Drug shortages have become a persistent challenge for the U.S. healthcare system, affecting hospitals, pharmacies, providers, and patients alike. The FDA defines a drug shortage as “a period of time when the demand or projected demand for the drug within the United States exceeds the supply of the drug.” Shortages can create long-term operational challenges that require substantial planning and resource allocation. When shortages occur, providers often seek alternative therapies, modify treatment plans, or delay care altogether.
A major reason for concern stems from the fact that shortages tend to persist for extended periods. Pharmacy Times reported that 89% of 2024 drug shortages active had already existed in 2023. The 2025 USP Annual Drug Shortages Report further noted that the average duration for a drug shortage is now over five years. These multi-year shortages suggest that structural issues within the pharmaceutical supply chain drive shortages, rather than temporary disruptions.
These disruptions lead to significant financial consequences as well. The American Hospital Association details that hospitals have reported drug-expense increases of as much as 20% due to the need to obtain alternative medications and implement new administration procedures. The economics of generic drugs also contribute to this trend. FDA shortage data found that 84% of drugs in shortage were generic products, while drugs costing less than $1 per unit accounted for 56% of shortages. Because these products often operate with extremely low profit margins, manufacturers have limited financial incentives to invest in additional production capacity or supply chain redundancy. As a result, even relatively small disruptions can have significant consequences for drug availability.
Together, these factors emphasize why drug shortages remain a priority for regulators and healthcare organizations. The challenge extends beyond individual products and reflects broader issues involving supply chains, manufacturing capacity, and market economics.
Factors Reducing Drug Shortages
After years of worsening drug shortages, the U.S. pharmaceutical supply chain is showing signs of improvement in 2026. According to reports from ASHP, the number of active drug shortages has declined from a record high, and fewer new shortages were reported in 2025 than in any year since 2006. Although drug shortages remain a concern, several factors may help explain why overall shortages have fallen from recent peak levels. These include onshoring efforts, increased production and supplier participation, and the recovery from major disruptions such as the COVID-19 pandemic and natural disasters.
Onshoring
By onshoring pharmaceutical manufacturing, the U.S. can improve long-term supply chain resilience. Moving production to the United States will not only reduce dependence on overseas facilities but also help limit exposure to international transportation and supply chain disruptions.
The need for onshoring became increasingly apparent during the COVID pandemic, and recent policy efforts have increasingly emphasized domestic production. The White House’s April 2026 action on pharmaceutical imports directed the administration to pursue measures related to domestic manufacturing and established a framework for monitoring and enforcing approved onshoring plans. Although generic drugs were not initially subject to the new tariffs, the broader policy direction demonstrates the increasing focus on reducing dependence on foreign pharmaceutical supply chains. Major companies like Eli Lilly, Novartis, Johnson and Johnson, and Roche have pledged a total of more than $480 billion over the next 4 to 10 years in onshoring efforts, reflecting the growing emphasis on supply chain resilience.
Increased Production and New Suppliers Entering the Market
Another factor contributing to improvement of shortages comes from increased production and the entry of additional suppliers into the market. When shortages arise, both existing manufacturers and new market participants often work to increase available supply and restore access. This is especially true for generics with a higher price point and greater manufacturer margin.
The FDA often works with manufacturers to address production problems, expedite regulatory actions, facilitate alternative sources of supply, and use temporary importation when appropriate. FDA findings show that 42% of shortage drugs experienced significant production increases, either because new suppliers entered the market or existing manufacturers expanded output enough to restore at least half of the previously unavailable supply. Additionally, 30% of shortage drugs had their quantities fully restored to pre-shortage levels. These findings suggest that market responses can play a vital role in mitigating and eventually resolving shortages.
Rebounding From the Pandemic
Recovery from major disruptions may also help explain why shortages have improved in recent years. Events such as the COVID-19 pandemic exposed significant vulnerabilities within pharmaceutical supply chains, but the gradual recovery from these events has helped stabilize production and distribution networks. The COVID-19 pandemic placed extraordinary stress on the healthcare system and pharmaceutical supply chain. Demand for both pharmaceutical and medical products surged, while lockdowns and transportation disruptions complicated manufacturing and distribution efforts.
These pandemic-associated disruptions were tied to a unique period of crisis. As manufacturing operations resumed normal activity, transportation bottlenecks eased, and supply chains adapted to post-pandemic conditions. In this way, normalization from the pandemic itself may be one factor contributing to improvements in overall shortage conditions.
Looking at the pandemic from a different angle, COVID led to increased demands on FDA workers to manage the crisis. With the increased demands on the agency, high turnover and staffing shortages were reported. Because of these shortages, FDA foreign inspections dropped both during and following the pandemic. As FDA audits of manufacturing facilities decreased, facility shutdowns due to underlying quality issues were also likely to decrease, thus resulting in few drug shortages. In that respect, fewer drug shortages may not be seen as a good thing, as it could indicate that product with quality issues is making its way to the market.
