[Ip-health] New York Times: The U.S. Tried to Build a New Fleet of Ventilators. The Mission Failed.

Thiru Balasubramaniam thiru at keionline.org
Sun Mar 29 11:11:59 PDT 2020


The U.S. Tried to Build a New Fleet of Ventilators. The Mission Failed.
As the coronavirus spreads, the collapse of the project helps explain
America’s acute shortage.

A U.S. Strategic National Stockpile in Texas. The government has thousands
of ventilators, but not enough to cope with the coronavirus pandemic.
By Nicholas Kulish, Sarah Kliff and Jessica Silver-Greenberg
March 29, 2020
Updated 11:04 a.m. ET

Thirteen years ago, a group of U.S. public health officials came up with a
plan to address what they regarded as one of the medical system’s crucial
vulnerabilities: a shortage of ventilators.

The breathing-assistance machines tended to be bulky, expensive and limited
in number. The plan was to build a large fleet of inexpensive portable
devices to deploy in a flu pandemic or another crisis.

Money was budgeted. A federal contract was signed. Work got underway.

And then things suddenly veered off course. A multibillion-dollar maker of
medical devices bought the small California company that had been hired to
design the new machines. The project ultimately produced zero ventilators.

That failure delayed the development of an affordable ventilator by at
least half a decade, depriving hospitals, states and the federal government
of the ability to stock up. The federal government started over with
another company in 2014, whose ventilator was approved only last year and
whose products have not yet been delivered.

Today, with the coronavirus ravaging America’s health care system, the
nation’s emergency-response stockpile is still waiting on its first
shipment. The scarcity of ventilators has become an emergency, forcing
doctors to make life-or-death decisions about who gets to breathe and who
does not.

The stalled efforts to create a new class of cheap, easy-to-use ventilators
highlight the perils of outsourcing projects with critical public-health
implications to private companies; their focus on maximizing profits is not
always consistent with the government’s goal of preparing for a future

“We definitely saw the problem,” said Dr. Thomas R. Frieden, who ran the
Centers for Disease Control and Prevention from 2009 to 2017. “We innovated
to try and get a solution. We made really good progress, but it doesn’t
appear to have resulted in the volume that we needed.”

The project — code-named Aura — came in the wake of a parade of near-miss
pandemics: SARS, MERS, bird flu and swine flu.

Federal officials decided to re-evaluate their strategy for the next public
health emergency. They considered vaccines, antiviral drugs, protective
gear and ventilators, the last line of defense for patients suffering
respiratory failure. The federal government’s Strategic National Stockpile
had full-service ventilators in its warehouses, but not in the quantities
that would be needed to combat a major pandemic.

In 2006, the Department of Health and Human Services established a new
division, the Biomedical Advanced Research and Development Authority, with
a mandate to prepare medical responses to chemical, biological and nuclear
attacks, as well as infectious diseases.

In its first year in operation, the research agency considered how to
expand the number of ventilators. It estimated that an additional 70,000
machines would be required in a moderate influenza pandemic.

The ventilators in the national stockpile were not ideal. In addition to
being big and expensive, they required a lot of training to use. The
research agency convened a panel of experts in November 2007 to devise a
set of requirements for a new generation of mobile, easy-to-use ventilators.

In 2008, the government requested proposals from companies that were
interested in designing and building the ventilators.

The goal was for the machines to be approved by regulators for mass
development by 2010 or 2011, according to budget documents that the
Department of Health and Human Services submitted to Congress in 2008.
After that, the government would buy as many as 40,000 new ventilators and
add them to the national stockpile.

Companies submitted bids for the Project Aura job. The research agency
opted not to go with a large, established device maker. Instead it chose
Newport Medical Instruments, a small outfit in Costa Mesa, Calif.

Newport, which was owned by a Japanese medical device company, only made
ventilators. Being a small, nimble company, Newport executives said, would
help it efficiently fulfill the government’s needs.

Ventilators at the time typically went for about $10,000 each, and getting
the price down to $3,000 would be tough. But Newport’s executives bet they
would be able to make up for any losses by selling the ventilators around
the world.

“It would be very prestigious to be recognized as a supplier to the federal
government,” said Richard Crawford, who was Newport’s head of research and
development at the time. “We thought the international market would be
strong, and there is where Newport would have a good profit on the product.”

