Government Response to Drug Shortages: Federal Actions in 2025

The U.S. is facing its worst drug shortage crisis in history. As of November 2025, there are still 277 active drug shortages nationwide, according to Global Biodefense. These aren’t just minor inconveniences-they’re life-or-death gaps in care. Cancer patients miss chemotherapy doses. Hospital ERs scramble for antibiotics. Anesthesiologists delay surgeries because the only available IV bag is from a different manufacturer with untested side effects. The federal government has responded with new policies, but the results are mixed, and many of the root problems remain untouched.

What’s Really Causing These Shortages?

It’s not one thing. It’s a chain of failures. Most critical drugs-especially sterile injectables like saline, insulin, and chemotherapy agents-are made in just a handful of factories. Three companies control nearly 70% of the U.S. sterile injectable market. If one plant shuts down for a quality issue, the entire country feels it. Over 80% of the raw ingredients (active pharmaceutical ingredients, or APIs) come from China and India. These suppliers aren’t just far away-they’re often the only source. No backup. No redundancy.

Manufacturers don’t make money on these drugs. A vial of generic doxycycline might cost $0.50 to produce but sells for $1.25. Compare that to a new cancer drug that costs $10,000 a dose. Why would a company invest millions to build a second production line for a drug that barely covers its costs? The market punishes competition in low-margin essential medicines. So they don’t. And when something goes wrong-power outage, contamination, equipment failure-the system has no cushion.

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 now stockpiles raw ingredients for 26 essential drugs: antibiotics, anesthetics, and key oncology medications. The idea? APIs last 3 to 5 years longer than finished drugs and cost 40-60% less to store. Instead of hoarding vials of epinephrine, the government hoards the chemical that makes epinephrine.

The theory sounds smart. But here’s the catch: only 12% of critical API production has been brought back to the U.S. in seven years of federal efforts. The SAPIR reserve doesn’t fix manufacturing. It just delays the crisis. And it’s narrow. The 26 drugs on the list make up less than 5% of all shortage incidents. The FDA’s own data shows that oncology drugs alone account for 31% of all shortages-but only 4% of the SAPIR list.

FDA’s Role: Enforcement vs. Flexibility

The FDA has two jobs: keep drugs safe and keep them available. They’ve tried both. In 2024, they resolved 85% of shortages by working directly with manufacturers-fast-tracking inspections, allowing temporary imports, and giving companies extra time to fix problems. That’s how they solved the saline shortage that hit 90% of U.S. hospitals in 2018.

But enforcement? That’s 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. The European Union issued 142 under similar rules. In the U.S., reporting is voluntary in practice. Only 58% of manufacturers comply with the six-month advance notice rule. Small companies? Only 18% report on time.

In November 2025, the FDA launched its Enhanced Shortage Monitoring System. It uses AI to track 17 data streams: shipping delays, hospital purchase patterns, factory batch records. It predicts shortages 90 days in advance with 82% accuracy. That’s a big step. But if no one’s required to report early, the system only sees what’s already broken.

What Congress Is Trying to Fix

H.R.5316, the Drug Shortage Act, is moving through the 119th Congress. It would let pharmacists compound urgent-use medications without waiting for full FDA approval. That’s helpful for hospitals running out of rare drugs. It also creates a new fund to help hospitals maintain backup suppliers. The Congressional Budget Office estimates it could cut shortages by 15-20% over five years-for $740 million. That’s less than 0.1% of total U.S. drug spending.

The bipartisan Drug Shortage Prevention and Mitigation Act proposes something even more practical: Medicare bonus payments to hospitals that keep alternative drug sources on hand. Right now, hospitals spend an average of $1.2 million a year just managing shortages-tracking inventory, switching meds, training staff, dealing with errors. If Medicare rewarded them for being prepared, more would do it.

But neither bill tackles the real problem: low profit margins. Without financial incentives to make generic drugs, nothing changes.

The Bigger Picture: Why Stockpiling Isn’t Enough

Dr. Luciana Borio, former FDA Acting Chief Scientist, put it bluntly in her September 2025 commentary: “The U.S. approach is reactive, not preventative.” Stockpiling APIs helps in a crisis. But it doesn’t stop the next crisis. The real fix is building more factories-here, in the U.S.-and making it worth the cost.

The Department of Commerce gave $285 million in CHIPS Act funding to support domestic drug manufacturing in September 2025. Sounds good. But experts say it takes $6 billion to make a real difference. That’s less than 5% of what’s needed.

Even when companies try to build here, they’re slowed down. FDA approval for a new API plant takes 28-36 months. In the EU, it takes 18-24. Why? More inspections. More paperwork. Less coordination. The FDA isn’t broken-it’s overloaded.

Who’s Paying the Price?

Hospitals aren’t just spending money-they’re risking lives. A 2025 American Hospital Association survey found that 68% of hospitals have delayed treatments because of shortages. 42% reported medication errors from switching drugs. Pharmacists spend 10+ hours a week just managing inventory. On Reddit, one pharmacist wrote: “I had to compound cisplatin from raw powder because the vial was gone. We had no choice.”

Patients are skipping doses. A September 2025 report from Patients for Affordable Drugs found 29% of Americans skipped medication due to unavailability-not because they couldn’t afford it, but because it simply wasn’t in stock. Cancer patients were hit hardest: 68% had their treatment changed, delayed, or reduced.

What’s Working? What’s Not

The only federal initiative with proven results is the FDA’s Early Notification Pilot Program. Hospitals that reported potential shortages early saw their shortage durations drop by 28%. Mandatory reporting works. But the current administration has weakened those rules. The FDA now accepts voluntary reports. That’s like asking firefighters to call in fires when they feel like it.

The EU’s approach is simpler: require member states to stockpile critical drugs and create a centralized monitoring system. Between 2022 and 2024, their shortages dropped by 37%. They didn’t wait for a crisis. They planned for it.

The U.S. is trying to do both: stockpile and fix manufacturing. But without funding, without enforcement, and without a clear plan to make low-margin drugs profitable, it’s like patching a sinking ship with duct tape.

What Comes Next?

By Q2 2026, 14 new applications for second-source manufacturers are in review by the FDA. If approved, they could add backup supply for eight critical drugs. That’s progress. But it’s slow. And it’s not enough.

The real test will be in 2027. Will the SAPIR reserve be fully stocked? Will hospitals get paid to prepare? Will Congress fund domestic manufacturing at the scale needed? Or will we keep patching the same holes, year after year, while patients suffer?

Until the government makes it profitable to make essential drugs here, and until it forces manufacturers to report problems before they become crises, drug shortages will keep happening. Not because of bad luck. Because of bad policy.