Equitable Allocation of Free Drugs under California’s Medpin Program

The Problem

California’s “Medicine for People in Need” (Medpin) program had a windfall and a major organizational challenge: allocating $171 million in drugs supplied by 25 pharmaceutical companies as part of a litigation settlement benefiting indigent patients that affected 200 health clinics. The three-year Drug Distribution Project (DDP), which ended in 2003, ultimately required the administration of 2.6 million 30-day prescriptions in a manner that satisfied the litigation settlement’s mandate that the drugs be distributed “fairly and equitably.”

The Analytics Solution

Medpin initially contracted with a service provider to build a website to handle orders from clinics deemed eligible to receive free drugs under the program. Medpin then decided to ask O.R. experts to build a separate decision support system to allocate drugs equitably among the clinics. This system had to factor in many constraints, including limits on the total dollar value of contributed drugs that the pharmaceutical companies could provide over a specific time, minimum order sizes, varying dollar caps on drugs that individual clinics could receive over the course of the three-year program, and calculations showing that the drugs ordered by clinics were most critical to the needs of the clinics’ patient base.

The decision support system measured clinics’ effectiveness using weights that reflected the importance of a particular drug to a specific clinic based on the demographics of the clinic patient base. The system measured “equity” by the extent to which drug allocations were compatible with such variables as the clinics’ financial resources and geographic remoteness. Drugs were allocated so that clinics received an amount related to the requested amount and weighted by its priority for any drug in short supply. Finally, the system incorporated an over-arching goal of minimizing the amount of unallocated drugs at the end of each time period.

The Value 

The decision support system facilitated the efficient and equitable annual distribution of $57 million of pharmaceuticals over a three-year period, enabling many uninsured patients who had little or no access to medication to receive prescribed drugs. After the program’s conclusion, several drug companies were considering using the system to support their own charitable drug distribution efforts in the U.S.