated more than $200 million in revenue since March.

Yuan said he built a network of factories in China while mitigating the risks of fraud and product quality.

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Stanford student Jack Yuan has built a company that’s delivered 600 million pieces of PPE worldwide since March. Photography courtesy of Jack Yuan

Yuan said he reviewed legal documents, controlled quality, and negotiated with more than 200 factories and 20 freight companies to guarantee that his clients had the best price possible.

In less than a year, he’s established six new partnerships and now owns warehouses in New York, Los Angeles, Brazil, and Canada.

“When I first got into this, I had no idea how to run a supply chain. I did not know much about customs, packaging, contract reviews, or shipping,” Yuan said.

He’s provided high-quality PPE to such clients as the Canadian federal government, Brazilian federal government, New York state government, Michigan state government, Home Depot, and Amazon.

Yuan has hired 50 additional employees to help scale the company and decrease lead time for clients.

He’s worked with factories, governments, and hospitals in the United States, Canada, and Brazil to deliver more than 600 million pieces of PPE equipment since March.

He’s also dedicated a substantial part of his business to the less fortunate who may not have access to PPE.

“Our efficiency and low cost enable us to give back to nonprofits in the [San Francisco] Bay Area, Philly, New York, and other places that have been hit the hardest,” he told Healthline.

Yuan’s company has provided approximately 1 million masks for free this year to nonprofit organizations, such as the Ronald McDonald House Charities of Philadelphia, Masks2all, COVID-19 Mutual Aid Solidarity Network, and Masks4America.

Craig Carrier is a U.S. business executive who’s lived in China for more than 20 years.

He’s CEO of IMPACT BIOTEC, a division of IMPACT Technologies & Innovation Limited, a global renewable energy company.

Earlier this year, IMPACT pivoted to PPE because Carrier wanted to help medical professionals and patients.

Carrier said one of the biggest reasons for the ongoing PPE crisis in the United States is “underestimation” of PPE requirement resulting in a lack of purchases earlier this year.

“The motto of the Boy Scouts of America sums it up nicely: Be prepared, regardless of the budgetary constraints. Our children’s lives are at stake,” he told Healthline.

Throughout his career, Carrier has been involved in crisis management and has dealt with natural disasters, people at risk, and equipment and companies requiring immediate recovery.

During the pandemic, his company has provided PPE predominantly to Southeast Asia and emerging-market countries as well as the European Union and United States.

Carrier told Healthline that the PPE industry is “still rife with unethical companies and individuals. There are a significant number of knockoffs using the brand of high-quality companies.”

What other advice does Carrier have for U.S. buyers seeking PPE?

“First, analyze the price difference between companies with high-quality brands and those with lower-priced products, i.e., 35 percent to 40 percent lower for knockoffs,” Carrier said. “Second, ask for guarantees on the PPE for quality, etc. The knockoff brands refuse to guarantee their products.”

“And third, prequalify all clients for requirements, perform due diligence on the companies, and request copies of all certifications, and get references,” he added.

Carrier said bringing quality PPE to developing nations and rural, underdeveloped regions of the world is an especially challenging but worthwhile effort.

“When trying to bring product to some countries, we’ve had to deal with buyers who are not familiar with the workings of the PPE supply chains and the time frames and capacities of the market,” he said.

“There are also difficulties with shipping, high freight costs, funding constraints, corruption, and low levels of education in the masses, which adds difficulty to using such PPE as masks and sanitizers,” Carrier noted.

Despite the good intentions of PPE providers such as Thorstad, Yuan, and Carrier, the situation for many U.S. healthcare workers remains dire amid this latest COVID-19 surge.

A new survey from National Nurses United, the nation’s largest union of registered nurses, paints a dark picture of the impact the PPE shortage is having on healthcare workers.

The survey of more than 15,000 registered nurses reveals that workers feel hospitals are still failing to prepare for a surge of COVID-19 cases during flu season, and that infection control and prevention measures are still lacking.

More than 80 percent of nurses in the survey report they’re reusing at least one type of single-use PPE.

And 20 percent of nurses in hospitals report that their employer has recently limited the use of N95 respirator masks.

Just 16 percent of RNs in hospitals report they have universal PPE in the emergency room, according to the survey.

And only 12 percent of RNs report that their employer has increased PPE stock and supply in preparation for the winter flu season and COVID-19 surge.

“Hospitals are continuing to fail when it comes to preparation for COVID-19, even as flu season begins,” Bonnie Castillo, RN, the executive director of National Nurses United, said in a press statement.

“We should not still be operating under crisis standards of care. Nurses need PPE now to do their jobs safely,” she said.

Some of the United States’ largest PPE manufacturers, including Honeywell International Inc. and 3M Company, have recently boosted production.

But the shortages persist.

To increase the production of PPE, President Trump activated the Defense Production Act, the 70-year-old law that gives a president broad authority to mobilize industry toward emergency preparedness during a crisis.

