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Once a global leader in drug production, the United States now finds itself grappling with a growing drug shortage. In this issue, we delve into the factors driving this crisis, its profound human impact, and the strategies the U.S. is deploying to combat the shortage.

Under Dose 💊

Invisible enemies are often more dangerous than visible ones.

Bacterial infections were one such enemy, plaguing humanity for centuries until a Scottish microbiologist named Alexander Fleming discovered penicillin — the first antibiotic — in 1928. It was a groundbreaking moment in medical history, but there was a problem: no one knew how to mass-produce it.

It took 12 years and the determination of one nation — the United States — to solve this challenge. By the 1940s, American scientists and pharmaceutical companies had perfected the mass production of penicillin, making it widely available to millions. This achievement saved countless lives and made the United States a global leader in pharmaceutical innovation.

Yet today, the story has shifted. The U.S., once the world’s pharmaceutical powerhouse, now faces a different kind of invisible enemy: a perpetual drug shortage. The US is now heavily reliant on foreign nations for critical medications and has been facing drug shortages for over a decade now. 

Let’s take a look at what caused this shortage, its impact on average Americans, and what the government is planning to do to fix it.

Outsourced drugs

The pharmaceutical industry in the United States has long been a cornerstone of global drug innovation and production. In the mid-20th century, the U.S. was the world’s pharmaceutical powerhouse, with domestic manufacturers producing the lion’s share of drugs for both domestic use and international markets. 

In the late 1940s, the United States produced over half of the world's pharmaceuticals and accounted for one-third of international trade in medicines. At its height, the U.S. pharmaceutical industry was thriving, producing over 90% of the drugs used in the country, all within its borders.

In short, the pharmaceutical industry in America was flourishing. It had everything going for it—cutting-edge factories, a skilled workforce, and massive investments in research and innovation. But soon, things began to change. By the late 20th century, a massive wave of outsourcing reshaped the American pharmaceutical landscape.

A combination of economic, regulatory, and geopolitical factors drove the move toward outsourcing pharmaceutical production. In the US, domestic pharmaceutical production became expensive due to rising labor costs, stringent environmental regulations, and the growing complexity of drug manufacturing processes.  

India, with its strong base in generic drug manufacturing, and China, with its expertise in producing active pharmaceutical ingredients (APIs), became pivotal players. 

According to the United States Senate Committee report on the health and national security risk of drug shortages between 2010 and 2015, the number of Chinese-based API manufacturers registered with the FDA more than doubled from 188 in 2010 to 445 in 2015.  By 2020, it was estimated that over 90% of APIs used in U.S. drugs were sourced from India and China. 

Regulatory differences also greatly influenced the decision to outsource. For instance, China and India had fewer regulatory hurdles and were willing to adapt quickly to global pharmaceutical standards. This regulatory flexibility allowed companies to ramp up production and lower compliance costs. 

The U.S., on the other hand, had a more stringent regulatory framework, which, while ensuring higher safety and quality standards, also increased production timelines and costs.

Also, the outsourcing trend was not merely a cost-saving measure; it was also a strategic response to competitive pressures. U.S. pharmaceutical companies sought offloaded production to these more affordable markets to maintain their profit margins.

The result: the percentage of drugs manufactured domestically in the U.S. steadily declined while imports surged. For example, in 1990, pharmaceutical imports accounted for just under 10% of the total U.S. drug supply.

By 2020, this figure increased to nearly 40%, reflecting a fourfold increase over three decades. This dependency on foreign production fundamentally altered the dynamics of the pharmaceutical supply chain.

Yes, outsourcing production made drugs cheaper, but it also planted the first seeds of the drug shortage problems the U.S. faces today. It became glaringly apparent during the COVID-19 pandemic.

Pandemic effect

During the COVID-19 pandemic, the United States faced an alarming shortage of drugs and medical equipment, adding immense pressure to an already overwhelmed healthcare system. Global supply chain disruptions, a sudden surge in demand, and manufacturing delays all came together to create a crisis that put millions of patients at risk.

According to the American Society of Health-System Pharmacists (ASHP), by mid-2020, over 200 essential medications were in critically low supply. Many of these drugs were vital for treating COVID-19 patients and managing other serious conditions that worsened during the pandemic.

Hospitals struggled to secure sedatives like propofol and midazolam, which were crucial for ventilated patients. Similarly, albuterol inhalers, a lifeline for patients suffering from respiratory issues, also ran out in many facilities. 

According to the American Society of Health-System Pharmacists (ASHP), by mid-2020, over 200 essential medications were in critically low supply

The shortages didn’t stop there. Chemotherapy drugs for cancer patients, antibiotics for bacterial infections, and antivirals for chronic illnesses became increasingly hard to find. One of the most prominent examples was remdesivir, one of the first treatments approved for emergency use against COVID-19. Supplies ran out quickly, forcing hospitals to carefully assign doses and prioritize only the sickest patients.

The crisis extended beyond drugs. Hospitals and healthcare workers were left scrambling for basic protective gear. The demand for personal protective equipment (PPE) like N95 masks, gloves, and gowns shot up by over 1,000% in some areas. This left healthcare workers, already on the frontlines of the pandemic, without the supplies they needed to stay safe.

Sadly, nothing has changed for the US pharmaceutical supply chain since COVID-19. 

Current state 

Today, the U.S. pharmaceutical supply chain is under immense strain, with drug shortages reaching a record high of 323 active shortages this year — the highest in two decades, according to the American Society of Health-System Pharmacists (ASHP). This crisis has highlighted critical weaknesses in how essential drugs are produced and distributed. 

