HealthIndustryResearch & Innovation

Policy priorities to prepare for the next health crisis – including building more resilient medical supply chains

With 7million reported COVID-19 deaths and over 19 million excess deaths estimated worldwide by January 2023, COVID-19 brought to the fore the weakness of health systems as well as interconnected sectors and systems, ranging from elderly care to the innovation ecosystem, to medical supply chains.

Put it simply, health systems were not resilient enough as we thought they ought to be. They lacked ability to prepare for, absorb, recover from and adapt to major shocks. Such vulnerabilities need to be urgently addressed to be ready for the next crisis – no matter whether this will be a novel pathogen, a natural disaster, a cybersecurity attack, or an armed conflict. Otherwise, the costs will be larger and the impact on people greater.

The recent OECD report, Ready for the Next Crisis? Investing in Health System Resilience sheds light on major pre-existing vulnerabilities of health systems exacerbated by the COVID-19 pandemic: health systems were underprepared, understaffed, and faced underinvestment.

Annual investments to improve health system resilience would represent around 1.4% of GDP, on average across OECD countries, relative to 2019 expenditure. Targeted priority investments are needed where health systems proved insufficiently resourced to withstand shocks: in the health workforce, alongside increased spending on prevention and health information systems and infrastructure to improve the use of data for better decision making, surveillance and research.

Ensuring that health systems are better prepared and that the next shock does not leave such a challenging legacy also requires preparedness, adaptation, and improvement of the interconnected systems to healthcare and global co-operation. For example, promoting global co-operation will be key to finding better ways to pay for global public goods like vaccines. Public support will be essential for financing, regulation, manufacturing, and provision of health technologies needed for resilience in the future. These changes must be accompanied by credible obligations if such technologies are to be equitably distributed, especially in times of crisis.

Another critical area concerns reinforcing medical supply chains resilience. The effective functioning of health systems relies on the availability of adequate and reliable supplies of equipment and therapeutics, such as essential medicines and medical devices, including consumables. Medicines and medical devices are sophisticated products, subject to complex regulatory frameworks and manufactured through long international supply chains.

Already before the COVID-19 pandemic, issues of quality, concentration of markets and profitability of some products contributed to supply disruptions and shortages. In the initial stages of the pandemic, supply chains showed considerable elasticity in the face of extreme stress. Nonetheless, disruptions and shortages of key medical supplies were experienced due to spikes in demand and bottlenecks in supply. Widespread shortages of essential medicines and medical devices were experienced especially at the beginning of the pandemic. Almost all OECD countries saw problems securing personal protective equipment and testing material.

Three key policy options can be considered to improve the responsiveness and reliability of medical supply chains for future health crises.

First, improved market intelligence to monitor flows and state of supply chains. Difficulties in identifying the suppliers and countries involved in medical device supply chains can undermine assessment and mitigation of risks by governments. Greater transparency and improved reporting are therefore needed to ensure resilient and secure supply. Real-time information and co-operation between countries and manufacturers may be required to anticipate and address issues. In the context of the food price crisis of 2007-2008, the experience with the establishment of mechanisms such as the Agriculture Market Information System (AMIS) created by the G20 in 2011 could offer some lessons for health systems. AMIS allows governments to share information on markets, policies and stocks of four key food commodities, supporting transparency and helping to identify bottlenecks and emerging risks thanks to consistent reporting and monitoring on market indicators and policy decisions.

Second, smart procurement and diversification in suppliers. Quality issues may be at the origin of shortages of some medicines and medical devices. Rules and standards exist to avert quality issues, but implementation and enforcement can be challenging. Having sufficient manufacturing capacity drawing on diversified sources of supply helps to prevent quality issues from driving shortages. Market dynamics and regulatory requirements may discourage investment in production capacity and limit diversification in supply. Greater supplier diversity and increased capacity require a reassessment of current procurement and pricing practices for some products. Caution should be exercised to ensure that policy instruments do not disrupt the smooth functioning of international supply chains. Trade and transnational production are important to enhance diversification of supply and create additional capacity at the global level. In particular, trade is important for access to technology and equipment.

A third resilience strategy to mitigate spikes in medical products demand is strategic stockpiling. To be efficient and effective, stockpiling strategies of emergency supplies should be planned and co-ordinated with the private sector and across countries. Securing supply chains for essential medicines and medical devices will improve outcomes during crises, strengthening overall health system resilience. It will also encourage predictability and reliability between disruptions.

Overall, promoting the long-term resilience of medical supply chains will benefit from stronger collaborative approaches that balance measures best undertaken by the private sector with those more appropriately managed by governments, as well as internationally harmonised and co-ordinated approaches to regulation and stockpiling.

The next crisis may not take the form of a pandemic, and the global community faces the prospect of a continuing “polycrisis”. Against this backdrop, there are significant social and economic benefits of investing in health system resilience including in stronger and reliable medical supply chains. Doing so now is vital to facing tomorrow’s challenges.

 

Selected key references OECD (2023), Ready for the Next Crisis? Investing in Resilient Health Systems, OECD Health Policy Series, OECD publishing, Paris.

Morgan, D. and C. James (2022), Investing in health systems to protect society and boost the economy:Priority investments and order-of-magnitude cost estimates, OECD Health Working Papers, No. 144, OECD Publishing, Paris.

Chapman, S., Dedet, G. and Lopert, R. (202x), Shortages of medicines in OECD countries, OECD Health Working Papers, No. 137, OECD Publishing, Paris.

Visit the OECD Health Systems Resilience webpage