Billionaire Mark Cuban has been trying to do his part to help hospital workers get more protective equipment, working with a non-profit group and delving into the market himself to find gold-standard N95 respirator masks he could buy for medical personnel.
He uncovered something else instead. What he found poking around in that marketplace is leading him increasingly to believe that respirator maker 3M Co. is shirking its duty to keep prices low and get masks where they’re needed most during a national emergency. The problem, he says, is that 3M sells the masks through a network of resellers who aren’t held accountable for raising prices and don’t have to direct their sales to hospitals.
“3M lists all its distributors online, the ones buying and selling these things, and these distributors are making as much money as they possibly can,” Cuban said in an interview. “It’s wrong, it’s criminal.”
A representative for 3M pointed to a previous statement saying the company hasn’t changed the prices it charges for respirators as result of the Covid-19 outbreak, and can’t control the prices dealers or retailers charge for their products. 3M also released a letter this week from Chief Executive Officer Mike Roman to Attorney General William Barr condemning “pandemic profiteers.”
Cuban, the 61-year-old owner of the Dallas Mavericks, is an entrepreneur and reality-TV star with 7.8 million Twitter followers and a long history of fines by the NBA commissioner for being too brash. He’s new to the world of medical supplies, but his opinion is getting some reception in Washington. A senior official confirmed that Cuban has held informal talks with the Trump administration, but declined to elaborate or identify who he spoke with. The official said the administration is open to hearing all ideas to speed availability of resources to fight the virus
The White House didn’t immediately respond to a request for comment.
Cuban confirmed he’s been in touch with higher ups at the White House about “price gouging” taking place among mask-sourcing middlemen, though he clarified he’s not working on a “coordinated effort” with the Trump administration.
Across the U.S., states are bidding against one another for masks priced as much as 10 times the usual amount as more patients show up at hospitals with symptoms of Covid-19. Individual traders are noticing the skyrocketing cost, too.
Tamer Abdouni, the founder of Beirut-based Consultium Ltd., a firm that facilitates global trade, was able to source a 3M respirator mask for $1.25 only six weeks ago. Now, through a series of distributors, he can only find a mask for more than five times that cost.
“The problem is there are so many middlemen buying these products and reselling them,” says Abdouni, who works with buyers in the U.S. and other countries. “You can’t pinpoint who is to blame.”
Bachir Diange, an entrepreneur who co-founded the impact venture fund United Global Alliance, is working to help governments across Africa and partners in the U.S. find affordable N95 masks. “The price is now unsustainable,” he says, “You find yourself with 10 intermediaries that are acting like it’s the wild, wild west. They’re not interested in the impact of the moves they make.”
Scammers may already be trafficking counterfeit or faulty products, according to Premier Inc., which helps 4,000 member hospitals buy and manage their supplies.
“A grey market is amassing around personal protective equipment,” Premier said in a warning letter to health-care providers. “We contacted the legitimate manufacturers of these products, who could not determine how these fraudulent sellers obtained supplies.”
Cuban says his outrage was initially prompted by an influx of emails from so-called distributors trying to sell him “billions” of masks. “I have emails saying, ‘I have a 100,000 masks per sale at $8 per piece.’ I would ask if these were 3M masks, N95s, and if they could prove it. I literally have been offered billions of masks at premium prices from $4 to $8, million-dollar minimum orders, who knows what’s real.”
While several companies make N95 masks, 3M, the 118-year-old Minnesota manufacturing giant, is one of the most well-known and prestigious brands. In response to surging demand for the respirators, Roman has doubled global production of N95 masks in the last two months to about 100 million a month, with plans to expand annual production to 2 billion a year over 12 months.
Cuban said he’s reached out to Roman but remains dissatisfied.
“I’m excited that 3M has increased capacity. But supply hasn’t been matched with demand,” he said. “Why is 3M not telling distributors, pick up the phone, sell your inventory to the hospitals, or will never let you buy more product?”
When Cuban has found mask sellers he considers legitimate, he’s diverted them to Project N95, a non-profit organization working with governments and health-care providers to deliver much-needed medical equipment, including N95 and surgical masks, isolation gowns and ventilators. Cuban said he’s working as an adviser to the group, and would support them with capital, should they need it. His work with the group is one reason he’s so incensed by what he sees as profiteering.“It’s operating like an illegal drug market, not a legitimate market,” he said. “I get wanting to make millions of dollars, but people are dying.”
©2020 Bloomberg L.P.