1
00:00:03,240 --> 00:00:08,080
Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's day forty one

2
00:00:08,280 --> 00:00:12,879
Speaker 1: since coronavirus was declared a global pandemic. Our main story.

3
00:00:13,880 --> 00:00:18,279
Speaker 1: U S hospitals have turned directly to Chinese manufacturers to

4
00:00:18,440 --> 00:00:24,200
Speaker 1: obtain badly needed masks for healthcare workers, but the skyrocketing

5
00:00:24,320 --> 00:00:30,360
Speaker 1: demand has created a Wild West scenario. Profiteering middlemen ratchet

6
00:00:30,400 --> 00:00:35,040
Speaker 1: up prices and buyers sometimes go to extraordinary lengths to

7
00:00:35,159 --> 00:00:41,080
Speaker 1: try to ensure quality. But first, here's what happened today.

8
00:00:46,680 --> 00:00:48,960
Speaker 1: The White House in Congress have agreed on a new

9
00:00:48,960 --> 00:00:52,680
Speaker 1: pandemic relief plan that will inject funds into a tapped

10
00:00:52,680 --> 00:00:56,880
Speaker 1: out small business aid program and offer aid for coronavirus

11
00:00:56,920 --> 00:01:02,240
Speaker 1: testing and overwhelmed hospitals. President Donald Trump said he'd sign

12
00:01:02,280 --> 00:01:05,840
Speaker 1: the measure and begin discussions on the next round of stimulus.

13
00:01:06,440 --> 00:01:10,760
Speaker 1: The measure could be approved by Congress as soon as Thursday.

14
00:01:11,040 --> 00:01:14,800
Speaker 1: The Justice Department will consider taking legal action against governors

15
00:01:14,800 --> 00:01:18,319
Speaker 1: who continue to impose stringent rules for dealing with the

16
00:01:18,360 --> 00:01:22,560
Speaker 1: coronavirus after the crisis subsides in their states, According to

17
00:01:22,600 --> 00:01:27,039
Speaker 1: Attorney General William Barr in an interview on The Hugh

18
00:01:27,120 --> 00:01:30,360
Speaker 1: Hewitt Show Tuesday, bar said measures like stay at home

19
00:01:30,480 --> 00:01:34,360
Speaker 1: orders and directives to shut down businesses are justified up

20
00:01:34,360 --> 00:01:37,520
Speaker 1: to a point, but states should eventually move to more

21
00:01:37,600 --> 00:01:42,319
Speaker 1: targeted measures. The comments come as the Trump administration and

22
00:01:42,400 --> 00:01:45,720
Speaker 1: states are fighting over the best strategy to deal with

23
00:01:45,760 --> 00:01:51,000
Speaker 1: the crisis. Trump has stoked tensions with some Democratic governors

24
00:01:51,040 --> 00:01:55,800
Speaker 1: who have defended strict social distancing rules, even as his

25
00:01:55,880 --> 00:02:03,440
Speaker 1: administration backs guidelines calling for states to reopen gradually. Earlier today,

26
00:02:03,760 --> 00:02:07,480
Speaker 1: President Donald Trump suggested in a tweet that his administration

27
00:02:07,600 --> 00:02:11,639
Speaker 1: will bail out the oil industry. Oil is the latest

28
00:02:11,680 --> 00:02:17,440
Speaker 1: sector to fall victim to cratering demand because of the coronavirus. Yesterday,

29
00:02:17,760 --> 00:02:20,239
Speaker 1: the price of a barrel of West Texas crewde fell

30
00:02:20,280 --> 00:02:24,880
Speaker 1: below zero for the first time in history. Trump tweeted

31
00:02:24,880 --> 00:02:27,880
Speaker 1: today that he was ordering his secretaries of Energy and

32
00:02:27,960 --> 00:02:30,920
Speaker 1: the Treasury to make a plan to make money available

33
00:02:31,040 --> 00:02:35,760
Speaker 1: to oil companies. The catalyst for yesterday's historic plunge in

34
00:02:35,760 --> 00:02:40,000
Speaker 1: prices was a contract expiration date that left traders in

35
00:02:40,080 --> 00:02:44,799
Speaker 1: a panic about having to take delivery of physical barrels.

