As Illinois Pays Big For Some Ventilators, One Supplier Says Disruption Is To Blame For High Prices

medical supplies New York
Stacks of medical supplies pictured in New York on March 24, 2020. Illinois has spent millions to secure scarce medical supplies since the pandemic began. John Minchillo / Associated Press
medical supplies New York
Stacks of medical supplies pictured in New York on March 24, 2020. Illinois has spent millions to secure scarce medical supplies since the pandemic began. John Minchillo / Associated Press

As Illinois Pays Big For Some Ventilators, One Supplier Says Disruption Is To Blame For High Prices

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Newly-revealed state data show the tally for Illinois’ spending on the COVID-19 pandemic is $174 million and growing, a cost Gov. JB Pritzker said Tuesday is the price for the White House’s disengagement in helping states acquire enough medical supplies.

The total includes massive spending on N95 masks, ventilators and hand sanitizer by Pritzker’s administration. The numbers are laid out on a new digital portal Democratic state Comptroller Mendoza created to track spending.

The sticker shock came as COVID-19 deaths continued their surge upward in Illinois. Pritzker’s administration announced 74 additional deaths Tuesday, bringing the statewide death toll from the coronavirus to 868.

The single largest beneficiary of the state’s rush to acquire new equipment to deal with the rising COVID-19 caseload is a Houston-based contractor, David Lolis. State records show Pritzker’s administration paid $13 million to Lolis’ firm, Atomic Blue LLC, for 200 ventilators due to be delivered to the state by next Monday.

That breaks down to $65,000 per ventilator – a price roughly equivalent to what it would cost to buy a higher-end new Mercedes automobile.

The Democratic governor said ventilators used to cost half as much — at a range of $25,000 to $40,000. But the global demand for ventilators left very few available for purchase, driving up the price.

In an interview with WBEZ, Lolis said he was contacted by Pritzker’s office and defended the prices, citing the same supply chain constraints as the governor.

A Darien village trustee knew Lolis has contacts in the Chinese manufacturing world, where the ventilators bound for Illinois are built, and gave Pritzker Lolis’ name, Lolis said.

Lolis, whose company manufactures germicidal lamps, said he contacted more than a dozen facilities in China about Illinois’ desire for ventilators, but the prices were roughly all the same — or higher.

New quarantine-certification requirements imposed by China on exports have caused delays, he said. There’s a scarcity of raw supplies needed to produce ventilators, transportation networks are destabilized, and an unprecedented worldwide demand, all combining to disrupt supply chains. That causes prices to skyrocket, he said.

“What used to be smooth and fluid becomes crunchy with a wrench in it,” Lolis said, describing the path to move goods from China to the U.S during the pandemic.

Two other state contracts appear in Mendoza’s portal for ventilators, including $6.34 million to SKS Healthcare Supplies and Equipment for 300 ventilators, and $7.45 million to ReMED Services LLC for 1,000 ventilators. Both appeared to represent far less expensive deals for the life-saving equipment that’s on short supply.

The state also paid close to $1.8 million to charter two round-trip flights to Shanghai, China, between Wednesday and next Monday. That was to transport the supplies needed in the state’s COVID-19 response.

Pritzker has complained repeatedly that the state is paying inflated prices for scarce medical supplies – sometimes three to four times more than they ordinarily would be. But his administration has previously declined to release specifics on those contracts, saying the state is in competitive bidding wars against other governments.

The governor has placed blame for that inflation on President Trump’s unwillingness to invoke a federal law on a widespread scale to force private companies to manufacture equipment needed on the pandemic’s frontlines.

Asked Tuesday whether the high prices amounted to price-gouging, Pritzker told reporters at his daily briefing that his administration had little choice but to pay what the market was charging for what little supplies and equipment were available.

“If it’s price gouging and we can identify it as such, we’re turning that information over to the attorney general. What I would say is this is the market every state has been thrown into,” Pritzker said. “This is what I’ve been talking about for a month now: that had the president put in place the Defense Production Act to help us with all these items, we wouldn’t be paying $5 or $6 sometimes for an N95 mask that in a normal circumstance costs 85 cents or a dollar.”

“The same is true for some of the ventilators that we’re acquiring. A typical ventilator that’s useful in an [intensive care unit] situation, the price starts at $25,000, maybe up to $35,000 or $40,000,” he said. “When we’re paying more than that, that’s typically because the market has bid up the prices for any available ventilators.”

“Let me be clear: There are very few ventilators available in the entire world. We are acquiring whatever we can so that we’re ready in the event there’s a spike in ICU beds and a need for ventilators,” the governor said.

In a statement, Mendoza said her office would continue to push pandemic expenditures to the front of the line and added the portal’s design is to show the cost of the state’s emergency response.

“As long as this unprecedented public health crisis continues, my office will prioritize payments for the tools and supplies our frontline health care workers need to protect themselves, their patients and our communities,” she said. “I hope our online portal showing Illinois’ investment in fighting this deadly virus will help drive home the message that none of this should be taken lightly and that people need to stay home and stay safe.”

Other developments on the state’s COVID-19 frontlines include:

  • Illinois’ flattening curve: Pritzker released new data that showed this wave of the pandemic appears to be cresting. On March 22, new COVID-19 cases were doubling roughly every two days. As of Sunday, the caseload was doubling every eight days.

    “The fact that our doubling rate continues to increase in every metric is a clear demonstration that there is a deceleration of virus transmission,” the governor said. “We are, in fact, bending the curve.”

    Additionally, a week ago, Pritzker said the percentage of intensive care beds occupied by virus-stricken patients jumped from 35 to 43%. As of Tuesday, data from his office showed the percentage dropped to 40%. Likewise, a week ago, the percentage of COVID-19 patients connected to ventilators rose from 24 to 29%, the governor said. On Tuesday, 25% of ventilators statewide were being used by COVID-19 patients, Pritzker said.

    “Both of those numbers are evidence of positive trends,” the governor said.

  • Big budget hole: Pritzker teased that he will have more to say later this week on the subject of the financial hit the state is taking in response to the COVID-19 pandemic, but he also stated the brutal truth.

    “No one should mistake the fact that this is going to be a very, very difficult fiscal financial challenge for the state of Illinois,” Pritzker said. “It’s nobody’s fault. It just is where it is and we’re gonna have to deal with it.”

    The governor’s stay-at-home order launched on March 21 is expected to sharply erode state sales tax revenues because of the mass closure of businesses, and resulting widespread layoffs are likely to have an impact on state income taxes. Both revenue streams represent Illinois’ biggest money-generating taxes. Additionally, state gambling revenues have been shut off since Illinois casinos went dark on March 16.

    Pritzker asked residents to contact their federal representatives in Congress to advocate for another stimulus program meant to help states with their budget holes created by stay-at-home orders.

Dave McKinney and Tony Arnold cover Illinois state politics and government for WBEZ. Follow them on Twitter @davemckinney and @tonyjarnold.