House Democrats find administration overspent for ventilators by as much as $500 million

DID JARED ARRANGE THEIR RESALE ABROAD FOR PROFIT
Heidi Przybyla,NBC News•July 31, 2020

WASHINGTON — Throughout the coronavirus pandemic, President Donald Trump has repeatedly touted his administration's supply of ventilators, a critical tool for treating patients with life-threatening respiratory symptoms.

But internal emails and documents obtained by Democrats on the House Oversight Committee suggest that the Trump administration failed to enforce an existing contract with a major medical manufacturer, delayed negotiations for more than a month and subsequently overpaid as much as $500 million for tens of thousands of the devices — a costly error at a time when officials from some of the biggest states were warning of shortages.


The communications between administration officials and Philips Respironics, a global medical equipment manufacturer that finalized a $643.5 million contract with the Trump administration in April, are included in a 40-page report shared with NBC News.

The information raises serious concerns about an estimated $3 billion in taxpayer dollars spent on ventilators from a number of suppliers, according to committee staff members who briefed NBC News.

Trump, facing criticism for a slow and inconsistent response to the pandemic, has repeatedly pointed to his administration's distribution of ventilators as a success story. He falsely claimed as early as April that the Obama administration had left no ventilators in the Strategic National Stockpile upon leaving office. In a speech April 29, Trump said that under his leadership, the U.S. had become "king of ventilators, thousands and thousands of ventilators."

Philips Respironics has one of the largest contracts with the federal government to produce ventilators, but documents in the report found that the administration paid it more per unit than any other U.S. purchaser.

According to the initial Obama-era contract to build the Strategic National Stockpile, Philips is under no obligation to deliver the bulk of the 10,000 ventilators it originally was contracted for until September 2022, the report notes, citing a statement given to ProPublica.

Even so, the Department of Health and Human Services has said it expects most of the 43,000 devices negotiated under a second contract to arrive by the end of this year.

The White House did not respond to inquiries from NBC News, nor did Philips.

"Democrats will stop at nothing in their endless quest to politicize this pandemic," said Matt Smith, a spokesman for Oversight Committee Republicans.

"After months of Democratic governors rushing to television cameras to beg for more ventilators, Congressional Democrats are now unhappy with the Administration’s successful efforts to quickly secure a robust supply from American manufacturers," Smith said. "Rather than provide credit for the more-than quadrupling of available ventilators in the national stockpile since March, they now seek to diminish President Trump’s success by throwing a tantrum over contracting terms. This is just the latest example of a Democratic Party more concerned with partisan politics than fighting COVID-19."

"These documents indicate that, before and during the pandemic, inept contract management and incompetent negotiating by the Trump Administration denied the country the ventilators it needed," the committee concluded in its report.

The money spent on overpayments, the report suggests, "could have been used for personal protective equipment and critical medical supplies that were in short supply across the country."

"The results of this investigation lead me to question how many other ways have the American people been unknowingly hurt by this administration's incompetence and ineptitude over the course of the pandemic and over the past three-and-a-half years," Rep. Raja Krishnamoorthi, D-Ill., said in an interview with NBC News.

The report says Philips secured a "financial windfall to which it clearly is not entitled" and recommends that to "remedy this apparent profiteering, the Trump Administration now should engage competent contracting officers at federal agencies to determine whether any of these funds can be clawed back."

In late January, with the pandemic moving through China and into Europe, Philips approached Trump administration officials to ask whether it should accelerate ventilator production under an existing contract, the report says.

But it wasn't until April 7, after demand for the devices had peaked and already started to ebb, that the Department of Health and Human Services signed a new contract with Philips to purchase 43,000 ventilators at $15,000 apiece. The administration never tried to negotiate that price, based on the documentation. By comparison, a purchaser in Missouri paid $9,327 for a single unit on April 30.

According to ProPublica, the contract the Obama administration negotiated with Philips in 2014 was for 10,000 similar ventilators at $3,280 apiece. After development was delayed, Obama officials gave Philips an extension until November 2019, which would have been in time to address the pandemic. The Trump administration never tried to build on that contract and continued to grant the company several extensions in negotiating a new one, the report found.

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White House trade adviser Peter Navarro, who recently criticized the nation's top infectious disease expert, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, as having "been wrong about everything," negotiated the new contract at almost five times the price the Obama administration paid. The devices Navarro purchased were "functionally identical" to the previous ones, according to Food and Drug Administration approvals in the report.

While Navarro served as chief negotiator, the deal was formalized by Adam Boehler, CEO of the U.S. International Development Finance Corporation, who is a former college roommate of Jared Kushner, Trump's senior adviser and son-in-law. Christopher Abbott, an aide to Navarro who graduated from college just last year, oversaw a majority of the communications between Philips and the White House.

A March 25 email from Philips Vice President Nick Padula to Abbott recommended that the administration purchase a model with "more clinician-friendly screens" than those purchased by the Obama administration.

Had Trump officials asked how the screen was different, the report said, they would have discovered that the screens "are identical to the screens on the less expensive" models, the report says.

In addition to what committee staff described as a "fleecing" of the federal government, the report documents a belabored federal response as the leaders of the hardest-hit states, including Govs. Andrew Cuomo of New York and Gretchen Whitmer of Michigan, were imploring the federal government to play a greater role in purchasing and distributing ventilators.

On March 24, with New York state then the center of the pandemic in the U.S., Cuomo openly pleaded with the federal government for thousands more ventilators than it had provided, saying it was "urgent." Trump rejected invoking the Defense Production Act to compel U.S. companies to produce enough equipment to meet demand, while Trump criticized Cuomo's response to the pandemic.