36
00:02:44,840 --> 00:02:49,480
Speaker 1: But the industry has struggled since widespread shutdowns killed the

37
00:02:49,520 --> 00:02:54,200
Speaker 1: demand for fuel. An estimated nine percent of drilling and

38
00:02:54,320 --> 00:02:58,680
Speaker 1: refining jobs were lost in March. The oil price slide

39
00:02:58,800 --> 00:03:03,000
Speaker 1: continued today, suggesting it's the massive glut in the market

40
00:03:03,080 --> 00:03:08,200
Speaker 1: causing the route rather than any technical quirk. Finally, a

41
00:03:08,200 --> 00:03:12,120
Speaker 1: new roadmap for restarting the economy suggests the US would

42
00:03:12,120 --> 00:03:15,760
Speaker 1: have to increase its testing capability by ten to fifty

43
00:03:15,880 --> 00:03:21,200
Speaker 1: fold from its current levels. Today, the Rockefeller Foundation released

44
00:03:21,200 --> 00:03:25,200
Speaker 1: a plan that would partially reopen the economy once major

45
00:03:25,280 --> 00:03:29,520
Speaker 1: investments in healthcare had been made. The plan, which would

46
00:03:29,560 --> 00:03:32,720
Speaker 1: cost as much as ninety billion dollars a month, calls

47
00:03:32,800 --> 00:03:36,560
Speaker 1: for one hundred to three hundred thousand new public health

48
00:03:36,600 --> 00:03:42,240
Speaker 1: workers to create an adequate testing and contact tracing program.

49
00:03:42,360 --> 00:03:46,880
Speaker 1: Regieve Shaw, the Foundation's president, says doing this would allow

50
00:03:46,920 --> 00:03:51,280
Speaker 1: the economy to partially reopen until a vaccine is widely available,

51
00:03:51,840 --> 00:03:59,920
Speaker 1: and thus would pay for itself within a month. And

52
00:04:00,160 --> 00:04:06,640
Speaker 1: now our main story. The shortages of protective masks that

53
00:04:06,760 --> 00:04:10,680
Speaker 1: keep healthcare workers safe from COVID nineteen are well documented

54
00:04:10,680 --> 00:04:14,839
Speaker 1: by now. American hospital companies trying to meet the need

55
00:04:15,120 --> 00:04:19,080
Speaker 1: have turned to a fast growing, often chaotic mask market

56
00:04:19,160 --> 00:04:23,640
Speaker 1: that has sprung up in China. Reporter Riley Griffin recently

57
00:04:23,680 --> 00:04:28,080
Speaker 1: reported on the hospital groups and companies desperate for suppliers

58
00:04:28,720 --> 00:04:32,400
Speaker 1: and the strange measures they are taking to secure masks

59
00:04:32,440 --> 00:04:40,800
Speaker 1: and spot fakes. Why have we been seeing this surge

60
00:04:41,000 --> 00:04:44,880
Speaker 1: for the particular and what kind of companies are working

61
00:04:44,920 --> 00:04:49,880
Speaker 1: to alleviate this new demand. So the nine respirator is

62
00:04:49,880 --> 00:04:52,800
Speaker 1: a type of mask that is so named because it

63
00:04:52,920 --> 00:04:58,120
Speaker 1: filters out at least of airborne particles of this certain size.

64
00:04:58,720 --> 00:05:01,560
Speaker 1: It's become a tool used on front lines to prevent

65
00:05:01,640 --> 00:05:06,240
Speaker 1: doctors and nurses from contracting COVID nineteen. So during normal times,

66
00:05:06,680 --> 00:05:13,080
Speaker 1: this FDA approved device, really it isn't typically warned by

67
00:05:13,120 --> 00:05:17,600
Speaker 1: so many medical staff. Now, as you've mentioned, demand has

68
00:05:17,640 --> 00:05:22,040
Speaker 1: surged to unprecedented levels. One account has a seventeen fold

69
00:05:22,120 --> 00:05:26,839
Speaker 1: surgeon demand, and that's happening just as domestic supply has dwindled.

