Key Takeaways
- Drug shortages have declined significantly, but the labor, substitution costs, and operational strain created by shortages continue to affect health systems.
- Compounding pharmacies can provide an important backup during drug shortages, with 503A and 503B facilities serving different patient-specific and institutional needs.
- The semaglutide shortage demonstrated both the scalability of compounding and the challenges pharmacies face when shortage-related demand ends abruptly.
- Strong quality systems, environmental monitoring, staff competency, documentation, and supplier qualification are essential when pharmacies rapidly increase production during shortages.
- Preparing during periods of stable supply can help pharmacies and hospitals respond more effectively when the next major drug shortage disrupts the health care supply chain.
Active drug shortages hit 323 in early 2024, the highest count since tracking began. Less than two years later the number fell below 100, the lowest level since 2006, after five consecutive quarters of decline.
Drug shortages dropped to their lowest count in nearly two decades during 2025, yet U.S. hospitals were still spending close to $900 million a year in labor to manage the ones that remained (figures verified August 2026).
Scar tissue explains the gap between those two facts. Hospital labor costs tied to shortages rose from $359 million in 2019 to $894 million in 2024, pharmacy teams averaged 20 hours a week working around missing drugs, and the largest facilities reported 60. Health systems paid another $200 million a year for higher-priced substitutes, with sterile injectables the hardest category to replace. None of that spending appears on a shortage list, which is why the headline count understates the cost.
Jocelyn Freimuth spent the shortage era on the supply chain’s quiet flank. Board-certified in sterile compounding, she builds quality systems and standard operating procedures for pharmacies and health systems through Camino Compass, the consulting firm she co-founded. When a manufactured drug goes missing, a compounding pharmacy is often what stands between a hospital and a canceled treatment, and the past two years tested that arrangement in both directions.
How Compounding Absorbs a Shortage
Federal law opens a valve when a drug lands on the FDA’s shortage list: licensed compounders may prepare versions of the missing product until supply recovers. Two kinds of operations do that work, and the difference between them is roughly the difference between a tailor and a garment factory.
503A compounding pharmacies:
- Prepare medications for individual, patient-specific prescriptions
- Operate under state board of pharmacy oversight
503B outsourcing facilities:
- Produce standardized batches for hospitals and clinics without patient-specific prescriptions
- Register with the FDA and follow manufacturing-grade quality requirements
Hospitals leaned on both throughout the record years, sourcing everything from chemotherapy staples to basic IV preparations. Elasticity is the system’s virtue: compounders can start producing in weeks, not the years a new manufacturing line demands. Statute draws the boundary, since copies are permitted only while the shortage lasts, and the permission evaporates once the FDA calls supply recovered.
Why injectables dominate shortage lists is a manufacturing story. Sterile production lines are expensive to build, unforgiving to run, and concentrated among a handful of makers competing on razor-thin generic prices, so one contamination finding or one line breakdown can erase a national supply. Pills tolerate a factory hiccup; a sterile bag of chemotherapy does not. Compounding exists partly because that fragility never fully goes away.
The GLP-1 Stress Test
Semaglutide showed what the valve looks like at maximum flow, and then what closing it looks like. Shortage-era rules let compounders sell copies of the blockbuster weight-loss and diabetes drug to a mass market, an unprecedented scale for a system built around individual prescriptions. The FDA declared the semaglutide shortage resolved on February 25, 2025, giving 503A pharmacies until April 22 and 503B facilities until May 22 to stop producing copies.
An entire product category unwound in ninety days. Pharmacies that had rebuilt their business around one molecule faced a cliff, and patients mid-treatment needed transition plans nobody had drafted. Regulators also kept a caveat on the table, noting that enforcement remained available for products of substandard quality regardless of shortage status.
Jocelyn Freimuth read the episode as a preview rather than an anomaly. Any future shortage of a blockbuster therapy would recreate the same pattern: a demand spike no manufacturer can meet, a compounding surge to fill it, and an eventual wind-down that punishes whoever treated the surge as permanent. Operations built for the full cycle, not just the boom, are the ones that keep their patients and their licenses.
