Government Response to Drug Shortages: Federal Actions in 2025-2026

Feb, 7 2026

The U.S. is facing its worst drug shortage crisis in history. As of late 2025, more than 277 drugs remain in short supply, according to Global Biodefense, with hospitals forced to scramble for alternatives, delay treatments, and even risk patient safety. Behind these numbers is a broken system - one where a handful of overseas factories produce most of the nation’s essential medicines, and where federal action has been patchy, inconsistent, and often too late. But in 2025, the federal government rolled out a sweeping set of new policies aimed at fixing this. Here’s what’s actually happening - and whether it’s enough.

The Strategic Active Pharmaceutical Ingredients Reserve (SAPIR)

The centerpiece of the federal response is the Strategic Active Pharmaceutical Ingredients Reserve (a federal stockpile of raw drug components, not finished pills). Launched in 2020 and expanded by Executive Order 14178 in August 2025, SAPIR targets 26 critical medicines, including antibiotics, anesthetics, and cancer drugs. The logic is simple: stockpile the raw ingredients - active pharmaceutical ingredients (APIs) - instead of finished products. APIs cost 40-60% less to store, last 3-5 years longer, and are easier to transport than vials of insulin or chemotherapy drugs. More importantly, they reduce dependence on foreign suppliers, especially China, which supplies roughly 80% of the U.S. API supply.

By late 2025, the Department of Health and Human Services (HHS) had begun stockpiling APIs for 19 of the 26 targeted drugs. But here’s the catch: 98% of all drug shortages involve medications outside this list. Oncology drugs alone account for 31% of all shortages, yet make up only 4% of SAPIR’s targets. Critics argue this is like building a firebreak around one house while the whole neighborhood burns down.

FDA’s Role: Fixing Shortages One Manufacturer at a Time

The Food and Drug Administration (FDA) is the primary agency responsible for monitoring and resolving drug shortages has a different strategy: work directly with manufacturers. When a shortage looms, the FDA doesn’t wait - it steps in. In 2024, the agency resolved 85% of reported shortages by using its regulatory flexibility: speeding up inspections, approving temporary imports, and even allowing manufacturers to switch suppliers mid-production.

A major success story? The saline shortage of 2018-2020. At its peak, 90% of U.S. hospitals ran low on IV saline. The FDA worked with five manufacturers to ramp up production, approved alternate sources, and within 14 months, the shortage was fully resolved. That’s the kind of agility the system needs - but it’s not scalable. Most shortages aren’t caused by a single plant going offline. They’re caused by systemic problems: thin profit margins, lack of competition, and regulatory bottlenecks.

The 2025-2028 HHS Draft Action Plan: Four Goals, One Big Problem

In September 2025, HHS released its long-term plan: COORDINATE, ASSESS, RESPOND, PREVENT. Sounds solid. But look closer.

• COORDINATE: The plan calls for better communication between FDA, ASPR, CDC, and the Department of Defense. But a September 2025 GAO report found only 35% of ASPR’s recommended interventions had been implemented across agencies.
• ASSESS: A new National Medical Countermeasures Inventory dashboard is supposed to give real-time visibility into drug supplies. But as of November 2025, only 28 of 50 states had set up the required supply chain mapping systems.
• RESPOND: Emergency protocols exist - but they’re rarely tested. Hospitals report they’re left to improvise during crises, often using unapproved substitutes.
• PREVENT: This is the most important goal - and the most neglected. The plan encourages domestic manufacturing, but offers no real financial incentives. Companies won’t build expensive sterile injectable plants if they can’t make a profit.

Why Domestic Manufacturing Isn’t Happening

The U.S. needs more drug factories. But building them is slow and expensive. It takes 28-36 months to get FDA approval for a new domestic API facility. In the EU, the same process takes 18-24 months. And even when facilities are approved, they’re often built overseas. In 2024, the FDA approved 56 new manufacturing sites - but 42% were in Ireland and Singapore.

Why? Profit. Sterile injectables - the most commonly shorted drugs - have razor-thin margins. A single vial of generic doxycycline might sell for $0.50. The cost to build, certify, and run a sterile production line? $200 million. No company will invest unless the government pays them to. The CHIPS Act a federal program originally designed for semiconductor manufacturing recently allocated $285 million for pharmaceutical facilities. That sounds big - until you realize it’s less than 5% of what experts say is needed to make a real difference.

The Hidden Costs: Hospitals, Pharmacists, and Patients

The real impact of drug shortages isn’t in government reports - it’s in hospitals, pharmacies, and patient rooms.

• Hospitals spend an average of $1.2 million per year just managing shortages, according to the American Hospital Association.
• Pharmacists spend 10+ hours per week tracking down alternatives - time they could spend counseling patients.
• 68% of hospitals report treatment delays. 42% report medication errors caused by last-minute substitutions.
• 29% of Americans have skipped doses because a drug wasn’t available - not because they couldn’t afford it, but because it simply didn’t exist on shelves.

One pharmacist on Reddit described having to compound cisplatin - a chemotherapy drug - from raw powder because the pre-made vials were gone. Another said her hospital used five different manufacturers for the same antibiotic in a single week. That’s not just inconvenient. It’s dangerous.

What’s Missing: Real Incentives and Real Data

The biggest flaw in the federal response? It ignores the root cause: economics. There’s no profit in making low-margin, high-demand drugs. So companies don’t make them - or they make them overseas where labor and regulation are cheaper.

Two proposals could change that:

• H.R.5316, the Drug Shortage Act: Would allow hospitals to use urgently needed compounded drugs during shortages. It passed committee but still needs full House approval.
• Medicare incentive payments: The AHA proposed paying hospitals extra for maintaining backup supply chains. Simple. Effective. Never adopted.

Meanwhile, the FDA’s own data shows compliance with mandatory shortage reporting is just 58%. Small manufacturers - the ones most likely to fail - have an 82% non-compliance rate. And the FDA issued only 17 warning letters for non-reporting between 2020 and 2024. In the EU, under similar rules, they issued 142.

Comparing the U.S. to the EU

While the U.S. is still debating whether to stockpile APIs, the European Union has been ahead for years. The European Medicines Agency (EMA) runs a centralized, mandatory shortage reporting system. Member states must maintain minimum stockpiles of essential drugs. Between 2022 and 2024, the EU cut its shortage rate by 37%.

The difference? Europe treats drug access as a public health right. The U.S. treats it as a market problem. One approach is proactive. The other is reactive.

The Future: AI, Predictions, and a Fragile System

There’s one bright spot: the FDA’s Enhanced Shortage Monitoring System an AI-driven tool launched in November 2025. It uses 17 data streams - shipping logs, hospital orders, production batches - to predict shortages 90 days in advance with 82% accuracy. Early results are promising. Hospitals using it report 28% shorter shortage durations.

But AI can’t fix a broken system. If manufacturers still face no penalty for not reporting, if domestic production remains unprofitable, and if only 12% of API production has been brought back to the U.S. despite seven years of effort - then prediction tools are just fancy alarms on a sinking ship.

The truth? The federal government is reacting to symptoms, not causes. Stockpiling APIs helps in a crisis. But it won’t stop the next shortage. To do that, you need to fix the market. You need to pay manufacturers to make the drugs we can’t live without. You need to enforce reporting. You need to cut red tape. And you need to stop treating drug access like a supply chain puzzle - and start treating it like a matter of life and death.