Impact of the US-Iran Conflict on Global Health Care Supply Chains

Summary of Major Points

• The closure of the Strait of Hormuz amidst U.S.-Iran conflict disrupts global health care supply chains, causing increased costs and shortages in pharmaceuticals, MRI-related helium supplies and cold-chain products.
• Health care providers are feeling the operational and financial strain due to rising freight, fuel and insurance costs, leading to higher prices and longer lead times for imported drugs, medical equipment and time-sensitive supplies.
• Health care organizations are advised to monitor availability of supplies, transportation delays and price fluctuations tied to the ongoing conflict and shipping restrictions, potentially revisiting inventory levels, supplier diversification and contingency planning.

Following the U.S.-Iran clash, the Strait of Hormuz’s closure has impacted global health care supply chains, causing essential product shortages and cost hikes. U.S. efforts to stabilize transit through the Strait have not yet restored normal shipping or alleviated supply chain disruptions.

Most Disrupted Health Care Supplies

The rising costs, supply constraints and increased delays in transportation are affecting numerous medical products and materials, including:

Pharmaceuticals

India, being the largest single source of generic prescription drugs for the U.S., is heavily impacted by the Strait closure, leading to increased costs and potential shortages. In addition, the conflict affects countries such as Jordan and Israel, critical players in active pharmaceutical ingredient (API) production, and Israeli fluorosilicic acid production for U.S. water treatment plants.

Helium

Qatar’s helium supply, essential for MRI scanners, is affected by the conflict, posing operational challenges for health care providers.

Aluminum

The Middle East, a significant global aluminum supplier, plays a critical indirect role in health care through its use in medical devices and health care infrastructure. Disruptions are likely to impact the manufacturing of medical equipment and consumables, general medical products, and cold-chain supplies.

Risks for Health Providers

The Strait of Hormuz disruption significantly raises logistics costs, with medicine costs quadrupling in some regions due to transportation delays and soaring insurance premiums for shipping. Key areas to monitor include the scale of U.S./allied escort operations, higher insurance and shipping premiums, port congestion, lead times for critical medical inputs, rising input costs, drug pricing pressures, and provider margin pressure.

[Original source.]