Healthcare providers are working around the clock to safely care for patients during the COVID-19 pandemic, and the last thing they need to worry about is whether their products are reliable, safe and legitimate.
Unfortunately, a gray market is amassing around personal protective equipment (PPE), as unauthorized, third-party sellers hawk masks, gowns and other scarce supplies at a markup. And not all of these supplies are what they appear to be.
What is the Gray Market?
The gray market is a supply channel that is unofficial, unauthorized or unintended by the original manufacturer. In markets where the products are scarce or in short supply, gray markets may crop up to sell the item at any price the market will bear. In the case of COVID-19, where more than 2,000 unique stock-keeping units (SKUs) are on allocation from distributors, gray market vendors are attempting to capitalize on providers’ needs, offering difficult to obtain supplies at a 50X markup.
While price gouging is certainly amoral in a public health emergency, the gray market poses additional dangers.
For instance, Premier has seen gray market offers for N95 masks, among other products. We contacted the legitimate manufacturers of these products, who could not determine how these fraudulent sellers obtained supplies. In other words, these sellers are not authorized distributors of the product they are purporting to sell, signaling that the respirators did not come from the manufacturer as advertised. What’s worse, the manufacturer also pointed out differences in the packaging used. Modified packaging is often a hallmark of a counterfeit product, as are different packaging materials and misplaced logos or markings.
At best, this means these respirators came from a questionable source, with no way to verify safe storage, handling and valid expiration dates. At worst, they could be out-and-out fakes. Either way, there is a risk that the offered products will not perform as marketed, increasing the risk to healthcare workers, as well as patient health and safety.
How Health Systems Can Protect Against COVID-19 Scams
Check that the product is registered with the U.S. Food and Drug Administration (FDA). With the exception of industrial N95s, which have only recently and temporarily been permitted for emergency use in healthcare by the CDC, all other PPE including surgical masks, face shields, surgical gloves and gowns, isolation gowns, caps and shoe covers must be registered with the FDA. If the supplier is unable to provide demonstration of FDA registration, then it is not permitted to legally market that product for sale or use in healthcare in the United States.
If an offer is too good to be true, it probably is. Be wary of any sellers who approach you with products for sale outside of your usual supply chain channels and stick with those vetted marketplaces that have an existing integral supply chain including traditional wholesalers, group purchasing organizations or trusted e-Commerce platforms. Those claiming to have products that no other legitimate source can access are most likely trafficking in suspicious products or products from suspicious sources.
Understand risks. Fully understand the risks the gray market can pose to your patients and the facility, including the possibility that supplied products may be counterfeit, stolen, diverted, mishandled or adulterated. Engage with your legal and risk management departments to better comprehend the differences between a legal and an illegal operation.
Develop and communicate a policy for purchasing decisions. Develop a policy for how you will decide which distributors and suppliers to do business with. Carefully consider and document exceptions that may be allowed to your existing policy, such as emergency loans from other hospitals or purchases from sources outside of normal suppliers and distributors. Communicate the policy and process for any exceptions to administration, medical staff, nursing, pharmacy staff, the purchasing department and any other key stakeholders.
When in doubt, check it out. Unscrupulous sellers may be offering products that look like the original manufacturer’s items but aren’t. Counterfeiters can be very sophisticated and replicate packaging to look almost identical to the real thing. If you are not sure of a product’s legitimacy, contact your GPO and have them vet the offer with the original manufacturer. Premier’s relationships with manufacturers allows us to investigate the authenticity of the origin of the products. If the product’s origin can’t be verified, we do not recommend that you proceed with the purchase.
Compare and scrutinize purchases. Whenever a purchase is made from a new supplier, compare and scrutinize the package; the label, including font, color and size; and the contents. If the product label appears to have been altered, has residue or doesn’t appear consistent with earlier purchases – or if the content itself shows these signs and appears to be different – question its authenticity. Also, listen to patients, who can also detect abnormalities.
Keep records of suspect organizations. Keep records of any vendors you have refused to do business with and reasons for those decisions, to provide purchasing staff with a resource to check prior to making purchases. In addition, report any suspect suppliers that may be trafficking in counterfeit, stolen, diverted or adulterated product to appropriate local, state or federal law enforcement authorities.
During COVID-19, Premier continues to act as a trusted connection point for healthcare providers, suppliers and the government. We are working 24/7 to address challenges as they occur and help our alliance of more than 4,000 hospitals and health systems and 175,000 non-acute providers access the supplies they need to serve their communities. We are also partnering with the Administration and private sector to create both short-term and long-term solutions, and sharing our insights to help inform the public understanding.
Access our COVID-19 resources and tools.