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Good Shepherd Pharmacy and Remedi PDF

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In May 2019, pharmacist and social entrepreneur Phil Baker contemplated a just-
completed phone conversation. When leukemia patient Scott Beck died in April, his
grieving family donated his unused cancer medications to Good Shepherd Pharmacy
(Exhibit 1). Baker wrote Mr. Beck’s widow to express his condolences and thank her
for the donated meds. This afternoon, theBecks’daughter called to thank Baker:“Dad
would want others to benefit from medication he no longerneeds.”She added:

appreciation for the care we received as patients, we participate in NIH1studies
that aim to improve early detection. Donating Dad’s unused medication is
another way that we give back. Good Shepherd Pharmacy blessed our family
by providing a way to make that happen.

The call strengthenedBaker’sresolve to redistribute unused medications to
patients who needed them. In 2015 he founded the Good Shepherd charity pharmacy.
In 2016 he successfully lobbied for a Tennessee law to let individuals donate unexpired
medications to authorized charity pharmacies. While waiting for necessary rules to be
written (so the law could go into effect), Baker asked a member of his church --
redistribution software. Fisher advised him to take this project step by step. Soon,
Baker and Fisher co-founded a company, Remedi LLC, which in summer 2018
launched a web site that gathered local patient medication requests and solicited
medication donations. A design team discussed whether blockchain-based software
could securely and efficiently support medication redistribution.

In spring 2019 Baker formed a RemediChain Consortium. Some members agreed
to help test a new blockchain-based medication redistribution process, as nodes on the
blockchain. In April a local non-blockchain pilot test analyzed the feasibility of a new
delivery verification process.

Copyright2020 by theCase Research Journaland by Howard Goode and Janis Gogan. The authors
developed this field-researched case for class discussion rather than to illustrate either effective or
ineffective handling of the situation. The authors thank CRJ Editor Gina Grandy and anonymous
CRJ reviewers for their helpful suggestions, and Clinton Daniel who tested the case with University
of South Florida students. Janis Gogan thanks Bentley University, which generously provided
summer research funding that partially supported this case study. An earlier version was presented
at NACRA 2019. Contact Author: Janis L. Gogan, Bentley University, 175 Forest Street, Waltham
MA 02452-4705 USA, 508-748-1952
Will this Blockchain Deliver Donated
Drugs toNeedyPatients?

Recently, potential investors expressed interest in Remedi LLC but Baker worried
that if they did not deliver an impressive blockchain solution soon, investor interest
might quickly dissipate. He figured the blockchain team should commit to a final design
by September 2019, and then a project would launch to develop a secure and scalable
medication distribution system. Knowing this project would likely entail many
challenges, Baker wanted to meet with Fisher and the design team to identify
foreseeable project challenges. After that, he wanted to meet with consortium members
to tap their ideas on how to mitigate those challenges.“Thesemeetings should happen
sooner, notlater,” hethought.


In 1993 Tennessee resident Phil Baker enlisted in the U.S. Marine Corps Reserve.
While a Reservist, in 1998 he enrolled in a pre-pharmacy program at Middle Tennessee
State. After his honorable discharge, Baker earned his Doctor of Pharmacy degree from
University of Tennessee, in 2005.

Baker’s first job after graduation was as a manager at a Kroger store pharmacy.
Later, he was pharmacy director at Baptist Rehabilitation Germantown Hospital. In
both jobs, Baker encountered some patients who, confronted with high-priced
prescriptions,“walkedaway, and neverreturned.”He knew that a patient who skipped
or “shorted” doses was more likely than others to show up in emergency rooms for
treatment.2At Baptist Rehab he met a patient who had blacked out due to diabetic
shock. Like many cash-strapped patients, this patient skipped doses some days, took
“Fortunately, he survived, but his story is all too familiar.” High drug prices were
implicated in many personal bankruptcies.4Some cancer drugs cost $100,000/year or
more per patient.5 6U.S. patients paid about 20% of medication costs out-of-pocket.
Many health plans only partially covered drug costs and many patients lacked
prescription-drug coverage altogether.

Meanwhile, usable medications were routinely discarded, for various reasons: a)
patient recovered, with leftover medication; b) patient discontinued a drug because of
low efficacy or medical complications; c) patient died before completing a course of
treatment. Baker vividly recalled the day a grieving husband brought hiswife’sunused
cancer medications back to the pharmacy, and requested that Baker “please give this
to another cancer patient who needsit.”However, at that time, Tennessee pharmacies
were not permitted to accept drugs donated by individuals.


On his own time, in 2012 Baker began providing complimentary medication-
management services to elderly, disabled, and low-income community members (some
were fellow members of Grace Church Memphis). After reviewing their prescribed and
over-the-counter medications, sometimes Baker was able to help a patient’s primary-
care provider identify equivalent lower-cost generic medications. He came to feel his
volunteer work was more personally fulfilling than his work at Baptist Memorial.

In Fall 2015 Baker launched a nonprofit charity, Good Shepherd Pharmacy, at a
South Memphis shopping mall, to provide its members with free or markup-free
medicine. The first year was rent-free; thereafter, rent was capped at $1,500 per month.
As a 501 (c)(3) charity, it was staffed by Baker, another pharmacist, three certified
pharmacy technicians, and an intern. Good Shepherd operated as a mail-order

2Case Research JournalVolume 40Issue 1Winter 2020
pharmacy (not a retail storefront). Those who could not afford the annual membership
fee of $600 were charged lower fees (on a sliding scale).

