US aid freeze sows disruption in HIV, malaria product supply chains
The U.S. Agency for International Development (USAID) usually places around $600 million of orders annually for products such as medicines, diagnostic tests and equipment like bed nets, as part of one of its biggest health supply contracts including HIV, malaria and reproductive health.
But the freeze has put orders and forecasts, particularly those made months in advance, on hold. That will likely have far-reaching implications for deliveries, cost, and timings, according to two sources with knowledge of the global health supply chain and others working in the sector.
Companies including the U.S. firm Abbott (ABT.N), opens new tab, Switzerland's Roche (ROG.S), opens new tab, and India's Cipla (CIPL.NS), opens new tab are all likely to be affected, alongside others including Hologic (HOLX.O), opens new tab, Viatris (VTRS.O), opens new tab, Hetero and Aurobindo (ARBN.NS), opens new tab, the first of the sources told Reuters.
"We are monitoring the situation closely. Our highest priority is to ensure that patients have continuous access to our diagnostic tests and treatments around the world," said a Roche spokesperson in response to Reuters' questions. The other companies either declined to comment or did not respond. The U.S. State Department did not immediately respond to requests for comment.
The first source said waivers from the U.S. government, intended to allow lifesaving work to restart, only applied to orders already moving around the world. Even those were not fully functional as the USAID payment system remained down, he said. Future funding and orders were more uncertain, even for companies where the raw materials have been assembled or the manufacturing capacity booked, he added.
Medicines and diagnostic tests for HIV and malaria, as well as preventive tools like bed nets and contraceptives, could be impacted, he said.
"There will be a huge backlog," said Fitsum Lakew Alemayehu, the African Union liaison manager at WACI Health, an African advocacy organization. "In Africa, millions have been on those treatments."
'BULLWHIP' EFFECT
The dismantling of USAID has already had significant impact across the globe, including shuttering HIV clinics, stranding emergency food aid, and halting research., opens new tab
For medical supplies, the freeze could also hit prices, because companies have been able to operate more efficiently knowing that they would continue to get orders from USAID, all of the sources said.
Prashant Yadav, a medical supply chain expert and senior fellow at the nonpartisan Council on Foreign Relations think tank, said the upheaval could upend this system of advance demand forecasts entirely, hitting prices and ultimately risking budget shortfalls across other buyers, like governments and global health funders.
He said it was an example of the "bullwhip" effect in supply chains, where "any small changes, even if they are for a short duration of time, get amplified at every level in the system". The term is derived from a scientific concept in which movements of a whip are amplified from the origin - the hand cracking the whip - to the endpoint.
Even if the aid freeze ends after a 90-day review, as the Trump administration originally suggested, restarting production will be complex and there could be legal issues, several experts said.
"This is a huge mess to untangle," said Tom Cotter, chief executive officer at Health Response Alliance, a nonprofit organization dedicated to ensuring equitable access to health services during emergencies.
here.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
8 minutes ago
- Reuters
What US stagflation risks mean for world markets
LONDON, Aug 18 (Reuters) - The spectre of U.S. stagflation is stalking global markets, causing some investors to position portfolios to dodge the potential damage that tariffs could wreak on growth and inflation in the world's dominant economy. Some 70% of global investors surveyed by BofA Global Research in early August said they expect stagflation - the combination of below trend growth and above trend inflation - in the next 12 months. Recent data showing U.S. labour market weakness, a sharp rise in U.S. core inflation and an unexpected surge in producer prices justifies this concern. But stocks around the world, including in the United States, remain near record highs and bond markets are calm, suggesting little panic even as U.S. stagflation risks move increasingly onto the radar. "Stagflation is in the mind of the market, but not the price," said Carmignac fixed income manager Marie-Anne Allier. Here's a rundown of how U.S. stagflation risks could play out across global markets. Persistent inflation, or the fear of it, can pummel longer-dated bonds by eroding the real value of fixed interest payments over time. Paul Eitelman of Russell Investments, which helps institutions manage more than $1 trillion of assets, said pension funds and insurers have become increasingly nervous about inflation hitting their bond portfolios. "If we had a another very weak employment report, that would significantly ramp up (U.S. stagflation) concerns," he added. Nor would non-U.S. bonds offer much protection. "Interest rates and the long end of the bond curve are highly correlated between the G7 economies," said Mayank Markanday, portfolio manager at Foresight Group. "If you see a big selloff in the long end of the U.S. curve we are likely to see impact on some of the others." There has already been a selloff in long-dated bonds across major markets. While 2-year yields are lower in the U.S., Germany and Britain this year, 30-year yields are higher. If sticky inflation stops the Federal Reserve from cutting rates this year, short-dated bonds would suffer too. Fidelity International multi-asset manager Caroline Shaw said the group expected U.S. growth to slow and stagflation was one of their two core scenarios. She remains positive on U.S. big tech stocks but in mid-July bought derivatives called put options that would profit should the more cyclical Russell 2000 small cap index fall. (.RUT), opens new tab As with bonds, stocks globally are likely to suffer, even if stagflation is confined to the U.S. Since 1990, world stocks (.MIWD00000PUS), opens new tab have fallen by an average of 15% at times when U.S. manufacturing activity data showed both a contraction and higher than average prices, according to State Street head of macro strategy Michael Metcalfe. But stocks keep surging for now, which Metcalfe says suggests investors think "the disruption to the global trading system isn't going to disrupt big tech earnings." Markets are ignoring bad news and focusing on the good, said Man Group chief market strategist Kristina Hooper. "It's like parenting, you only want to see the best in your children, and we're at a stage where it's possible for markets to do that," she said. Nabil Milali, multi-asset and overlay portfolio manager at Edmond de Rothschild Asset Management, is another investor who says data shows the U.S. economy is heading for stagflation. He anticipated further weakness in the dollar against the euro . Stagflation presents twin risks for the greenback, said Milali, because weak growth can devalue a currency and persistent inflation erodes its purchasing power abroad. The euro is up over 12% against the dollar so far this year. Other currencies like the Japanese yen and Britain's pound have also strengthened. Here's where it gets harder, but stagflation could provide another reason to keep buying gold, already the go-to asset class for investors worried about a variety of risks, said Man Group's Hooper. Other assets that offer protection against inflation could be attractive, such as short-dated inflation linked bonds, said Foresight Group's Markanday. Professional investors are turning to complex derivatives products like inflation swaps, which rise in value when price indices exceed a certain level, Russell's Eitelman said. The U.S. two-year inflation linked swap is near its highest in over two years.
