Strait of Hormuz standoff puts supply of America’s generic drug prescriptions at risk.

The closure of the Strait of Hormuz by Iran is a military strategy with vast consequences for the global economy, not just in the form of higher oil prices, but with disruptions in supply chains involving metals and manufacturing, and farming and food prices. And at some point in the future, supply chain experts say, Iran’s attempt to choke of the strait will also hit American medicine cabinets. The only question is exactly how long existing stockpiles of prescriptions of generic drugs can last before the U.S.-Iran war becomes a significant health issue in the U.S.

The connection between a Middle Eastern sea chokepoint and a U.S. pharmacy counter is less obvious than it might seem — and more direct than most consumers realize. The U.S. gets nearly half of its generic prescriptions from India — roughly 47 percent by volume, according to Rohit Tripathi, vice president of industry strategy for manufacturing at RELEX Solutions, a Helsinki-based pharmaceuticals supply chain planning software company. India, in turn, depends on the Strait of Hormuz for around 40 percent of its crude oil imports. “That oil ultimately feeds into the petrochemical inputs used throughout pharmaceutical manufacturing. So even though American consumers are not buying medicines directly from the Gulf, they are still at the end of a supply chain that runs through it,” Tripathi said. 

Multiple ingredients needed to manufacture many drugs in India often travel through Gulf logistics hubs first. Chemical inputs produced in China are commonly consolidated by distributors in places like Dubai and across the UAE before being shipped on to Indian drug manufacturers. “Even when ingredients move directly from China to India, production still relies heavily on petrochemical supplies from the Gulf,” said Steve Blough, chief supply chain strategist at Infios, a supply chain execution software firm. “Disruptions around the Strait of Hormuz could quickly ripple into global pharmaceutical supply chains and eventually affect U.S. consumers,” Blough said, adding that the situation could quickly manifest as shortages for critical medicines in the U.S. and higher costs. 

“Fuel costs will effect the costs of everything, but the biggest effects will be on generics because they have the tightest margins,” said Marc Kahn,  former dean of the University of Nevada, Las Vegas medical school and current chief of hematology. Kahn points to glycerin, a common medication ingredient that is petroleum-based, that could be impacted if oil supplies remained choked off. Acetaminophen, he points out, is traditionally manufactured from phenol, a chemical derived from petroleum.

Nearly half of U.S. generic prescriptions originate in India, which relies on the Strait of Hormuz for the arrival of key inputs in drug manufacturing including petroleum-based materials, and for shipping finished medicines to the U.S. 

People should not be worried about their medications yet, including high-volume ones for diabetes and hypertension, statins and antibiotics, as most medical distributors keep a 30- to 60-day supply on hand to withstand disruptions.

President Donald Trump is pressing other nations including NATO allies and China to help protect ships using the vital global marine traffic route. The risks from higher oil prices, and potential for drug shortages and delays, get more real every day.

Source: www.cnbc.com

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