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Alerts and Updates

CARES Act Creates New Opportunities for Companies That Can Supply PPE and Other Essential Medical Products

March 30, 2020

CARES Act Creates New Opportunities for Companies That Can Supply PPE and Other Essential Medical Products

March 30, 2020

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In recent weeks, there have been extreme shortages of PPE and other key medical products and supplies across the nation.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) into law. The CARES Act will provide federal agencies with nearly $100 billion to address the supply chain breakdowns in medical products needed to combat the COVID-19 pandemic. The rapid influx of funding creates new opportunities for companies that can manufacture or supply essential personal protective equipment (PPE) and other key medical products.

Extreme Shortages of PPE and Other Medical Products and Supplies

In recent weeks, there have been extreme shortages of PPE and other key medical products and supplies across the nation. For example, a comprehensive survey conducted by the U.S. Conference of Mayors between March 20 and March 24 that involved 213 U.S. cities in 41 states and Puerto Rico with a collective population of 42 million people, identified a need for 28.5 million face masks, 24.4 million items of PPE (e.g., gowns and gloves), 7.9 million test kits, and 139,000 ventilators. Supply chain integrity is a challenge for healthcare facilities even in normal times; the surge of COVID-19 patients has, according to experts, “broken” the medical supply chain in the United States.

How the CARES Act Responds to Existing Medical Supply Chain Challenges

Essentially, the CARES Act seeks to address these shortages and other medical supply chain issues in three main ways.

  • First, the new law designates $80 million in emergency funding for use by the U.S. Food and Drug Administration (FDA) to fight COVID-19, including support for the development of necessary medical countermeasures and vaccines, advanced manufacturing for medical products and the monitoring of medical product supply chains.
  • Second, the Act includes extensive funding for the Centers for Disease Control and Prevention (CDC), the National Institutes of Health (NIH) and other agencies for research, health surveillance programs and other resources to respond to the crisis. The broad resources include investments in research for diagnostics, vaccines, and treatments for the virus, and $16 billion for PPE and other supplies for healthcare professionals administering countermeasures as part of the Strategic National Stockpile.
  • Third, the CARES Act mandates that the National Academies of Sciences, Engineering and Medicine conduct a study of the medical product supply chain and to issue a report with its findings and recommendations. The report must include the input of relevant government agencies and outside stakeholders.

Opportunities for Manufacturers and Suppliers of PPE and Other Medical Products

Clearly, the CARES Act creates new opportunities for entities that can manufacture or supply the desperately needed PPE and other kinds of medical products. While it may take some time before the FDA, CDC and other federal agencies fully implement the provisions set forth in the CARES Act, companies that can manufacturer or supply the PPE and other kinds of medical products should take note that many state governments are eager to start sourcing such products as soon as possible.

In many states, companies interested in providing products or services to respond to the COVID-19 pandemic have been directed to contact their congressional representative and/or FEMA.  Additionally, certain state hospital associations are helping to coordinate demand for PPE and supplies as well as vetting potential suppliers to avoid the risk of fraud and abuse. Individual health systems, hospitals and other healthcare facilities are also reaching out to manufacturers directly in hopes of obtaining much needed supplies without delay.

Companies that are interested in seizing such opportunities that have not previously manufactured or supplied such products should be aware that there are often federal and/or state approvals that must be obtained relating to such products, and they should consider contacting experienced legal counsel to understand what requirements exist and how they can be satisfied.

About Duane Morris

Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For Further Information

If you have any questions about this Alert, please contact Geoffrey M. Goodale, Delphine O'Rourke, Michael E. Barnicle, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.