Price
gouging (i.e., extortion or making someone pay too
much for something), in particular within the context of the current COVID19
pandemic, appears only slightly less gruesome than the original meaning of the
term gouging. Indeed, the original
meaning of the term gouging refers to
a horrifying form of ocular torture, consisting in forcing an eyeball out of
its socket using thumb pressure.[Merriam-Webster, gouging]
Perhaps then, that the current surge in the
use of the term price gouging comes as no real surprise. Use of the term price gouging has spiked recently in connection with logistics and
procurement of medical equipment and safety supplies for the COVID19 Pandemic.
Medical safety supplies such as N95 face masks and protective hazmat suits, and
most recently medical equipment for COVID19 treatment, such as ventilators.
N95 means that the masks are NIOSH (US National Institute of Occupational Safety and Health)-approved to reduce exposure to at least 95% of airborne
particulate hazards.
In the highly contagious context of the
COVID19 pandemic, where the survival of healthcare personnel depends on the use
of protective wear such as N95 masks and hazmat suits, and admitted patients in
critical condition depend on ventilators, nations worldwide are scrambling to
stay ahead of the staggering number of cases and hospitalizations, replenishing
stockpiles and creating them where there were none. However, such a scramble for procurement arises in a bidding process, where states in the US,
and beyond, are all competing against each other for critical medical supplies
and equipment. As a result, prices are gouged.
In other words, prices are driven up to unprecedented highs.
In the matter of procurement price gouging, connected to the COVID19 pandemic, figures do the talking. For example, according to New York State Governor Andrew Cuomo, N95 masks that used to cost 85 cents/piece are now selling for 7$ a piece (Cuomo Press Conference, March 22, 2020). Likewise, according to Cuomo, ventilators that used to cost $20,000 now cost $50,000 (Cuomo Press Conference March 30, 2020). Thus, price gouging is occurring in a catastrophic situation that is recording exponential increases in the number of confirmed cases and death toll. For example, in New York City alone, between March 22 and March 31 (today), confirmed cases increased from approx. 10,764 and 76 deaths, to approx. 40,900 confirmed cases (at 9:30 EST) and 932 deaths (NYCity DOH, March 31, 2020). Likewise, confirmed cases for the State of New York have climbed to close to 80,000 cases to date, with no predicted leveling in sight (NY DOH, March 31, 2020)
In the matter of procurement price gouging, connected to the COVID19 pandemic, figures do the talking. For example, according to New York State Governor Andrew Cuomo, N95 masks that used to cost 85 cents/piece are now selling for 7$ a piece (Cuomo Press Conference, March 22, 2020). Likewise, according to Cuomo, ventilators that used to cost $20,000 now cost $50,000 (Cuomo Press Conference March 30, 2020). Thus, price gouging is occurring in a catastrophic situation that is recording exponential increases in the number of confirmed cases and death toll. For example, in New York City alone, between March 22 and March 31 (today), confirmed cases increased from approx. 10,764 and 76 deaths, to approx. 40,900 confirmed cases (at 9:30 EST) and 932 deaths (NYCity DOH, March 31, 2020). Likewise, confirmed cases for the State of New York have climbed to close to 80,000 cases to date, with no predicted leveling in sight (NY DOH, March 31, 2020)
To prevent further price
gouging of medical equipment and safety supplies, ahead of the epidemiological catastrophe now unfolding,
New York Governor Andrew Cuomo was even driven, on March 22, to call for the nationalization of medical supply procurement in the US, and use of the Defense Production Act (DPA). In
other words, a plea for the Federal Government to take over the procurement of
medical supplies, in an attempt to prevent uncontrolled bidding, and the inevitable spike in prices of critical medical equipment and supplies. In
Cuomo’s own words:
“I’m calling on the Federal Government to nationalize the medical supply chain.The Federal Government should immediately use the Defense Production Act to order companies to make gowns, masks and gloves. Currently, states are competing against other states for supplies.” [Coleman,J., March 22, 2020]
Short of nationalizing the production of medical supplies and equipment in
the US, which would mean that the Federal Government would take over and own
the production facilities of US companies, the Defense Production Act (DPA) offers a close alternative form of executive intervention in private business and industry. Voted in 1950, during
the Korean War, the DPA allows the Federal Government variously
to regulate prices (prevent price gouging), to requisition property, to allocate resources, and/or to commission production (or request prioritization of production) for the
procurement of vital defense equipment, whether the equipment consists of
medical supplies, materials such as titanium and aluminum, the development of
new technologies or the disclosure of information. Since voted in 1950, the
DPA has been used on several low-key occasions (Kanno-Youngs, Z and A. Sawnson, March 31,2020). In fact, most recently, the DPA has been used, precisely
in connection with the procurement of ventilators for the COVID 19 pandemic.
