Letter to Mike Kaufmann, Chief Executive Officer for CardinalHealth - Warren and Blumenthal to Medical Equipment Wholesalers: Explain Your Role in the Jared Kushner-Led "Project Air Bridge" that Failed to to Provide Critical Supplies for States' COVID-19 Responses

Letter

Dear Mr. Kaufmann:

We write to inquire about your company's interactions with the White House Coronavirus Task
Force, the U.S. Federal Emergency Management Agency (FEMA), and other executive branch
entities distributing medical supplies during the coronavirus disease 2019 (COVID-19)
pandemic.

Last month, the Trump administration initiated what White House Senior Advisor, Jared
Kushner, described as an "unprecedented public-private partnership" with private sector
medical supply companies, called "Project Air Bridge."2 Through this program, the federal
government pays for medical supplies--including masks, face shields, gowns, and gloves--to be
shipped by air freight, expediting shipments that would otherwise be made by ocean freight.
Upon landing in the United States, half of the supplies are "directed by the distributors to
customers within hotspot areas," with the remaining half being fed into "distributors' normal
supply chain and onto their customers across the U.S."

We applaud and support efforts to quickly bring medical supplies to states, territories, and tribal
nations who desperately need them, but we are concerned by the Trump Administration's
process for doing so, which appears to be--at least in part--driven by politics rather than public
health, and delegates decisions about distribution to private companies with little to no
transparency about how distribution and pricing decisions are made.

The administration has not been clear about how it determines which areas of the country are
COVID-19 "hotspots." Briefing points indicate that the areas are "determined by HHS and
FEMA based on CDC data," but the administration has not answered requests for more detail
from reporters, nor from members of Congress, and public statements by President Trump and
others indicate that these decisions are partly influenced by politics and the whims of the
President.

The administration has also provided little explanation of what happens to the half of supplies
that are fed into the "normal supply chain." In expediting shipments, the administration has
reportedly saved medical supply companies more than $25 million in shipping costs.
The leader of the administration's Supply Chain Task Force has stated that he is "not here to disrupt a
supply chain."9 But given the "unprecedented" nature of this partnership, and the numerous
reported problems with states and hospital officials being unable to obtain personal protective
equipment (PPE) and other medical supplies, or having shipments of these materials seized by
federal officials and spirited to unknown destinations, the American people need an explanation
for how these supplies are obtained, priced, and distributed through Project Air Bridge.
Unfortunately, neither the administration nor your company has explained critical details, such as
the content of any existing contracts or financial agreements.

Some states are reportedly bidding against each other on the open market for supplies, paying up
to 10 times the normal prices for some goods.12 This raises the question of how prices are being
established and who exactly is profiting off of this unprecedented crisis that has claimed the lives
of tens of thousands of Americans.

One of the companies participating in Project Air Bridge told the LA Times that its agreement with the administration stipulates that it charge"reasonable" prices, but provided no detail beyond that.
Even if your company is indeed charging "reasonable" prices, we are concerned that the supplies, once sold, may ultimately be making their way to third-party sellers that jack up the prices, as some state officials believe.

Our concerns about states' ability to acquire supplies quickly and at a reasonable cost are
amplified by reports that federal agents appears to be seizing purchases of medical supplies for
redistribution.
The chief physician executive of a Massachusetts hospital system recently
described the measures that he had to take in order to protect a shipment of face masks and
respirators from being seized by the Federal Bureau of Investigations and the Department of
Homeland Security (of which FEMA is a part), including transporting the supplies in trucks
disguised as food-service vehicles.
In explaining its actions, FEMA has issued a series of
statements that fail to explain why it might be seizing supplies, the extent to which it is doing so,
or what it is doing with them after seizure. After seizing supplies earmarked for first responders
in Milford, MA, a FEMA spokesperson said that, "PPE being distributed internally within the
United States is not being seized or re-routed by FEMA. Reports of FEMA commandeering or
re-routing such supplies are false." FEMA then provided a statement describing Project Air
Bridge, adding that the agreement by which "companies are obligated to sell a predetermined
percentage of their cargo to areas that HHS and FEMA identified as hot spots… may be
misconstrued as FEMA "commandeering' supplies from the company or their customers."18
FEMA's description of Project Air Bridge, as a response to explain where the order of supplies
went, raises even more questions, raising the possibility that supplies--already ordered and paid
for by a state--are being taken by FEMA, entrusted to a private medical supplier, sold to a thirdparty broker, and then auctioned back to that same state for an outrageous price after a delay of
days or weeks.

Between reports of shortages across the country, seizures of supplies by the government, and
outrageous prices, there is an extraordinary level of confusion and dismay about the current state
of the medical supply chain. Given the critical need for supplies as the pandemic continues to
unfold, the administration's continued stonewalling about Project Air Bridge, and the fact that
your company is in a position of knowledge about the supply chain, we request that you answer
the following questions by May 8, 2020.
1. How was your company selected as a participant in Project Air Bridge?
2. What specific contracts or agreements are in place between you and federal government
entities regarding Project Air Bridge? With what agencies has your company signed these
agreements?
3. How do you receive medical supplies and PPE from Project Air Bridge? What costs do
you pay for the federal government's transport of these items, and how does it compare to
your typical costs for obtaining items from suppliers?
4. How has your company distributed medical supplies and PPE?
a. How is your company or the government determining which half of supplies will
be distributed to hotspots, and which half will instead be fed into the "normal
supply chain"? For example, are medical supplies being divided into halves by
number of unit? Cost? Is each category of medical product being divided
separately?
b. Have you been provided with instructions to distribute supplies to COVID-19
"hotspots"? Please provide any lists of hotspots that have been provided to you, as
well as any relevant dates for which those lists were current.
c. How is your company distributing the supplies that are fed into its "normal supply
chain"? Are these supplies going to orders that were placed before the initiation of
Project Air Bridge? Are they going to existing customers under renegotiated
terms? Are they auctioned to the highest bidder? Please describe your company's
practices in as much detail as possible.
5. Please provide a full accounting of the distribution of all medical supplies and equipment
that you have been provided via Project Air Bridge, including a list of all COVID-19-
related supplies and PPE you have received, the quantity of each item, and information
on where this quantity has been distributed, including a list of how much each recipient
(states, localities, and tribal governments, hospitals or medical systems, or other thirdparties) has received.

How do you determine selling prices for medical equipment and PPE that you have
obtained via Project Air Bridge?
What restrictions, if any, dictate your ability to set prices on medical supplies
distributed via Project Air Bridge? One report says that your company is required
to charge "reasonable" prices.20 Please describe any such requirements in detail.
How is the government monitoring and enforcing compliance with such
requirements?
7. Please provide a full accounting of the cost and pricing of all medical supplies and
equipment that you have been provided via Project Air Bridge, including a list of (1)
average cost to obtain each type of supply or equipment, (2) your average selling prices
for each type of supply or equipment, and (3) your average selling price for each pieces
of supply or equipment for each major recipient (states, localities, and tribal
governments, hospitals or medical systems, or other third-parties).
8. Is your company entrusted with distributing pre-existing orders of supplies that are seized
by FEMA? Has it been given any directives on how to distribute these supplies?

Sincerely,

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