By 2023, generic drugs made up 90% of all prescriptions filled in the U.S.-but they only cost 20% of what the country spends on medicine. That sounds like a win. Except millions of patients can’t get them. Insulin, epinephrine, antibiotics, levothyroxine-these aren’t rare or experimental drugs. They’re the ones people rely on every day. And they’re disappearing.

The system was built to save money. Now it’s breaking.

The 1984 Hatch-Waxman Act was supposed to make generics affordable and widely available. It worked. Too well. Generic manufacturers started competing not on quality, but on price. A single tablet might be sold for less than a penny. When a new company enters the market, they undercut the others by a fraction of a cent. The next one drops it again. Soon, no one is making enough to cover costs, let alone invest in better equipment or safer production.

Branded drug companies make 70-80% gross margins. Generic manufacturers? Many operate at 15-20%. Some drugs are sold at under 5% profit. That’s not a business. It’s a race to the bottom.

Where your pills are made-and why that matters

Almost 97% of antibiotics, 92% of antivirals, and 83% of the top 100 generic drugs in the U.S. have no active ingredient made here. Instead, they come from factories in India and China. The U.S. used to make 35% of its own active pharmaceutical ingredients (APIs) in 2010. By 2023, that dropped to 14%.

It’s not just about distance. It’s about control. One facility makes the API. Another blends it with fillers. A third coats the pill. A fourth packages it. Each step happens in a different country. If one link breaks-say, due to a factory shutdown in China or an export ban in India-the whole chain snaps.

In early 2020, India halted exports of 26 essential medicines, including acetaminophen. That’s the active ingredient in Tylenol. Suddenly, hospitals couldn’t get painkillers or fever reducers. The pandemic didn’t cause the shortage. It exposed it.

Quality control isn’t optional. But it’s expensive.

The FDA inspects foreign facilities less often than U.S. ones. When they do, they find problems. In 2022, Intas Pharmaceuticals in India had its cisplatin-used for cancer treatment-banned from the U.S. market after inspectors found “enormous and systematic quality problems.”

U.S. manufacturers keep 95%+ accurate batch records. Some foreign ones? As low as 78%. That gap isn’t just paperwork. It’s safety. A 2023 study found generic drugs made in India had 54% more serious adverse events-including hospitalizations and deaths-than identical drugs made in the U.S. The study didn’t prove cause, but the pattern is too strong to ignore.

Fixing a single FDA inspection violation costs an average of $1.7 million and takes 12 to 18 months. Building a new FDA-approved factory in the U.S. costs $250-500 million. In India? $50-100 million. No wonder companies leave.

Why no one fixes this

Group purchasing organizations (GPOs) and pharmacy benefit managers (PBMs) control contracts. They pick the cheapest bid-even if it’s from a factory with a history of violations. A hospital might save $50,000 a year on antibiotics by switching to the lowest bidder. But if that supplier shuts down? The hospital can’t just order from someone else. There’s no backup.

The FDA can’t force manufacturers to produce more. Their only tool? Calling and asking nicely. In 2023, there were 278 active drug shortages-the highest number since tracking began in 2011. Two-thirds were generics.

Some companies have tried to adapt. A few have invested in continuous manufacturing-technology that monitors quality in real time, reducing errors. But it needs big upfront cash. Only 12 such facilities exist in the U.S. They make less than 3% of all generic drugs.

Who pays the price?

Patients don’t just wait longer. They pay more.

When levothyroxine (a thyroid hormone) went short, one nurse practitioner had to switch 89 patients to brand-name versions. Their monthly cost jumped from $10 to $150. Medicare beneficiaries saw heart meds go from $10 to $450 a month.

Pharmacists on Reddit report switching antibiotics for 17 different infections in six months. Cancer patients get delayed treatments. Diabetics ration insulin. Nurses tell stories of patients showing up with symptoms because they couldn’t refill their meds.

It’s not a glitch. It’s a design flaw.

What’s being done-and why it’s not enough

The FDA created a Drug Shortage Task Force. Congress passed the CREATES Act in 2019 to stop branded companies from blocking generic competition. The 2024 federal budget added $80 million for more foreign inspections. That’s a 12% increase. But the number of foreign facilities needing inspection rose by 40%.

Bipartisan bills in 2023 proposed tax breaks for U.S.-based API production and national stockpiles of critical drugs. That’s a start. But tax credits won’t fix a market that rewards the lowest bid, no matter the risk.

Some hospitals are bypassing GPOs entirely and negotiating directly with manufacturers. That’s smart. But it only helps big systems. Small clinics and rural pharmacies? They’re still stuck with the lowest bidder.

The future looks bleak-unless we change the rules

By 2027, the number of generic manufacturers serving the U.S. could drop from 127 to 89. That means fewer suppliers, more pressure on the ones left, and more shortages.

Experts agree: this isn’t about pandemics or geopolitics. It’s about economics. If you pay less than it costs to make a drug, people stop making it. That’s basic math. The system isn’t broken because of bad actors. It’s broken because the rules reward short-term savings over long-term survival.

There’s no magic fix. But there are choices. We can pay more for generics and keep supply chains stable. Or we can keep chasing pennies-and keep watching essential medicines vanish from shelves.

For now, patients are the ones holding the bag.