Health

Michigan free-market center slaps Dana Nessel's 'energetic pursuit' of price gougers


March 30, 2020, 11:31 AM by  Alan Stamm

Update: The Mackinac Center for Public Policy reflects its free-market advocacy with a shot at Attorney General Dana Nessel's fight against crisis profiteers.

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At its news site, Michigan Capitol Confidential, the Midland organization suggests Monday: "If suppliers could raise prices, surgical masks might not disappear so fast."

Managing editor Tom Gantert cites a March 27 warning to a West Bloomfield distributor that charged $10 per face mask (article below) and a March 18 letter to a company listing two masks on eBay for $28.50.

Statewide shortages of surgical masks may not have been relieved by the Michigan Attorney General’s energetic pursuit of suppliers who raised prices, which otherwise could help maintain uninterrupted supplies of items subject to high demand.

Got that now? Our state's Consumer Protection Act enforcer is a villain to those who'd like an unregulated marketplace free-for-all where vital medical supplies could cost as much as the richest customers are willing to pay.

Original coverage, Sunday:

Dana Nessel's criticism of a suburban Detroit firm is caustic: "Price-gouging has no place in our healthcare industry, especially during times of a public health crisis."

The target of her rebuke is DiaMedical USA, a West Bloomfield medical equipment supplier that listed professional-grade face masks last week at $99.95 for a box of 10. The N95 nose-and-mouth covers still are online at that price, though now for a box of 20. 

That first price was an apparent violation of the state Consumer Protection Act, in effect since 1996, Nessel's office warns chief executive Jeffrey Ambrose on Friday in a two-page "notice of intended action." He's directed "to immediately cease and desist from engaging in the unlawful business practices described."

In a harsh rebuke, Ambrose is accused of crisis profiteering. "It appears you intend to exploit hospitals and clinics who are especially in desperate need of these supplies," two assistant attorneys general write.


The Metro Detroit firm earlier listed this price for 10 masks, the state says. Even for 20, this is far more than stores and other online sellers charge. 

Separately, Nessel comments in a media release:

"Hospitals, doctors, nurses and other medical professionals depend on this equipment to perform their jobs and take care of people who are sick, and lives should not be put in jeopardy because businesses want higher profits."

A notice atop the main page on DiaMedical's site notes that "the demand for many infection-control supplies is much greater than the current availble products. ... Heathcare providers and emergency responders will be given priority."

Responding a comment request from Deadline Detroit, Ambrose says in a statement that "the [profit] margin on these products is identical to what it was a year ago."

He defends the posted price of N95 masks -- currently $5 each for a 20-item box. "Unfortunately, costs all throughout the supply chain -- from the manufacturer to priority shipping and freight -- have drastically increased nearly 10-fold." 

The Orchard Lake Road company's statement adds:

"Our pricing will continue to reflect the best value we can possibly provide the healthcare community. Our number one priority is getting these much-need products into the hands of those that need it.

"The last month has been an extremely challenging time in terms of supplying health care-related products. Sales of medical masks such as the N95 respirator mask have seen a more than 300-percent surge in national sales over the past month compared to the same time last year and wholesales prices have substantially increased. Manufacturers are struggling to to keep up. ... As supply increases we anticipate availability and wholesale costs to reflect that."


The industry supplier is on Orchard Lake Road in West Bloomfield.

Friday's state letter to the CEO cities "unfair trade practices" and says:

"We recently received a consumer complaint informing us your company is selling 3M n95 face masks, model 8210, through your website for $99.95 for a box of 10. The consumer reported that the same 3M 8210 model mask is typically $1.50 per mask, or $15.00 for a box of 10. ...

"Upon further investigation, it was discovered that several suppliers sell the same face masks for much less. Grainger, a commercial supplier, sells the same 3M 8210 masks for $21.94 for a box of 20. Additionally, Home Depot sells boxes of 10 3M 8210 masks for $23.97. It is apparent the prices reflected on your website are substantially higher than other suppliers. ...

"The price you intend to charge for these face masks [when back in stock] is grossly in excess of the price at which similar goods are sold."

Nessel's release says her office received nearly 1,900 price-gouging reports related to COVID-19 as of Friday. Complaints are taken online and by phone at (877) 765-8388 from 8:30 a.m. to 4:30 p.m. weekdays. 



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