The federal supply chain reviews of 2021 and 2024, and what HHS proposed

In March 2021, 87 percent of the FDA-registered factories that made active ingredients for generic drugs sold in the US were located outside the country. The Department of Health and Human Services put that figure in its chapter of a June 2021 White House supply chain review¹, alongside a warning that FDA had no data on how much of the ingredient supply those factories actually produced.

Three years later, HHS published a white paper on drug shortages² that went further. It proposed two programs that would grade generic manufacturers on supply reliability and tie Medicare hospital payments to whether hospitals bought from reliable sources.

These two documents are the main federal statements of what is wrong with the generic drug supply chain and what Washington might do about it. Both are cited in later rules and executive orders, and parts of them have turned into Medicare policy. This explainer walks through when each appeared, what each found, what each proposed, and what has happened since.

The executive orders behind the reviews

A string of pandemic-era orders set up the 2021 review. Executive Order 13944³, signed August 6, 2020, told FDA to identify within 90 days a list of essential medicines, countermeasures and critical inputs. FDA published that list⁴ on October 30, 2020 (GxRadar covers it in a separate piece). Executive Order 14001⁵, signed January 21, 2021, ordered a pandemic supply chain resilience strategy within 180 days.

Then Executive Order 14017⁶, signed February 24, 2021, ordered four 100-day reviews. One went to the HHS secretary, who was told to report on "risks in the supply chain for pharmaceuticals and active pharmaceutical ingredients and policy recommendations to address these risks." The other three covered semiconductors, large batteries and critical minerals.

What the 100-day review found

HHS opened its chapter with a diagnosis that later federal documents repeat. Over 30 years, it said, the generic market, "which accounts for 90 percent of the drugs prescribed to Americans, has consolidated and increasingly outsourced its production to countries with lower labor and manufacturing costs in response to low profit margins." It named three features of a sound supply chain: quality manufacturing, geographic diversification and redundancy, meaning several makers for each product and its ingredients.

Facility counts were the headline numbers.

HHS also analyzed 120 medicines, 118 of them from FDA's essential medicines list, and found domestic ingredient facilities for only 60. For 50 of the drugs, 70 percent of the ingredient facilities were in Asia. The report was careful about the limits. Facility counts are not volumes, it said, and China and India "could account for 42 percent of facilities, but the volume could be higher." GxRadar's pieces on China and India go deeper on those two countries.

What the review recommended

In its summary, the White House asked HHS to seek new authority to "track production by facility, track API sourcing, and require API and finished dosage form sources can be identified on labeling." The HHS chapter laid out next steps. A consortium of public health experts would pick 50 to 100 drugs "most critical to have available at all times" for a Critical Drug List. HHS would use Defense Production Act processes to work out what incentives might bring production onshore or nearshore, and would study whether to stockpile ingredients for those drugs. The chapter favored a "virtual" stockpile, which it said "would involve contracts with API and drug suppliers to hold surplus together with support for surge manufacturing capacity, rather than keeping APIs and drugs physically stockpiled at a central location."

Some of this was carried out. In May 2022 ASPR published an assessment that prioritized 86 essential medicines, a list Medicare later adopted, according to a January 2026 CMS notice⁷. The ingredient stockpile idea resurfaced in 2025 as the Strategic API Reserve, described in our explainer on that reserve.

The 2024 white paper and the two accountability programs

HHS released "Policy Considerations to Prevent Drug Shortages and Mitigate Supply Chain Vulnerabilities in the United States" in April 2024, as the American Society of Anesthesiologists reported that month⁸. It blamed "a broad lack of transparency, concentration among middlemen, and prices for generic drugs that are driven to levels so low that they create insufficient incentives" for resilient manufacturing. It counted 123 drugs in shortage as of January 2024 and estimated that hospitals spend at least $600 million a year managing shortages. Echoing FDA's 2019 root-causes report⁹, it noted that generic sterile injectables made up about 63 percent of shortages from 2013 to 2017.

Its core proposal had two parts, both aimed first at generic sterile injectables used in hospitals.

• Manufacturer Resiliency Assessment Program (MRAP). Through a public-private partnership, a private entity would assign resilience scores to generic manufacturers based on their practices and past performance, informed in part by FDA's quality management maturity work.
• Hospital Resilient Supply Program (HRSP). Medicare would pay incentives, impose penalties, or both, based on a scorecard of hospital purchasing and inventory practices. HHS modeled the phase-in on the electronic health records program, which began with incentives and turned to penalties once 87 percent and then 95 percent of hospitals took part.

HHS estimated the combined 10-year cost at $3.26 billion to $5.11 billion, about $750 million for MRAP and $2.51 billion to $4.36 billion for HRSP. It said both would need "additional statutory authorities and funding" from Congress. The paper also listed legislative requests from the president's fiscal 2025 budget, among them requiring manufacturers to tell FDA about demand increases they cannot meet, to report the suppliers they rely on, and to name the original maker of the active ingredient and finished product on labeling.

What happened next

Medicare moved first on hospitals, on a small scale. In its fiscal 2025 inpatient payment rule¹⁰, published August 28, 2024, CMS finalized a separate payment to small, independent hospitals (100 beds or fewer, not part of a chain) for the extra cost of keeping a six-month buffer stock of one or more of the 86 essential medicines, starting with cost reporting periods that began on or after October 1, 2024.

Federal emphasis then shifted toward domestic production. Executive Order 14336¹¹, signed August 13, 2025, told ASPR to obtain a six-month supply of ingredients for about 26 critical drugs, "with a preference for obtaining domestically manufactured APIs if possible." In January 2026, CMS asked for comment on a possible "Secure American Medical Supplies" hospital designation that could lead to streamlined payment policies for hospitals that buy domestically made protective equipment and essential medicines. Comments closed March 30, 2026. The same notice said the 86-drug essential medicines list "is currently under review and is scheduled to be updated in 2026." See our pieces on Buy American rules and onshoring for that thread.

The shortages the reports set out to address have not gone away. As of November 3, 2026, FDA listed 69 current shortages, 71 percent of them injectables, with a median age of 1,710 days, according to GxRadar's analysis of FDA shortage data¹² on our shortage tracker. The updated essential medicines list, due this year, is the next document to watch.