Let’s Talk About Drug Shortages

Another casualty of the COVID-19 pandemic is drug shortages.

The shortages that are caused by pandemics and natural disasters can be profound and are somewhat unpredictable but have previously only made up approximately 5% of the cause of all shortages.

That said, the U.S. is experiencing a rapidly increasing frequency of drug shortages, which have caused numerous difficulties for clinicians, healthcare facilities, patients, and federal regulators. Many of the causes of shortages such as manufacturing difficulties, raw materials shortages, voluntary recalls, supply and demand issues, business and economic issues, and regulatory issues could possibly be reduced, mitigated, or completely avoided.


The FDA defines a drug shortage as a period of time when the demand or projected demand for the drug within the United States exceeds its supply. ASHP (American Society of Health-System Pharmacists) defines a shortage as a supply issue that affects how a pharmacy prepares or dispenses a drug product or influences patient care when prescribers must use an alternative agent. As a result, ASHP’s published list of shortages is much larger than the FDA’s.

In June 2018, bipartisan members from the US Senate and House of Representatives got together to create a Drug Shortages Task Force, along with the FDA, to oversee the issues and underlying forces that cause drug shortages. The task force believes that there is no simple solution for addressing drug shortages, but the data they had compiled did reveal some of the causes and potential solutions.

The FDA analyzed 163 drugs that went into shortage in the 5-year period between 2013 and 2017. Of the 163 drugs in the sample, 63% (103) were drugs administered by injection (“sterile injectables”) and 67% (109) were drugs that have a generic version on the market. They were also older drugs, with a median time since first approval of almost 35 years. After many years off-patent, the injectables were sold at relatively low prices compared to other marketed drugs. In the year prior to going into shortage, the median per-unit price was $8.73 for all the shortage drugs, $11.05 for injectables, and $2.27 for orally administered drugs.


Drug shortages are caused by many factors. The FDA’s analysis determined that quality issues (e.g., substandard manufacturing facilities or processes, or significant quality defects that are identified in the finished product) are the most common immediate cause of manufacturing disruptions at 62%, where the other reasons listed caused much less of an effect with an increase in demand resulting in 12%, natural disaster 5%, and product discontinuation is only 3%.

Because the FDA couldn’t directly measure the profitability of shortage drugs, it instead indirectly explored this question by examining trends in the revenues, prices, and volumes sold of these drugs, compared with similar non-shortage drugs. The report showed that the companies experienced steadily decreasing revenues for the drugs that became short.  Among these drugs, the magnitude of the decline was greater than similar non-shortage drugs. 

Other business and economic reasons that create drug shortages are the drug’s share of a company’s total sales, declining prices, very limited contribution to the manufacturers’ total revenues, and difficulties acquiring raw materials in the global supply chain (API, finished drugs).

Three additional root causes of drug shortages that the FDA identified from their report are due to the lack of incentives for manufacturers to produce less profitable drugs. The market does not recognize and reward manufacturers for “mature quality systems” that focus on continuous improvement and early detection of supply chain issues, and logistical and regulatory challenges make it difficult for the market to recover from a disruption.



Shortages can worsen patients’ health outcomes by causing substitution of safe and effective therapies with alternative treatments; compromising or delaying medical procedures; or causing medication errors. In the FDA’s report previously mentioned, 47% of patients were substituting less effective therapies when a drug of choice is not available. Yet, even when alternatives to the preferred drug are available, a patient’s care may be compromised. According to a recent study, 56% of hospitals reported they had changed patient care or delayed therapy due to drug shortages, 36.6% said they had rescheduled non-urgent or emergent procedures and there were possible treatment delays in 75% of patients. 

The alternative treatments may require an inpatient stay increasing stress for patients and families, while potentially exposing patients to pathogens in the hospital environment and substantially increasing costs. In some extreme cases, drug shortages can even result in death.

Healthcare Workers and Facilities

Drug shortages also significantly burden healthcare providers, healthcare facility finances, and other personnel. Prices increase during shortages whether it is from supply and demand or a more expensive alternate drug or treatment. Shortages cost healthcare systems hundreds of millions of dollars annually. Studies have estimated that responding to drug shortages costs hospitals $359 million each year in labor costs (Kacik 2019) and another $200 million each year to substitute drugs in shortage with alternatives (“Drug Shortages Cost U.S. Care Providers” 2011).

The impact of drug shortages has a widespread impact on the quality of health care in the U.S. Shortages create higher hospital expenses, increased labor costs, and safety risks. Labor costs increase due to additional time spent managing shortages searching for the drug in other supply channels or an alternative drug or treatment, the rationing of drugs, reconfiguring procedures, and modifying IT systems to name a few.


The FDA report on drug shortages also recommends enduring solutions. 

They recommend:

  • Creating a shared understanding of the impact of drug shortages on patients and the contracting practices that may contribute to shortages
  •  Developing a rating system to incentivize drug manufacturers to invest in quality management maturity for their facilities
  •  And promoting sustainable private sector contracts (e.g., with payers, purchasers, and group purchasing organizations) to make sure there is a reliable supply of medically important drugs 

An additional solution to help prevent drug shortages in the future is implementing improved data sharing for discontinuations or interruptions of manufacturing reported to the FDA. This communication could help establish a risk management plan to identify potential vulnerabilities within manufacturing, establishing lengthened expiration dates that may help prevent the shortage from exacerbating, and by the FDA having less stringent regulatory oversight of certain post-approval manufacturing changes.  Finally, changes in how drugs are paid for, including potential changes in contracting, could enable generic manufacturers to charge sustainable prices that enable them to continue the production of their products.

The lack of an advanced warning system is the main cause of problems. Manufacturers are required to give the FDA six months advance notice only when they plan to stop producing a single-source, medically necessary drug. Some drug manufacturers do voluntarily alert the FDA about anticipated shortages, but if all manufacturers of a product are notified that a drug shortage is impending, they might be able to increase production to avert it. Again, this relates to increasing communication among all parties and maintaining a constant sharing of information.  


As a buyer or purchasing agent, there are a few things that can be done to help minimize the impacts of drug shortages as well. Although it is often not possible to predict when a drug shortage will occur, strategies for dealing with shortages should be defined in advance and could potentially prevent the problem from becoming a crisis. 

Some of the strategies include:

  • Validating drug shortages 
  • Assess the inventory of drugs in short supply
  • Establish contact with other facilities or sites
  • Identify alternative drugs or therapeutic equivalents
  •  Prioritize patients to receive shortage drugs
  •  Follow good inventory management
  •  And modify clinical guidelines.  

It is necessary for the pharmacy buyer to be proactive and knowledgeable to prioritize shortages, be cognizant of the most up-to-date developments within the pharmaceutical supply chain, and ultimately provide the best level of pharmacotherapy and care for patients.