Can we manage expiry dated stock better?

A great discussion on Linked In, about the possibility of extending the expiry life of medicines after a recent study revealed that some drugs may retain viable potency for decades; long after the product officially expired.  The possibilities of some drugs being able to be sold with very long expiry dates is tantalising and holds the promise of
eliminating the waste of expired drugs becoming an expensive loss to healthcare providers, wholesalers and distributors.

Unfortunately the collective wisdom from the discussion was that this would be very difficult from both a scientific and regulatory perspective.

The thread went on to discuss the related risk of improper disposal of unwanted or expired drugs into landfill or the sewer once the drugs are in the community.  We have two separate but related issues here.  The management of expiry dated pharmaceuticals and the safe disposal of unused or expired pharmaceuticals once they are out in the community.

My question about both is what is the size of the problem and what is the opportunity?  Is the cost of the work both scientific and regulatory actually worth the result of extending the life of a drug?  Most drugs have at least two years of life from manufacture and this is plenty of time for these drugs to be used in normal circumstances.  Does anyone know the real value of wasted stock due to product expiry?  

Furthermore the financial loss due to expiry gets higher the further down the supply chain the product expires.  The financial loss of expired product to a manufacturer (at manufactured cost) may be trivial compared to the loss to a hospital or pharmacy which has paid normal selling price.  Current commercial arrangements may prevent this, but the cost of expired drugs to the community could be reduced if expired stock could be returned to a manufacturer for a partial credit that reflected the selling price less the real cost of manufacture and disposal.  My point is that the real cost of expired drugs could probably be much less than it currently is, if government and other regulatory bodies (the PBS and State Health Departments in Australia) pushed back on the manufacturers to reduce their financial losses due to expiry as part of the supply contract conditions.

As a specialist in healthcare logistics and supply chain, my perspective is that a lot of work can be done to prevent medicines expiring by better supply chain management which is much easier and cheaper than a campaign to extend the expiry dating of drugs. Good practice supply chain will keep inventories low and match demand to supply which will minimise the risk of expiry.  Developing mechanisms for collaboratively managing the expiry risk of low volume medicines across organisations in the healthcare supply chain will go a long way towards preventing the waste and expense of expired stock.

Similarly the proper disposal of expired drugs from the community is a matter of reverse logistics which is standard practice for returns and the mechanisms already exist.  Setting up the mechanisms to return drugs from the community to the pharmacy and then back to the manufacturer should be the standard practice.  Make the manufacturer responsible for the whole of life cost of the drug including safe disposal.  This would add minimal cost to the drugs and puts the responsibility where it belongs keeping us all a little safer.  In Australia this process is federally funded and called The RUM Project but the government manages the return and incineration of the drugs.

If your organisation has responsibility for managing inventories of expiry dated products then we have a freely available Excel template which will calculate if you have any stock that is likely to expire in future, how much and when.  You can find the Expiry Risk Calculator (WPI members only) on our website.  I hope it helps you avoid otherwise unforeseen stock losses.

If warehousing, logistics and supply chain are important to your business or your personal career then why not follow this blog by email or on Google+.  To tap in to the full benefits of business and career boosting ideas I suggest you join The Warehouse Performance Initiative.