But multiple PPE industry sources for this story said the president’s use of the law has been sporadic, in part because of his philosophy that the private sector should handle such things, not government.

President-elect Joe Biden said throughout his campaign that he will substantially bump up the use of the law.

Biden has vowed to quickly appoint a national “supply chain commander” to oversee the manufacturing and distributing of PPE through a more aggressive invoking of the act.

PPE industry officials interviewed by Healthline said that those who can’t afford to pay top price often end up with inferior-quality products, which puts healthcare workers and patients in jeopardy.

They said it starts with manufacturing, where cheap labor and poor working conditions are still common and can, and often do, affect quality.

At Malaysia-based Top Glove, the world’s largest manufacturer of latex gloves, workers — mostly laborers from Nepal, Bangladesh, and other countries — report having 72-hour workweeks, cramped living conditions, and low wages, according to a recent Los Angeles Times report.

In July, the U.S. Customs and Border Protection slapped a detention order on imports from two of Top Glove’s subsidiaries for using forced labor.

Two weeks ago, Top Glove announced it was shutting down more than half of its factories after more than 2,400 of its workers tested positive for COVID-19 amid a surge in demand.

When hospitals and other healthcare entities in the United States want to learn which PPE companies are legitimate, the Food and Drug Administration (FDA) is the federal agency that’s supposed to provide that information.

But the FDA has dropped the ball, said Joan Melendez, founder and president of Xcelrate UDI, a health tech startup that’s primary interest is keeping patients and healthcare workers safe from faulty medical devices, biologics, and equipment.

Melendez described Xcelrate UDI as a “medical device barcode scanning solution” that goes beyond compliance to improve patient and healthcare worker safety before use and at the point of care.

Another big reason why there are so many problems with poor-quality PPE, she told Healthline, is that the FDA has failed to properly report when a manufacturer has products recalled or has been removed as a seller, or has a product that’s failed to meet criteria under emergency use authorization laws.

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Joan Melendez has created a clearinghouse so healthcare facilities can check on the quality of PPE. Photography courtesy of Joan Melendez

The Federal Food, Drug, and Cosmetic Act states that the FDA commissioner may allow unapproved PPE to be used in an emergency caused by a chemical, biological, radiological, or nuclear threat when there are no alternatives.

“There are more than a dozen databases on the FDA’s website for medical device recalls alone,” Melendez said. “The FDA website is a mess. The right hand doesn’t know what the left hand is doing, leaving manufacturers, distributors, and providers to rely on data that is inaccurate or old. How can you ‘do no harm’?”

Melendez said corruption in the PPE industry is still rampant in part because hospitals are forced to buy from unknown distributors due to shortages.

Without proper identification or vetting as a result of an emergency use authorization, inferior products get through, she said.

“Did you know that 60 to 70 percent of the PPE brought in through [emergency use authorization] is ineffective?” Melendez said.

“This puts our healthcare workers at greater risk. They assume they are protected using a N95, when it’s basically no more effective than a surgical mask, which in my opinion is less effective than a tissue,” she said.

That’s why Melendez created UDI Clearinghouse for healthcare providers wanting to know whether the PPE they’re considering purchasing has been recalled or reported with adverse events.

“We are providing access to UDI Clearinghouse at no cost to healthcare systems and providers,” Melendez said.

PPE allowed into the country for emergency use is listed on an emergency use authorization website and not on other FDA databases, including the recall pages, she explained.

Many manufacturers of PPE that came in under emergency use have been removed, and many manufacturers have as well, she added.

“Where would you look for this information? On the 13-plus recall databases at the FDA? No [emergency use] recalls and removals are listed elsewhere,” Melendez said.

Earlier this month, she spoke at an FDA safety committee meeting.

“I pleaded with them to please allow the use of email to communicate recall notifications,” Melendez said. “This allows us to work with manufacturers, so we can strengthen our database so hospitals will know if the product has been recalled, is authorized to sell in the USA, or has an adverse event regardless.”

Meanwhile, Thorstad, who began all this by helping his mother and her fellow healthcare workers, said that amid all the PPE madness, there is some good that’s surfaced.

Much like natural disasters, Thorstad said, COVID-19 has in some ways brought the world closer together.

“We have experienced the unexpected globally, not regionally. No gender, race, or age group has gone unscathed from the virus,” he said.

“While there is plenty of science to analyze in the years ahead to determine what happened during this crisis, we must implement new systems to minimize the impact of similar occurrences in the future,” Thorstad said.

Thorstad hopes such a global evil from nature never returns.

But history has shown that it will.

“We also know that biochemical terrorism exists and that world security experts will do all they can to prevent disaster. But what if?” Thorstad said.

“If 2020 has taught us anything, it’s that the worst-case scenarios must be accounted for. Proper preparedness is a necessary policy,” he said.

To report COVID-19 fraud or price gouging, contact the National Center for Disaster Fraud hotline at 866-720-5721 or visit their website.