70
00:05:27,600 --> 00:05:32,120
Speaker 1: So hospitals treating COVID nineteen patients have actually found they

71
00:05:32,160 --> 00:05:35,960
Speaker 1: only have a three day supply, and big manufacturers of

72
00:05:36,720 --> 00:05:40,320
Speaker 1: respirators like three M what they have done is ramp

73
00:05:40,480 --> 00:05:44,680
Speaker 1: up and work to double production. But this domestic supply

74
00:05:44,960 --> 00:05:47,839
Speaker 1: is simply not enough to account for what's needed in

75
00:05:47,960 --> 00:05:51,560
Speaker 1: US hospitals. And that's the cold, hard truth. We've seen

76
00:05:51,640 --> 00:05:56,719
Speaker 1: some institutions other organizations actually turned to China for these items.

77
00:05:56,880 --> 00:05:59,160
Speaker 1: So I'm wondering if you might be able to explain

78
00:05:59,400 --> 00:06:04,080
Speaker 1: how China's manufacturers have mobilized to meet this new I

79
00:06:04,080 --> 00:06:07,760
Speaker 1: mean beyond the US, but a global demand. So China

80
00:06:07,839 --> 00:06:12,400
Speaker 1: has always been a massive manufacturer of medical supplies, but

81
00:06:12,520 --> 00:06:15,640
Speaker 1: now it's really at the center of this global gold

82
00:06:15,720 --> 00:06:19,640
Speaker 1: rush for respirators. But remember, the country was the first

83
00:06:19,680 --> 00:06:23,200
Speaker 1: to be hit hard by the coronavirus pandemic. When their

84
00:06:23,240 --> 00:06:27,480
Speaker 1: own manufacturing shutdown, they turned to Japan, to South Korea,

85
00:06:27,560 --> 00:06:31,880
Speaker 1: even the US for masks. Now, more recently, when the

86
00:06:31,920 --> 00:06:35,440
Speaker 1: industry got up and running again, though, China's government encouraged

87
00:06:35,520 --> 00:06:39,560
Speaker 1: facilities to make more personal protective equipment to meet domestic

88
00:06:39,800 --> 00:06:43,320
Speaker 1: and foreign demand, and they've done just that. We've seen

89
00:06:43,360 --> 00:06:49,159
Speaker 1: cosmetic makers, toy producers, even lingerie factories now producing respirators.

90
00:06:49,680 --> 00:06:53,640
Speaker 1: These Chinese manufactured and regulated respirators go by a different name,

91
00:06:53,839 --> 00:06:56,520
Speaker 1: and that's important to note. They are known as K

92
00:06:56,800 --> 00:07:01,200
Speaker 1: and N and they're not f d A approved products.

93
00:07:01,480 --> 00:07:04,640
Speaker 1: They are regulated by the Chinese equivalent of our U

94
00:07:04,760 --> 00:07:08,760
Speaker 1: S Food and Drug Administration. But since desperate times call

95
00:07:08,839 --> 00:07:13,920
Speaker 1: for desperate measures, and the US doesn't have enough manufacturing capacity.

96
00:07:13,960 --> 00:07:17,960
Speaker 1: We've seen the US Food and Drug Administration recently give

97
00:07:18,080 --> 00:07:22,760
Speaker 1: an emergency use authorization for this Chinese product. But there

98
00:07:22,800 --> 00:07:26,440
Speaker 1: does seem to be a bit of wariness about these

99
00:07:26,560 --> 00:07:30,880
Speaker 1: Chinese manufactured ppe or the Chinese manufactured respirators. Can you

100
00:07:30,880 --> 00:07:35,560
Speaker 1: explain why there is this hesitancy about using these very

101
00:07:35,640 --> 00:07:38,360
Speaker 1: needed products. I think, at the end of the day,

102
00:07:38,440 --> 00:07:43,080
Speaker 1: working with Chinese manufacturers and intermediaries just comes with its

