President Donald Trump last evening blasted 3M (NYSE:MMM) for selling some of its N95 masks to other countries, hours after invoking the Defense Production Act to prioritize orders from the Federal Emergency Management Agency.
“We hit 3M hard today after we saw what they were doing with their masks,” Trump tweeted Thursday night. “‘P Act’ all the way. Big surprise to many in government as to what they were doing — will have a big price to pay!”
3M countered by saying that demand for the masks, deemed critical for healthcare workers exposed to the coronavirus, has far outstripped its ability to produce them. In a statement, the company implied that selling only to the United States when people in other countries were also suffering from the coronavirus, was wrong.
Earlier this week, the company said it secured approval from China to export to the U.S. 10 million N95 respirators manufactured by 3M in that country. The Trump administration’s request that 3M stop selling respirator supplies in Canada and Latin America has “significant humanitarian implications,” the company said, because “we are a critical supplier of respirators” to healthcare workers in those countries.
“In addition, ceasing all export of respirators produced in the United States would likely cause other countries to retaliate and do the same, as some have already done,” the company added. “If that were to occur, the net number of respirators being made available to the United States would actually decrease. That is the opposite of what we and the Administration, on behalf of the American people, both seek.”
The head of medtech trade group AdvaMed expressed the same concern last Friday after Trump invoked the Korean War-era act to order General Motors to manufacture ventilators with Bothell, Wash.-based Ventec Life Systems.
3M said it has been working closely with the administration to ramp up production of the respirators and will continue to do so. “We appreciate the authorities in the DPA that provide a framework for us to expand even further the work we are doing in response to the global pandemic crisis,” the company said.
“We will continue to maximize the amount of respirators we can produce on behalf of U.S. healthcare workers, as we have every single day since this crisis began,” it added. “We also continue to act on reports of price gouging and unauthorized reselling related to 3M respirators. This activity is unethical and illegal. We are working with the U.S. Attorney General and attorneys general of every state, making it clear that 3M has not and will not raise prices for respirators and offering our assistance in the fight.”
AdvaMed issued a statement this morning saying that people and companies engaged in price gouging of medical devices during the coronavirus pandemic appear to be “third parties who are hoarding products that are crucial to the public.”
“While AdvaMed members set their prices individually and AdvaMed has no involvement in these decisions, we are confident that prices set by manufacturers on this much-needed equipment have remained consistent since before the pandemic began, even as the cost of component parts and materials have risen as the result of worldwide demand pressures,” group president and CEO Scott Whitaker said in the statement. “I am proud of our industry’s commitment to people over profits and their dedication to saving as many lives as possible.While the trade group acknowledged it has no say in its member companies’ pricing.
“Our member companies’ No. 1 priority is saving lives and at no time in our history has that been more apparent than over the past month as they have dramatically ramped up production of the diagnostics and devices that are essential to identifying, treating and combatting COVID-19,” Whitaker added. “We fully support the president’s recent executive order granting U.S. Attorney General Barr the authority to prosecute any and all who engage in price gouging. We stand with the president and patients in fully condemning those who do.”
Shares of MMM were trading down 0.66% at $1.37 apiece.