The U.S. drug supply chain continues to face mounting challenges—from rising global dependencies to widespread medication shortages. As of late 2025, more than 250 essential medicines are in shortage nationwide, underscoring the need for stronger, more reliable domestic manufacturing systems.
A new report from the API Innovation Center highlights the most urgent steps the healthcare and pharmaceutical industries must take to stabilize the nation’s supply of active pharmaceutical ingredients (APIs). The insights come from roundtable discussions held in August 2025. Bringing together leaders from pharmaceutical manufacturing, hospital systems, retail pharmacies, government agencies, and the broader economic sector.
Their message was clear: rebuilding a resilient U.S. drug supply chain requires collaboration, investment, and a shift in how we measure value.
1. Build Predictable Demand and Long-Term Contracts
For decades, API manufacturing has been hindered by volatile purchasing patterns and short-term contracts. The report emphasizes that predictable demand signals and multi-year contracts are crucial to mitigating risk in private investment in U.S. manufacturing facilities.
Without these long-term commitments, domestic producers struggle to justify the significant upfront cost of API infrastructure, leaving the nation reliant on foreign suppliers.
2. Move Beyond “Lowest-Cost” Purchasing Models
A recurring theme from the roundtable discussions was the need to rethink the traditional lowest-cost purchasing model. Experts argue that this approach often prioritizes price over reliability, quality, and long-term sustainability.
Instead, the industry should shift to value-based models that reward manufacturers for consistent production standards, transparency, and supply continuity. Even if prices are modestly higher. Such a shift could prevent shortages of critical medications and ensure more predictable access for hospitals and pharmacies.
3. Increase Transparency Across the Supply Chain
Another key recommendation is improving end-to-end transparency—from raw material sourcing to final product distribution. Today’s fragmented visibility makes it difficult to anticipate shortages or identify vulnerabilities before they cause disruption.
Enhanced data-sharing and digital traceability could enable smarter, real-time decision-making across manufacturers, distributors, and regulators, strengthening national preparedness during crises or surges in demand.
4. Foster Broad Stakeholder Collaboration
The API Innovation Center emphasizes that no single entity can solve this problem alone. Real progress will require public-private collaboration between healthcare providers, government agencies, and the pharmaceutical industry.
Aligning incentives, standardizing communication, and creating unified contingency frameworks are key steps toward building a supply chain that can withstand global shocks and ensure reliable access to essential medicines.
The Road Ahead
As the U.S. heads deeper into 2025, the pharmaceutical landscape stands at a turning point. The shortage of more than 250 medications serves as a stark reminder that dependence on overseas manufacturing is no longer sustainable.
By focusing on predictable demand, value-based purchasing, transparency, and collaboration, the healthcare system can take meaningful strides toward a more secure and resilient drug supply chain—one capable of protecting patients and supporting innovation for decades to come.
