The global healthcare supply chain

The global healthcare supply chain

Key themes raised by Trust CoLab participants about the global healthcare supply chain

In April 2020, as COVID-19 was sweeping across the world, USP and the MIT Center for Collective Intelligence contacted experts who had participated in the Trust CoLab to seek input on the single biggest issue in the global healthcare supply chain that should be addressed to ensure the availability of safe, quality medical products.

Many responses focused on the supply chain for drugs. Participants anticipated drug shortages in the future, and some saw them already occurring. Just-in-time supply chain practices, which seek out the lowest cost producers and keep inventories at a minimum, were seen by respondents as a primary cause of drug shortages.

To keep costs down, participants noted, drug makers and healthcare providers in North America and Europe have come to rely heavily on imports of finished drugs and active pharmaceutical ingredients (APIs) from India and China, which created significant vulnerabilities when the pandemic hit. API and medicine production facilities in China and India shut down during their coronavirus outbreaks, leading to major reductions in output. And the Indian government announced plans to curb exports of certain drugs and APIs to ensure its own domestic needs would be met.

Some respondents went beyond the pharmaceutical supply chain and also addressed medical devices and supplies. This is understandable, given the shortages of personal protection equipment and devices like respirators that occurred in pandemic hotspots like Northern Italy and New York City. Respondents who took this broader perspective also noted that problems arising since the COVID-19 outbreak were tied to just-in-time supply chain practices.

The most pressing post-pandemic challenges in the medical devices and supplies sector respondents were caused by shortages resulting from supply-demand imbalances, which led to allocation of devices and equipment based not on medical need but on competitive, market-based bidding. In the face of this dynamic, suppliers of medical devices and supplies at times had to make life-or-death decisions about how to allocate supply in response to the surfeit of orders they were receiving.

To address post-pandemic supply chain challenges, respondents had several recommendations, which will be discussed in future regional reports.