The Business of Pharmacy Podcast™
May 8, 2023

The Inner Workings of Reverse Distribution | Michael Zaccaro, CEO, Pharma Logistics

The Inner Workings of Reverse Distribution | Michael Zaccaro, CEO, Pharma Logistics

Reverse distribution is a process that is critical to the success of pharmaceutical companies, and it involves the return of expired or unused products from retailers, hospitals, and pharmacies to the manufacturer or wholesaler. The conversation between Mike Koelzer and Mike Zaccaro, CEO of Pharma Logistics, shed light on the inner workings of reverse distribution, the challenges faced by pharmaceutical companies, and the solutions being employed to address these challenges.

One of the biggest challenges in reverse distribution is dealing with manufacturers who do not have liberal return goods policies. This makes it difficult for reverse logistics companies like Pharma Logistics to recover credit for their clients' expired goods. However, Zaccaro is quick to point out that manufacturers are not intentionally obfuscating the process to delay paying back. This highlights the importance of evaluating a manufacturer's return goods policy in deciding whether it should be included in a formulary or not.

Another challenge is the varying levels of responsiveness and customer service provided by different manufacturers. Pharmacists are often a captive audience for manufacturers, and they may not have much leverage to demand better returns policies. However, reverse logistics companies can provide value by working to maximize the amount of money their clients can recover from manufacturers through the returns process.

To be successful in reverse distribution, companies like Pharma Logistics need to establish systems and processes that allow them to provide a high level of customer service while remaining compliant with regulations. This includes having a clear brand promise, focusing on compliance and regulatory issues, and customizing solutions for individual clients. Additionally, having the correct structure in place, including specific roles such as an account management role, is important to allow people to succeed.

Technology is also playing an increasingly important role in reverse distribution. The implementation of the Drug Supply Chain Security Act (DSCSA) provides a unique license plate for every item, which enables better tracking and reduces errors in the supply chain. Robotic processing automation is being employed to eliminate the number of touches their farmers have on a particular product, and AI can make processes more efficient. However, there are also risks associated with better inventory management reducing the need for reverse logistics services, and companies will need to pivot and provide even more value to customers through data-driven solutions.

In conclusion, reverse distribution is a complex process that requires careful management and attention to detail. Companies like Pharma Logistics are working hard to address the challenges faced by the pharmaceutical industry and provide value to their clients through their expertise in reverse logistics. As technology continues to advance, these companies will need to stay ahead of the curve and provide even more innovative solutions to stay competitive in the market.

The Business of Pharmacy Podcast is an interesting and entertaining weekly podcast discussion on the business of pharmacy. Hosted by Mike Koelzer, an independent pharmacist in Grand Rapids, Michigan, each episode covers a new topic relevant to pharmacists and pharmacy owners. In addition to hosting the podcast, Mike also enjoys improving his sight-reading at the piano.