Reuters
10 minutes ago
- Reuters
Britain cancels extra border checks for animals ahead of UK-EU deal
LONDON, Aug 18 (Reuters) - Britain is suspending the previously planned introduction of extra border checks on live animal imports from the European Union to ease trade ahead of the implementation of a deal agreed in May to reduce friction, the UK government said on Monday. Extra border checks on some animal and plant goods imported from Ireland will also be suspended. May's sanitary and phytosanitary (SPS) deal, part of a wider reset in UK-EU relations, will reduce paperwork and remove routine border checks on plant and animal products moving between the UK and EU, while maintaining high food standards. However, the deal is yet to be implemented as details are still being negotiated. In the meantime, British traders must continue to comply with the terms of the UK's Border Target Operating Model (BTOM) that protect the country's biosecurity, including existing checks. The suspension of the introduction of additional border checks follows the announcement in June that checks on EU fruit and vegetable imports had been scrapped. A spokesperson for the Department for Environment, Food and Rural Affairs could not give a timeline for implementation of the SPS deal. When Britain left the EU's single market in 2021, the EU immediately enforced its rules, leading to port delays and prompting some British exporters to stop selling to the bloc. Britain was much slower implementing its post-Brexit border arrangements, and after repeated delays and confusion it started to set new rules in phases from January last year.
Daily Mirror
40 minutes ago
- Daily Mirror
Major NHS prescriptions update from Government amid call for cost-free medication
Campaigners have called for a set of conditions to be added to the NHS prescription charge exemption list The Department of Health and Social Care has issued a key update on NHS prescriptions after thousands complained of 'unfair' costs. Its message follows a petition calling for Sickle Cell Disease (SCD) to be added to the charge exemption list, meaning many patients would no longer have to pay for medication. SCD describes a group of serious, life-long health conditions that impact red blood cells. It's especially common among people with an African or Caribbean family background, and may give rise to several debilitating symptoms. This particularly includes 'sickle cell crises', being painful episodes that may last days or even weeks, an increased risk of infections, and anaemia, causing worsened tiredness. Unlike treatments for diabetes, epilepsy and cancer, SCD medication currently isn't listed on the prescription cost exemption list. Creators of the parliamentary petition argue this is 'unfair' and many patients 'may not be able to work but still face monthly costs for vital medication'. However, the Government said that 'extensive arrangements' are already in place to ensure medication is affordable in England, and added that there are 'no current plans' to add SCD to the exemption list. In its petition response, issued on August 11, the Government said: "The Government has no current plans to review the list of medical conditions that entitle someone to apply for a medical exemption certificate, including relating to Sickle Cell Disease. "There are extensive arrangements in place in England to ensure that prescriptions are affordable for everyone. Approximately 89% of prescription items are dispensed free of charge in the community in England, and there are a wide range of exemptions from prescription charges already in place for which those with sickle cell disease may be eligible." It's crucial to note that a medical exemption certificate, not the medical condition, entitles certain patients to free NHS prescriptions. You can obtain one by speaking to a GP or doctor before completing an application form. These usually last five years before a renewal is needed. However, anyone under 16, 16 to 18-year-olds in full-time education, and those over 60 are already entitled to free NHS prescriptions and do not need an exemption certificate. The Department of Health and Social Care also added that people on low incomes can apply for further help with health costs through the NHS Low Income Scheme. This provides help to those who are not automatically exempt from charges but may still be entitled to 'full or partial help if they have a low income and savings below a defined limit'. Its response added: "People who need to pay NHS prescription charges and need many prescription items could save money with a prescription prepayment certificate (PPC), which allows people to claim as many prescriptions as they need for a set cost. "A 3-monthly PPC (costing £32.05) or an annual PPC (costing £114.50) will save people money if they need four or more items in 3 months or 12 or more items in 12 months. "To help spread the cost, people can pay for an annual PPC by 10 monthly direct debits. A holder of a 12-month certificate can get all the prescriptions they need for just over £2 per week." The original petition, entitled 'Add Sickle Cell Disease to NHS Prescription Charge Exemption List', currently has just over 25,700 signatures. If it reaches 100,000 signatures, it will be considered for a debate in Parliament. You can view the petition in full here. Additional information about the NHS Low Income Scheme is also available here, and a link to purchasing PPCs can be found here.
