SMART-status: reallocated_sector_ct FAILING_NOW

Yes, the only way to fix this issue is to do a backup and replace this drive. Why do you want to risk data on this drive when clearly there are physical issues already reported by S.M.A.R.T.?

From Wikipedia:

Reallocated Sectors Count - Potential indicator of imminent electromechanical failure.

And definition:

Count of reallocated sectors. When the hard drive finds a read/write/verification error, it marks that sector as "reallocated" and transfers data to a special reserved area (spare area). This process is also known as remapping, and reallocated sectors are called "remaps". The raw value normally represents a count of the bad sectors that have been found and remapped. Thus, the higher the attribute value, the more sectors the drive has had to reallocate. This allows a drive with bad sectors to continue operation; however, a drive which has had any reallocations at all is significantly more likely to fail in the near future.[3] While primarily used as a metric of the life expectancy of the drive, this number also affects performance. As the count of reallocated sectors increases, the read/write speed tends to become worse because the drive head is forced to seek to the reserved area whenever a remap is accessed. If sequential access speed is critical, the remapped sectors can be manually marked as bad blocks in the file system in order to prevent their use.

You can't influence this in any way. The disk will automatically replace faulty sectors as long as there are spare ones available (how many depends on your drives model and can be found in the spec).

If the number of reallocated sectors does not increase, you might be on the safe side. But better don't count on it and replace the drive as soon as possible or you will risk losing your data.