New Research Highlights Supply Chain Risk As Key To Addressing Drug Shortages

A four-year research project by INSEAD and five other institutions reveals that understanding the interaction between medical criticality and supply chain risk is crucial for addressing drug shortages. The study was conducted by researchers from INSEAD, Tilburg University, BI Norwegian Business School, the Norwegian Institute of Public Health, Lancaster University, and the Rotterdam School of Management, developed the Risk/Criticality Matrix (RCM) to provide a structured approach to this issue, the organisation informed in a press statement on Tuesday.

Drug shortages are increasingly problematic in Europe and worldwide. The situation in France came to a head on 30 May when pharmacists protested in the streets over unreliable drug supplies. In the Netherlands, the total annual cost of drug shortages was approximately EUR 220 million in 2023. Meanwhile, pharmacists in England have warned that shortages are so severe that patients are at risk of immediate harm and even death.

The COVID-19 pandemic highlighted drug shortages, but this structural issue persists even without demand and supply shocks. Most shortages are managed reactively, without considering supply chain risk. Luk Van Wassenhove, Emeritus Professor of Technology and Operations Management, and Iman Parsa, postdoctoral researcher at the Humanitarian Research Group at INSEAD, led a project to address this gap.

Funded by the Research Council of Norway, the “Measures for Improved Availability of Medicines and Vaccines” (MIA) project analysed drug shortages in Belgium, France, Norway, Sweden, the Netherlands, and the UK. The result was the Risk/Criticality Matrix, a tool that classifies drugs based on supply chain risk (e.g., exported vs. locally produced) and medical criticality (e.g., blood thinners vs. erectile dysfunction drugs).

The study further states that the matrix helps align diverse stakeholders, including policymakers and international organisations, by visualising the dynamic interaction between medical criticality and supply chain risk. It guides decision-making to determine the most appropriate and affordable interventions without jeopardising patient care.

The Risk/Criticality Matrix is part of a continuous improvement loop that ensures interventions remain effective and aligned with changing conditions, such as pandemics or when a brand-name drug becomes generic. The study suggests , a systems approach, supported by evidence and stakeholder alignment, is essential to address the chronic issue of drug shortages exacerbated by the complexity and opacity of drug supply chains.