ShortageSim: Simulating Drug Shortages under Information Asymmetry
This work addresses drug shortages for healthcare systems and regulators by providing a novel simulation tool, though it is incremental as it builds on existing multi-agent and LLM methods.
The paper tackles the problem of understanding drug shortages in pharmaceutical supply chains by developing ShortageSim, an LLM-based multi-agent simulation framework that models strategic interactions under information asymmetry, resulting in an 83% reduction in resolution-lag percentage for simulated shortages compared to a baseline.
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 \textbf{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, \textbf{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 \textbf{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 open-source \textbf{ShortageSim} and a dataset of 2,925 FDA shortage events at https://github.com/Lemutisme/Sortage_Management, providing a novel computational framework for designing and testing interventions in complex, information-scarce supply chains.