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Remarks to the ALEC Policy Summit

Alex M. Azar II
Hubert Humphrey Building
December 4, 2020
Washington, D.C.

I believe that we will look back on many elements of our response, including Operation Warp Speed and the progress we made on PPE, not just as unprecedented, but also as uniquely American achievements.

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Thank you for that introduction, Speaker Gunn, and thank you to Mississippi for being a great partner to us throughout this crisis.

Thank you, everyone, for the opportunity to address the ALEC policy summit today.

ALEC’s efforts to inform the work of state governments over the years represent an important insight about American life. There is a major role for the federal government in tackling the challenges we face, but an effective response to any challenge requires discerning where national leadership is needed, and where local expertise works best. Similarly, it requires asking where the government needs to take over, and where we need to let the private sector lead.

This division of labor is recognized throughout the statutes and procedures we have for national emergencies. Many of you know the mantra: federally supported, state managed, locally executed.

This layered approach is included in the pandemic flu plans that I helped write back in 2005 under HHS Secretary Mike Leavitt, all the way through to the pandemic plans that were regularly written and updated under the Obama Administration and the Trump Administration.

Those plans lay out considerations and trigger points for many of the issues we’ve faced this year: mitigating the spread of the disease, scaling up diagnostic capacity, ensuring that healthcare systems can bear the influx of patients, and driving development of vaccines and therapeutics.

What the plans don’t do, however, is lay out how the federal government, state and local governments, and the private sector will actually implement those efforts—as we’ve done in unprecedented ways throughout this year.

Today, I want to explain how we used federal leadership and American ingenuity to execute on one of these key efforts, and one that is of utmost importance to you as state leaders: ensuring that our healthcare system has the supplies needed to care for patients.

But first, it’s helpful to understand the strategic intent that I laid out in January: delay and flatten the curve so that we could remain within the capacity of our healthcare system. We know that mortality increases when the health system is at or beyond its capacity in the ability to deliver care to individuals, and we saw this in Wuhan and in northern Italy.

Through our aggressive and early efforts to delay the spread of the disease into the United States, we bought ourselves precious time to expand our healthcare system’s capacity, such that we were able to stay within it.

Because of these efforts, the mortality rate for American patients over 70 with COVID-19 has dropped more than 80 percent since April. One of the most accurate and comprehensive ways to measure the cost of the pandemic—excess mortality—was substantially lower across all ages in the U.S. from April to June than in Spain, the U.K., Belgium, Italy, and the Netherlands.

Every life taken by COVID-19 is a tragedy. We mourn the Americans we have lost, and the deep costs that the virus has imposed on our country.

But we should be proud of the work that’s been done by heroic healthcare workers and public servants who made sure that American patients got the care they needed.

Today, I’ll explain how we’ve ensured that those frontline workers have the supplies they need, especially personal protective equipment, or PPE.

In just the 11 months since this crisis began, we have entirely rethought how we backstop America’s hospitals during emergencies—solving a challenge greater than anyone expected it to be.

To understand that challenge, I’ll first explain where we began—with the asset known as the Strategic National Stockpile.

Then I’ll walk through the actions we took in the very early days of the pandemic, the ways in which we boosted supplies of PPE, and how we ensured that supplies were going where they needed to go.

Finally, I’ll explain how we’ve used this year’s lessons to begin reinventing this whole enterprise in real time, creating a next-generation Strategic National Stockpile, or SNS 2.0.

Most Americans learned of the Strategic National Stockpile for the first time this year. I happen to be rather more familiar with it because I was at HHS when its predecessor, the National Pharmaceutical Stockpile, was first renamed the Strategic National Stockpile, in 2003, and then transferred to the Department of Homeland Security the same year, and then transferred back to HHS in 2004. Isn’t government grand?

The SNS was not designed to supply the entire country during a nationwide public health emergency. Rather, it was originally conceived—and supplied—to meet the needs of a few state and local governments when healthcare systems were overwhelmed by discrete healthcare emergencies.

To put things in perspective, the entire American healthcare distribution chain each year has revenues of nearly $800 billion. The SNS had an acquisition budget of about half a billion dollars a year.

It was always going to be a drop in the bucket in comparison to a national healthcare system stressed by a pandemic.

The SNS focused—including during the Trump Administration—primarily on acquiring supplies of countermeasures where the federal government would be the unique purchaser, such as anthrax countermeasures, smallpox vaccines, products for dealing with chemical nerve agents, and the like.

