Chapter 14 Inventory Control

The Formulary System Formulary: itemized list of medications dispensed by institution Approved by P&T Committee Major factor in inventory control and cost management

P&T Committee Comprised of: Physicians Pharmacists Nurses Other health professionals Appointed to committee Decide which drugs to include in formulary

Drug Inclusion Factors Effectiveness Safety Abuse Potential Drug Interactions

Drug Inclusion Factors (cont’d) Therapeutic Duplication Medication Errors Cost

Therapeutic Substitution Way to reduce inventory costs Cost-effective drug is substituted for other drugs in the category Constitutes a formulary change Must be agreed upon by the P&T Committee Only allowable within the institution

Product Buying Sources Manufacturer direct Can be difficult for small pharmacies Wholesaler May require Prime Vendor Agreement

Wholesalers Require a percentage of purchases be made from wholesaler Provide discounts and services Offer prompt delivery Often have online listing of stock Generous return policies

Manual Ordering Processes Compile order “Want book” Collecting empty prescription bottles Place order by phone, fax, or modem

Electronic Ordering Processes Bar coding Hand-held machine scans bar codes of needed items Machine connects to phone line or modem Order transmitted Fully computerized system Monitors each transaction Re-orders as necessary

Ordering Schedule II Drugs Requires a DEA Form 222 Filled out in triplicate Hand-delivered to driver Authorized signature Every detail must be complete and accurate

Steps in Receiving Process Order arrives at pharmacy Check against shipping manifest Note or refuse damaged boxes Note products with special storage needs Sign driver’s manifest promptly

Invoice Details Name Brand Dosage form Package Size Strength

Invoice Details (cont’d) Quantity Cost of item Any applicable discounts Terms of payment

Checking the Invoice Check order against invoice for all factors Check expiration date of each product Newly ordered item should have at least six months Re-order non-received items for next day

Checking the Invoice (cont’d) Create written record for items removed before proper check-in Date and initial checked invoice Send invoice on for payment Delayed payments can void discounts

Placing Checked Order in Stock Check for urgent prescriptions in order Should be processed first Place order items on appropriate shelf

Precautions for Shelving Triple-check label Manufacturer packaging often emphasizes logo instead of strength and dose Store similar looking products separately Liquids and injectables Sensitivity to light or temperature Visually check color and clarity

Expiration Dating Check inventory regularly for expired medication At least monthly Consult policy for when drugs are to be pulled Check all floor stock and satellite areas Check “opened on” date for liquids and injectables

Expiration Dating (cont’d) Dispose of expired medication properly Unopened bottles may be returned for credit Special conditions for control drug disposal Vary from state to state

Investigational Drugs Drugs that are part of research studies Very specific protocols for dispensing and returning Inventory management critical Strict records must be kept Details about drugs, study protocols, and patients are confidential

Controlled Drugs Special inventory and storage requirements Required biennial inventory of all controlled drugs Schedule II records must be kept separately

Inventory Management Central to profitability of pharmacy Inventory budget: Established by institution or pharmacy owners Depends on: Pharmacy size Daily ordering capacity Turnover rate

Indicators of Inventory Management Average inventories and turnover rates measure how well inventory is being managed Turnover rate Total annual cost of goods divided by average inventory Average inventory Sum of beginning and ending inventories divided by two

Maintaining Inventory Levels Remove expired drugs from shelf Promptly send back drug recalls Lower amount of infrequently used stock Periodically adjust minimum/maximum levels (for computerized inventory control)

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