This is an excerpt from Medically Necessary, a health care supply chain newsletter. Subscribe here.
The deal: Over the last week, the Department of Defense, in coordination with the Department of Health and Human Services, has inked contracts worth $1.8 billion for COVID-19 tests with several manufacturers.
On Friday, the DOD announced $647 million in contracts for over-the-counter COVID-19 tests from OraSure, Quidel, Abbott Laboratories and Intrivo. On Monday, the department announced $1.2 billion in additional contracts for rapid, point-of-care tests with Abbott Laboratories and Celltrion.
The announcements follow a commitment from the White House to invest heavily in COVID-19 testing to stop the spread of the virus and help people return to work, school and other daily activities.
Background: Earlier this month, the White House announced plans to increase testing at homes, pharmacies and doctors’ offices.
That plan includes purchasing 280 million rapid, point-of-care and over-the-counter COVID-19 tests worth nearly $2 billion. The White House also plans to use the Defense Production Act to ensure manufacturers can produce enough tests.
Those tests would be used for long-term care facilities, community testing sites, critical infrastructure, shelters, prisons and jails, according to the plan.
The delta variant increased demand for testing in August and September, according to medical distributors.
Following the release of the White House’s COVID-19 plan, diagnostic test manufacturers say they are ramping up production quickly.
Several test manufacturers idled factories and furloughed workers in May and June when demand for testing fell.
The details: The contracts for over-the-counter tests were funded through the American Rescue Plan and are supposed to supply “critical medical resources to the nation,” according to a Defense Department press release.
The four test makers will provide 60 million tests. OraSure and Quidel will supply the bulk of the tests, contributing more than 20 million units each.
Deliveries of those tests should begin in October and will continue through September 2022.
According to a Reuters report, the rapid, point-of-care tests will go to nursing homes and other high-risk populations as called for in the White House’s COVID-19 plan.
A Health and Human Services representative told Bloomberg that Abbott will provide between 13.4 million and 158 million tests. Celltrion will supply 19 million to 232 million tests, according to the Bloomberg report.
In total, all the recent contracts could result in up to 450 million tests for the federal government — or slightly more than one test per person in the U.S.
The demand: The White House COVID-19 plan places a big emphasis on convenient, rapid testing.
The Biden administration hopes to create a rule requiring large employers to vaccinate workers or test them weekly. The plan also encourages schools and entertainment venues to increase testing.
Those measures would likely increase demand for testing further. But the federal government hasn’t released details on how those programs will work, so it’s difficult to estimate the impact or evaluate whether enough tests are available.
US and EU launch task force focused on supply chain for COVID-19 vaccines, therapeutics
The news: The U.S. and the European Union are launching a task force dedicated to fixing bottlenecks in the supply chain for COVID-19 vaccines and therapeutics. The task force, which was first proposed in June, met in Washington this week to define its mission.
The task force’s goals are to assess demand for COVID-19 vaccines and drugs, monitor supply chains, address bottlenecks and encourage initiatives to increase production.
Zoom out: The task force is part of the United States’ and EU’s larger plan to end the pandemic. In addition to the supply chain task force, the governments have agreed to:
- Share billions of vaccines with lower-middle-income countries.
- Cooperate on the delivery and administration of vaccines, which includes coordinating cold chain logistics and immunization programs.
- Establish a fund to finance efforts to fight COVID-19 around the world.
- Create a surveillance system to detect future pandemics.
- Invest in vaccine manufacturing capacity in low- and lower-middle-income countries.
The details: An outline describing the task force is light on details, but mentions that activities could include preventing export restrictions and encouraging the sharing of know-how and technology through a World Health Organization program.
Some drugmakers oppose the idea of sharing intellectual property to help boost vaccine production around the world.
Earlier this year, European Union governments blocked the export of COVID-19 vaccines to Australia, according to Reuters. Some overseas vaccine manufacturers also called the United States’ use of the Defense Production Act a type of export restriction.
More climate commitments from health care suppliers
Last week, I wrote about hospital systems pressuring their suppliers to reduce greenhouse gas emissions in the health care supply chain. This week, two large health care suppliers made new commitments to reduce their carbon footprints.
Cardinal Health recently committed to halving its direct emissions and emissions associated with power use by 2030, using 2019 emissions as a baseline.
“Our approach to doing business must help protect our planet for future generations,” Cardinal CEO Mike Kaufmann said, according to a press release.
In addition to cutting emissions, Cardinal has been working with Business for Social Responsibility (BSR) to map out climate risks and opportunities over the next decade. The effort considered several future scenarios ranging from 1.5 degrees Celsius to 4 C of warming.
The effort found that the most acute climate risks for Cardinal include hurricanes, floods, extreme heat and wildfires, threatening warehouses and supply routes. The report also notes that, going forward, customers may start demanding more climate friendly products.
Cardinal cut its emissions in its 2020 fiscal year, partly due to the economic slowdown caused by COVID-19. The company hasn’t released emissions data for the most recent fiscal year because that data is still being evaluated by an independent company.
Previously, the company only calculated a small portion of its emissions associated with outside organizations, such as suppliers or logistics companies. Cardinal is hoping to get a more complete picture of those emissions going forward.
Becton, Dickinson and Co. (BD) went a bit further, pledging to reach net zero emissions by 2050.
“We are reducing the environmental impact of our product portfolio by changing the way we approach plastics and packaging materials and working closely with our supply chain partners to reduce our carbon footprint,” BD CEO Tom Polen said, according to a press release.
The company had already committed to reducing its direct emissions and emissions related to energy use by 46% before 2030, using 2019 as a baseline.
The new commitment includes a much broader range of emissions, including emissions generated by BD’s supply chain and by doing business with other companies.
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