Government Response to Drug Shortages: Federal Actions and Policy Shifts in 2025

The U.S. is facing its worst drug shortage crisis in history. As of late 2024, more than 277 drugs remained in short supply-everything from antibiotics and anesthetics to life-saving cancer treatments. Hospitals are scrambling. Pharmacists are spending over 10 hours a week just tracking down alternatives. Patients are skipping doses because their meds aren’t available. And while the federal government has launched new initiatives to fix this, many experts say the response is too little, too late-and built on the wrong assumptions.

What’s Really Causing the Shortages?

It’s not one problem. It’s a chain reaction. Most drug shortages start with a single manufacturing plant. Just five facilities in the U.S. produce 78% of all sterile injectables. If one of them shuts down for an inspection, a power outage, or a quality control issue, the ripple effect hits hospitals nationwide. These plants are often owned by just three companies that control 68% of the market, according to the FTC’s 2025 report. That means no backup. No redundancy. Just one point of failure.

Add to that the fact that many of these drugs are low-margin generics. No company wants to invest in making $0.10 pills when they can make millions on a new $10,000 cancer drug. So manufacturers cut corners. They outsource. And 80% of the active pharmaceutical ingredients (APIs)-the actual chemical components that make drugs work-come from China and India. When global supply chains glitch, the U.S. feels it first.

The Strategic Active Pharmaceutical Ingredients Reserve (SAPIR)

In August 2025, President Trump signed Executive Order 14178, expanding the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR). This program aims to stockpile raw materials for 26 essential drugs-mostly antibiotics, anesthetics, and oncology medications. The idea? APIs are cheaper to store than finished pills, last 3-5 years longer, and reduce dependence on foreign suppliers.

It sounds smart. But here’s the catch: 98% of drug shortages involve medications outside this list. The FDA’s own data shows oncology drugs make up 31% of all shortages, yet only 4% of SAPIR’s targets are cancer meds. That’s like building a firebreak around your garage while your whole house is burning down.

And while the government is stockpiling APIs, it’s also cutting funding for the very programs that could prevent shortages in the first place. The 2026 HHS budget slashes $1.2 billion from FEMA’s emergency response and $850 million from state public health grants. BARDA, which funded innovations in continuous manufacturing, saw its budget drop 22% from 2024 levels.

How the FDA Actually Manages Shortages

The FDA doesn’t just sit back. It works directly with manufacturers to resolve 85% of shortages. How? By fast-tracking inspections, allowing temporary imports, and giving companies flexibility to adjust production. Back in 2018-2020, this approach helped fix the saline shortage that affected 90% of U.S. hospitals.

In November 2025, the FDA launched its Enhanced Shortage Monitoring System-an AI-powered tool that analyzes 17 data streams, including shipping logs, batch records, and hospital purchase patterns. It can predict a shortage 90 days in advance with 82% accuracy. That’s a huge step forward.

But enforcement is weak. Between 2020 and 2024, the FDA issued only 17 warning letters for companies that failed to report potential shortages, even though the law requires it. In the EU, under similar rules, they issued 142. That’s not a difference in policy-it’s a difference in will.

Why Reporting Doesn’t Work

Manufacturers are legally required to report possible shortages six months in advance. But compliance? Only 58%. Small manufacturers-those with fewer than 50 employees-are even worse, with 82% failing to report. Why? Because there’s no penalty. No consequence. No one’s watching.

The FDA’s Drug Shortage Database tracks over 1,200 active and resolved shortages. But most hospitals don’t even know it exists. A survey by the American Hospital Association found that 62% of provider reports to the FDA were for drugs already listed-meaning they didn’t know the shortage was already public. That’s not a data problem. It’s a communication failure.

The Congressional Push: H.R.5316 and Beyond

Congress is considering H.R.5316, the Drug Shortage Act. It would let pharmacists use compounded versions of shortage drugs more easily and create a national inventory dashboard. The Congressional Budget Office estimates it would cut shortages by 15-20% over five years-for $740 million. That’s less than 0.1% of total U.S. drug spending.

Meanwhile, the bipartisan Drug Shortage Prevention and Mitigation Act proposes Medicare payments to hospitals that maintain backup supply chains. The AHA supports it. But so far, only 28 of 50 states have implemented the supply chain mapping tools required by the HHS 2025-2028 Action Plan. Rural hospitals say it takes 3-6 months just to get the software running.

What’s Working? The Early Notification Pilot

The one federal program that’s actually working? The FDA’s Early Notification Pilot. Hospitals that sign up get early alerts about potential shortages. Those hospitals see shortages last 28% less time than those that don’t participate.

Why? Because early warning lets them shop around. Switch suppliers. Adjust prescriptions. Order in bulk. It’s simple. It’s practical. And it’s the only intervention with proven results.

Yet the current administration has weakened mandatory reporting rules. That’s like taking away smoke alarms after a house fire.

Industry and Patient Impact

Hospitals are spending an average of $1.2 million a year just managing shortages. Pharmacists are working overtime. Nurses are double-checking substitutions. And patients? They’re getting sicker.

A September 2025 survey by the National Comprehensive Cancer Network found that 68% of oncology patients had their treatment changed due to drug unavailability. Patients for Affordable Drugs reported that 29% of Americans skipped doses because their meds weren’t on the shelf-not because they couldn’t afford them, but because they simply weren’t there.

On Reddit, pharmacists are sharing horror stories: compounding cisplatin from raw chemicals, using five different manufacturers for the same drug in one week. These aren’t outliers. They’re routine.

Why the U.S. Is Falling Behind

The EU has a centralized system run by the European Medicines Agency. They require member states to stockpile critical drugs. Between 2022 and 2024, they cut shortages by 37%.

In the U.S., we’re still trying to build the plane while flying it. We’re stockpiling raw materials instead of fixing the system. We’re cutting funding for innovation while expecting manufacturers to solve a $5.2 billion problem with no profit incentive.

The FDA approved 56 new manufacturing facilities in 2024-but 42% of them were overseas. It takes 28-36 months to get a new U.S. API plant approved. In the EU? 18-24 months.

And the biggest problem? No one’s holding anyone accountable.

What Needs to Change

Stockpiling APIs helps in emergencies. But it doesn’t fix the root causes:

• Make reporting mandatory and enforce it. Issue warnings. Impose fines. Publicly name violators.
• Incentivize second-source manufacturing. Pay companies to make the same drug in a different facility. The FDA’s new expedited review pathway for second-source producers is promising-but it needs funding and teeth.
• Fix the economics. If low-margin drugs are essential, the government should pay a fair price. Otherwise, companies will keep abandoning them.
• Expand the SAPIR list. Add oncology drugs, insulin, and other high-demand, high-risk medications.
• Invest in domestic production. The $285 million in CHIPS Act funding is a start, but it covers less than 5% of what’s needed.

What You Can Do

If you’re a patient, ask your pharmacist: Is this drug in short supply? Is there a safe alternative? If you’re a provider, sign up for the FDA’s Early Notification Pilot. If you’re a policymaker, demand accountability. This isn’t just about logistics. It’s about survival.

The U.S. doesn’t need more reports. It needs action. And it needs it now.