Indeed, on March 27, 2020, President Trump
signed a Memorandum on Order Under the Defense Production Act Regarding General Motors Company, according to which
General Motors, in collaboration with Ventec Life Systems, a small ventilator manufacturer, have risen to the occasion, stepping-in to volunteer, and subsequently agreeing to set up crash production of ventilators at
a General Motors factory in Kokomo, Indiana (Boudette & Jacobs, 2020). Ventilators that might be delivered, before the end of the month of April 2020, to places like New York City, dubbed the canary in the coal mine (1). In other words, the hardest-hit US city, where
it is anticipated that there will be a desperate need for ventilators in the coming weeks, as well as many additional
critical shortages, in the stressed-out healthcare system.
Note
(!) The canary in the coal mine: Expression used by Cuomo during the March 30, 2020 Press Conference. The term refers to the caged canaries that coal miners would carry into the coal mines to alert them to the presence of hazardous gases such as carbon monoxide.
(!) The canary in the coal mine: Expression used by Cuomo during the March 30, 2020 Press Conference. The term refers to the caged canaries that coal miners would carry into the coal mines to alert them to the presence of hazardous gases such as carbon monoxide.
References
Boudette, N. E. and A. Jacobs (March 30, 2020) Inside G.M.’s Race to Build Ventilators, Before Trump’s Attack. NYTimes
https://www.nytimes.com/2020/03/30/business/gm-ventilators-coronavirus-trump.html
CDC - COVID19 – Cases in the USA
https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html
https://www.nytimes.com/2020/03/30/business/gm-ventilators-coronavirus-trump.html
CDC - COVID19 – Cases in the USA
https://www.cdc.gov/coronavirus/2019-ncov/cases-updates/cases-in-us.html
CDC- NIOSH-approved N95 Particulate filtering facepiece respirators
Coleman, J. (March 22, 2020) Cuomo calls on the federal government to order companies to manufacture medical supplies.The Hill.com
https://thehill.com/policy/healthcare/public-global-health/488882-cuomo-requests-federal-
government-order-companies-to
DOH- Department of Health – New York City - Daily Data Summary – COVID19 NYC – March 31, 2020
government-order-companies-to
DOH- Department of Health – New York City - Daily Data Summary – COVID19 NYC – March 31, 2020
DOH- Department of Health – NY State - NY county by county breakdown of
positive Novel CV cases – NY State
John Hopkins University Coronavirus Resource Center – World data on Coronavirus pandemic
https://coronavirus.jhu.edu/map.html
https://coronavirus.jhu.edu/map.html
Kanno-Youngs, Z and A. Sawnson (March 31,2020) Wartime Production Law Has Been Used Routinely, but Not With Coronavirus,
https://www.nytimes.com/2020/03/31/us/politics/coronavirus-defense-production-act.html
Merriam-Webster, gouging
https://www.merriam-webster.com/dictionary/gouging?utm_campaign=sd&utm_medium=serp&utm_source=jsonld
Merriam-Webster, gouging
https://www.merriam-webster.com/dictionary/gouging?utm_campaign=sd&utm_medium=serp&utm_source=jsonld
NY Governor A. Cuomo Press Conference – March 22,
2020
NY Governor Cuomo Press Conference requesting Fed. Government to nationalize
medical supply chain – Albany briefing – March 22, 2020
NY Governor A. Cuomo Press conference – March 30, 2020
Rascoe, A. (March 25,2020) Trump Resists Using Wartime Law To Get,
Distribute Coronavirus Supplies-- NPR
(National Public Radio)
Trump, D.J. (March 27, 2020) Memorandum on Order Under the Defense
Production Act Regarding General Motors Company
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