Ongoing Risks: Supply Chain Bottlenecks
Despite encouraging signs of improvement, drug supply shortage risks remain. While overall shortages have fallen, the average duration of shortages has increased. This suggests that the industry’s challenges concentrate on more complex shortages.
A lower number of active shortages does not necessarily mean the underlying issues have disappeared. A drug may be manufactured by multiple companies, but those companies may rely on the same small number of active pharmaceutical ingredient (API) suppliers or key raw-material (KRM) sources. This creates a bottleneck effect. If a single API producer, manufacturing site, or specialized supplier experiences a quality problem, natural disaster, geopolitical disruption, or regulatory shutdown, multiple finished-drug manufacturers can be affected simultaneously. Supply chain bottlenecks can continue to affect manufacturing, sourcing, and distribution, particularly for products with limited suppliers or complex production requirements. Reliance on a single manufacturer of an API or KRM, whether that manufacturer is in the U.S. or abroad, increases the shortage risk.
Affected Drug Classes
The impact of shortages manifests in drug categories with complex manufacturing requirements or limited supplier networks.
Cancer medications represent one of the most significant areas of concern. Products such as cisplatin, carboplatin, oxaliplatin, and ifosfamide have experienced shortages due in part to the complexity of production and the limited number of manufacturers capable of producing them. According to the American Society of Clinical Oncology, more than 100,000 patients have already been affected, with liberal estimates reaching 500,000 patients. Among affected patients, 68% reported difficulty finding substitute medications, and 45% experienced treatment delays, with one in ten cancer patients reporting impacts to care, says the American Cancer Society. Estimates from Becker’s Oncology state that as many as 97% of hospitals were affected by shortages involving carboplatin and cisplatin in 2023. These drug shortages leave patients in critical condition, without the drugs they need.
Shortages often affect sterile compounded drugs. Because these medications must comply with rigorous safety and quality standards, the number of qualified manufacturers is often limited. This can create bottlenecks within the supply chain and make it more difficult to rapidly increase production when demand rises or disruptions occur.
Additionally, endocrinology and metabolic therapies often find themselves in shortage. Narrow therapeutic windows often mean that these products are more costly to manufacture. Many of these drugs have thin profit margins, making them unappealing for pharmaceutical manufacturers. Patients often need continuous therapy when these medications regulate their health, and major consequences lie ahead without consistent sourcing for these medications.
Tariff Pressure on Generic Drugs
In addition to existing supply chain challenges, tariff proposals could create new pressures on the generic drug market. Because many generic manufacturers already operate on thin margins, significant tariff increases will be difficult to absorb.
In July 2026, the administration announced plans for tariffs on imported generic drugs beginning in 2028, with a 100% tariff initially and a higher rate planned thereafter. Faced with higher costs, companies may have limited options: absorb the additional expense, pass costs on to customers, shift production to the United States over time, or discontinue products that become economically unviable. The long-term objective of onshoring may be to strengthen supply chain resilience, but policies that increase costs or disrupt existing global supply chains, before domestic capacity is available, could create short-term supply risks. Consequently, the debate extends beyond pricing and raises broader questions about future manufacturing decisions, supply chain strategies, and product availability.
Proactive Thinking and Competitive Therapeutic Alternatives
Addressing challenges that threaten long-term stability will require proactive planning throughout the healthcare system. Collaborative supply chain planning, predictive analytics, payer involvement, and clinical decision-support tools can help organizations anticipate shortages and develop mitigation strategies before disruptions affect patient care.
As shortages persist in certain drug classes and new pressures such as tariffs increase strain on generic manufacturers, demand may increasingly shift toward competing therapies, compounded alternatives, biosimilars, and other therapeutic substitutes. Manufacturers and providers that can offer reliable alternatives may benefit from increased utilization, as clinicians seek replacement options for products affected by recurring shortages.
When health systems fail to avoid shortages, alternative therapies may provide temporary solutions. Options include compounded medications and therapeutic substitutions. Compounding pharmacies may prepare customized formulations when no commercial equivalent exists, although these products require careful oversight and quality control. In other situations, clinicians may be able to substitute oral and injectable formulations when pharmacokinetically appropriate. While these alternatives cannot fully eliminate the impact of shortages, they can help preserve patient access to treatment during periods of constrained supply.
Can Drug Shortage Improvements Persist?
The recent decline in drug shortages is encouraging, but the industry should avoid viewing the trend as a sign that the problem has been solved. The more important question is whether the pharmaceutical supply chain is becoming more resilient.
Greater domestic manufacturing, diversified sourcing, stronger regulatory coordination, and sufficient manufacturing capacity could help create that resilience. At the same time, policymakers and purchasers may need to consider whether the lowest possible drug price should always be the primary objective for essential medicines.
The U.S. drug shortage landscape may be improving, but until the industry addresses the bottlenecks beneath the surface, the next disruption could still have an outsized impact on medication access and patient care.