Federal officials were pleased. In addition to replenishing the national
stockpile, “we also thought they’d be so attractive that the commercial
market would want to buy them, too,” said Nicole Lurie, who was then the
assistant secretary for preparedness and response inside the Department of
Health and Human Services. With luck, the new generation of ventilators
would become ubiquitous, helping hospitals nationwide better prepare for a

The contract was officially awarded a few months after the H1N1 outbreak,
which the C.D.C. estimated infected 60 million  and killed 12,000 in the
United States, began to taper off in 2010. The contract called for Newport
to receive $6.1 million upfront, with the expectation that the government
would pay millions more as it bought thousands of machines to fortify the

Project Aura was Newport’s first job for the federal government. Things
moved quickly and smoothly, employees and federal officials said in

Every three months, officials with the biomedical research agency would
visit Newport’s headquarters. Mr. Crawford submitted monthly reports
detailing the company’s spending and progress.

The federal officials “would check everything,” he said. “If we said we
were buying equipment, they would want to know what it was used for. There
were scheduled visits, scheduled requirements and deliverables each month.”

In 2011, Newport shipped three working prototypes from the company’s
California plant to Washington for federal officials to review.

Dr. Frieden, who ran the C.D.C. at the time, got a demonstration in a small
conference room attached to his office. “I got all excited,” he said. “It
was a multiyear effort that had resulted in something that was going to be
really useful.”

In April 2012, a senior Health and Human Services official testified before
Congress that the program was “on schedule to file for market approval in
September 2013.” After that, the machines would go into production.

Then everything changed.

The medical device industry was undergoing rapid consolidation, with one
company after another merging with or acquiring other makers. Manufacturers
wanted to pitch themselves as one-stop shops for hospitals, which were
getting bigger, and that meant offering a broader suite of products. In May
2012, Covidien, a large medical device manufacturer, agreed to buy Newport
for just over $100 million.

Covidien — a publicly traded company with sales of $12 billion that year —
already sold traditional ventilators, but that was only a small part of its
multifaceted businesses. In 2012 alone, Covidien bought five other medical
device companies, in addition to Newport.

Newport executives and government officials working on the ventilator
contract said they immediately noticed a change when Covidien took over.
Developing inexpensive portable ventilators no longer seemed like a top

Newport applied in June 2012 for clearance from the Food and Drug
Administration to market the device, but two former federal officials said
Covidien had demanded additional funding and a higher sales price for the
ventilators. The government gave the company an additional $1.4 million, a
drop in the bucket for a company Covidien’s size.

Government officials and executives at rival ventilator companies said they
suspected that Covidien had acquired Newport to prevent it from building a
cheaper product that would undermine Covidien’s profits from its existing
ventilator business.

Some Newport executives who worked on the project were reassigned to other
roles. Others decided to leave the company.

“Up until the time the company sold, I was really happy and excited about
the project,” said Hong-Lin Du, Newport’s president at the time of its
sale. “Then I was assigned to a different job.”

The government agreed to cancel the contract. The world was focused at the
time on the Ebola outbreak in West Africa. The research agency started
over, awarding a new contract for $13.8 million to the giant Dutch company
Philips. In 2015, Covidien was sold for $50 billion to another huge medical
device company, Medtronic. Charles J. Dockendorff, Covidien’s former chief
financial officer, said he did not know why the contract had fallen apart.
“I am not aware of that issue,” he said in a text message.

Robert J. White, president of the minimally invasive therapies group at
Medtronic who worked at Covidien during the Newport acquisition, initially
said he had no recollection of the Project Aura contract. A Medtronic
spokeswoman later said that Mr. White was under the impression that the
contract had been winding down before Covidien bought Newport.

It wasn’t until last July that the F.D.A. signed off on the new Philips
ventilator, the Trilogy Evo. The government ordered 10,000 units in
December, setting a delivery date in mid-2020.

As the extent of the spread of the new coronavirus in the United States
became clear, Dr. Anthony S. Fauci, director of the National Institute of
Allergy and Infectious Diseases, revealed on March 15 that the stockpile
had 12,700 ventilators ready to deploy. The government has since sped up
maintenance to increase the number available to 16,660 — still fewer than a
quarter of what officials years earlier had estimated would be required in
a moderate flu pandemic.

Last week, the Health and Human Services Department contacted ventilator
makers to see how soon they could produce thousands of machines. And it
began pressing Philips to speed up its planned shipments.

The stockpile is “still awaiting delivery of the Trilogy Evo,” a Health and
Human Services spokeswoman said. “We do not currently have any in
inventory, though we are expecting them soon.”

Kitty Bennett contributed research.

Nicholas Kulish is an enterprise reporter covering immigration issues.
Before that, he served as the Berlin bureau chief and an East Africa
correspondent based in Nairobi. He joined The Times as a member of the
Editorial Board in 2005. @nkulish

Sarah Kliff is an investigative reporter for The New York Times. Her
reporting focuses on the American health care system and how it works for

Jessica Silver-Greenberg is an investigative reporter on the business desk.
She was previously a finance reporter at the Wall Street Journal.
@jbsgreenberg • Facebook

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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