103
00:07:43,200 --> 00:07:47,600
Speaker 1: own set of risks. Given how quickly the market is mobilizing,

104
00:07:48,400 --> 00:07:53,600
Speaker 1: it's also become overrun with layers of profiteering middlemen, these

105
00:07:53,640 --> 00:07:57,960
Speaker 1: bidding wars, prices that are are so volatile they can

106
00:07:58,080 --> 00:08:02,000
Speaker 1: range for a can ninety five anywhere from uh, you know,

107
00:08:02,280 --> 00:08:05,800
Speaker 1: a buck fifty to twelve dollars, and that's still higher

108
00:08:05,800 --> 00:08:09,400
Speaker 1: than they are in typical times. The root of it,

109
00:08:09,440 --> 00:08:12,880
Speaker 1: too is this concern about the goods quality, and US

110
00:08:12,960 --> 00:08:17,280
Speaker 1: regulators essentially have said they can't serve as a body

111
00:08:17,360 --> 00:08:20,200
Speaker 1: that is able to sift out the bad apples here,

112
00:08:20,800 --> 00:08:25,720
Speaker 1: and so what can say the government's hospitals organizations, do

113
00:08:26,520 --> 00:08:29,000
Speaker 1: you know if they're willing to source these products from China.

114
00:08:29,520 --> 00:08:31,480
Speaker 1: What are some of the steps that they can take

115
00:08:31,600 --> 00:08:33,960
Speaker 1: or that they are taking to make sure these products

116
00:08:34,240 --> 00:08:39,400
Speaker 1: are actually good or safe to use. So, until fairly recently,

117
00:08:39,760 --> 00:08:43,120
Speaker 1: guidance from the U S government agencies was inconsistent on

118
00:08:43,200 --> 00:08:47,840
Speaker 1: whether China's version of respirators these k and were suitable

119
00:08:47,880 --> 00:08:51,360
Speaker 1: for use. The FDA was allowing respirators made in other

120
00:08:51,400 --> 00:08:56,080
Speaker 1: countries at first, but didn't include China on this list,

121
00:08:56,280 --> 00:09:03,199
Speaker 1: this Emergency Use Authorization list. That guidance came much more recently.

122
00:09:03,600 --> 00:09:06,679
Speaker 1: They have since amended that, but are stating that hospitals

123
00:09:06,679 --> 00:09:09,400
Speaker 1: and other buyers should be careful in considering the product

124
00:09:09,480 --> 00:09:13,320
Speaker 1: they end up using given these concerns about legitimacy of

125
00:09:13,360 --> 00:09:16,120
Speaker 1: the product. In our story, we look at a company

126
00:09:16,160 --> 00:09:19,640
Speaker 1: called Premier, Inc. Which serves as a group purchasing organization

127
00:09:19,720 --> 00:09:22,880
Speaker 1: for more than four thousand US hospitals and health systems.

128
00:09:23,360 --> 00:09:26,760
Speaker 1: It has more than sixty billion and purchasing power, and

129
00:09:26,760 --> 00:09:29,120
Speaker 1: they knew that there simply wasn't enough US products, so

130
00:09:29,200 --> 00:09:32,000
Speaker 1: it's scrambled to China. Some of the things that they're

131
00:09:32,040 --> 00:09:36,960
Speaker 1: doing is actually using code words to first vet various facilities.

132
00:09:37,400 --> 00:09:42,360
Speaker 1: So when they are screening manufacturing facilities. They have people

133
00:09:42,440 --> 00:09:46,960
Speaker 1: on the ground at those facilities using gibberish that they've

134
00:09:47,120 --> 00:09:51,680
Speaker 1: pre planned to ultimately assure that the communication is real

135
00:09:51,880 --> 00:09:53,920
Speaker 1: and the person on the other end of the screen

136
00:09:54,200 --> 00:09:58,839
Speaker 1: is who they think they are. Once a facility has

137
00:09:58,920 --> 00:10:04,439
Speaker 1: passed that initial test, Premiere was deploying its employees based

