The authors describe a drug distribution system based on the use of a physician’s medication order form and a patient medication record. The pharmacist dispenses medication from the original order and a pharmacy recorder transcribes pertinent information to the patient medication record. The recorder also calculates a reorder date so that the order will automatically be pulled before the reorders are dispensed. The cost to the pharmacy of such a system is outlined, as is nursing time saved. The net cost to the hospital for one vear was $9700. A significant savings in nursing time was realized. An analysis of the use of the physicians' medication order form is presented. A form used by nurses to reorder drugs in short supply is described and the reasons for the drug shortages are analyzed. An investigation of charge floor stock drug losses is also presented.