Reported by Jennifer Rigby and Lisa Baertlein
The recent halt in foreign aid by the U.S. government has disrupted the supply chain for vital medical products needed to combat diseases like HIV and malaria in some of the world’s most impoverished nations. This freeze is expected to create life-threatening shortages that could persist for months, according to sources familiar with the situation.
The U.S. Agency for International Development (USAID) typically places approximately $600 million worth of orders annually for essential medical supplies, including medicines, diagnostic tests, and equipment such as bed nets, as part of a major health supply contract covering HIV, malaria, and reproductive health. However, the freeze has led to a suspension of orders and forecasts, particularly impacting those made well in advance. This disruption is likely to have far-reaching consequences for delivery schedules, costs, and availability, say insiders in the global health supply chain.
Major companies like Abbott from the U.S., Roche from Switzerland, and Cipla from India are among those expected to be affected by this freeze, as well as others like Hologic, Viatris, Hetero, and Aurobindo, according to one of the sources.
Roche, in response to inquiries from Reuters, stated, “We are closely monitoring the situation. Our top priority is to ensure continuous access to our diagnostic tests and treatments for patients worldwide.” Other companies either refrained from commenting or did not respond, while the U.S. State Department did not provide immediate feedback.
The sources revealed that waivers granted by the U.S. government to resume life-saving operations only apply to existing orders in transit, with the USAID payment system still inactive. Future funding and orders remain uncertain, even for companies with raw materials in stock or manufacturing capacity reserved, creating a potential backlog in the production and distribution of medicines and tests for HIV and malaria, as well as preventive items like bed nets and contraceptives.
The repercussions of this aid freeze have already been significant, leading to the closure of HIV clinics, disruption of emergency food aid, and suspension of critical research efforts worldwide. The freeze could also impact prices, as companies have relied on consistent orders from USAID to operate efficiently.
Prashant Yadav, a medical supply chain expert and senior fellow at the Council on Foreign Relations, warned that the disruption could destabilize the demand forecast system, affecting prices and causing budget shortfalls for other buyers like governments and global health funders. He likened this situation to the “bullwhip” effect in supply chains, where even minor disruptions can have amplified consequences across the entire system.
Even if the aid freeze is lifted following a 90-day review, as initially suggested by the Trump administration, restarting production and supply chains will be a complex and challenging process.
“Disentangling this situation is going to be a significant challenge,” remarked Tom Cotter, the CEO of Health Response Alliance, a nonprofit committed to promoting fair access to healthcare services in emergencies. According to multiple experts, there may be legal complications associated with the issue. This insight was shared by Jennifer Rigby, with additional reporting provided by Maggie Fick in London and Rishika Sadam in Hyderabad.