138
00:10:04,440 --> 00:10:08,640
Speaker 1: in Asia to these various facilities to actually go inspect

139
00:10:08,800 --> 00:10:12,920
Speaker 1: K on the line as they were packaged and as

140
00:10:12,920 --> 00:10:15,960
Speaker 1: they were sent. And logistics also plays a big part

141
00:10:15,960 --> 00:10:19,160
Speaker 1: of this. It's quite costly and difficult to be shipping

142
00:10:19,160 --> 00:10:22,960
Speaker 1: these products out of China into the US. Once that

143
00:10:22,960 --> 00:10:27,800
Speaker 1: that product has arrived here domestically in the States, they've

144
00:10:27,840 --> 00:10:32,120
Speaker 1: inspected that product again, and then they've worked with their

145
00:10:32,160 --> 00:10:37,160
Speaker 1: own logistics companies to get product to various emergency rooms.

146
00:10:37,800 --> 00:10:41,000
Speaker 1: But something that's worth underscoring, Laura is that there's no

147
00:10:41,280 --> 00:10:47,600
Speaker 1: clear playbook and everybody is approaching this differently. Since US

148
00:10:47,679 --> 00:10:51,600
Speaker 1: regulators have taken somewhat of a back seat and push

149
00:10:51,640 --> 00:10:57,400
Speaker 1: the risk towards US hospitals, health systems, group purchasing organizations

150
00:10:57,400 --> 00:11:01,640
Speaker 1: that are determining whether or not this product legitimate, these

151
00:11:01,760 --> 00:11:05,120
Speaker 1: entities have to make those decisions for themselves, so we're

152
00:11:05,120 --> 00:11:08,560
Speaker 1: still seeing an influx of some faulty product here into

153
00:11:08,559 --> 00:11:12,320
Speaker 1: the country. What is China doing to try and tamp

154
00:11:12,360 --> 00:11:16,480
Speaker 1: down all these these fakes that are are popping up everywhere. Well,

155
00:11:16,559 --> 00:11:20,200
Speaker 1: China has certainly faced some pressure to crack down on

156
00:11:20,320 --> 00:11:25,880
Speaker 1: subpar suppliers, counterfeitters, and these unscrupulous middlemen that have been

157
00:11:26,360 --> 00:11:30,160
Speaker 1: surging the prices by investigating cases of companies making fake

158
00:11:30,400 --> 00:11:34,640
Speaker 1: or unreliable equipment and face masks um. The Chinese government

159
00:11:34,640 --> 00:11:38,600
Speaker 1: actually announced this month that its customs agency would inspect

160
00:11:38,720 --> 00:11:43,400
Speaker 1: every shipment of medical respirators and other medical protective clothing

161
00:11:43,679 --> 00:11:48,559
Speaker 1: before they export. They've also worked to create lists, essentially

162
00:11:48,640 --> 00:11:53,400
Speaker 1: of what they see as legitimate manufacturers. These moves have

163
00:11:53,600 --> 00:11:57,200
Speaker 1: led to reports in delayed shipments of product getting to

164
00:11:57,240 --> 00:12:01,760
Speaker 1: the US, and there's some frustration about that actually among buyers,

165
00:12:01,800 --> 00:12:05,840
Speaker 1: but others say it's a much needed layer of scrutiny

166
00:12:05,880 --> 00:12:09,440
Speaker 1: into this market that has both good and bad product

167
00:12:09,920 --> 00:12:13,600
Speaker 1: coming out quickly. What exactly is the rough timeline they're

168
00:12:13,640 --> 00:12:16,960
Speaker 1: trying to shoot for in terms of someone making the respirators,

169
00:12:17,559 --> 00:12:20,320
Speaker 1: verifying them, and then getting them, let's say, onto US

170
00:12:20,400 --> 00:12:24,920
Speaker 1: soil or to emergency room. What is their goal for timeframe.