There were supplies of PPE in the stockpile, but not enough to meet the needs of the whole country in a nationwide pandemic--not even a small fraction of that need. On top of that, about three-quarters of the SNS supply of N95 respirators was disbursed to help with a national shortage during the H1N1 flu response, and never replenished, leaving us with about 12 million N95s when the pandemic began.

Further, a couple of aspects of the healthcare supply chain system made this situation even more complex.

First, hospitals and healthcare distributors, like so many other businesses, have become incredibly efficient, typically operating on a just-in-time delivery system. This is an efficient but fragile system. Even during ordinary times, it’s not uncommon for hospitals to see their orders only partly filled by suppliers.

Second, most of our medical supplies were made outside the United States, because of lower labor costs, raw material costs, and less strict environmental regulations. By one industry estimate, about 80 percent of the world’s supply of PPE is made in Asia.

To understand the approach we took to this challenge, we have to go back to the beginning, as we were first learning about the virus from media reports out of China. Not long after we knew it had pandemic potential, we were already working to address potential supply chain issues.

I spoke with our CDC Director, Bob Redfield, about the virus for the first time on January 3, after he’d had multiple unofficial, but concerning, conversations with his Chinese counterpart.

The same day, at my direction, HHS notified the National Security Council, which stood up regular policy coordination meetings on January 14. Then, we stood up a cabinet deputies committee under the NSC’s direction to deal with complex border control, quarantine, and repatriation issues.

This interagency body, which was run initially by the Deputy National Security Advisor and then by the White House Chief of Staff, eventually was labeled the White House Coronavirus Task Force, led by White House officials like any interagency policy coordinating body.

On January 23, two days after the first case was identified in the United States and three days after China officially admitted the virus was being transmitted from human to human, I directed our Assistant Secretary for Preparedness and Response, or ASPR, to stand up a formal emergency planning structure under Emergency Support Function 8, the public health and medical part of the federal response.

The next day, ASPR formed three government-wide task forces—on healthcare system capacity and resilience; development of medical countermeasures like diagnostics, therapeutics, and vaccines; and on supply chains. In our daily HHS coronavirus operations group, I personally directed the FDA leadership to be in touch with all regulated entities to determine whether we were at risk of supply shortages due to disruptions in China. The initial feedback from FDA’s outreach on one of the areas I worried about most—generic drugs—was that U.S. suppliers had built up a significant reserve in preparation for the Chinese New Year, so we had a good backup supply.

The same week, HHS leaders like Dr. Bob Kadlec, head of ASPR, began conversations with manufacturers of N95 respirators in the United States. They had one message to manufacturers: Make more respirators, and we’re going to find a way to buy them.

In January, the United States was producing N95 respirators at a rate of about 20 million per month.

By March—before there was significant community spread in the United States—industry players informed us that they were increasing to nearly triple that rate, to about 50 million a month.

This work began when there were just 8 cases in the United States and 125 cases in total confirmed around the world outside of China—before I had declared a Public Health Emergency on January 31.

We had essentially leapt ahead of any instructions in the “pandemic playbook” you may have heard about from the previous administration—a playbook that does not mention boosting U.S. capacity for PPE at all as a trigger when a foreign-originating threat begins spreading around the globe.

The next mention of PPE in that particular playbook comes once a state or local health system has been overwhelmed or their requests for assistance have come in. It suggests that the federal government “determine whether Strategic National Stockpile resources are necessary.”

As I explained, actually keeping American hospitals supplied would require going far, far beyond that. Throughout February and March, we continued steps to expand supplies.

To secure funding, I tapped into the Infectious Disease Rapid Response Fund in late January, and notified Congress the following week that I intended to use my full transfer authority to deal with the outbreak. 

In early February, I notified OMB that we would need a large supplemental appropriation to invest in vaccines, diagnostics, and therapeutics, to contract with PPE manufacturers, and to fund the massive new and unprecedented border control initiatives we had initiated.

Back in February, we also began examining Defense Production Act authorities to ensure we could fully mobilize American industry and prevent the movement of critical supplies out of the United States.

On March 2, after several weeks’ worth of collaborative work between FDA and CDC, the FDA received and quickly responded to a CDC request to authorize the use of industrial N95 respirators for use in healthcare settings. This created the potential to use millions of additional N95s in new settings where they were badly needed. 

We authorized systems to enable reuse of N95s, and created regulatory flexibilities to enable the conservation of precious PPE. We developed COVID-19 cohorting techniques to organize COVID-19 patients together and reduce the need for PPE.

