The consequences of medicine shortages on healthcare utilization and care fragmentation

We evaluate the consequences of medicine supply disruptions for healthcare utilization, care fragmentation, and costs. To provide causal evidence on such systemic effects, we examine the global recall of valsartan in July 2018, a widely used antihypertensive medicine. Drawing on German healthcare claims data covering 30,976 affected patients, we employ a difference-in-differences design with matched patients unaffected by supply disruptions. We find that nearly 70% of valsartan users discontinued medication but switched to other treatments, keeping the overall provision of antihypertensive care stable. Pharmaceutical costs rose, driven primarily by a 5.3% increase in costs for antihypertensives, imposing a significant financial burden on insurers. The recall temporarily increased general practitioner service utilization and care fragmentation, while pharmacy fragmentation persisted for up to a year, affecting one in five patients. Our quantification of hidden adjustment costs and burden-shifting effects in outpatient care underscores the need for pharmaceutical shortage management policies that recognize the temporary inefficiencies specifically introduced into medicine dispensing. Our findings generalize to other sudden supply disruptions and likely represent a benchmark of the consequences of medicine shortages.