California’s enormous mask order won’t disrupt supply chain for others

OAKLAND — After California ordered 200 million masks a month to protect essential workers from coronavirus, will states and nations elsewhere lose out? Gov. Gavin Newsom says no.

Newsom announced Tuesday night that California — which boasts the fifth largest economy in the world — will channel nearly $1 billion toward obtaining 200 million masks a month for California’s healthcare personnel, grocery store clerks, homeless outreach teams and other frontline workers at heightened risk for the coronavirus.

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The market-altering magnitude of that purchase spurred questions about whether California would effectively compete with similar efforts across America and beyond, driving up prices and exacerbating an already-dire shortfall of medical equipment. But Newsom predicted the effort would have the opposite effect by augmenting the available supply.

“We are not just looking at supplies in a scarce marketplace where it’s a zero-sum game, we are being additive,” Newsom told reporters, saying “California, in this case, has been a catalyst to increase supply that will not only avail itself to the state of California but across this country and potentially in other parts of the globe.”

Governors in other virus-stricken states, like New York Gov. Andrew Cuomo, have bemoaned a fragmented procurement system that leaves states vying for the same finite stock of supplies — a situation Cuomo likened to a bidding war on eBay.

But Newsom said California was looking to collaborate with other states, citing incipient efforts to coordinate with procurement counterparts and saying other governors have had a “favorable” response.

And while other governors have regularly blasted the federal government for not asserting a role as a central supplier, Newsom rejected the notion that California was delivering a rebuke to federal inaction.

“This is not political. This is not in any way, shape or form usurping or undermining,” Newsom said.

Newsom frequently compares California to a nation-state and did so again on Wednesday, saying California is uniquely positioned to wield the procurement powers that come with the world’s fifth-largest economy. Former Gov. Gray Davis echoed Newsom’s characterization and said “during a crisis, that makes the challenge even more important, even more weighty.”

“Being the governor of California can be a big asset, not only in developing relationships with other countries that can help provide needed medical equipment, but also dealing with the president or vice president,” said Davis, adding that the state’s economic might has opened up to Newsom “all kinds of relationships for development for trade, for helping one another out,” particularly given that China “sees this as an opportunity to be a positive actor on the world stage.”

The initiative could avoid undercutting other states and countries if it uses new suppliers and provides long-term stability in the market, encouraging companies to expand and up their production, said Prashant Yadav, a senior fellow at the Center for Global Development who has worked for years to improve supply chains for medicines and health products. But it’s important that California allow other states to make purchases on the platform as well, Yadav said.

“If the dynamics are, this is only for the state of California or primarily for California — and others are second at best — then I think it risks fragmenting the market state by state, which is not what we want,” he said.

It will now fall to the Legislature to authorize hundreds of millions of dollars for masks, starting with a $495 million allocation that relied on cobbling together funds from different state pots. Under the deal Newsom announced, California would spend on masks alone $990 million — nearly the equivalent value of an up to $1.1 billion relief package the Legislature passed last month.

The governor’s deals are intended to secure 200 million masks per month for two months, with the first ones arriving at the beginning of May, according to a Capitol source.

Of the monthly allotment, 150 million will be the highly sought N95 masks, while 50 million will be surgical masks, Newsom said.

Newsom spoke to his “deep respect and gratitude” to legislators who could help “leverage our investment” in a manner that “protects the taxpayers, as well.”

While legislators applauded Newsom’s aggressive move, some were frustrated that they have received scarce information from his administration on the huge volumes of medical supplies the state has been rapidly stockpiling — especially since the Legislature controls the state’s pursestrings. The governor announced the deal on Rachel Maddow’s MSNBC show Tuesday night.

“It would be great to get a heads-up directly from the governor’s office rather than watching it on national TV,” Assemblyman Phil Ting (D-San Francisco), who chairs the Assembly Budget Committee, said in an interview on Wednesday morning. “We don’t have any information as to how many masks we’re buying, who we’re buying them from, at what price. …What are we obligated? For how long are we obligated?”

An array of private companies and nongovernmental organizations will lean on existing and already-vetted supply chains, many of them stretching to China, to obtain the new burst of masks, Newsom and administration officials said. The administration cited humanitarian organizations like Americares, medical supply companies like McKesson and Cardinal, and global procurement firms Big Mountain Development and JR Resources.

“We’ve leveraged all of those partnerships and relationships to build in to using their pipelines to leverage those to help,” Newsom said. “So, that has been a source of ongoing PPE, particularly masks, but it’s also shields and gowns and other kinds of commodities, both in real time and in our effort to build in the out weeks and the out months additional PPE.”

California also plans to shore up its supply by cleaning and then reusing masks. The state will work with federal authorities and a defense contractor to deploy technology allowing up to 80,000 masks a day to be prepared for a second use. That amounts to just under 2.5 million masks a month, roughly 1 percent of the total mask allocation Newsom touted.

The governor said the technology would allow masks to be sterilized and reused up to 20 times and that the state is already working with hospitals to retain some of their used masks.

But Stephanie Roberson with the California Nurses Association said her organization has examined various sterilization methods, and “we have determined unequivocally that none of these methods are safe or effective.”

“That’s concerning to us,” she said. “The science isn’t there from where we sit.”

Newsom said the state is spending $1.4 billion on personal protective equipment, though it remained unclear Wednesday as to whether the $990 million mask purchase is part of that total or in addition.

California got a stark reminder of the potential pitfalls of the scramble to obtain masks last week, when a health care union’s announced deal to acquire 40 million masks collapsed and yielded a federal fraud investigation.

Ting said that the massive outlay announced by Newsom would necessitate strict oversight — “We’re going to need a little more details before we are able to approve this purchase,” he said — and he said it generates more questions for elected officials who have already struggled to wring timely information from the Newsom administration.

“We understand we’re in crisis mode, so we don’t want to slow things down,” Ting said, “but having said that, we do have legislators that represent areas that haven’t seen anything. So their question is: ‘We hear 41 million masks have been delivered, have any of those have been delivered to my counties, my cities, my district?’ and they just haven’t heard anything.”

Those concerns notwithstanding, health care professionals said the reinforcements would arrive at a time of critical need. Roberson said more masks are needed given that “we literally have nurses dying now,” but she expressed skepticism about new shipments making it to those who need protection the most.

“The stats on Covid-positive health care workers continue to climb at an alarming rate, and so it is a good news the governor is prioritizing PPE by any means necessary,” Roberson said, “but I am still getting daily, daily concerns from our nurses that they are not getting the PPE in their hands.”