Circular economy application in pharmaceutical supply chains in the UK: a holistic evolutionary game approach

The environmental hazards of improperly managed waste have gained universal recognition among scholars and stakeholders. These hazards are especially critical in the pharmaceutical sector since leftover medications contain active chemicals that threaten the environment and human health. Nonetheless, implementation of adequate measures to ensure proper collection and treatment of pharmaceutical leftovers remains insufficient, and tons of unwanted medications are discarded in landfills and wastewater annually. Such outcomes are due to lack of coordination between the parties involved and poor incentive systems in place. To address this issue, we study coordination in pharmaceutical reverse supply chains and government incentive strategies. We employ the evolutionary game methodology to evaluate strategic behaviour of pharmacies and a waste recycler under different incentive plans. We are focusing on both reward- and awareness-driven customer segments to boost the return volume of unwanted medications. Moreover, supply chain coordination is investigated as a tool to enhance the economic viability of the system. We compare the incentive plans based on return volume, participation rate, budget spend, and implementation time, to recommend the most effective plan. An extensive numerical study provides insights into the performance of the incentive plans in different conditions. The results reveal that a plan that provides proper incentives to pharmacies for targeting both, reward- and awareness-driven customers, coupled with contract-based coordination, outperforms other plans, and does not necessarily require a budget allocation. Our study is motivated by the UK’s National Health System but it is generalisable to pharmaceutical reverse supply chains in other countries as well.