U.S. pharmaceutical domestic market share collapsed from 83.7% in 2002 to just 37.1% by 2023.
Drug shortages hit a record 323 in early 2024, with hospitals facing 300–500% price markups.
Up to 83% of shortages involve generics, as U.S. manufacturers are undercut by subsidized foreign competitors.
85% of hospital pharmacists say shortages are critically or moderately impactful, leading to delayed or rationed care.
40% of U.S. generics have only one FDA-approved manufacturer, creating dangerous single points of failure.
In the U.S. today, frontline cancer treatments are being rationed. ERs are short on sedatives. Amoxicillin—one of the most prescribed antibiotics in the country—has been in critical shortage. These are not temporary disruptions. They reflect a structural breakdown caused by the erosion of America’s pharmaceutical manufacturing base and a decades-long surge in generic drug imports.
Over the past two decades, domestic production capacity has been hollowed out in favor of imports, leaving the U.S. dangerously dependent on vulnerable global supply chains.
The economic architecture promised to deliver affordability has eroded the industrial base required to ensure availability. The implications are unmistakable: the U.S. drug shortage crisis is not simply a healthcare problem. It is a failure of industrial strategy, supply chain resilience, and national health security.
A System in Shortage
There are currently 270 active drug shortages in the United States. Shortage levels have intensified in recent years, reaching a record high of 323 in early 2024—a number not seen in over two decades.
These shortages are long-standing vulnerabilities spanning many critical categories—sterile injectables, antibiotics, oncology drugs, and other staple treatments—each an indispensable component of modern medical care.
These are not rare or specialty drugs: they are the medicines doctors rely on every day to treat infections, manage pain, and save lives. An American Hospital Association (AHA) study found that 85% of hospital pharmacists reported the shortages as critically or moderately impactful, forcing rationing, delaying, even canceling treatments, and directly endangering patients.
A primary driver behind these shortages has been the U.S.’s heavy reliance on imports and fragile foreign supply chains.
Plant Closures and Single Points of Failure
The U.S.’s reliance on imported generic drugs has also not led to more suppliers, but fewer. The market has quietly consolidated over the past decade. About 20% of critical drugs have APIs exclusively from China. And 40% of U.S. generic drugs have only one FDA-approved manufacturer, creating single points of failure. This means that a single disruption can cripple national access to a drug, which is already occurring with incidents like Intas Pharmaceuticals and the explosion at a Chinese piperacillin-tazobactam plant.
In 2023, the FDA shut down a single Indian plant—Intas Pharmaceuticals—that supplied approximately 50% of America’s cisplatin, a key chemotherapy drug. Inspectors uncovered a ‘cascade of failure’ in quality controls, including shredded and acid-doused documents, prompting the shutdown. With no domestic backup, doctors reported rationing treatment, delaying patient care, and resorting to second-tier therapies.
Far from preventing shortages, the import wave has helped cause shortages—by undercutting and eliminating domestic producers. U.S. producers have been steadily pushed out due to import surges, foreign state subsidies, and China’s near-monopoly—controlling up to 90% of key pharmaceutical chemical inputs.
There is only one remaining U.S. facility producing amoxicillin. The Bristol, Tennessee plant used to make enough amoxicillin to treat the entire country. But now the plant is struggling to keep its doors open even as the U.S. struggles with an amoxicillin shortage crisis.
These shortages reveal how the current U.S. trade system has failed to ensure stable medicine supply—while devastating the domestic producers who once sustained it.
Free trade promised lower prices for U.S. medicines, but those savings immediately vanish when domestic capacity is gone and drug shortages hit. Hospitals report paying 300–500% markups for critical drugs in shortage, meaning the short-term “cheapness” of imports evaporates in a crisis.
The Economics Behind the Collapse
At the heart of the crisis is a simple economic truth: both China and India have deliberately taken over the U.S. pharmaceutical industry through industrial strategy and state subsidies, making generic drugs too cheap to make competitively in the United States.
Roughly 90% of prescriptions filled in the U.S. are for generics, yet these account for only 17.5% of total drug spending. Off-patent drugs, often priced at pennies per dose, offer razor-thin margins that few U.S. firms can sustain.
According to the FDA and American Hospital Association (AHA), up to 83% of drug shortages involve generics—driven largely by manufacturers exiting the market or being forced out as imports drive prices below sustainable margins.
As prices fall and contracts are frequently undercut, the supply chain becomes fragile by design—with even minor disruptions capable of breaking production and cutting off access to essential medicines.
“Rock-bottom” imported generic pharmaceutical prices have caused many plant closures and manufacturer bankruptcies across the U.S. These closures include Akorn Pharmaceuticals, a domestic producer of sterile generics, which filed for bankruptcy in 2023, abruptly ceased operations across all four of its U.S. manufacturing facilities, and laid off 400 employees. The closure instantly yanked dozens of products off the market—many with no short-term replacement.
