I was having the same issue; it affected 7 apps.
I tried all the following with no success. (When I say I "re-purchased" that means I got the message that another family member already bought the app and I can download it for free, then it downloaded - but I still got the error.) This is what I tried:
- re-purchased one of the affected apps in the App Store with the device user's Apple ID (not the Apple ID who originally purchased the app)
- deleting the app and then re-purchasing
- rebooting the iPad
- signing out of the App Store, and then signing back in with the same (i.e. the device user's) Apple ID
- deleting the affected apps, then signing out of the App Store, then restarting the iPad, then signing into the App Store (again with the device user's Apple ID), then repurchasing the apps with the same Apple ID.
Despite trying all these steps, I still got the "This app is no longer shared with you" message with all the affected apps.
Finally I was able to resolve the issue as follows:
- delete all the affected apps
- backup the iPad to iCloud
- completely wipe the iPad (using General > Reset > Erase All Content and Settings)
- restore using the most recent iCloud backup
- re-purchase the affected apps in the App Store using the device user's Apple ID
This time, after getting the message that another family member already bought the app and I can download it for free, the apps finally worked as normal.
So, restore from iCloud backup solved the issue, which means that if you happen to only be using iCloud backup already, then it's not necessary to mess around with iTunes to solve this issue.
Frustratingly it took many hours of work to get this far.
I'd like to mention that, contrary to what some others have been saying:
- the affected apps were not all free; it was a mixture of paid and free apps
- the affected apps were not ones that state Family Sharing is not supported in the App Store - e.g. Google Chrome was affected and that quite clearly says Family Sharing is supported
- the affected apps were not ones that had recently been updated - at least, not according to the App Store's update log
Also, it may not have been spelled out, that what's particularly annoying about this issue is that you can't even ignore Family Sharing and download the app again with the device user's Apple ID - especially for apps that are free anyway. In other words, it's not just that Family Sharing doesn't work, it's that Family Sharing is preventing you from doing something that you could have done without / before Family Sharing.
Finally, one piece of unexpected behaviour is that during the restore process, I was prompted for the password of a really old, defunct Apple ID I haven't used in years, which is not part of Family Sharing at all. Does it mean one of the apps on the device was purchased with this old Apple ID? I could have sworn I purchased all the apps with my new Apple ID. How can I find out which Apple ID was used to purchase each app? There are instructions for this on the web, but they all involve using iTunes - but I don't sync with iTunes, I use iCloud instead. Is there any way to find the offending app(s) within iOS?