The Pharmacists’ Nemesis: Expiring Inventory (and how to handle it)

by Dr. Alex Toth

Dr. Alex Toth is the Owner of Plumsted Pharmacy in New Jersey and Co-Founder of InStockRx.

If you are a Community Pharmacy Owner or Pharmacist in Charge looking for new strategies to improve your margins, this is for you.

Expiring inventory is like Public Enemy #1 for a pharmacist. It wastes medications that patients need and could use and has a financial impact on the pharmacy. As Pharmacists, we take an oath to consider the welfare of humanity and relief of suffering, and embrace and advocate changes that improve patient care. While expiring inventory does not directly violate our oath, it sure feels like a missed opportunity to serve humanity.

From a financial perspective, pharmacies face significant pressure. It is like death by a thousand cuts, with Prescription Benefit Managers (PBMs) continuing to cut reimbursements, drug shortages being felt around the country and pharmacies experiencing increased expenses on several fronts. Pharmacies simply cannot afford to let their inventory “evaporate” off their shelves via expirations.

There is also the misconception that stores can simply return all of that expired inventory to a reverse distributor and get full credit from a manufacturer. However, this is often not the case.

Common reasons for expiring stock include:

Errors in ordering

Patient discontinuation of a non-returnable medication

Short-dated product shipped to the pharmacy (short-dated defined as: medications that have an expiration date within 6-12 months from the time of purchase)

Pharmacy staff not restocking shelves correctly

Often, these link back to a pharmacy team not being properly trained or equipped with the proper tools for inventory management and analysis.

Consider this ‘day in the life’ of a pharmacist:

While pharmacy staff are working to put away items received from a recent shipment, several customers come in to pick up their prescriptions, request a vaccine, etc. The pharmacy staff stop what they were doing so they can tend to their customers, or quickly put the new inventory on the front of the shelf. They have good intentions of going back to it, but the demands of the day take them away from stocking that new inventory behind the older inventory.

This will cause a situation where your “old” inventory is always being pushed further back on the shelf while creeping closer to its expiration date. From a high level it looks like that inventory is turning over every day, however these hidden products can expire.

How do pharmacies identify expired or soon to expire inventory?

Most pharmacies identify expiring inventory by assigning pharmacy bays or shelves to technicians to place stickers and pull inventory that is soon to be or may be expired. This is very time-consuming, highly prone to errors and reactive in nature. Solely relying on this method not only puts a pharmacy at risk of losing money when a product expires, but it also puts them at risk for Board of Pharmacy inspections looking for expiring inventory.

Alternatively, there are innovative solutions that pharmacies can use to proactively search and identify inventory that is approaching expiration. For example, InStockRx platform offers an “Expiring Inventory Analysis” (see below). With this report, pharmacies can proactively direct staff to investigate specific inventory items sitting on their shelves. This is a great way for a Pharmacy Manager or Owner to audit how their staff is managing inventory, view trends of their inventory life cycle, and save time by not having to physically check every single bottle.

InStockRx – Expiring Inventory Analysis

Strategies to manage or eliminate expired inventory problems

Pharmacies are searching for effective solutions that reduce medication waste. Some example strategies that pharmacies use include:

Cycle filling medications for patients

Only labeling “uncommon” products once the patient has confirmed pickup of the item

Training employees on best practices for handling inventory

Proactively using modern tech solutions to identify inventory that has the potential to expire

Implementation of these methods will help to minimize expiring inventory and increase profitability.

Selling vs. Waiting to Expire

Despite the best efforts of the most meticulous pharmacy owner and staff, there will always be some product that could end up expiring. The best option is to liquidate that inventory to another pharmacy via pharmacy-to-pharmacy marketplaces before it expires because once that product expires, the only option is to send a product back to a reverse distributor.

There is a disconnect between what pharmacies think they are getting from reverse distributors vs. what they actually receive. Reimbursements can range from 0% to 100%, but the average is usually around 20 cents for every $1.00 returned to a distributor. There must be a better way for a pharmacy to prevent this type of financial loss.

This is where InStockRx can help pharmacies. InStockRx helps pharmacies identify product(s) that are soon to expire and then connects them with another pharmacy that needs or has a known usage of that item. From there, InStockRx helps facilitate the transaction in a DSCSA compliant manner. Often times, the pharmacy with expiring inventory doesn’t even need to manually list that item for sale because the analytics behind InStockRx will proactively match them with another pharmacy.

By using analytics and reporting, owners can become more proactive about managing their expiring stock, reduce waste and increase profits. The result is fewer products expiring on pharmacy shelves, better service for patients and improved cashflow.

Are you ready to get off the emotional and financial rollercoasters with expiring stock? Click here to get started with InStockRx.

by Dr. Alex Toth

Dr. Alex Toth is the Owner of Plumsted Pharmacy in New Jersey and Co-Founder of InStockRx.