Closures like these have only deepened the shortage crisis by accelerating the shutdown of U.S. plants.
As a result, imports have gutted America’s pharmaceutical production base. In 2002, U.S. manufacturers produced 83.7% of the pharmaceuticals consumed domestically. By 2023, that number plummeted to just 37.1%, with a corresponding $157.8 billion loss in potential domestic production value.
FIGURE 1:
*DMSI Calculations made using BLS Sectoral Output for Pharmaceutical and Medicine Manufacturing data & Census Bureau HTS Chapter 30 Pharmaceutical Product Import/Export Value
The collapse of domestic pharmaceutical manufacturing is not accidental. It is the result of decades of unguarded trade liberalization, sustained price pressure from imports, and the absence of a national production strategy.
Without a comprehensive and focused U.S. trade policy, hospitals and wholesalers have focused almost exclusively on lowest-cost bids, without factoring in reliability, domestic sourcing, or quality. This results in thin profits, disinvestment, and plant closures for U.S. pharmaceutical manufacturers.
The U.S. Needs a Strategic Pharmaceutical Trade Policy
The 2025 Section 232 investigation into generic pharmaceutical imports rightly frames this crisis as a national security threat. The U.S. government must act swiftly. Here’s what must be done:
Impose specific and tailored import quotas and/or tariffs on generic pharmaceutical imports, especially those from adversarial countries or with histories of safety violations.
Expand domestic production through tax credits, loan guarantees, and long-term federal contracts for essential medicines.
Mandate full supply chain transparency, including API origin labeling and manufacturing site disclosure.
Strengthen FDA enforcement abroad and bar imports from repeat violators.
The U.S. should also favor imports from trusted nations with shared and equivalent safety standards while rebuilding our own base. And a Strategic API Reserve—via programs like the Strategic National Stockpile (SNS) and the Strategic Active Pharmaceutical Ingredient Reserve (SAPIR)—could provide emergency stockpiles for critical compounds.
Conclusion
This is not a supply chain problem. This is a trade and industrial policy failure. We have built a market in which essential medicines are priced so low that no one wants to make them. Then we express shock when they disappear from the shelf and patients lose treatment.
The dangerous consequences of offshoring our pharmaceutical base are already here—rationed care, patient delays, and empty shelves. We have surrendered control of our medicine supply to China and India—and patients are paying the price.
The drug shortage crisis should be seen for what it is: a national economic breakdown with direct implications for public health, military readiness, and national security. America does not just have a drug shortage problem. It has a production collapse. Unless that changes, the next shortage won’t be a surprise—it will be a certainty.
The American pharmaceutical supply chain has become dangerously dependent on imports and foreign-controlled supply chains. Over the past 20 years, the country has experienced a skyrocketing rate on pharmaceutical imports and increasing foreign reliance.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
America’s Drug Shortage Isn’t a Supply Problem—It’s a Production Crisis
KEY POINTS
In the U.S. today, frontline cancer treatments are being rationed. ERs are short on sedatives. Amoxicillin—one of the most prescribed antibiotics in the country—has been in critical shortage. These are not temporary disruptions. They reflect a structural breakdown caused by the erosion of America’s pharmaceutical manufacturing base and a decades-long surge in generic drug imports.
Over the past two decades, domestic production capacity has been hollowed out in favor of imports, leaving the U.S. dangerously dependent on vulnerable global supply chains.
The economic architecture promised to deliver affordability has eroded the industrial base required to ensure availability. The implications are unmistakable: the U.S. drug shortage crisis is not simply a healthcare problem. It is a failure of industrial strategy, supply chain resilience, and national health security.
A System in Shortage
There are currently 270 active drug shortages in the United States. Shortage levels have intensified in recent years, reaching a record high of 323 in early 2024—a number not seen in over two decades.
These shortages are long-standing vulnerabilities spanning many critical categories—sterile injectables, antibiotics, oncology drugs, and other staple treatments—each an indispensable component of modern medical care.
These are not rare or specialty drugs: they are the medicines doctors rely on every day to treat infections, manage pain, and save lives. An American Hospital Association (AHA) study found that 85% of hospital pharmacists reported the shortages as critically or moderately impactful, forcing rationing, delaying, even canceling treatments, and directly endangering patients.
A primary driver behind these shortages has been the U.S.’s heavy reliance on imports and fragile foreign supply chains.
Plant Closures and Single Points of Failure
The U.S.’s reliance on imported generic drugs has also not led to more suppliers, but fewer. The market has quietly consolidated over the past decade. About 20% of critical drugs have APIs exclusively from China. And 40% of U.S. generic drugs have only one FDA-approved manufacturer, creating single points of failure. This means that a single disruption can cripple national access to a drug, which is already occurring with incidents like Intas Pharmaceuticals and the explosion at a Chinese piperacillin-tazobactam plant.
