Why Canada needs to build its own medical supply chain now

Take helium, for example. Most people associate helium with birthday balloons, but it is actually the lifeblood of MRI machines, which need the gas to stay cold enough to function. Qatar produces a massive one-third of the world’s supply of helium, but missile strikes from Iran have essentially shut down the country’s shipping terminals. Because of this, Canada’s biggest helium distributor has declared “force majeure”—basically a legal “get out of jail free” card because they might not be able to fulfill their orders.

If this keeps up, Canadian hospitals might have to start rationing access to MRIs for “life-or-limb” cases only.

It’s not just high-tech gas, either. The cost of basic medical supplies like medical gloves has spiked by up to 40% because the raw materials—plastics and synthetic rubber—are getting more expensive. For a major hospital, a 40% jump in the cost of plastic disposables isn't just a rounding error: it can mean millions of dollars in unexpected costs.

While we want our hard-earned tax money to go toward patient care, it is instead being swallowed up by rising global prices from supply shocks.

Getting global supplies to Canada has become a logistical nightmare. Usually, medical equipment and drug components from Asia and India travel through the Suez Canal. But with the war making those waters dangerous, shipping lines are taking the long way around, adding “conflict surcharges” to every bill. Marine insurance premiums for transiting the war’s conflict zones have risen ever higher since the war began.

Generic drugs Canadians rely on are also at risk. India is the largest source of our generic medicines, but because shipping and major air hubs in the UAE and Qatar are disrupted, those drugs are being rerouted. This adds transportation and insurance costs that will eventually show up in hospital drug prices.

The ripple effects are even stopping us from building for the future. The math of new construction is impossible for governments to ignore and B.C.’s recent decisions halting hospital expansion and pausing long-term care home construction are likely to become more common across the country.

Even our plan to fix the health workforce staffing shortage is in jeopardy.

The federal government set aside billions to hire thousands of new doctors and nurses by 2029. But with energy and food costs soaring, hiring incentives don’t go as far as they were supposed to. Higher inflation is leading to tougher wage demands during labour negotiations, as healthcare worker wages struggle to keep up with inflation.

So, how do we fix it? Canada is but a small player on the global scene.

One not-so-popular idea is a “windfall tax” on energy companies. Since Canada exports energy, our oil and gas sectors are making large profits because of high oil prices. The government could take a larger slice of those profits and pump them back into the healthcare system.

But the real lesson here is that Canada is too dependent on the rest of the world for its basic survival and just-in-time logistics aren’t realistic during prolonged global conflicts.

This war has exposed a strategic weakness: Canada relies on global shipping routes and foreign transport hubs that can be broken by a single well-aimed missile. We didn’t learn our lesson from the global pandemic and require hospitals to buy at home.

To protect ourselves from the impact of future conflicts, we need to focus less on seeking the lowest price and instead build more resiliency in our health system by investing in sovereign supply chains—which is a fancy way of saying we need to start making more of our own medical and construction supplies right here.

If we don't, even healthcare will be at the mercy of the next crisis happening halfway across the globe.

Jason M. Sutherland is the UBC Professor of Health Services and Policy and Director of the Centre for Health Services and Policy Research in the School of Population and Public Health at the University of British Columbia.