Both lessons outlast the episode. Compounding can scale to national demand faster than any other part of the drug supply, and unwinding that scale is abrupt enough to hurt anyone who mistook an emergency valve for a permanent market.
Where Jocelyn Freimuth Points the Quality Question
Volume was never the risk that worried the quality side of the profession; speed without controls was. A pharmacy that triples its output during a shortage inherits manufacturing-scale stakes with pharmacy-scale infrastructure, unless someone has built the systems in advance.
Jocelyn Freimuth’s consulting work concentrates on precisely that gap: documentation that tracks every preparation, environmental monitoring that catches contamination before a recall does, staff competency that gets verified rather than assumed, and supplier qualification for the raw ingredients that surge purchasing makes tempting to source carelessly. Systems built during calm quarters are the only ones that hold during loud ones.
Jocelyn Freimuth’s position gives the argument unusual range. Camino Compass advises the small operations that absorb shortage demand and the health systems that depend on them, which puts the same quality conversation at each end of the purchase order.
Inside a hospital, the shortage playbook is its own quiet discipline. Substitution protocols decide which alternative products can stand in, therapeutic committees ration what cannot be replaced, and pharmacy staff redo the math on every affected order. Twenty to sixty hours a week of that work, the burden hospitals reported through the record stretch, is time bought back only by supply that arrives already trustworthy.
Is the Backup System Ready for the Next Squeeze?
Nothing in the decline resolved the drivers. Thin generic margins still push manufacturers out of low-profit injectables, single-source products still concentrate risk in individual factory lines, and one hurricane proved capable of disrupting national IV fluid supply. A count under 100 measures a good stretch, not a cured disease. Sterile injectables stay the category to watch, because the drugs hardest to substitute are also the ones hospitals cannot schedule around.
Hospital pharmacy groups spent the record years pressing for structural fixes, from manufacturing incentives to earlier supply-chain transparency, and most of those proposals remain pending. Meanwhile the same drivers frame the planning conversations Jocelyn Freimuth has with client pharmacies deciding what capability to build next. Betting on permanent calm has never once paid off in this market.
Preparation, in Jocelyn Freimuth’s framing, belongs to the quiet years by definition. The safety net has to be woven before anyone falls into it, and a shortage list at its lowest point since 2006 is the weaving season. Hospitals writing this year’s budgets and pharmacies choosing this year’s investments are deciding, mostly without saying so, how the next 323 will go.
FAQs
How do compounding pharmacies help during drug shortages?
When a drug appears on the FDA’s shortage list, eligible compounders can prepare versions of the medication while the shortage continues. This can provide hospitals, clinics, and patients with an alternative source while manufacturers work to restore supply.
What is the difference between 503A and 503B compounding pharmacies?
503A pharmacies generally prepare medications for individual patients based on specific prescriptions and operate under state pharmacy oversight. 503B outsourcing facilities can produce standardized batches for health care facilities without patient-specific prescriptions and are registered with the FDA.
What did the semaglutide shortage reveal about compounding?
The semaglutide episode demonstrated how quickly compounding can scale when demand exceeds manufactured supply. It also showed the risks of treating shortage-driven demand as permanent because production may need to wind down quickly when the FDA determines that the shortage has been resolved.
Why are sterile injectable drugs especially vulnerable to shortages?
Sterile injectable manufacturing is expensive, technically demanding, and often concentrated among a limited number of manufacturers. A contamination issue, production-line failure, or other disruption can therefore remove a significant portion of the available national supply.
How can pharmacies prepare for future drug shortages?
Pharmacies can strengthen preparation by developing quality systems, maintaining accurate documentation, monitoring the environment, verifying staff competency, and qualifying suppliers before a shortage occurs. Hospitals can also maintain substitution protocols and other shortage-response processes so teams are better prepared when supply disruptions arise.