The Problem

The COVID-19 pandemic has given transnational criminal groups a new and significant avenue to increase profits and diversify their assets: counterfeit personal protective equipment (PPE). Rural, poor, and marginalized communities are most affected by COVID-19, due to their reduced access to medical care. People of colour are also disproportionately affected by the pandemic and thus are greatly impacted on both the demand and supply sides of the counterfeit PPE industry. Currently, 29.6 million Americans lack medical insurance, and healthcare costs are a leading factor in 66.5 percent of bankruptcies in the United States. As a result, about 45,000 Americans die every year due to a lack of health insurance. Given the dire state of the American healthcare system, selling counterfeit PPE to otherwise underserved communities has been particularly lucrative for criminal groups. 

The US-based PPE manufacturer, 3M, has been the primary target, with millions of its PPE (mainly N95 masks and respirators) being counterfeited. The equipment is sold at inflated prices to desperate customers, resulting in millions of dollars in weekly revenue for the suppliers. Markets are primarily online, promoted through various social media platforms, and shipped by mail through underground e-commerce providers or under-regulated social media platforms. Counterfeit PPE has also made its way onto legal channels referred to as grey or dark markets. Despite those in the public and private sectors taking steps to combat the problem, it appears that health-related illegal trade markets are here to stay. 

Why It Matters

This issue is important for national and international security as it directly impacts the lives, safety, and security of millions of Americans. It deprives healthcare workers and vulnerable individuals of the medical equipment they need to survive. According to a recent survey by the American Medical Association, 1 in 3 doctors in the United States has experienced extreme difficulties acquiring PPE. Doctors in New York City, once the epicenter of the pandemic in the United States, were also facing regular PPE shortages. In these cases, doctors and nurses may have to turn to the black market for PPE supplies. This phenomenon is emblematic of a deeply broken healthcare system. It signals the level of risk that individuals are willing to endure to get the critical care that they require, which they have not received from their governments.

The American Federal Government’s Response

To address counterfeit PPE during the COVID-19 pandemic, the US federal government has coordinated systematic armed raids against suppliers of counterfeit COVID-19 PPE. These raids have almost entirely been conducted by the FBI, FDA, DHS, and CBP, in coordination with state and local law enforcement agencies at the National Intellectual Property Rights Coordination Center in Arlington, Virginia. The perpetrators have been charged with various crimes, including fraud, money laundering, counterfeiting, and price gouging. Before the raids, the FDA issued warning letters to firms it deems are “selling fraudulent products with claims to prevent, treat, mitigate, diagnose or cure” COVID-19. These warning letters are publicly available to “name and shame” listed firms. The FDA has also set up a website to report “unlawful sales of medical products on the Internet,” which helps them collect open-source intelligence and direct raids. Many of the raids have been publicly announced by DHS Secretary Alejandro Mayorkas. 

Shortcomings

While transparent, this policy deprives marginalized communities of healthcare without reparations. The US government destroys the seized PPE, citing them as a “threat to health and safety.” On a deeper level, the raids do not address the core issue, which is a lack of universal healthcare. The reciprocal relationship between healthcare companies and the US government has contributed to federal government inaction on healthcare reform. Specifically, between 1999 and 2018, the pharmaceutical and health product industry spent USD $4.7 billion on lobbying the United States government, as well as USD $1.3 billion on campaign contributions at the national level. This is a problem heightened by Citizens United v. FEC, the Supreme Court decision which determines that political donations fall under the First Amendment on freedom of speech, which is almost unrestricted, allowing virtually no limits on donations to political causes and candidates. 

Policy Recommendations

This issue is part of a much broader problem and hence requires significant reform in various areas, including the Supreme Court, healthcare, and campaign finance overhauls. The policy response to this problem will also signal whether lessons from the US-led War on Drugs have been learned and whether the US will adequately adapt to the changing nature of illegal financing. Beginning with short-term policy reform, if the raids are to continue (as they most likely are), they should be conducted without lethal weapons to mitigate physical and mental damage to suspects, civilians, and law enforcement personnel as a result of accidents and escalated tensions. On a tactical level, if the aim is to effectively prevent illicit economies, the raids should be targeted against the organizational leaders, rather than low-level manufacturers and dealers. 

In addition, the incentive to produce and consume counterfeit PPE should be reduced by nationalizing the PPE manufacturing industry to ensure widespread access and create economic opportunity. Universal PPE should also be provided from government stockpiles to healthcare workers and long-term care homes to tackle shortages in critical areas. Doing so would prevent these facilities from resorting to the black market for PPE supply. Finally, to help mitigate political opposition towards national healthcare reform, a series of campaign finance reforms should be implemented. Supreme Court justices should be added to depoliticize the Court, and a new Supreme Court ruling should be passed to override Citizens United v. FEC. A constitutional amendment should also be added to guarantee publicly-funded federal elections. As the majority of the American electorate supports a universal single-payer healthcare system, these measures would suppress the systemic incentive to produce and consume essential medical care illegally.

Edited by Chase Kelliher

Joseph Bouchard

Originally from Quebec City, Joseph earned a BA in International Relations and Latin American Studies from the University of British Columbia. He is currently pursuing a Master's of International Affairs...