Starting early in March, we worked with American clothing manufacturers to spool up the production of reusable, multilayered cloth masks that could stand in for surgical masks. By the end of March, for instance, Hanes had retrofitted production lines to make millions of these masks per week.

On March 4, we published a notice of intent to purchase 500 million N95s for the SNS, helping to drive more manufacturing investments and expansion—at a time when there were still just about 100 COVID-19 cases confirmed in the United States and before we had secured a supplemental appropriation from Congress to pay for these supplies.

We also needed supplies that had never been part of the SNS, including swabs. In March, literally all of the swabs being used in the United States for COVID-19 testing were made by one northern Italian company. You might remember what was happening in northern Italy at the time.

So we worked with a company in Maine, Puritan, to more than double their production of swabs starting in April, eventually procuring tens of millions of made-in-America swabs for testing this year and paying to build an additional factory for them under the Defense Production Act.

But, even as we worked to spur more production, we also needed to ensure that the private-sector supplies of PPE were going where they were needed most.

To do that, we had to know where those needs were: Where were hospitals taking in the most COVID-19 patients, and where were supplies being shipped, stockpiled, or running low?

But we also needed to know, as I mentioned, where product was flowing, which required visibility into the supply chains of medical distributors. We’d started talking to them in February and early March, but we needed something more systematic. So, in mid March, I called up a colleague of mine, Susan DeVore, who leads one of America’s largest hospital group purchasing organizations, and we brought together the CEOs of the major medical distributors, suppliers, and group purchasing organizations to determine how we could work together to get complete visibility into the U.S. supply chain and allocate product where it was needed most.

In part by invoking a provision in the Defense Production Act—and in part by making sure we had plenty of antitrust attorneys on that call—we reached an agreement that the distributors would provide HHS with real-time data about where their product was going.

Bringing together the private sector like this and creating a sort of supply chain control tower, with visibility into where supplies were going all over the country, was a concept never even mentioned or considered in the pandemic planning frameworks.

Then, in order to understand where the virus was hitting health systems hardest, we needed near real time data on the number of COVID-19 patients in hospitals. Starting in March, we obtained that through a reporting system that CDC already had for other purposes and through a second, new direct reporting system we set up. Hospitals could use that second reporting system, through a vendor called TeleTracking, to share not just how many COVID-19 patients they had but also their stocks of PPE.

Even once we knew where we needed to send supplies, getting supplies to the United States was more complex than you might have expected. Factories in China, which made the bulk of American healthcare’s PPE supplies, had been shuttered during COVID-19 lockdowns. Even when these factories restarted, the typical supply chain could take about 45 days to deliver product to hospitals in the United States by ship. We needed that product on our shores within days.

So, as we were ramping up coordination with FEMA, we called up the owner of the biggest domestic and international supply chain there is: the U.S. military. They gave us the head of logistics for the Joint Chiefs, Rear Admiral John Polowczyck. He arrived at HHS with a team on March 9, and he served as head of our supply chain task force throughout this crisis, including at FEMA during the period when they were running the National Response Framework.

Together, we launched Operation Airbridge, to charter aircraft that would bring desperately needed PPE from factories abroad to where it needed to go in the United States. By getting these supplies here and marrying that up to the data HHS was collecting, we could redirect supplies where they were needed most—actions that undoubtedly saved lives and helped protect healthcare workers who were at the greatest risk.

Throughout this time, requests were flowing in from states about needed PPE, as part of the traditional system the SNS had for making requests. But states had an incredibly difficult time actually knowing what needs they had, which meant we had an equally difficult time knowing where we needed to send the limited supplies available. We literally had states like New York demanding ventilators, while ventilators sat in their warehouses.  Some states actually deployed members of the National Guard to hospitals to take inventory of their PPE stocks.

As much progress as we made, we needed to be better at distributing PPE nationally, we needed a more detailed picture of where it needed to go in real time, and we needed to keep expanding domestic production.

That’s where—in a remarkable feat of ambition—we decided, during a pandemic, to start building a next-generation Strategic National Stockpile.  As a business leader, I’m well known as someone who rebuilds the race car while competing in the race. That’s what we had to do here.  As a learning organization, we had to recognize that the past pandemic plans, the existing public health doctrine, and the structure of the Strategic National Stockpile were inadequate to this unprecedented task.

SNS 2.0 would have a broader and deeper reserve of medical supplies, it would have a supply chain control tower with full visibility into hospitals’ own inventories and their supply chains, and it would help spur domestic production. Today, while that project is not yet complete, it has already dramatically increased our preparedness.

