Drug Shortages Explained: Inside the Broken Supply Chain

The pharmaceutical supply chain is under unprecedented strain. Between 2018 and 2023, 258 unique active ingredients entered national shortages in the US, representing nearly 2,000 individual drug products. According to USP's 2025 Annual Drug Shortage Report, 89% of drug shortages in 2024 carried over from the previous year, with more than 40 lifesaving drugs in shortage for over three years. The consequences are tangible: delayed care, increased medication errors, and elevated patient mortality.

Four systemic drivers underlie these shortages, low pricing that discourages investment, geographic concentration of manufacturing (particularly in China and India), process complexity, and quality failures. Together, they create a fragile, domino-like system with little margin for disruption. The COVID-19 pandemic didn't create these vulnerabilities, but it made their consequences impossible to ignore.

Industry professionals describe a self-reinforcing cycle of caution. Mike Stenberg, Vice President, Business Development, LGM Pharma, explained "When you're pessimistic about your growth potential and you're worried about the supply chain and face an ever-increasing pressure on decreasing prices, your natural reaction in the industry is to slow down, be more cautious, invest less. That becomes a self-fulfilling prophecy."

In response, companies are rethinking sourcing strategies, vetting suppliers deeper down the chain, building safety stock, and pursuing geographic diversification. Reshoring, however, is costly: U.S. manufacturing runs 30 to 50 percent higher than in China, India, or Mexico. Policy is also catching up. Europe's newly published Critical Medicines Act encourages local production and resilient infrastructure. In the U.S., USP's Medicine Supply Map now tracks upstream supply chains for all approved medicines. Tony Lakavage, executive vice president and head of Global External Affairs, USP explained, "There are levers that we can use to make the supply chain stronger, more advanced manufacturing technology, near-shoring product development, and diversifying more broadly."

References

1. Pharmaceutical supply chain resilience: lessons from the pandemic. DrugPatentWatch. Published February 24, 2026. Accessed March 20, 2026. https://www.drugpatentwatch.com/blog/pharmaceutical-supply-chain-resilience-lessons-from-the-pandemic/
2. McGeeney JD, McAden E, Sertkaya A. Analysis of Drug Shortages, 2018-2023. Data Brief. Prepared by Eastern Research Group, Inc. for the Office of the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services (HHS); January 8, 2025. Accessed March 20, 2026. https://www.ncbi.nlm.nih.gov/books/NBK611681/
3. ​The generic injectables market in USA: a critical pillar of healthcare facing growing strain. GRG Health. Published September 9, 2025. Accessed March 20, 2026. https://www.grgonline.com/post/the-generic-injectables-market-in-usa-a-critical-pillar-of-healthcare-facing-growing-strain