Preventing Hoarding of Health and Medical Resources To Respond to the Spread of COVID-19

Background

Executive Order 13910, issued in March 2020, was an emergency measure designed to combat the significant threat posed by the COVID-19 pandemic to the United States' healthcare systems. By utilizing the Defense Production Act of 1950, the order delegated authority to the Secretary of Health and Human Services to prevent the hoarding of critical health and medical resources such as personal protective equipment (PPE) and sanitizing products. This aimed to preclude market imbalances that could occur when individuals or companies stockpiled these critical supplies, leading to shortages and inflated prices in the face of surging demand.

The order had tangible impacts on regulations and operational policies. The Department of Health and Human Services (HHS), in coordination with agencies like the Federal Emergency Management Agency (FEMA), was empowered to designate materials as "scarce" and to take enforcement actions against parties hoarding these items. This led to numerous directives without formal rulemaking, where agencies identified critical supplies and initiated mechanisms to seize hoarded stockpiles, reallocating them to areas of urgent need. These actions were crucial in the early pandemic phase, easing supply chain bottlenecks and ensuring that medical facilities and essential services had access to necessary materials.

Socially, the executive order aimed to engender a sense of national solidarity by emphasizing equitable access to health resources. It sought to deter unethical profiteering behaviors by warning about legal repercussions for those attempting to exploit the healthcare crisis for financial gain. The deterrent effect of potential penalties and the moral authority of governmental action encouraged corporations and individuals to adopt more responsible distribution and consumption patterns of health-related resources. Alongside this, increased public awareness and media coverage of such hoarding prevention measures further discouraged hoarding behavior at both individual and corporate levels.

While the intentions behind the order were publicly debated, in the context of the chaos of the initial pandemic period, its enactment was seen by many as a necessary intervention. However, it was also criticized by some as overly broad. Detractors argued that it potentially stifled market mechanisms that could ensure distribution even if at elevated prices, stoking tension between free market advocates and those endorsing interventionist policies. These regulatory impacts and operational adjustments, however, contributed to a temporary stabilization in medical resource availability during a tumultuous period.

Enforcement actions under this order included seizures coordinated by the Department of Justice in partnership with state law enforcement agencies. Several high-profile cases of PPE hoarding were prosecuted, which served to validate the need for stringent control measures. Furthermore, HHS’s authority to prescribe conditions on the accumulation of resources saw broad compliance from businesses, which adapted their procurement and supply strategies to align with federal guidance, showcasing the far-reaching influence of the order on corporate behaviors during the pandemic.

Reason for Revocation

The revocation of this executive order in April 2024 by President Joseph R. Biden Jr. reflected a shift in both the public health landscape and broader policy ideology. By 2024, the acute phase of the pandemic had substantially subsided due to widespread vaccination efforts and the development of effective therapeutic treatments. The healthcare system was no longer under the severe strain that justified emergency hoarding prevention measures. Consequently, the rationale for maintaining such stringent controls dissipated.

Another impetus for revocation was part of a broader ideological shift away from crisis-driven regulatory interventions towards normalizing supply chain functions. The Biden administration, emphasizing a pivot toward resilience and sustainability, sought to encourage market-based solutions and rebuild trust in commercial distribution practices, believing them to be more efficient in resource allocation absent an emergency context. Hence, the revocation can be seen as an alignment with a post-crisis economic policy aimed at deregulating overly restrictive government interventions.

Additionally, the revocation was likely influenced by the recognition of the unintended negative consequences of prolonged regulatory measures on market dynamics. Extended periods of federal intervention in supply chains can lead to inefficiencies, disincentivize private sector engagement, and provoke complacency in market actors who rely on government action rather than their own innovation or problem-solving. Removing these controls was a step towards reinvigorating a free-market ethos and allowing competition to promote price stabilization and innovation once again.

This decision was consistent with a broader administrative strategy to transition pandemic-related policies to long-term public health strategies. Rather than focusing on emergency powers and enforcement, the emphasis was feasibly directed toward building infrastructure that could withstand future public health challenges, integrating lessons learned from the pandemic into systemic health reforms. By easing control measures like those enforced under the order, the administration aimed to foster strategic stockpiling and distribution mechanisms within the private sector, signaling a return to traditional market operations.

Winners

The revocation primarily benefits private sector entities within the healthcare supply chain. Medical supply companies, previously under scrutiny for potential price gouging or hoarding, regained the freedom to operate without the risk of stringent federal oversight. This regulatory rollback likely spurred renewed investor confidence, providing an impetus for firms to optimize supply chains and expand production capabilities. Firms such as 3M and Honeywell, major players in the PPE market, were positioned to capitalize on normalizing distribution practices without the fear of federal intervention.

The resumption of market freedoms also benefits logistics companies involved in the movement of medical resources. Without the burden of federal directives dictating allocations and restrictions, these companies enjoyed an enhanced ability to streamline operations and maximize efficiency, catering to market demands without being constrained by government-imposed priorities. This normalization supports innovation and responsive service delivery in the logistics sector, particularly as companies refine technologies to improve distribution efficiencies.

Furthermore, healthcare facilities themselves stand to gain from a transition to market-driven resource distribution. With stabilized supply chains, hospitals and clinics could expect more predictable delivery timelines and potentially more competitive pricing. This environment would contribute to reducing operational uncertainties experienced during the pandemic’s peak, enabling healthcare providers to focus on patient care rather than resource acquisition challenges. For nonprofit healthcare providers, this shift could also mean better accessibility to philanthropic contributions in the form of PPE or critical goods donations without bureaucracy.

Losers

Conversely, the removal of hoarding prevention measures may adversely impact vulnerable populations who remain reliant on regulated access to medical resources. Low-income communities and rural areas, more dependent on structured distribution systems due to limited buying power and logistical challenges, risk facing disproportionate availability issues should market forces fail to ensure equitable distribution. The absence of regulatory oversight could exacerbate existing disparities in healthcare access between socio-economic strata.

Additionally, public sector entities, particularly at state and local levels, that benefitted from the federal support mechanisms and enforcement cooperation facilitated by this order might experience a gap. These entities, often resource-constrained, relied on the federal government’s authoritative reach to manage fraud and price gouging within their jurisdictions during peak demand cycles. Without federal backing, local governments could face challenges in maintaining equitable supply distribution and in policing unethical practices within their purview.

There are also specific industry segments for whom the revocation poses challenges. Small-scale PPE producers, who entered the market under favorable conditions created by incentivized demand and federal prominence on domestic production, may find the market landscape shifted as large players regain dominance. The reduction in government intervention might increase competition pressure, underscoring the need for small producers to adapt quickly or explore consolidation opportunities to ensure survival. As such, these businesses face potential market contractions and sustainability crises absent federal procurement safety nets.