At the beginning of the pandemic, we had less than a one-month reserve of nationwide supply for the products we stocked. And we stocked fewer than one-third of the types of products needed to battle a pandemic like this. By the time SNS 2.0 is complete, we plan to have 90 days’ worth of supply of 100 percent of those products.

In January, we had 12 million N95 respirators in the Strategic National Stockpile. Today, we have 150 million—and these supplies have increased even while we’ve ensured that private sector orders are being met. For the first time ever, we have reserves of testing supplies, such as swabs, in the SNS.

Now, you might wonder, where are you going to put 3 months’ worth of healthcare supplies?

We’re making use of smart private-sector solutions to find the most sustainable ways to store these products, including something called vendor-managed inventory. Essentially, we’ll pay companies to keep on hand a supply of the products we need. This ensures the products are there when we need them, but that inventory is constantly turned over so that items don’t expire. This is the approach I used when I acquired hundreds of millions of pills of ciprofloxacin during the anthrax attacks after 9/11.

We’ve now formalized the supply chain control tower that we started creating in March, giving us remarkable visibility into medical supply chains. On top of that, through reporting mechanisms we’ve created, we can now know on a weekly basis what hospitals have on their shelves in terms of 5 different PPE categories and 38 pharmaceutical products.

I mentioned earlier how we boosted production of N95s in America to about 50 million a month by March. Thanks to new contracts we’ve awarded and new regulatory approvals for manufacturers by NIOSH, we’re now making about 160 million N95s a month here in America.

In July, we awarded a contract to support the opening of a medical glove manufacturer in New Hampshire—before which there was literally no American-owned company making medical gloves anywhere in the country. They’re now making approximately 50 million gloves a year.

As a result of all of this work, we are dramatically better prepared to support hospitals and nursing homes than we have ever been before. As case counts have risen in the United States, we have been well-prepared to meet health systems’ needs.

Because of increased production and greater coordination, we’ve seen a substantial decline in requests to the SNS this summer and fall. At the beginning of this month, our data suggests 92 percent of states have on hand a 30-day supply of PPE or greater in their own stockpiles. Fifty percent have on hand a 60-day supply or greater. Major hospitals report having 14- to 30-day reserves. I personally have visited hospitals that have filled their beautiful atriums with PPE supplies, as a makeshift warehouse—it’s not pretty, but it works.

This represents a real success not just in terms of federal capacity, but a layered approach: It’s best for hospitals themselves to have reserves on hand, because there are always some delays in medical supply chains.

States benefit from having their own stockpiles to meet the needs of essential personnel that are traditionally not within the purview of a federal public health response, such as EMS or law enforcement. Everyone has a role to play—and together, we have made incredible progress.

Some will still argue that the PPE problem has not been solved because markets for these supplies are still tight. What this misses is that, during an ongoing emergency, no problem is permanently solved.

It’s like saying we failed to equip our military during World War II because it never became as easy to find bullets in 1945 as it was in 1939. What we needed to do was ensure supplies got where they were needed most, expand the availability of those supplies, and build a buffer so that dramatic surges in demand could be met—and that’s exactly what we’ve done.

Of course, PPE is not the whole story. On top of ensuring that our hospitals had access to PPE, we’ve also been able to significantly expand healthcare capacity, through new flexibilities, deregulation, and deployment of federal assets. Today, as case counts rise in many places, the greatest strain on our healthcare system at the moment is limited supply of personnel.

We’ve been providing flexibilities to expand the pool of available workers, funding contracts for temporary healthcare workers, enabling the deployment of national guard healthcare workers, and, as a last resort, deploying federal providers to those places hardest hit.

Thankfully, there is an end in sight, as we approach the rollout of safe and effective vaccines in a matter of days or weeks, thanks to the incredible work we’ve led under Operation Warp Speed.

I believe that we will look back on many elements of our response, including Operation Warp Speed and the progress we made on PPE, not just as unprecedented, but also as uniquely American achievements.

Because of the heroic achievements of Americans from every walk of life—from our heroic healthcare providers who haven’t had a day off in months, to manufacturing workers doing overtime, to ordinary people making sacrifices to protect loved ones—we have saved so many lives, and we will get through this crisis.

Thank you for the work that every one of you has done as part of our response so far, and know that, because of your efforts, victory is in sight. Thank you.

Content created by Speechwriting and Editorial Division 
Content last reviewed on December 4, 2020