The Hatch-Waxman Act revolutionized the generic drug market, significantly reducing healthcare costs. However, the very success of generic drugs has led to shortages due to low prices, making production and quality assurance economically unfeasible. Group purchasing organizations (GPOs) have been blamed for driving prices down, but economists argue that their pricing power alone cannot fully explain the persistent shortages. The issue stems from the ‘common agency problem,’ where individual GPOs have insufficient incentives to ensure adequate supply because the benefits of their actions spill over to competitors. Government action and non-governmental initiatives are needed to address this market failure, such as subsidies for shortage-prone drugs, hospital reserves, and quality monitoring.