The cost-effectiveness of inventory reserves for preventing drug shortages in Germany: a health-economic evaluation

Based on a recent legislative change in Germany, maintaining a six-month inventory reserve for pharmaceuticals has become the primary strategy used by the German government to prevent shortages and stockouts. This study aimed to estimate the number of drug shortages preventable under the medicines stockpiling mandate and to determine the maximum stockpiling duration that remains cost-effective. The study adopted the perspective of the German social health insurance and analyzed a publicly available database containing information on all past drug shortages in Germany from the first entry in 2012 to May 2023 (n = 2768). The proportion of preventable drug shortages was estimated as a function of inventory duration. Additionally, secondary data were used to ascertain the costs associated with inventory carrying (including storage, capital, and expiration costs) and the gain in quality-adjusted life years (QALYs) resulting from avoiding relevant shortages of medication packages. Maintaining a six-month inventory could prevent approximately 70% of drug shortages. The empirical analysis revealed a diminishing incremental benefit of extending the drug supply duration, leading to an increasing marginal cost-per-QALY ratio. Based on a health opportunity cost-based cost-effectiveness threshold, the cost-effective upper limit of inventory duration under the current assumptions was approximately 922 days. This estimate was particularly sensitive to assumptions about FIFO ("first in, first out") warehouse procedures, number of drug shortages, and the valuation of health gains. This study indicates that Germany's recently introduced six-month inventory mandate could substantially reduce drug shortages and deliver good value for money, with a very high probability of cost-effectiveness across the willingness-to-pay thresholds examined in the sensitivity analysis. However, key uncertainties-especially around FIFO procedure compliance, health opportunity costs, and the clinical consequences of shortages-warrant ongoing monitoring and periodic reassessment as new evidence becomes available.