Value chain disruptions: policy responses to antibiotic shortages in global value chains

Abstract

Significant disruptions have recently afflicted global value chains (GVCs), causing shortages of essential products like antibiotics. Antibiotic shortages are a prioritized issue for policymakers because they increase patient suffering and healthcare costs. Focusing on the case of Sweden, we use a unique dataset of generic antibiotic GVCs and show that more than three-quarters of them entail substantial shortage risk. Through extensive qualitative data, we first identify six policies currently under discussion by Swedish policymakers to address antibiotic shortages, and then discuss their potential impact on the configuration of antibiotics GVCs, as well as how these policies change when moving from the Swedish to the EU context. Our analysis shows specifically that mandatory parallel sourcing, relocations, and new reimbursement models are the three policies with the strongest expected effects. This study contributes to the GVC and international business literature by introducing three types of mechanisms (reinforcing, gathering, and multiplying) whereby policy can affect the resilience of GVCs. We also contribute novel insights about necessary changes in policies when moving from the national (Sweden) to the supranational (EU) level, as well as about how different types of GVC governance frame the relevance of policies for other small high-income countries.