Richard Schwabacher, Sr. Vice President, Healthcare Product
Rob DeWig, Vice President, Healthcare Solutions
America’s hospitals are grappling with persistent shortages of essential medications, particularly generic sterile injectables critical for emergency care and surgeries. This ongoing issue forces healthcare providers to ration supplies, seek alternatives, or delay treatments, bringing hidden vulnerabilities in the global supply chain to light.
Case in point: VCU Health in Richmond, Virginia, like many hospitals last year, faced a severe IV fluid shortage that prompted conservation measures and workflow adjustments. Clinicians had to prioritize critical cases and modify treatment plans — using smaller IV bags and pivoting to oral medication when possible — highlighting the immediate impact of such shortages.
Data from the American Society of Health-System Pharmacists (ASHP) indicates that drug shortages in the United States have increased significantly towards the end of 2024 and into 2025. In the first quarter of 2024, the number of active drug shortages reached 323, the highest figure since 2014. By September 2024, this number decreased to 277, but 50% of these shortages have persisted for 2 or more years.
The U.S. pharmaceutical supply chain’s heavy reliance on a limited number of manufacturers and international suppliers, especially from countries like China, Canada, and Mexico, exacerbates these challenges. Disruptions such as factory shutdowns or raw material shortages can have immediate and widespread effects. Intense price competition in the generic drug market has further reduced manufacturers’ incentives to maintain excess capacity, leaving hospitals with limited options during shortages.
Trade policy shifts under the Trump administration add another layer of complexity. Without a clear doctrine, business leaders are disadvantaged in forecasting as unpredictable shifts create systemic uncertainty. Recent proposals to impose tariffs on pharmaceutical imports and raw materials are aimed at reshoring drug manufacturing and reducing reliance on foreign suppliers. While these measures could strengthen domestic production in the long run, they also raise concerns about potential price increases and supply chain disruptions in the short term. If pharmaceutical companies adjust their sourcing or manufacturing strategies in response, hospitals may need to reassess procurement plans accordingly.
For hospital executives, proactive measures are essential to mitigate these risks. Diversifying suppliers is a critical step. Health systems should assess their exposure to potential disruptions, identify alternative sourcing options, and establish partnerships with nonprofit organizations that help stabilize the supply of essential hospital drugs through long-term contracts and inventory reserves.
Enhancing inventory management is also crucial. Hospitals have traditionally relied on just-in-time supply models to control costs, but recurring shortages necessitate a reevaluation of this approach. Implementing predictive analytics can help anticipate shortages and adjust procurement strategies accordingly. Some hospitals are exploring strategic stockpiling of critical medications, though this requires balancing inventory costs against the risk of expired stock.
Engaging in policy advocacy is another vital strategy. Healthcare leaders should actively participate in shaping policies that ensure long-term resilience while minimizing short-term disruptions. This includes advocating, like ASHP, for tariff exemptions for essential medicines and incentives for manufacturers to maintain production buffers.
Leveraging technology, particularly artificial intelligence, can further strengthen supply chain resilience. AI-powered platforms can analyze extensive datasets to predict shortages before they occur, allowing hospitals to proactively model and, if needed, adjust sourcing. Machine learning models can optimize inventory management, reducing waste while ensuring the availability of essential drugs. Additionally, blockchain-integrated AI solutions can enhance supply chain transparency, tracking raw material flows and reducing the risk of counterfeit drugs entering the system.
The U.S. healthcare system has long responded to crises, from pandemics to regulatory shifts, often adapting gradually. However, persistent drug shortages, fragile global supply chains, and evolving trade policies now demand a more proactive approach. Hospitals that take action today—by diversifying suppliers, investing in predictive analytics, and advocating for balanced policy solutions—will be better prepared for future disruptions. The next crisis won’t wait. Neither should we.