Impact of the Iran Conflict on the Pharmaceutical Supply Chain

The ongoing conflict in Iran is increasingly threatening the pharmaceutical supply chain, particularly affecting the production and pricing of drugs reliant on petrochemicals. The war has led to significant disruptions in trade routes, notably the Strait of Hormuz, which is critical for energy supplies and has implications for pharmaceutical production.

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Petrochemicals are essential in the manufacturing of pharmaceuticals, with an estimated 99 percent of pharmaceutical feedstocks and reagents derived from these materials. The rising cost of crude oil, which has surpassed $100 a barrel, poses a risk to the affordability of medications. The U.S. Pharmacopeia (USP) has indicated that while the Middle East is not a major pharmaceutical producer, the region still plays a role in the supply chain, particularly through countries like Jordan and Israel, which contribute significantly to the production of certain active pharmaceutical ingredients (APIs).

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Gerren McHam, vice president of external affairs at the API Innovation Center, and Michael Ganio, senior director of pharmacy practice and quality for the American Society of Health-System Pharmacists, are notable voices in this discussion. They emphasize the potential for increased costs and supply chain vulnerabilities due to the conflict. The USP has also highlighted the risks associated with disrupted trade routes, particularly the Red Sea, which is vital for transporting pharmaceutical ingredients from India to Europe and the U.S.

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Experts express concerns about the fragility of the pharmaceutical supply chain, especially regarding generic drugs. Ganio has referred to the potential pressure on generic drug imports as an "almost indirect tariff," indicating that increased energy costs could lead to higher prices for consumers. McHam warns that the current situation serves as a reminder of the vulnerabilities within the supply chain, raising bipartisan concerns about future disruptions.

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Despite the potential risks, current assessments indicate that the conflict has not yet significantly impacted the availability of medicines in the U.S. McHam stated, “At the moment, in terms of the U.S., there’s no indication that the conflict is having anything directly impacting the supply chain, or availability of medicines.” However, he cautioned that the broader implications of such conflicts could lead to future challenges.

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As the conflict continues, stakeholders in the pharmaceutical industry are closely monitoring the situation. The potential for further disruptions remains a concern, particularly if the conflict escalates or if other trade routes, such as the Bab el-Mandeb Strait, become compromised. The industry is preparing to implement mitigation strategies should shortages arise, but the long-term effects of sustained conflict on the pharmaceutical supply chain remain uncertain.

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• “If the instability really persists, you’ll probably see lead times, transportation costs that can impact direct items that we need for our medicines, including the key starting materials into active pharmaceutical ingredients,” — Gerren McHam, API Innovation Center

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• “There are therapeutic alternatives. We’ve actually weathered some drug shortages of those products in the recent past anyway, so we are familiar with some mitigation strategies if needed,” — Michael Ganio, American Society of Health-System Pharmacists

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• “This is a reminder of how exposed we are with our pharmaceutical supply chain, specifically generics; especially those key materials that go into those medicines,” — Gerren McHam, API Innovation Center

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