CBP, HSI Officials Describe Work to Stop COVID Fraud, Counterfeits
At the first of two Senate Finance Committee hearings on securing the medical supply chain, senators learned that Homeland Security Investigations has opened 570 cases, and, cooperating with CBP, has stopped “900 shipments of mislabeled, fraudulent, or unauthorized COVID-19 test kits, treatment kits, homeopathic remedies, purported anti-viral products, and” personal protective equipment.
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Steve Francis, assistant director for the Global Trade Investigations Division of HSI, shared that data at the July 28 hearing. He said that 45% of the seizures were of COVID-19 test kits, 27% were ineffective pharmaceuticals, 10% were substandard protective gear, such as masks. And 16% were lanyards which, sellers promised, would protect you from catching the coronavirus that causes COVID-19 if you wore it around your neck.
Francis said the volume of fraud shifted according to what was in the news. He said that when hydroxychloroquine was being hyped, counterfeit pills under that name were being sold. “While all products are not necessarily counterfeit, they may not meet U.S. regulatory standards nor provide the medical benefits they claim,” he said. Also, he said, because so many test kits were going to residential addresses, HSI worked with foreign customs officials, leading to seizures overseas.
The CBP official in charge of cargo security, Thomas Overacker, told the committee that over the last six months, cargo volumes have declined 12% compared with the same period in 2019, with the worst drop in May, when the volume was down 26% from May 2019.
At the same time, the surge of imports of masks and gloves -- and the new exporters -- challenged the agency.
In April, medical imports more than tripled. “While Malaysia remains the largest source country for surgical and medical gloves, the number of sellers of these products has increased by 128 percent,” he said.
In response to a question about forced labor and mask production in China, he said he couldn't speak to that, but said that CBP just placed a withhold release order on Malaysian medical gloves that were made with forced labor. He said CBP does follow all leads on forced labor complaints.
He said the number of companies in China shipping masks increased by 160%.
Many of the questions the witnesses faced were outside their areas of responsibility, such as questions on how the government should push pharmaceutical firms to diversify their sources of active pharmaceutical ingredients, or why the federal government left states to do bidding wars for protective gear.
Overacker said a CBP Center of Excellence and Expertise team responsible for medical goods “fielded approximately 2,500 incoming inquiries, which range from providing guidance on importing PPE, resolving holds, or expediting import release of medical supplies, to facilitating donations of PPE to U.S. recipients. The efforts of the [COVID-19 Cargo Resolution Team, or] CCRT, working with our interagency and private sector partners, have helped secure the importation of approximately $1.2 billion in medical supplies for the COVID-19 response.”
Sen. Rob Portman, R-Ohio, said the hearing missed the point that the most important thing the U.S. could do to avoid low-quality imports and counterfeits and orders that aren't filled at all would be to produce more masks or other goods in the U.S. -- or if not in the U.S., at least in this hemisphere.
He said the Berry Amendment, which requires the purchase of U.S.-made apparel for the armed services, ought to apply to PPE. Sen. Lindsey Graham, R-S.C., has a bill that would do this, and it is in the Senate COVID-19 relief package that's under consideration. He said he's been frustrated that the government has been offering only 90-day contracts, and factories that want to switch to making N95 masks need several-year contracts to make the investments make sense. “This should not be a partisan issue,” he said.