Chinese supplier Siyang HolyMed outsourced some of its surgical gowns production to a non-registered, non-qualified facility where sterility could not be assured — sending hospitals scrambling after Cardinal Health (NYSE:CAH) recalled 9 million of the gowns after learning of the problem.
That was the story Dublin, Ohio–based Cardinal Health disclosed in a news release out after the close of stock trading today, saying that it terminated its relationship with the FDA-authorized Chinese supplier after discovering the problem in December 2019.
Cardinal Health officials apparently already knew that Siyang HolyMed could be problematic. In spring 2018, the company learned that the supplier had outsourced some of its production to a non-registered, non-qualified facility — but a quality review supported by lab testing concluded the move hadn’t impacted the products, according to Cardinal Health.
Said Cardinal Health: “Based on the results of the quality review, the company determined a field action was not necessary, and therefore did not coordinate any such action with the FDA.”
For now, Cardinal Health is expecting a $96 million quarterly charge because of the recall. The company also said today that it is recalling 2.9 million procedure packs manufactured between September 2018 and January 2020 that contain affected gowns — a subset of the 9 million previously announced.
“I apologize to patients and our customers. We understand the gravity of this situation and the disruptions to the healthcare system that will impact patient care,” said Cardinal Health CEO Mike Kaufmann.
The FDA announced earlier this month that it is working to assess quality issues surrounding surgical gowns and the PreSource procedural packs that contain them. The agency said it is seeking to identify alternative surgical gowns to keep clinical care operations working smoothly — with FDA saying at the time that it wasn’t aware of anyone harmed because of the problem.
For its part, Cardinal Health is taking a number of actions to deal with surgical gown shortages:
- Increasing manufacturing of similar and replacement products;
- Offering more protective AAMI Level 4 gowns to help bridge the supply gap;
- Working to identify alternatives — including in many cases working with industry partners who offer comparable products;
- Mobilizing employees to work directly with healthcare providers to replace gowns and procedure packs.
“We are fully committed to making this right, and we are doing everything we can to ensure it never happens again,” Kaufmann said.