How Drug Shortages Quietly Put Your Generics Underwater

Three clocks run at different speeds, and the gaps between them are your loss:

• Your acquisition cost moves immediately. A shortage or supply disruption can raise what you pay your wholesaler overnight.
• NADAC moves weekly — and now slower for generics. CMS refreshes the National Average Drug Acquisition Cost file weekly from a survey of pharmacy invoices. But beginning with the December 2024 update, CMS applies a three-month moving average to generic drugs to dampen volatility. That smoothing is reasonable for stability, but it means generic NADAC reflects a sudden spike gradually, not at once. CMS’s own methodology notes that drug shortages during the survey period can affect the calculated rate.
• The PBM’s MAC list moves on the PBM’s schedule. Many states require PBMs to update MAC lists at least every seven days, but “at least weekly” still trails an overnight spike — and the update may be prospective only, leaving the claims you already dispensed underwater.

Put together: cost jumps now, NADAC catches up slowly, the MAC list lags and may never pay back the claims you took the loss on. It’s the same below-NADAC gap as always, just triggered by a supply shock instead of a stale list.

Shortages don’t hit randomly — they concentrate in low-margin, low-cost generics, which are exactly the drugs most exposed to below-cost reimbursement. Reporting from Brookings found that in 2024 a large share of the sterile injectables and oral generics in shortage were already invoiced at just a few dollars, and IQVIA has found shortages far more common among the cheapest drugs than the most expensive. When a $3 generic’s cost triples in a shortage, the dollar loss per fill looks small — but across a quarter of fills, on the handful of drugs that recur, it adds up.

• ASHP and the University of Utah Drug Information Service tracked 323 active drug shortages in the first quarter of 2024 — an all-time high, surpassing the prior record of 320 in 2014, with injectables making up a large share of new shortages.
• An HHS ASPE report to Congress, drawing on a RAND analysis of 2016–2020 data, found drug prices rose between roughly 7.2% and 16.6% in the twelve months after a shortage, an increase driven mostly by generics.

• Monitor weekly. Watch NADAC and the FDA and ASHP shortage lists for the drugs you actually dispense, so an underwater claim doesn’t sit undetected for a month.
• Document at the spike. Keep the dated wholesaler invoice showing your elevated per-unit cost on the fill date. This is the single piece of evidence that wins a MAC appeal — and reconstructing it later is much harder.
• Appeal immediately. Filing windows are short; file inside yours with the invoice, NDC, and claim data. See the appeal process.
• Know your state’s shortage protections. Some states require PBMs to reimburse at least the wholesale acquisition cost for an NDC that’s on the FDA shortage list, and a growing number set a NADAC-based reimbursement floor. Check whether yours does — it can turn a manual appeal into an automatic floor.

If you’d rather catch these as they happen instead of after the month closes, MarkupRx flags your generics that fall below NADAC and drafts the appeals. See the below-NADAC pattern for your state, no login: see your state.