Milan Patel · Private ← back

The Back-Order Is a Routing Problem

When a pharmacy tells a patient that a drug is unavailable, it sounds like the drug does not exist. Usually it does. It is sitting in a distribution center that the pharmacy does not have an account with.

Allocation is what creates that gap. When supply tightens, a wholesaler does not split the shortfall evenly. It protects its largest customers and its contracted volume first, because that is what the contracts require. An independent pharmacy is never the largest customer. It gets a percentage of its usual order, or nothing, and the reason it hears is that the item is on allocation.

The drug is not missing. It is in a building you can’t buy from today.

So the problem is not manufacturing, at least not the part a pharmacy can do anything about. It is routing. Somewhere there is a licensed distributor with that item in stock who would happily open an account. The pharmacy does not know which one, has no time to find out mid-shift, and cannot risk buying from a seller it has not verified.

That is the whole job. Know who actually has the item, know they are licensed to ship it into the state, and make the introduction while the prescription is still waiting. Handled that way, a shortage stops being a supply crisis and becomes a phone call.

— Milan Patel routes licensed wholesalers to independent pharmacies and 340B clinic networks in New York.