Drug Shortages Are Now a Policy Problem—Not Just a Supply Problem

Why the ASHP list leads, how 503As & 503Bs can help, and how tariffs, disasters, state actions, and legislation shape patient access to drugs during a national shortage.

Record Highs, Real Impacts

Drug shortages are not new, but the scale and persistence today mark a turning point. In 2024, the number of drugs in shortage reached the highest levels seen in a decade, with sterile injectables — anesthetics, oncology agents, emergency medicines — especially affected (ASHP statistics). The FDA’s root-cause analysis confirms that manufacturing quality issues, economic disincentives, and fragile global supply chains remain drivers.

What’s different now is that policy decisions have become inseparable from operational responses. Whether a shortage counts depends on how FDA defines it. Whether compounding can step in depends on 503A vs. 503B pathways. Whether imports are available depends on trade and tariff rules. Shortages are no longer simply a supply hiccup; they are a system-level policy challenge.

Operators: What You Can Do Now

1. Monitor Two Lists

Most practitioners rely on both the FDA shortage database and the ASHP current shortages. But they are not interchangeable:

  • FDA list = based on manufacturer notifications and national-impact thresholds. It’s the legal trigger for 503A/503B compounding under shortage exceptions.

  • ASHP list = practitioner-facing, reporting shortages as experienced on the ground. It often flags a problem weeks or months before FDA’s list. ASHP outlines the key differences between the lists.

Tip: Build an SOP that ingests ASHP updates as early-warning, while recording FDA listings as compliance documentation. Hospitals that skip this dual approach risk either moving too late (if they only wait for FDA) or stepping outside legal guardrails (if they only rely on ASHP).

2. Stand Up a 503B Playbook

Section 503B, created under the Drug Quality and Security Act, allows outsourcing facilities to compound and distribute without patient-specific prescriptions, under FDA inspection and CGMP standards.

503Bs can only step in under defined conditions:

  • The drug must appear on the FDA shortage list.

  • If compounding from bulk APIs, it must align with FDA’s 503B bulks policy.

  • If compounding a version of a marketed drug, it must comply with FDA’s copies guidance.

Practical moves for operators:

  • Pre-qualify multiple 503Bs with documented CGMP compliance (FDA inspection database). Don’t wait until a crisis.

  • Audit labeling and presentations (e.g., preservative-free, ready-to-administer syringes) since these can reduce nursing risk.

  • Document shortage justifications in procurement records — this creates defensible evidence in audits or state inspections.

A robust 503B playbook can mean the difference between canceled procedures and continuity of care.

3. Fund Preparedness

The federal government now recognizes the financial burden of preparedness. CMS finalized a rule granting separate IPPS payments for certain small hospitals that maintain a six-month buffer of essential drugs (see the buffer-stock policy and the MLN notice).

Even if your institution isn’t eligible, the lesson is clear: quantify the hidden costs of shortages. Overtime pay, canceled surgeries, and risky substitutions all add up. Building an internal business case for local buffer stock may unlock funding that seems invisible until you attach real numbers.

4. Stress-Test for Disasters

Shortages aren’t only about economics or quality lapses. Natural disasters and utility outages can have cascading effects. The Hurricane Maria crisis in Puerto Rico knocked out IV fluid production for months.

Operator checklist:

  • Ask every supplier where each critical SKU is manufactured.

  • Confirm backup power, water, and redundancy measures.

  • Pre-identify 503B surge partners for rapid substitution.

  • Conduct tabletop exercises: what happens if a key site goes dark tomorrow?

Hospitals that practiced these drills during COVID-19 pivoted faster when shortages hit.

External Forces Shaping Access

Tariffs & On-Shoring

The U.S. is now explicitly using trade policy to reshape the drug supply chain. The White House’s supply chain review, NYT analysis, AP coverage and Reuters analysis outline the complexities of the U.S.’s dependence on global drug sources and offer a dual approach as a potential solution for onshoring supply:

  • Tariffs on select APIs from non-allied nations.

  • Incentives for U.S. and allied advanced manufacturing.

For operators, the risk is timing. Tariffs may bite before domestic alternatives scale up. Procurement teams need advance notice to avoid sudden stockouts.

State Actions

States are experimenting with bold new levers:

  • California’s CalRx program, aiming to produce biosimilar insulin (CalRx initiative). Progress has been slower than hoped, but the signal is strong: states are entering the market as buyers and producers.

  • Florida importation plan, Section 804 was authorized by FDA in early 2024 (FDA authorization). Implementation requires rigorous testing, relabeling, and reporting.

For hospital leaders, these programs may not change procurement tomorrow, but they forecast future models of state-level intervention.

Human Factor: Last-Mile Escalation

Even with policies and buffer stocks, shortages ultimately play out at the bedside. Nonprofits like Angels for Change run hotlines to locate scarce medicines for urgent patient needs. Their existence underscores a sobering reality: when systems fail, it is often grassroots coordination that prevents harm.

Example: Semaglutide Removal

Recent court rulings upheld FDA’s removal of semaglutide from the shortage list, curtailing compounding under the exception. While manufacturers reported restored national supply, patient and provider reports described uneven access in some regions. Going forward, shortage-resolution determinations can reduce disruption when they apply a multi-source evidence standard—pairing manufacturer attestations with patient/provider access indicators (e.g., fill rates, backorders, wait-time trends)—and include time-bound transition steps before flexibilities are withdrawn. (Current status: see FDA’s drug shortages portal.)

Policymakers: What’s Next

Pending Federal Legislation

The compounding community has advanced H.R. 5316 (119th Congress), a bipartisan bill that would:

  • Permit limited urgent-use distributions by 503A pharmacies in defined cases.

  • Extend shortage windows to prevent abrupt disruptions.

  • Require FDA to annually update its list of bulk substances for 503Bs.

  • Expand shortage definitions to include demand surges.

  • Update labeling and notification rules to improve visibility (bill docket).

If passed, it could rebalance flexibility for compounders while preserving safeguards for patients.

A Synthesis: Bridging Policy and Practice

Every review — from the FDA’s shortage task force to ASHP’s practitioner updates — points to the same conclusion: there is no silver bullet.

A both-and approach is required:

  • Build diversified, domestic (and allied) manufacturing capacity.

  • Use 503A/503B compounding as a lawful bridge when commercial supply falters.

  • Support early-warning (ASHP) and legal triggers (FDA).

  • Calibrate tariffs, state programs, and CMS buffer stock to reduce fragility.

Bottom line: Drug shortages are no longer just about manufacturing capacity. They are a test of how well policy, practice, and preparedness align to protect patients.

Experiencing a Shortage Now?

Restore Health Consulting (RHC) helps 503A and 503B organizations design resilient playbooks: shortage dashboards, 503B partner qualification, labeling & presentation strategies (RTA, PF), and inspection-ready documentation. Talk to RHC.

Disclaimer

This article is for general information and does not constitute legal advice. Always consult counsel on state and federal requirements.

Amy Summers