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US medical suppliers get antitrust clearance to collaborate during pandemic

The Justice Department said joint logistics operations among five American medical supply distributors to provide protective medical gear to virus hot spots does not violate antitrust law.

The Justice Department on Saturday announced that it will not challenge the joint logistics activities of five large American medical supplies manufacturers to accelerate the distribution of protective gear during the U.S. coronavirus outbreak.

McKesson Corp. (NYSE: MCK), Owens & Minor (NYSE: OMI), Cardinal Health (NYSE: CAH), Medline Industries and Henry Schein (NASDAQ: HSIC) on March 24 asked the Justice Department for an expedited antitrust legal review of their collaboration, including working together on international sourcing, logistics and airlift operations, during the health crisis.  

“These medical supplies distributors should be applauded for their efforts to both assist the United States in responding to the COVID-19 pandemic and stay within the bounds of antitrust law,” said U.S. Assistant Attorney General Makan Delrahim in a statement.

The medical supplies distribution collaboration is part of an emergency response plan initiated by the Federal Emergency Management Agency (FEMA) and U.S. Health and Human Services (HHS) Department in late March to rapidly address a national shortage of protective medical gear, such as face masks, gowns and gloves, as well as medicines, for hospitals dealing with highly contagious coronavirus patients.

The Justice Department completed its review and approval of the collaboration in days — a process that ordinarily takes months.

“The requesting parties have represented that they are working together to expand existing capacity and bring goods to communities in need,” the Justice Department said in its 11-page approval letter to the five companies. “The proposed conduct is limited in scope and duration, necessary to address COVID-19-related scarcity, and will not extend beyond what is required to facilitate the availability of needed supplies. Based on these representations and given the current circumstances, it appears as if the procompetitive aspects of any arrangement far outweigh any potential harm.”

As reported by FreightWaves/American Shipper, the collaborative efforts by the medical suppliers got underway a week and a half ago with the first “Project Airbridge” flights from China to deliver large volumes of personal protective gear to COVID-19 hot spots throughout the U.S.

The health care distributors are participating in FEMA’s Supply Chain Stabilization Task Force, which is working to preserve, procure, manufacture and accelerate delivery of critical medical supplies to coronavirus hot spots around the nation.

The Justice Department letter provided more details about what the private companies are doing to help the federal government with its logistics response. Their mission includes:

  • Helping FEMA and foreign governments address bottlenecks at existing foreign suppliers;
  • Helping FEMA and HHS identify and qualify new sources of supply;
  • Helping the agencies identify and monitor areas of increased demand for supplies and medications;
  • Expediting distribution of supplies and medications to FEMA-designated COVID-19 locations;
  • Helping FEMA and HHS understand competitive prices for supplies and medications;
  • Helping negotiate competitive prices; and
  • Providing FEMA and HHS with claims data and other data.

Atlas Air is one of the all-cargo airlines participating in Project Airbridge. It has operated three flights so far — two from China and one from Malaysia carrying supplies to New York City and Chicago.

The Purchase, New York-based carrier has also been busy with other relief efforts. It is flying Boeing 747 freighters for the Frontline Responders Fund, a GoFundMe project assisted by Flexport.org, the nonprofit arm of freight forwarder Flexport. On Thursday, Atlas Air operated a dedicated charter containing 65 tons of personal protective equipment, including 16,000 hazmat suits, for medical systems in the San Francisco Bay area. The shipment originated in Shanghai.

Atlas Air also operated a B747-400 filled with personal protective equipment donated by a customer to Spain in March and worked with Airlink to organize the shipment of seven tons of surgical masks and other equipment from Shanghai to Los Angeles.

(Eric Kulisch contributed to this story.)

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Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.

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