Two main sources accounted for most of GoodShepherd’sinventory:

Three charity wholesalers (Americares,7Direct Relief,8and Dispensary of
manufacturers (who got a tax deduction), but they did not handle expensive
specialty drugs. One charity wholesaler charged a $25,000/year fee, to cover
handling and shipping costs. It was difficult to predict which specific meds, in
what quantities, manufacturers would donate, and when.

Traditional pharmaceutical wholesalers were a“last-resort”source, when
particular medications could not be obtained from a manufacturer or charity
wholesaler. Good Shepherd negotiated steep discounts and passed savings on
to its members. Yet, many still could not afford them.

In 2016, with about 500 members, Good Shepherd’s revenues did not fully cover
operational costs. To reduce costs further, Baker hoped to establish an efficient and
safe way for individuals to donate expensive cancer drugs. Since Tennessee did not
allow individuals to donate medications, Baker resolved to change the law. First, he
learned about otherstates’laws and programs.


Worldwide, improperly-discarded drugs fell into the wrong hands or contaminated
landfills and waterways. Some 54% of patients threw leftover drugs in the garbage;
35% dumped them in the toilet or sink.10Drug molecules thus leached into ground
impacted fish and led to an increase in drug-resistant bacteria.12

Nationwide, nursing homes reportedly discarded about 740 tons of drugs per
year.13Diversicare estimated its 70 nursing homes (in 10 states) destroyed 20% of
patient medications. “It’s very discouraging, throwing away all those drugs when you
know they can benefitsomebody”said its pharmacy director.14

The FDA (Food and Drug Administration, U.S. Department of Health and
Association of Boards of Pharmacy®), working within FDA rules, set state rules and
guidelines. Georgia and Iowa were pioneers in fighting medication waste:

In 1997 Georgia passed the first law permitting medication re-use within long-
term care facilities.

Iowa law allowed residents to donate unexpired medications to authorized
charitable pharmacies.

Iowa-based SafeNetRx stated (on its web site):

SafeNetRx ... was created to provide affordable medication access to Iowans
in need of assistance. Initial programs focused on providing affordable
medications to Medicare-eligible Iowans. Since then our mission has expanded
to serve ourstate’ssafety-net patients and providers. We focus on...providing
low-cost pharmaceutical access to our most vulnerable populations while
generating significant cost savings across health systems.

In a 2008 pilot test, an Iowaclinic’spatients got donated warfarin (a blood thinner),
thyroid medications, antidepressants, and/or antipsychotics. The researchers estimated
that these patients avoided $600,000 in hospitalization costs, and participating
pharmacies reduced their drug incineration costs.16 17

Good Shepherd Pharmacy and Remedi3
NABP endorsed medication reuse only in “closed distribution systems” where
drugs never left the custody of licensed professionals (e.g., Georgia nursing homes and
Iowa safety net organizations -- community-based nonprofit or public healthcare
services organizations that served people who lacked access to health insurance or to
a health care provider). NABP was concerned about the ability“toensure the integrity
of drugs, which may place the public atrisk.”

In 2011, Baker learned, a Stanford University student project -- SIRUM
(Supporting Initiatives to Redistribute Unused Medicine)18-- helped pass California
laws to make it possible for institutions to donate surplus unexpired drugs to safety net
organizations.A501(c)(3)19nonprofitcharity,SIRUM20was funded by Y-
Combinator21, the Robert Wood Johnson Foundation22, Google23, and other backers.

In 2012 the NABP formed a medication waste task force24to consider issues such
as how to verify a donated drug was legitimate (donated by the patient for whom the
drug was originally prescribed, or by their family) and authentic (not counterfeit or

In 2015, when Baker learned that no national organization coordinated charitable
pharmacies’ efforts, he co-founded to “create a network of
charitable pharmacies that reaches every underserved patient in the United States.”25
Among its members were SafeNetRx and SIRUM. In 2015 SIRUM announced plans
to spread nationwide.26Its board of directors included people with nursing-home
administration, legal, public policy, and investment experience. Institutional sources
intermittently donated medications to SIRUM, which arranged delivery to recipient
charity pharmacies.SIRUM’sweb-based system tracked inventory and managed back-
end coordination (e.g., training donors and providing them with necessary shipping
materials and documents to deliver drugs via courier services). Receiving pharmacies
were charged an administrative fee for each shipment. Outside California, SIRUM
helped Good Pill Pharmacy in Georgia set up a process to deliver meds to patients in
“pharmacy deserts” such as rural Fort Gaines.27SIRUM also initiated programs in
Colorado, Oregon and Ohio.

In 2016 a New York law made pharmaceutical manufacturers responsible for drug
reclamation, including the “cost of collecting, transporting and disposing of covered
drugs from pharmacies and other authorizedcollectors”.28New York pharmacies were
required to receive wasted medications, in prepaid mail-back envelopes or via other
approved reclamation methods.29


Baker concluded that a new Tennessee law should specify who could donate meds, act
as collection sites (receive donated meds), process meds before re-dispensing, and
receive them. Baker helped write the bill, which specified that at the time of donation,
meds should be at least one month from expiration (moststates’laws specified donated
drugs should be 6 to 12 months from their expiration dates). Only U.S. residents could
donate drugs, and only licensed pharmacists could serve as inspectors. Dispensing
donated drugs to Tennessee residents was done according to a hierarchy of need
(residents without a prescription drug insurance benefit were highest priority, followed
by under-insured patients. Fully insured Tennessee patients were designated as low
priority). While no Tennessee pharmacy could donate drugs to individuals outside
reclamation programs (such as SafeNetRx in Iowa).

4Case Research JournalVolume 40Issue 1Winter 2020
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