ShortageSim: Simulating Drug Shortages Under Information Asymmetry

Drug shortages pose critical risks to patient care and healthcare systems worldwide, yet the effectiveness of regulatory interventions remains poorly understood due to fundamental information asymmetries in pharmaceutical supply chains. We present ShortageSim, the first Large Language Model (LLM)-based multi-agent simulation framework that captures the complex, strategic interactions between drug manufacturers, institutional buyers, and regulatory agencies in response to shortage alerts. Unlike traditional game-theoretic models that assume perfect rationality and complete information, ShortageSim leverages LLMs to simulate bounded-rational decision-making under uncertainty. Through a sequential production game spanning multiple quarters, we model how FDA announcements—both reactive alerts about existing shortages and proactive warnings about potential disruptions—propagate through the supply chain and influence capacity investment and procurement decisions. Our experiments on historical shortage events reveal that ShortageSim reduces the resolution-lag percentage for discontinued-disclosed cases by 83\%, bringing simulated durations more aligned to ground truth than the zero-shot baseline. We will open-source ShortageSim and a dataset of 2,925 FDA shortage events, providing a novel computational framework for designing and testing interventions in complex, information-scarce supply chains.