Rising oil prices, disrupted shipping lanes, and constrained supplies of materials as varied as helium and generic drugs are combining to stress the U.S. healthcare supply chain in ways that reach from overseas chokepoints to the hospital bedside. A report warns that the ongoing conflict in the Middle East is exposing structural vulnerabilities that predate the current crisis — and that post-pandemic efforts to rebuild domestic manufacturing capacity have not moved fast enough to close the gap.
The report, authored by Sean Brzozowski and Julie Abrams of Healthcare Ready and Dr. Jay K. Varma of the Community Impact Policy Institute, examines how disruptions across six commodity categories (oil and petrochemicals, plastics, helium, semiconductors, aluminum, and pharmaceuticals) are cascading through the healthcare system and driving up costs for hospitals and providers. U.S. hospital medical and surgical supply spending has increased by an average of 8.2% annually since 2020, now exceeding $57 billion and accounting for roughly 10 to 13% of total hospital spending. The authors argue that as commodity volatility persists, those increases are passed on to providers, resulting in lower margins, delayed investment, and constraints on patient care.
A Web of Interdependence
The report’s central argument is that nearly every component of healthcare delivery depends on a tightly interconnected set of globally sourced materials, and that disruption in any one area produces compounding effects across the system. Approximately 20% of global oil supply transits the Strait of Hormuz, and prices have surged past $115 per barrel since the conflict escalated. The Bab el-Mandeb Strait, a gateway to the Suez Canal handling an additional 5% of global oil supply, faces potential threat from Houthi activity in Yemen.
Oil volatility affects healthcare in multiple ways simultaneously: petrochemical feedstocks are essential raw materials for drug synthesis and packaging; transportation costs for medical supplies and personnel have risen substantially; and rural hospitals that rely on diesel-powered generators face added operational risk.
Plastics — derived from the same crude oil refining process — present a second layer of exposure. Medical-grade plastics are used across the sector for IV bags, syringes, tubing, surgical masks, dialysis equipment, and diagnostic instrument housings, among other applications. Seven countries account for more than 60% of global plastic production, and there are currently few viable substitutes for petrochemical feedstocks in medical-grade plastic manufacturing, meaning upstream disruptions translate directly into production constraints.
Helium presents a more acute near-term concern. Qatar, which supplies roughly 30% of global helium, paused production in response to the conflict and the Strait of Hormuz closure. Healthcare consumes approximately 20% of global helium annually, primarily for MRI scanners — each requiring between 1,500 and 2,000 liters of liquid helium — and for respiratory heliox therapy. Because helium must be extracted from natural gas deposits, it cannot be quickly sourced from alternative suppliers, and the United States, the world’s largest helium producer, is already operating at full capacity.
Pharmaceuticals and the Generic Drug Exposure
Perhaps the most direct patient-facing risk involves generic drugs. Ninety percent of all U.S. prescriptions are filled with generics, and nearly half of those generic drugs are manufactured in India. India in turn relies on the Strait of Hormuz for approximately 40% of its crude oil imports, which feed directly into pharmaceutical manufacturing. The report identifies low-income and uninsured populations, pediatric patients, elderly patients with chronic conditions, and patients at rural hospitals and community health centers as particularly vulnerable to disruptions in generic drug supply.
Complicating the picture further, the Trump administration announced on April 2, 2026, a 100% tariff on imported brand-name drugs, with tiered incentives for companies that commit to onshoring production. Generic drugs are currently exempt, though the administration reserved the right to revisit that decision in April 2027. The report notes that while domestic manufacturing investment could reduce long-term vulnerability, near-term tariff impacts could disproportionately affect smaller pharmaceutical companies that lack the capital to establish U.S. operations, potentially consolidating market power and raising prices for patients.
Why This Matters for Health Security
As demonstrated during the COVID-19 pandemic, the U.S. healthcare supply chain’s dependence on foreign suppliers creates systemic risk that surfaces whenever global trade is disrupted. Reshoring efforts launched in the years following the pandemic — backed by executive orders, federal funding, and bipartisan support — have not yet produced sufficient results. New domestic facilities are not coming online fast enough, and the economics of domestic production remain difficult to justify during periods of relative stability.
The authors offer six recommendations for healthcare organizations: moving away from just-in-time inventory practices toward greater days-on-hand buffer stocks; building and maintaining relationships with external partners including state agencies, healthcare coalitions, and group purchasing organizations; developing or connecting with regional healthcare coalition networks; incorporating supply chain disruption thresholds into business continuity plans; expanding telehealth capacity to maintain access when transportation costs rise; and implementing closed-loop recycling for helium and non-contaminated medical plastics to reduce dependence on constrained global suppliers.
On the policy side, the report calls for sustained investment in domestic pharmaceutical, medical device, and critical raw materials manufacturing, while cautioning that emergency use of authorities could introduce its own volatility into the supply chain.
Sources and further reading: