Recently released surveys of nurses and dentists illustrate health care providers continued inability to quickly procure certified and authentic personal protective equipment. (PPE). A survey of more than 1,000 dental practices released earlier in May found that 90% of those surveyed were concerned about procuring PPE.  A survey of over 23,000 nurses found that 87% had to reuse a single-use PPE during the period between April 15-May 10. This shortage corresponds with a high rate of infection for nurses even though only 16 percent of those surveyed had been tested for COVID-19.  Add the demands of nursing homes for PPE and there is an unprecedented supply shortage with no end in sight.

While media coverage of the PPE shortage has subsided, skyrocketing worldwide demand is coupled with significant supply issues. The lack of inventory will certainly escalate in the Fall when most experts agree the number of COVID-19 cases will increase. Even now as elective surgery is gearing up and dentists’ offices are reopening around the country, it remains challenging for providers to procure adequate supplies of PPE.

Compounding the problem is the fact that China, the likely source of the COVID-19 pandemic, has also been the world’s largest exporter of PPE. In the years prior to the pandemic,  Chinese-manufactured PPE will remain a critical part of the U.S. supply chain until a vaccine is universally available. As new U.S. businesses look to enter the market and import PPE in from China to the U.S., stories of fraud and price gouging abound: Health care systems with established vendors importing from China have seen price increases of 500%.

In addition to exercising extreme due diligence to prevent becoming the victim of fraud, anyone seeking to enter this market must be up to date on the most recent U.S. rules and regulations as well as developments in China.  Of course, importers must comply with U.S. Customs requirements and China’s export requirements.   For those considering the importation of PPE, all U.S. Food and Drug Administration (FDA) requirements must be met as well. Under ordinary circumstances, requirements for PPE hinge on the specific type of PPE being imported.  It is more critical than ever to have up to date legal counsel as both FDA’s and China’s requirements have been continually subject to change since the beginning of the pandemic.

Facemasks, face shields and N95 respirators have been in particularly short supply for health care providers in hospital and nursing home settings. In guidance issued in April, the FDA recognized the shortage caused by the pandemic:

[W]hen alternatives, such as FDA-cleared masks or respirators, are unavailable, individuals, including healthcare professionals, might improvise PPE. FDA does not intend to object to individuals’ distribution and use of improvised PPE when no alternatives, such as FDA-cleared masks or respirators, are available.

The myriad and complexity of rules and competing regulatory bodies governing certain types of PPE, such as face masks and respirators, is boundless.  An unsuspecting market participant can quickly run afoul of these often-times confusing regulations without proper guidance.  In this sub-area of PPE alone there are no less than four (4) government agencies including the FDAthe Centers for Disease Control and Prevention (CDC)the Occupational Safety and Health Administration (OSHA) and The National Institute for Occupational Safety and Health (NIOSH), and each provide sometimes contradictory regulation and oversight.

For example, the FDA regulates masks and respirators as devices when they meet the definition of a device set forth in section 201(h) of the Food, Drug and Cosmetic Act (FD&C Act), because they are devices when they are intended for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease.  PPE that falls within this definition must follow FDA regulations and meet specific performance standards.  For facemasks, face shields, and N95 respirators that are intended for use by the general public or other industries such as construction, FDA marketing authorization and the FD&C Act do not apply.  However, PPE used in health care and other industries is also subject to guidelines issued by OSHA.  OSHA requires employers to provide PPE to protect against certain hazards at work, including blood or infectious material. NIOSH, housed within the CDC, certifies and approves PPE for occupational use.

To determine whether PPE you may be considering procuring or supplying meets the definition of a device under the FD&C Act, the FDA considers the following three (3) factors:

1) they are labeled or otherwise intended for use by a health care professional;
2) they are labeled or otherwise for use in a health care facility or environment; and
3) they include any drugs, biologics, or anti-microbial/anti-viral agents.

Compounding the complexity in this area even for lawyers let alone “civilian” market participants on the buy or sell side of the PPE transaction, the FDA has issued numerous Emergency Use Authorizations (EUA) designed to mitigate the shortage by altering enforcement or regulatory requirements for equipment used by both health care providers and the general public.  Face masks are either categorized as surgical or non-surgical masks.   Non-surgical masks do not function as PPE as they are designed solely for source control and do not filter particles or provide protection from fluid.  To increase the supply of non-surgical face masks (not to be used as PPE) for the general public pursuant to the CDC guidance, the FDA has stated that regulatory approvals will not be required when the use of the face mask will not create an undue risk in light of the public emergency. The FDA website includes the following statement:

During the COVID-19 public health emergency, a face mask for a medical purpose that is intended for use as source control, is not labeled as a surgical mask, and is not intended to provide liquid barrier protection, may be authorized under the ‘umbrella’ EUA for face masks without submitting documentation to the FDA if the face mask meets the eligibility requirements.  A face mask authorized under this EUA must comply with the Conditions of Authorization (Section IV) of the EUA.  Please note that this EUA does not authorize face masks for use as personal protective equipment.

