Originally published by our sister publication Specialty Pharmacy Continuum

By Myles Starr

Active drug shortages in the United States are down from an all-time high of 323 in early 2024. However, a new ASHP report reveals that shortages remain stubbornly high, with 270 reported through the first quarter of 2025.

“Even though the number of shortages has remained fairly flat for the last three quarters, they are still a problem,” Michael Ganio, PharmD, BCPS, FASHP, the senior director of pharmacy practice and quality at ASHP, told Specialty Pharmacy Continuum. “New shortages are occurring at about the same rate that older shortages are resolving. Furthermore, most of the drugs that are facing shortages are older generic medications. In some cases, we’re talking about bags of salt water, IV solutions or electrolytes. Newer brand-name medications typically are not in short supply.” 

As of March 31, the top five drug classes with active drug shortages were central nervous system agents, antimicrobials, fluids/electrolytes, hormone agents and chemotherapies, with, respectively, 49, 39, 29, 24 and 23 agents in each category facing shortages.

Dr. Ganio explained that the main underlying issue causing these shortages is a challenging economic environment for generic drug production. “These medications have relatively slim profit margins, so manufacturers need to have an economy of scale where they have as much market share as possible to make the drug production worthwhile or profitable,” he said. “This results in a situation where very few manufacturers are making a particular product, leading to less resilience in supply when there is a production disruption of some sort.”

Exact causes of disruptions are varied and often difficult to identify. Data from the University of Utah Drug Information Service, cited in the ASHP report, noted that the causes of more than half of drug shortages in 2024 were unknown (55%). Other reasons cited for shortages were manufacturing issues, natural disasters, business issues, supply and demand concerns, and issues with raw materials (17%, 9%, 9%, 8% and 2%, respectively).

Despite the manifold and sometimes murky causes of shortages, Dr. Ganio outlined three strategies he believes are essential to reducing their number.

  1. Committed volume contracts with payor organizations guarantee that a drug manufacturer will produce, and be paid for, predetermined amounts of a medication at a predetermined price. “The way contracts currently work is that a manufacturer makes a bid to a purchasing organization, but if another manufacturer is able to come in and undercut that cost, the first manufacturer would either have to match the second’s price or lose the contact,” Dr. Ganio said. He concluded that consistent demand will allow manufacturers to invest in quality manufacturing. Furthermore, multiple volume contracts could create redundancy that can be relied on when one manufacturer fails.
  2. The creation of a buffer inventory of medications with a “first-in, first-out” usage policy will allow for resilience in case of a supply shock, as has been seen with hurricanes.
  3. An increase in transparency of the drug supply chain would allow the public and private sectors to make investments into addressing vulnerabilities. An example of the opaque nature of the drug supply chain concerns the country of origin that a drug is produced in: Most key starting materials used to make active pharmaceutical ingredients are concentrated in China, but API production is less concentrated. “If pharmaceutical tariffs are imposed, it’s unclear if a drug produced with APIs from China would face the tariff rates imposed on China or those of its final country of manufacture,” Dr. Ganio said. “The concern we have is that tariffs could cause profit margins to be further eroded, causing manufacturers to stop producing. However, there is insufficient clarity on the rules determining the country of origin of a drug’s manufacture to even prepare for the threat of drug tariffs.” 

All of Dr. Ganio’s suggestions are meant to curb the current race to the bottom in pricing of generics. “Purchasers don’t have any real metric to base reliability on outside of the price, because all things are assumed to be equal otherwise. We know from a history of FDA inspections, recalls and warning letters that all things are not equal,” he concluded. “A more robust drug supply chain, with fewer shortages, cannot be based on manufacturers solely competing to make the lowest-price medications. We need a generics market with stronger price support, more resilient contingency plans and more transparency.”

Dr. Ganio reported no relevant financial disclosures.