Where Are All N-95s Going?
There is an overflow of N-95 masks in the U.S. But they have no takers. How?! Read on.
N95 masks were introduced to most of us at the onset of Covid-19. Amazon searches were filled with queries for masks that could filter out the virus particles.
Soon, these masks went out of stock. Producing countries stopped exporting them and even local grocers started selling duplicates.
Yet, factories in the US got flooded with unsold N95s.
Prices of these life-saving masks still remain higher than pre-pandemic levels and hospital workers are often forced to reuse theirs. But, how did the US get here?
Initially, when demand soared and supply couldn't catch up, it triggered a set of events. Some to control the demand and some to take advantage of the opportunity.
WHO recommended that medical masks like N95 be used only by health workers and those at high risk.
Because of the lower supply, prices of N95s shot up. And so a lot of smaller medical facilities across the US started importing cheaper Chinese alternatives of N95. This is where the trouble started brewing.
Almost 70% of the imported Chinese masks did not meet minimum safety standards, or were counterfeit. A lot of hospitals paid massive bucks for masks that never showed up. So, they stopped trusting manufacturers.
Economists call this the problem of “asymmetric information”. This arises when one side has information and the other side doesn’t.
In this case, there are buyers who don’t know how good a seller’s mask is and only the seller knows whether their product is a counterfeit or the real deal.
And nothing kills demand more than mistrust.
By now, the real certified manufacturers of N95 had ramped up the production. But the situation of high demand and low supply had now changed to high supply and low demand.
Now the masks had only one hope. Only the big hospital chains could be the takers. But they refused. Why? Because they care only about big manufacturers that have factories spread across the country.
The country needed a solution, and so a few manufacturers certified by the US federal agency NIOSH decided to step in to sell directly to consumers and set up their own online platforms. But they hit a giant bump on the road.
Advertising of their products is banned on online platforms, since the Centre for Disease Control (CDC) in the US decided that certified PPEs that actually work should be reserved for healthcare workers only.
So, here we have a product that’s needed by millions, and also an inventory to match that demand. Yet, factories have reduced or halted production, laid-off workers and are running on losses.
So… what now?
Well, one solution would be bulk government purchases, akin to what the Indian government is doing. Or a nationwide effort to integrate supply chains of smaller manufacturers.
It seems as if the entire concept of a free market around N95 masks is on the verge of collapse! Time for the policymakers in the US to revisit their economics textbooks?
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