The FDA has also eased regulatory requirements for surgical face masks which are intended to provide liquid barrier protection as long as certain requirements including designated performance standards and labeling are met.  N95 respirators have been the subject of several EUAs, and the FDA has now allowed previously unauthorized respirators to be used by health care workers.  Respirators are personal protective equipment that tightly fit the face and filter airborne particles to protect health care workers.  They provide a higher level of protection against viruses and bacteria when properly fit-tested.  OSHA mandates that employers “fit test” when an employee is required to wear any tight-fitting respirator on the job.  These types of respirators only perform properly if there is a tight seal around the face and neck. OSHA has also eased its requirements for PPE and fit testing as a result of the shortages.

Along with the FDA, NIOSH also certifies N95 respirators. The FDA has recognized certain NIOSH-approved disposable respirators (Filtering Facepiece Respirators (FFRs), Power Air-Purifying Respirators (PAPRs) and reusable respirators); expired or decontaminated respirators; and certain non-NIOSH-approved respirators, including certain respirators from China.  For each category of respirator, there are different requirements that allow for use in the health care settings.

In addition, the EUAs set forth procedures for additions to the authorized list.  However, on May 6, 2020, in response to concerns about sub-standard products, the FDA had to limit to 14 from 80 previously authorized FFR that were recognized in an April 3rd EUA.  On June 6, 2020 that EUA was updated yet again in response to concerns about which respirators, intended as single-use, could be appropriately decontaminated for additional use.  The National Personal Protective Technological Laboratory of the CDC, which conducted the initial testing, reported in the May 6 EUA that some of the tested devices may have been counterfeit but was unable even to verify the actual manufacturer.  The updated June letter to health care providers states that even the respirators that remain on the approved list cannot be decontaminated for another use.  NIOSH certified N95 respirators, normally single-use PPE, have been approved for additional use if a EUA recognized decontamination process is used.  Accordingly, retaining counsel early to perform careful due diligence and to provide a road map to avoid potential legal issues is strongly recommended if you are or plan to be an importer of N95 respirators into the U.S.

The determination of whether the N95 respirators meet the FDA definition of a medical device is also relevant to compliance with U.S. Customs and Border Protection (CBP) regulations.  CBP requires that all N95 respirators entering the U.S. include the following: 1) the submission of entry documents; 2) payment of estimated duties, including any additional tariffs (determined by the Office of U.S. Trade Representative (USTR)) on the goods; and 3) examination by, and release of, the goods from CBP.

Not surprisingly, the U.S. oftentimes tense relationship with China is adding to the risks associated with importing these items.  As of March 31, China limited the export of PPE to manufacturers that have proper certification by the national medical products registry, including those in the U.S.   In addition, all exports of PPE are subject to inspection for review of proper documentation. While these actions were stated to be a quality control effort after several shipments of defective PPE, critics noted that the majority of the approved manufacturers are Chinese state-owned enterprises (SOE).  These SOEs have limited manufacturing capacity, and while there are other manufacturers who appear to qualify, the certification process routinely takes one year.

To protect any transaction involving the importation of N95 respirators, legal counsel should be engaged early and throughout the entire process. P rior to entering into any agreement to import N95 respirators, legal counsel can assist with due diligence and investigation of potential suppliers.  Once a business supplier has been identified, the contract must address the litany of risks associated with importing these goods. As discussed, there are both substantial commercial and regulatory risks to be identified.  After undertaking extensive due diligence, the agreement can be drafted to mitigate the risk of fraud. On the regulatory side, legal counsel will guide you through compliance with the multitude of enforcement authorities and keep you apprised of the rapidly changing regulatory landscape.  With a huge demand building and supply currently limited, only those with trusted contacts and legal counsel should attempt to import from China during this challenging time.

Contact  Carolyn Kurtz, one of our Partners, to discuss any concerns you may have concerning your current or anticipated PPE business at ckurtz@zplaw.com.