Why drug shortages happen

In 2011, 251 drugs went into shortage in the United States, a record. In 2025 the number was four. FDA reported both figures to Congress in its annual drug shortage report for calendar 2025². New shortages have trended down, the report noted, since Congress strengthened the requirement for manufacturers to warn FDA early about production problems in 2012.

New shortages are rare now. Old ones are not. FDA counted 93 ongoing shortages tracked by its drug and biologics centers as of Dec. 31, 2025, and said they "often persist due to market conditions, which include lack of incentives for firms to manufacture older, less profitable products as well as limited manufacturing capacity." In GxRadar's shortage tracker, built from FDA's shortage data⁹, the 69 drugs listed as current on Oct. 30, 2026, had been posted for a median of about 4.7 years, a figure our analysis of how long shortages last breaks down.

That persistence is the puzzle. In most markets a shortage pushes prices up and draws in new supply. For old, cheap generic drugs, especially hospital injectables, it often doesn't. FDA's 2019 root-cause report and later work by the Department of Health and Human Services explain why, and the explanation is mostly economic.

What counts as a shortage

Federal law 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," under 21 U.S.C. 356c⁴. FDA applies that test nationally. When a single pharmacy is out of stock, the cause is usually a local distribution problem that resolves "when the pharmacy is able to reorder from their distributor," the agency's FAQ says³. How FDA decides what goes on its list is covered in how FDA tracks drug shortages.

Figures are from FDA's CY 2025 report to Congress², except 2022, which comes from FDA's report for calendar 2022¹⁰. GxRadar's explainer on how FDA works to prevent shortages covers the tools behind the "helped prevent" column.

A profile of the drugs that run short

In June 2018, 31 senators and 104 members of the House asked FDA to study why shortages keep happening. The agency formed an interagency task force, and its economists analyzed 163 drugs that went into shortage between 2013 and 2017. The resulting report¹, published in 2019, found a clear pattern. Sixty-three percent were sterile injectables. Sixty-seven percent had a generic version on the market. The median drug had been approved almost 35 years earlier.

They were also cheap. In the year before going short, the median price per unit was $8.73 across all of them, $11.05 for injectables and $2.27 for oral drugs, inflation-adjusted to August 2018. Why injectables dominate is the subject of our piece on sterile injectable shortages.

Why the market does not fix itself

An October 2011 ASPE issue brief⁵ laid out part of the answer. Demand for medically necessary drugs barely responds to price, because they have few substitutes and insurers pay set rates. Supply cannot respond quickly either. Production needs specialized equipment and regulatory approvals, raw materials must be validated, and adding capacity takes years. If a price bump is expected to be temporary, nobody builds a new line for it.

ASPE also pointed to an asymmetry. A manufacturer that keeps spare capacity or a second ingredient source carries costs its competitors do not, and in a competitive generic market no firm will do that without a higher price or some other reward. That competitive squeeze is the flip side of the price curve described in why generic prices fall as competitors enter.

FDA's three root causes

FDA's 2019 task force named three, all economic. First, a lack of incentives to make less profitable drugs. Makers of older generics face intense price competition, uncertain revenue and high investment needs, and the report said "current contracting practices contribute to a 'race to the bottom' in pricing."

Second, the market does not reward mature quality management. Every plant must meet current good manufacturing practice rules, but those are a floor. Buyers have little information about how well a given plant manages quality, so there is no price premium for doing better, and underinvestment eventually shows up as quality failures and supply disruptions, the report found¹.

Third, logistical and regulatory hurdles slow recovery. Supply chains are longer and more spread out, with more production overseas and more use of contract manufacturers. Expanding output can mean new approvals in several countries or a new active ingredient source.

The evidence behind them

FDA traced the immediate trigger for each of the 163 drugs. Quality problems dominated:

Money trouble came first. For 86 of the drugs, FDA found signs of inadequate financial incentives in the years beforehand. Their revenues fell an average of 12.9 percent a year, against 3.3 percent for similar drugs that did not go short, and their prices fell 2.5 percent a year while comparison drugs rose 2.9 percent, according to the report¹.

Manufacturers also told FDA about contract terms with large buyers such as hospital purchasing groups, including low-price clauses that let a buyer walk away if a competitor bids lower, and weak failure-to-supply penalties. The report recommended more study of those practices, a rating system for manufacturing quality, and contracts that reward reliable supply.

What later federal work added

An April 2024 HHS white paper⁶ reached similar conclusions. It cited a broad lack of transparency, concentration among intermediaries, and generic prices driven so low they leave little room for redundancy. It counted 123 drugs in shortage as of January 2024 and said that, by some estimates, 90 to 95 percent of generic sterile injectables used for critical acute care rely on starting materials and drug substances from China and India, a dependence traced in our piece on India's place in the US generic supply.

In December 2024, ASPE tested the profitability argument directly. Looking at generic injectables launched between July 2018 and July 2021, it found that "70 percent of drugs in this market do not achieve profitability by their third year after launching," the issue brief said⁷. Generic injectables averaged five manufacturers per molecule, compared with nine for generic oral drugs.

Reasons manufacturers give today look much the same. Among the 69 current shortages in GxRadar's Oct. 30, 2026 snapshot of FDA's shortage data⁹, the stated reasons break down like this:

Forty-nine of the 69, or 71 percent, were injections. The labels are what manufacturers report, and "Other" covers nearly half, so the table says less about root causes than FDA's 2019 analysis does.

Who feels it

Hospitals carry much of the cost. The HHS white paper cited estimates that hospitals spend at least $600 million a year managing shortages. Patients feel it as well. Using a Census Bureau household survey, ASPE estimated that shortages of medical products affected about 38.8 million adults, 18 percent, in fall 2023, and "nearly half of those impacted by a shortage reported delaying or stopping use because a product was not available," its July 2024 brief said⁸. The 2023 cancer drug shortage was the most visible recent case.

When a medicine is hard to find, FDA suggests checking more than one pharmacy and asking a pharmacist or health care provider whether an alternative exists, its FAQ says³. FDA's next annual shortage report to Congress, covering calendar 2026, will show whether the run of very low new-shortage counts held.