Supply Chain Problems: Distribution Risks for Generic Drugs

When you fill a prescription for a generic drug, you probably assume it’ll be there when you need it. But for millions of Americans, that’s not a guarantee. As of April 2025, there were 270 active drug shortages in the U.S., according to the American Society of Health-System Pharmacists. And nearly all of them involve generic medications - the cheap, life-saving pills and injections that make up 90% of prescriptions but just 13% of drug spending. This isn’t a temporary glitch. It’s a systemic failure rooted in how these drugs are made, where they’re made, and how little money manufacturers make from them.

Why Generic Drugs Are the First to Go Missing

Generic drugs don’t have the same financial cushion as brand-name drugs. A single dose of a generic antibiotic might cost less than $1. A chemotherapy injection? Maybe $3. When profit margins are this thin, manufacturers don’t have room to absorb disruptions. If a factory in India gets shut down by an FDA inspection, or a typhoon hits a plant in China, there’s no money left over to reroute production or stockpile extra inventory. Brand-name drugmakers, by contrast, often have multiple factories, global supply chains, and enough profit to keep backup stock on hand. Generic manufacturers? They’re operating on razor-thin margins - and it’s showing.

One of the most dangerous shortages involves sterile injectables: IV fluids, antibiotics, chemotherapy drugs, and emergency medications like epinephrine. These aren’t pills you swallow. They’re injected directly into veins, often in hospitals or cancer clinics. Making them requires clean rooms, specialized equipment, and weeks of testing. One tornado in 2023 took out a Pfizer facility and halted production of 15 critical medications. Another time, quality issues at an Indian plant shut down cisplatin - a key chemotherapy drug - nationwide. No backups. No alternatives. Just patients waiting.

The Global Bottleneck: China and India

Almost 40% of the world’s active pharmaceutical ingredients (APIs) come from China. India handles much of the final manufacturing. Together, they supply the raw materials and finished products for the majority of U.S. generics. But this isn’t a diversified network - it’s a single, fragile pipeline. If one factory in Shanghai stops producing, or if political tensions disrupt shipping from Mumbai, the ripple effect hits hospitals in Ohio, Texas, and Maine.

The FDA has known about this risk for years. Reports show Chinese manufacturers have been hesitant to submit proper documentation for their facilities - not because they’re dishonest, but because they fear inspections might expose poor practices. Meanwhile, domestic inspections in the U.S. have been cut back. The result? A dangerous gap in oversight. A drug can be approved, shipped across the globe, and end up in a hospital without ever being properly checked.

Consolidation Creates Single Points of Failure

For many older generic drugs - like the ones used in ICUs or for kidney disease - there are only one or two manufacturers left. Why? Because when the price drops below $2 per dose, smaller companies can’t compete. They exit the market. The few remaining players then dominate. It sounds efficient. It’s not. It’s a recipe for disaster.

Take the case of doxycycline, a common antibiotic. In 2024, a single manufacturer’s production halt caused a nationwide shortage. Hospitals rationed doses. Patients with Lyme disease or pneumonia faced delays. The FDA later confirmed: only two companies were making it. When one failed, the other couldn’t scale up fast enough. No backup. No redundancy. Just a broken system.

The Hidden Cost: Healthcare Workers on the Frontlines

Behind every shortage is a nurse, pharmacist, or doctor scrambling to find a solution. One hospital pharmacist in Ohio told Pharmacy Times they spend 20-30% of their workweek just managing shortages. That’s not time spent on patient care. That’s time spent calling distributors, compounding drugs from scratch, or switching patients to less effective alternatives.

Doctors report having to choose between two risky options: use a substitute that might not work as well, or delay treatment. A cancer patient might wait weeks for a chemotherapy drug. A newborn in the NICU might get a weaker IV fluid. These aren’t theoretical risks. They’re daily realities in hospitals across the country.

The American College of Physicians found that shortages hit internal medicine and specialty care the hardest. Patients with chronic conditions, autoimmune diseases, or infections are the most vulnerable. And there’s no easy fix. You can’t just “order more” when the entire global supply chain is strained.

Why Tariffs Won’t Solve This

Some lawmakers have pushed for tariffs on imported drugs - 50%, even 200% - to force production back to the U.S. But experts warn this could make things worse. Higher tariffs mean higher costs. Higher costs mean manufacturers will raise prices or quit entirely. And if those imported APIs become too expensive, hospitals will face even bigger shortages.

The CSIS analysis points out that the U.S. produces less than 30% of its own APIs. Rebuilding that capacity would take 5-7 years and $20-30 billion. Even then, it wouldn’t cover all drugs. The infrastructure doesn’t exist. The skilled workers aren’t trained. The regulatory process is slow. Tariffs might sound like a patriotic solution, but they ignore the economic reality: generics are cheap because they’re made cheaply. Make them expensive, and you make them unavailable.

What’s Being Done - and Why It’s Not Enough

There are proposals. The Strategic National Stockpile could be expanded to hold six months’ worth of critical generics. Bills like S.2062 suggest mandatory reserves. Others call for public-private partnerships to fund domestic production. Transparency rules are being discussed - like labeling where APIs come from.

But implementation is stuck. Federal agencies like HHS have lost staff and funding. Regulatory bodies are overwhelmed. And manufacturers? They’re stuck in a cycle: low prices → low profits → no investment → more shortages → even lower prices. It’s a trap.

The University of Wisconsin School of Pharmacy says the only real solution is to increase the number of manufacturers. More players mean more competition, more redundancy, more resilience. But how do you get companies to enter a market where the profit per pill is less than a coffee?

The Path Forward: A New Economic Model

The system isn’t broken because of bad actors. It’s broken because the economics don’t add up. We need a new approach. One idea: government-backed price guarantees for essential generics. If a drug like epinephrine or heparin is critical, the government could guarantee a minimum price - just enough to cover production, quality control, and a small profit. That would let manufacturers plan ahead, invest in equipment, and hire workers.

Another idea: create a national inventory network. Instead of each hospital hoarding its own stock, a centralized system could track and redistribute shortages in real time. If a batch of IV fluids is available in Atlanta but needed in Detroit, move it. No more scrambling. No more rationing.

And yes - we need better oversight. More FDA inspectors. Better data sharing between countries. Mandatory reporting from manufacturers when production halts. Right now, we learn about shortages after patients are already affected.

What Patients and Providers Can Do Now

While systemic change takes time, there are small steps that help:

• Hospitals should track which generics are most at risk - especially sterile injectables and older drugs with few manufacturers.
• Pharmacists can build relationships with multiple suppliers, not just one.
• Doctors should document when a shortage forces a substitution - and report it to the FDA’s shortage database.
• Patient advocacy groups can push for transparency: ask hospitals to disclose which drugs are in short supply.

The goal isn’t to eliminate all shortages. That’s impossible. But we can stop the ones that kill.

What’s Next?

The number of active shortages in 2025 is still near record levels. Without a major shift in how we value and fund generic drug production, the problem will only get worse. Geopolitical tensions, climate disruptions, or a new pandemic could trigger a cascade of failures. The next shortage might not be a forgotten antibiotic. It might be the drug that keeps a cancer patient alive.

For now, the system is still holding - barely. But it’s not sustainable. And if we don’t fix the economics behind it, we’ll keep paying the price in delayed treatments, compromised care, and lost lives.