The elephant in the room that needs to be addressed is the manufacturing problem, which lies at the heart of the drug shortage crisis. To be specific, the shortage in the manufacturing of generic drugs and sterile injectables which accounts for a large number of current shortages.

Generic drugs play a vital role in the U.S. healthcare system, accounting for nearly 90% of all prescriptions filled. These medications provide an affordable alternative to brand-name drugs, saving the healthcare system billions of dollars annually and ensuring that life-saving treatments are accessible to millions of Americans.

However, the heavy reliance on generics has a downside: their production often operates on low-profit margins, discouraging manufacturers from investing in robust supply chains or modern production facilities.

This financial pressure has contributed to recurring shortages, particularly for older, off-patent medications that are no longer seen as profitable. When shortages occur, patients are forced to turn to brand-name alternatives, which can cost up to 20 times more, or go without medication altogether.

According to the U.S. Pharmacopeia (USP), in 2023, the average price of sterile injectable medicines in shortage was nearly 8.5 times lower than those not in shortage. 

The supply chain itself is another weak link. For example, the U.S. is heavily dependent on international suppliers, like China and India, for active pharmaceutical ingredients.  

Finally, quality control failures add another layer of complexity. For instance, the manufacturing of sterile injectables demands flawless processes, as any contamination can result in recalls or shutdowns — further worsening shortages. A notable example is the shortage of cisplatin, a critical cancer treatment drug, in the U.S., which was fueled by the closure of a production plant in India in 2023 due to contamination issues.

The drug shortage crisis is not just an abstract supply chain problem — it’s a healthcare issue that is affecting millions of Americans.

Human impact

The drug shortage crisis in the United States is having a profound impact on millions of people, disrupting treatments for critical conditions like ADHD, diabetes, and cancer. 

ADHD affects approximately 11.4% of U.S. children aged 3–17 years; this is about 7 million children. In the US, an estimated 15.5 million adults have ADHD, which is 6% of the adult population. These medications are vital for managing symptoms and helping patients function effectively in their daily lives.

Sadly, ADHD medications, such as Adderall (amphetamine) and Vyvanse (lisdexamfetamine), are among those in critically short supply, with nearly 75% of those on these medications having reported difficulties in filling prescriptions.

Credit: FDA

For diabetes patients, shortages of medications like Ozempic (semaglutide) and Mounjaro (tirzepatide) have created additional hurdles. These drugs are essential for managing type 2 diabetes, and their scarcity has left many patients without effective options for controlling their blood sugar levels.

Cancer patients are also feeling the brunt of the shortages, with life-saving drugs like cisplatin and carboplatin in critically low supply. These medications are essential for treating various cancers, including lung, ovarian, and testicular cancer. The shortage has forced oncologists to delay treatments or use less effective substitutes, which can have severe consequences for patient outcomes.

These shortages are affecting millions of lives, leading to treatment delays, medication rationing, and increased reliance on less effective or more expensive alternatives. 

Amid this crisis, one pressing question remains: What is the United States government doing to heal the medical supply chain and make it more resilient?

Bipartisan efforts 

Policymakers in the United States are coming together across party lines to tackle the rising issue of drug shortages. One important step in this direction is the End Drug Shortages Act, introduced in late 2024.

This act aims to enhance communication between pharmaceutical manufacturers and the FDA, which will help prevent supply chain disruptions before they happen. The FDA believes that better reporting mechanisms could have reduced more than 60% of drug shortages reported between 2020 and 2023.

End Drug Shortages Act was introduced in Nov 2024

The Biden administration has also played a crucial role in tackling the crisis. In 2023, President Biden expanded the Defense Production Act (DPA) to include pharmaceuticals, allocating $60 million to bolster domestic manufacturing of critical APIs and essential medicines. 

Furthermore, the administration launched the National Strategy for a Resilient Public Health Supply Chain in 2022, focusing on increasing transparency in drug supply chains, incentivizing U.S.-based manufacturing, and enhancing stockpiles of essential medicines to prevent shortages during emergencies.

The Protect Our Essential Medicines Act, which focuses on safeguarding the availability of critical medications, is a recent congressional development that strengthens the pharmaceutical supply chain. The act requires manufacturers to implement robust plans to prevent shortages, enhance supply chain transparency, and incentivize domestic production to reduce reliance on foreign sources. 

Conclusion 

It’s high time the United States takes decisive action to heal its broken drug supply chain. Millions of Americans depend on these medications—not just for their daily lives but for their very futures. The current state of drug shortages has exposed vulnerabilities that must be addressed with urgency and determination.

Domestic manufacturing must be prioritized and significantly expanded in the coming years. The pharmaceutical supply chain is not just a healthcare issue but a national security matter. The U.S. reliance on foreign nations, particularly China, for critical active pharmaceutical ingredients (APIs) leaves the country vulnerable to geopolitical tensions and supply disruptions.

Additionally, it is important to prepare for future shortages before they happen. A well-coordinated system that continuously monitors the drug supply chain identifies vulnerabilities, and implements preventive measures is essential. This includes maintaining strategic stockpiles of essential drugs and raw materials, as well as fostering partnerships with allied nations to diversify sources. 

Yes, Congress is already making strides toward addressing these issues with bipartisan legislation and executive actions. However, the focus must be sharper and the efforts more unified. 

Finally, federal investment and legislation alone won’t solve the problem. There has to be a seamless public-private partnership to combat the shortage. Collaborations between government agencies, private manufacturers, and research institutions can drive innovation and make America healthy again.

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!