Oil price volatility is a hidden driver of healthcare supply chain costs

What’s happening

Healthcare supply chains depend on fuel and petroleum-based inputs more than many shippers realise. Beyond emergency response fleets that rely on gasoline and diesel, petroleum is also a manufacturing component in widely used healthcare plastics (including IV bags, surgical tools and heart valves). Some pharmaceuticals include petroleum-derived compounds used in medications such as antibiotics, pain relievers and anaesthetics. Petroleum-based components are also used in high-tech equipment like ventilators, MRI machines and CT scanners.

Why it matters for healthcare supply chains

Oil price swings don’t just affect fleet fuel costs; they ripple through the production and transport of petroleum-based medical supplies, pharmaceuticals and critical equipment. As input and transportation costs fluctuate, healthcare shippers face higher risk of disruption across global lanes and temperature-controlled networks. Managing fluctuating operational costs is a necessity, making budgeting and sourcing resiliency a critical skill for supply chain teams.

What healthcare shippers can do to build resiliency

• Reduce exposure to single points of failure: Work with vendors that have diverse supply chains to avoid overreliance on single source production.
• Plan purchases more strategically: Use strategic purchasing approaches to help manage through periods of pricing volatility.
• Model transportation scenarios to improve efficiency: Healthcare shippers can improve logistics efficiencies by optimising supply chains through modelling scenarios with different modes of transportation and partnering with logistics providers that offer a wide variety of services to reach cost effective solutions.
• Ensure access to reliable capacity: This is especially important for critical and temperature-controlled deliveries, to keep essential products moving regardless of energy market shocks.

Policy watch: Changing Medicaid requirements

New work requirements established under the H.R. 1 act could result in between five and ten million Americans losing Medicaid coverage beginning in 2028. The two main drivers: more frequent eligibility checks and expanding work requirements into a national policy (work requirements are currently implemented at the state level in limited capacity). Compliance changes could create confusion and challenges with accessing and using online portals and that reduced Medicaid benefits may restrict access to treatments and services.

Implication for shippers

Keep an eye on how payer mix and demand patterns may change over time in response to coverage shifts and pressure-test distribution and service models for resilience.

Tariff updates

Pharmaceutical imports face sweeping Section 232 tariffs 

After an investigation by the U.S. Secretary of Commerce, on 2 April, 2026, the White House issued an Executive Order imposing new tariffs on imports of patented pharmaceuticals and associated pharmaceutical ingredients under Section 232.

The investigation found that the “United States is heavily reliant on imports, threatening to limit United States access to life-saving medications in the event of global supply chain disruption due to geopolitical or economic disruption…[with] approximately 54 per cent of patented pharmaceutical products distributed domestically…produced outside the country.”

While the default duty on patented pharmaceuticals and ingredients is set at 100%, there are a variety of company and country-specific exclusions and reductions outlined in the proclamation, including for those companies that have “onshoring plans” approved by the Secretary of Commerce. Countries with previously announced trade frameworks (i.e., European Union, Switzerland, United Kingdom and Japan) will see their tariffs align with the levels contained in those deals.

The tariff rates will be effective on 31 July, 2026 for companies listed in Annex III of the proclamation, with all others effective on 29 September, 2026.

Expanded metal tariffs raise rates and broaden enforcement scope 

On 2 April, 2026, the White House issued a new proclamation adjusting the tariffs on the imports of aluminium, steel and copper into the United States effective 6 April 2026. The action raises tariff rates, expands the duty base and tightens enforcement, with immediate implications for importers of metal products and metal-containing derivatives.

Additionally, Section 232 tariffs now apply to the entire customs value of covered aluminium, steel and copper articles and their derivative products, regardless of actual metal content, eliminating prior valuation approaches that applied duties only to the metal portion of the article. For more information and details, see our Client Advisory on the topic. 

For other developments about potential IEEPA tariff refunds, Section 122 application and the process for Section 301 investigations, go to the Trade Policy & Customs section of this report.

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