HHS cancelling ventilator contracts, says stockpile is full

WASHINGTON — The Trump admin­is­tra­tion is can­cel­ing some of its remain­ing orders for ven­ti­la­tors, after rush­ing to sign near­ly $3 bil­lion in emer­gency con­tracts as the COVID-19 pan­dem­ic surged in the spring.

The Depart­ment of Health and Human Ser­vices issued a state­ment Tues­day affirm­ing that the nation­al stock­pile has now reached its max­i­mum capac­i­ty for the life-sav­ing breath­ing machines, with near­ly 120,000 avail­able for deploy­ment to state and local health offi­cials if need. Though the orders were billed as a cost-sav­ing mea­sure, Democ­rats said the can­cel­la­tions show the White House vast­ly over­spent in its quest to ful­fill Pres­i­dent Don­ald Trump’s pledge to make the Unit­ed States the “King of Ventilators.”

“By ter­mi­nat­ing the remain­der of deliv­er­ies from these con­tracts, HHS is bal­anc­ing fed­er­al stock­pile require­ments with com­mer­cial mar­ket demand for ven­ti­la­tors,” said Car­ol Danko, an agency spokesper­son. “As a result, HHS is sav­ing the U.S. tax­pay­er mil­lions of dol­lars by halt­ing deliv­ery of addi­tion­al ven­ti­la­tors that are no longer required.”

The agency didn’t have an esti­mate for how much tax­pay­ers would save by can­cel­ing the con­tracts because the terms and poten­tial penal­ties for the ear­ly ter­mi­na­tions were still being nego­ti­at­ed with the com­pa­nies involved.

HHS con­firmed it was ter­mi­nat­ing con­tracts with ven­ti­la­tor man­u­fac­tur­ers Hamil­ton Med­ical and Vyaire Med­ical, which will result in the reduc­tion of 38,000 ven­ti­la­tors that had been sched­uled for deliv­ery to the Nation­al Strate­gic Stock­pile by the end of 2020.

An agency spokesper­son declined to com­ment on the sta­tus of its largest ven­ti­la­tor con­tract, a mas­sive $647 mil­lion deal with Philips that is now the sub­ject of an inter­nal HHS inves­ti­ga­tion and legal review.

But Steve Klink, a spokesman for Philips at the company’s head­quar­ters in Ams­ter­dam, con­firmed that its con­tract had also been can­celed and that it will not deliv­er the remain­ing 30,700 ven­ti­la­tors on its order to the U.S. stockpile.

Klink said HHS had not yet giv­en the com­pa­ny any “for­mal rea­son” for the cancellation.

“Unlike typ­i­cal­ly in the pri­vate sec­tor, the U.S. gov­ern­ment does not need any rea­son to ter­mi­nate an agree­ment,” Klink said. “We can con­fi­dent­ly say that we have deliv­ered on our com­mit­ments. While we are dis­ap­point­ed in light of our mas­sive efforts, we will work with HHS to effec­tu­ate the par­tial ter­mi­na­tion of this contract.”

The Philips con­tract has been under scruti­ny because the com­pa­ny had signed a 2019 agree­ment to deliv­er 10,000 basic emer­gency ven­ti­la­tors to the nation­al stock­pile by 2022 at a cost of about $3,280 each. But once the COVID pan­dem­ic hit, the com­pa­ny inked a new deal with the Trump admin­is­tra­tion to pro­vide 43,000 of its more com­pli­cat­ed and expen­sive hos­pi­tal-grade mod­els at an aver­age cost of about $15,000 each.

The com­pa­ny has said it still plans to deliv­er the 10,000 low-cost ven­ti­la­tors over the next two years under its ear­li­er contract.

House Democ­rats said they would expand their probe into the White House’s han­dling of the Phillips con­tract, which they said was nego­ti­at­ed by Trump trade advis­er Peter Navarro.

“Amer­i­can tax­pay­ers deserve to have their mon­ey well spent,” said Rep. Raja Krish­namoor­thi, chair­man of the House Sub­com­mit­tee on Eco­nom­ic and Con­sumer Pol­i­cy. “Incom­pe­tent nego­ti­a­tions by top Trump Admin­is­tra­tion offi­cials, like Peter Navar­ro, wast­ed hun­dreds of mil­lions of tax­pay­er dollars.”

White House deputy press sec­re­tary Sarah Matthews said Navar­ro “played a vital role in our coro­n­avirus response” by help­ing over­see fed­er­al con­tracts that helped cre­ate thou­sands of jobs.

“While the Trump Admin­is­tra­tion has been focused on sav­ing lives, House Democ­rats con­tin­ue to focus on point­less inves­ti­ga­tions,” Matthews said.

As the virus took hold and began to spread wide­ly across the U.S. in March, gov­er­nors and may­ors of big cities urged Trump to use his author­i­ty under the Defense Pro­duc­tion Act to direct pri­vate com­pa­nies to ramp up pro­duc­tion of ven­ti­la­tors. At the time, the nation­al stock­pile had only about 16,660 ven­ti­la­tors ready to deploy.

Trump ini­tial­ly resist­ed calls to invoke the Kore­an War-era pro­duc­tion act, but at the end of March he promised to deliv­er 100,000 new ven­ti­la­tors with­in 100 days. The pres­i­dent then tasked his son-in-law, White House advis­er Jared Kush­n­er, with lead­ing the effort. Dur­ing the month of April, HHS issued a flur­ry of emer­gency con­tracts to estab­lished ven­ti­la­tor com­pa­nies, as well as U.S. automak­ers Ford and Gen­er­al Motors.

“We became the king of ven­ti­la­tors, thou­sands and thou­sands of ven­ti­la­tors,” Trump boast­ed in an April 29 speech.

But by the time the new machines were being deliv­ered to the stock­pile in the ear­ly sum­mer, most doc­tors were mov­ing away from the wide­spread use of ven­ti­la­tors in all but the most crit­i­cal­ly ill COVID-19 patients due to high death rates for those put on the machines.

The AP report­ed in May that the admin­is­tra­tion had issued con­tracts for deliv­ery of near­ly 200,000 ven­ti­la­tors by the end of 2020 — rough­ly twice what experts then pre­dict­ed the coun­try would need.

GM said Tues­day it has fin­ished mak­ing all 30,000 ven­ti­la­tors under its $489 mil­lion con­tract. Ford announced ear­li­er it had fin­ished mak­ing 50,000 ven­ti­la­tors for the gov­ern­ment at a cost of $336 million.

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