Ventilators Are Expensive, Question Is Would They Reach Bulgaria on Time

The ventilators ordered by the Bulgarian government from a State-owned company in China are double the price of the one they trade for locally. Such price is justified only in the face of extreme urgency while the scarce devices must be delivered on time to strengthen intensive care wards in the fight against COVID-19 when the peak of the epidemic is approaching in Bulgaria. Two weeks after the placement of the order, there are no ventilators yet, and the government has only now decided to arrange and pay for their transport from China.

A 100% coronavirus fee

On March 27, 2020, Prime Minister Boyko Borisov and members of the Council of Ministers approved a contract with the Chinese National Pharmaceutical Corporation for Foreign Trade (a subsidiary of Sinopharm) for the supply of personal protective gear and medical equipment. With European funds provided under the Operational Program “Regions in Growth”, the Ministry of Health must purchase 1,176,770 pieces of protective masks worth EUR 1,412,124 and 50 ventilators worth EUR 1,500,000 or EUR 30,000 per unit.

Bivol inquired about the ventilator model several times. After two formal inquiry letters, a dozen phone calls and several press conferences by Bulgarian Health Minister Kiril Ananiyev, we finally obtained a response to some of our questions. The Ministry of Health replied in writing that the contracted 50 ventilators are of the VG70 model by Beijing Aeonmed CO. Ltd.

The ventilator is CE certified for use in the European Union (EU), but the VG70 also has the advantage of being the only Chinese product approved for use in the United States by its very strict Food and Drug Administration (FDA).

On March 30, 2020, the city of New York also placed a big order for 2,000 Aeonmed VG70 for a negotiated price of USD 41,000 (EUR 37,470) each. According to the US authorities, the price is reasonable because demand is huge and there is a deficit.

“When we started buying them, they about USD 25,000,” Governor Andrew Cuomo said in his March 28, 2020, daily briefing, quoted by the New York-based publication The City. “Now, they’re about $45,000. Why? Because they’re in such demand and there’s such competition to buy the ventilators.”

A check on several medical technology sites shows that the price of this particular model was revolving around USD 17,000 before rising twice due to the COVID-19 crisis.

Aeonmed’s importers are offering the same model in the Bulgarian market under BGN 30,000 even now. The problem is that they cannot deliver the ventilators in the coming days and weeks when they are likely to be needed most. The delivery period to which suppliers currently commit is two months or more.

Has the government looked for alternatives?

Medical experts consulted by Bivol described the VG70 as a mid-end product of the Chinese medical industry. The leaders in the industry are the German Dragerwerk AG but there is also Chinese production with European certification, which is of acceptable quality at significantly lower prices.

A check on the website of the Bulgarian Public Procurement Agency shows that a ventilator from another Chinese company, also certified in the EU and in the United States, has been delivered to a Bulgarian hospital for BGN 24,000 without VAT. Currently, the price is higher, of course.

So far, there is no information on how and why the Ministry of Health has opted for the Beijing Aeonmed VG70 ventilator. There is also no clarity whether there has been a discussion with experts on the options and a study of offers. We do not know whether the most favorable price-quality-availability combination has been selected to absorb the redirected EU funds to deal with the COVID-19 crisis.

The answer is in the deadlines

Although Chinese factories are operating at full speed, they are swamped with orders for ventilators from around the world. It takes technological time to manufacture them and delivery times are extended. That is why the mega-order of 2,000 respirators from New York is not good news for Bulgaria.

An importer of another higher-end brand Chinese ventilator told Bivol that regarding the urgent order of 50 respirators from Beijing Aeonmed, announced in early March 2020, the best option would be to get ten by the end of March 2020, ten by the end of April 2020, and the remaining 30 in June – July 2020.

The problem is that the forecast is that these ventilators will be needed much sooner than June-July. They may be needed then as well but the projected peak of the epidemic in Bulgaria is the end of April 2020.

Therefore, the double price for the 50 ventilators ordered by the government seems justified but only if Bulgaria has managed to firmly negotiate a fast delivery at the government level. Now, not later. If the ventilators arrive in a few months, the contract with the Chinese will end up being an unprofitable deal.

The fact that the government needed two weeks to arrange and pay for the transport of ventilators and masks from China is not cause for optimism. Prime Minister Borisov announced this on April 10, 2020. However, it still remains clear when the flight will take place.

Bivol asked the Ministry of Health questions about the timing and possible penalties in the contracts. No response was received until the editorial closure of this article.

A few days ago, the Anti-Corruption Fund also drew attention to the non-transparent procedure for this expenditure. The Fund formally requested access to China’s mask and ventilator import contracts.

The need for transparency of contracts and their clauses becomes even more acute against the backdrop of confirmations that Bulgaria is buying ventilators at double the normal price. The key is to find out what the delivery time is and whether the contracts provide for any penalties in case the Chinese company fails to deliver the equipment on time. Moreover, the manufacturer Beijing Aeonmed currently has a huge order from the United States that is also much more profitable than the Bulgarian one.

Dimitar Stoyanov, Atanas Tchobanov

Headline photo: VG-70 Respirator, Aeonmed website

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