171
00:12:26,000 --> 00:12:29,160
Speaker 1: I think that will vary day to day. But the

172
00:12:29,200 --> 00:12:32,480
Speaker 1: first shipment Premiere was able to secure and bring to

173
00:12:32,520 --> 00:12:37,439
Speaker 1: the US touchdown in Chicago nine days after they had

174
00:12:37,480 --> 00:12:42,360
Speaker 1: initiated a partnership with a Chinese manufacturing facility. So that

175
00:12:42,440 --> 00:12:44,920
Speaker 1: was the timeline. Bake in a day or two for

176
00:12:45,000 --> 00:12:48,840
Speaker 1: it to be delivered across the country from California to

177
00:12:48,880 --> 00:12:53,880
Speaker 1: New York, perhaps to get to actual healthcare workers. But

178
00:12:54,080 --> 00:12:57,920
Speaker 1: that nine day timeline is pretty quick. This is a

179
00:12:58,000 --> 00:13:03,160
Speaker 1: company that usually takes months to vet products coming from

180
00:13:03,160 --> 00:13:05,800
Speaker 1: outside the US, and they've never done this with k

181
00:13:05,920 --> 00:13:09,559
Speaker 1: and before. I think that if you're a glass half

182
00:13:09,640 --> 00:13:12,600
Speaker 1: full person, you look at Premiers work and you say,

183
00:13:12,640 --> 00:13:17,840
Speaker 1: this is incredible. Look at American ingenuity and ability to

184
00:13:17,840 --> 00:13:20,760
Speaker 1: to look elsewhere and source quickly. If you're a glass

185
00:13:20,760 --> 00:13:27,360
Speaker 1: half empty person, you're concerned that every company is doing

186
00:13:27,400 --> 00:13:31,400
Speaker 1: this on their own timeline, by their own standards, and

187
00:13:31,720 --> 00:13:34,480
Speaker 1: you got to trust that they're doing it right. This

188
00:13:34,559 --> 00:13:39,640
Speaker 1: is ah, this is the wild West. That's how suppliers, traders,

189
00:13:39,760 --> 00:13:42,800
Speaker 1: government officials have put it to me. It's every man

190
00:13:42,880 --> 00:13:47,840
Speaker 1: for themselves and you just have to be trusting of

191
00:13:47,880 --> 00:13:50,480
Speaker 1: the entity you're working with to make sure that this

192
00:13:50,559 --> 00:14:09,280
Speaker 1: is legitimate product. That was health reporter Riley Griffin. For

193
00:14:09,480 --> 00:14:13,400
Speaker 1: more on the messy mask market in China, read Riley's

194
00:14:13,440 --> 00:14:18,560
Speaker 1: April fifteenth story with Lauren Etter on Bloomberg dot Com.

195
00:14:18,600 --> 00:14:21,640
Speaker 1: And That's our Show. For more on the outbreak from

196
00:14:21,640 --> 00:14:24,960
Speaker 1: one D and twenty bureaus around the world, visit Bloomberg

197
00:14:25,040 --> 00:14:30,240
Speaker 1: dot com, slash Coronavirus and one Small favor. If you

198
00:14:30,320 --> 00:14:33,520
Speaker 1: appreciate the show, please leave us a review and rating

199
00:14:33,840 --> 00:14:37,800
Speaker 1: on Apple Podcasts or Spotify. It's the best way to

200
00:14:37,840 --> 00:14:43,680
Speaker 1: help more listeners find our global reporting. The Prognosis Daily

201
00:14:43,840 --> 00:14:47,240
Speaker 1: edition is hosted by Me Laura Carlson. The show was

202
00:14:47,280 --> 00:14:52,240
Speaker 1: produced by Me, top foreheads, Jordan Gospoure and Magnus Hendrickson.

203
00:14:53,040 --> 00:14:57,760
Speaker 1: Today's main story was reported by Riley Griffin. Original music

204
00:14:57,840 --> 00:15:01,960
Speaker 1: by Leo Sidron. Are at readers our Francesco Levi and

205
00:15:02,120 --> 00:15:07,720
Speaker 1: Rick Shine. Francesco Levi is Bloomberg's head of podcasts. Thanks

206
00:15:07,720 --> 00:15:23,160
Speaker 1: for listening. H