In 2023, the FDA shut down a single Indian plant—Intas Pharmaceuticals—that supplied approximately 50% of America’s cisplatin, a key chemotherapy drug. Inspectors uncovered a ‘cascade of failure’ in quality controls, including shredded and acid-doused documents, prompting the shutdown. With no domestic backup, doctors reported rationing treatment, delaying patient care, and resorting to second-tier therapies.
Far from preventing shortages, the import wave has helped cause shortages—by undercutting and eliminating domestic producers. U.S. producers have been steadily pushed out due to import surges, foreign state subsidies, and China’s near-monopoly—controlling up to 90% of key pharmaceutical chemical inputs.
There is only one remaining U.S. facility producing amoxicillin. The Bristol, Tennessee plant used to make enough amoxicillin to treat the entire country. But now the plant is struggling to keep its doors open even as the U.S. struggles with an amoxicillin shortage crisis.
These shortages reveal how the current U.S. trade system has failed to ensure stable medicine supply—while devastating the domestic producers who once sustained it.
Free trade promised lower prices for U.S. medicines, but those savings immediately vanish when domestic capacity is gone and drug shortages hit. Hospitals report paying 300–500% markups for critical drugs in shortage, meaning the short-term “cheapness” of imports evaporates in a crisis.
The Economics Behind the Collapse
At the heart of the crisis is a simple economic truth: both China and India have deliberately taken over the U.S. pharmaceutical industry through industrial strategy and state subsidies, making generic drugs too cheap to make competitively in the United States.
Roughly 90% of prescriptions filled in the U.S. are for generics, yet these account for only 17.5% of total drug spending. Off-patent drugs, often priced at pennies per dose, offer razor-thin margins that few U.S. firms can sustain.
According to the FDA and American Hospital Association (AHA), up to 83% of drug shortages involve generics—driven largely by manufacturers exiting the market or being forced out as imports drive prices below sustainable margins.
As prices fall and contracts are frequently undercut, the supply chain becomes fragile by design—with even minor disruptions capable of breaking production and cutting off access to essential medicines.
“Rock-bottom” imported generic pharmaceutical prices have caused many plant closures and manufacturer bankruptcies across the U.S. These closures include Akorn Pharmaceuticals, a domestic producer of sterile generics, which filed for bankruptcy in 2023, abruptly ceased operations across all four of its U.S. manufacturing facilities, and laid off 400 employees. The closure instantly yanked dozens of products off the market—many with no short-term replacement.
Closures like these have only deepened the shortage crisis by accelerating the shutdown of U.S. plants.
As a result, imports have gutted America’s pharmaceutical production base. In 2002, U.S. manufacturers produced 83.7% of the pharmaceuticals consumed domestically. By 2023, that number plummeted to just 37.1%, with a corresponding $157.8 billion loss in potential domestic production value.
FIGURE 1:
The collapse of domestic pharmaceutical manufacturing is not accidental. It is the result of decades of unguarded trade liberalization, sustained price pressure from imports, and the absence of a national production strategy.
Without a comprehensive and focused U.S. trade policy, hospitals and wholesalers have focused almost exclusively on lowest-cost bids, without factoring in reliability, domestic sourcing, or quality. This results in thin profits, disinvestment, and plant closures for U.S. pharmaceutical manufacturers.
The U.S. Needs a Strategic Pharmaceutical Trade Policy
The 2025 Section 232 investigation into generic pharmaceutical imports rightly frames this crisis as a national security threat. The U.S. government must act swiftly. Here’s what must be done:
The U.S. should also favor imports from trusted nations with shared and equivalent safety standards while rebuilding our own base. And a Strategic API Reserve—via programs like the Strategic National Stockpile (SNS) and the Strategic Active Pharmaceutical Ingredient Reserve (SAPIR)—could provide emergency stockpiles for critical compounds.
Conclusion
This is not a supply chain problem. This is a trade and industrial policy failure. We have built a market in which essential medicines are priced so low that no one wants to make them. Then we express shock when they disappear from the shelf and patients lose treatment.
The dangerous consequences of offshoring our pharmaceutical base are already here—rationed care, patient delays, and empty shelves. We have surrendered control of our medicine supply to China and India—and patients are paying the price.
The drug shortage crisis should be seen for what it is: a national economic breakdown with direct implications for public health, military readiness, and national security. America does not just have a drug shortage problem. It has a production collapse. Unless that changes, the next shortage won’t be a surprise—it will be a certainty.
U.S. Dangerously Reliant on High-Risk Imported Drug Supply
The American pharmaceutical supply chain has become dangerously dependent on imports and foreign-controlled supply chains. Over the past 20 years, the country has experienced a skyrocketing rate on pharmaceutical imports and increasing foreign reliance.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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