The Pharmacy The Pharmacy Technician 4ETechnician 4EChapter 13Chapter 13Inventory Inventory

ManagementManagement

Chapter OutlineChapter Outline

Inventory ManagementInventory Management Inventory SystemsInventory Systems Computer & InventoryComputer & Inventory OrderingOrdering FormsForms Stocking & StoringStocking & Storing

Inventory Management

• Inventory • A listing of medication of the goods or items that a

business will use in its normal operation. • Inventory management is an integral part of the

technician’s job responsibility.• The goal of inventory management

• To ensure that drugs are available when they are needed (usually are often urgently needed).

• Purchasing/inventory technician • A name given to those who are responsible for

ordering and maintaining inventory.

WholesalersWholesalers

• PurchasingPurchasing• Usually carried out by either an independent or Usually carried out by either an independent or

group process. The Controlled Substances Act (CSA) group process. The Controlled Substances Act (CSA) defines procedures for purchasing.defines procedures for purchasing.

• Most drugs are bought from Most drugs are bought from wholesalers or wholesalers or distributors.distributors.

• More than More than three-quarters three-quarters of pharmaceutical of pharmaceutical manufacturers sales are sold to wholesalers. manufacturers sales are sold to wholesalers.

WholesalersWholesalers

• Thousands of manufacturesThousands of manufactures produce medications and produce medications and it would difficult to deal with each of them (ordering, it would difficult to deal with each of them (ordering, shipping, payment arraignments, paperwork shipping, payment arraignments, paperwork requirement, etc.).requirement, etc.).

• Stock inventories of the most used medications and Stock inventories of the most used medications and make frequent deliveries, often on a daily basis. make frequent deliveries, often on a daily basis.

• Provide system for ordering, automated purchasing Provide system for ordering, automated purchasing systems, emergency delivery, etc.systems, emergency delivery, etc.

The FormularyThe Formulary The Formulary The Formulary

A list of medications that are approved for use in the hospital A list of medications that are approved for use in the hospital or an institution.or an institution.

Open formularyOpen formulary Allows purchase of any medication that is prescribed. Allows purchase of any medication that is prescribed.

Closed formularyClosed formulary A limited list of approved medications. A limited list of approved medications. A physician must receive permission to use a medication that A physician must receive permission to use a medication that

is not on the list. is not on the list. Generally used as a cost savings tool, in which less expensive Generally used as a cost savings tool, in which less expensive

substitutes are stocked. substitutes are stocked. A Therapeutic equivalent that isA Therapeutic equivalent that is chemically different but with chemically different but with

similar actions and effects may be substituted for a drug not similar actions and effects may be substituted for a drug not on the formulary.on the formulary.

Inventory ManagementInventory Management

• The Drug Enforcement Administration (DEA) The Drug Enforcement Administration (DEA) • Regulates the distribution of controlled substance and has Regulates the distribution of controlled substance and has

various distribution, inventory, record keeping, and various distribution, inventory, record keeping, and ordering requirements. ordering requirements.

• The DEA requires that a complete inventory of all controlled The DEA requires that a complete inventory of all controlled substances must be taken substances must be taken every 2 years. every 2 years. • Some states have more stringent requirements such as a Some states have more stringent requirements such as a

yearlyyearly inventory. inventory. • The complete inventory must include an inventory record and The complete inventory must include an inventory record and

an an extemporaneous compounding record.extemporaneous compounding record.• Schedule II substances Schedule II substances must be stocked separately in a must be stocked separately in a

secure placesecure place and require a special order form for reordering.

Safe PurchasingSafe Purchasing It is important to deal only with It is important to deal only with well-known or well-known or

established wholesalers and suppliers established wholesalers and suppliers who can who can document the pedigree or path of a drug from document the pedigree or path of a drug from manufacturer to consumer.manufacturer to consumer.

Unscrupulous manufacturers can made Unscrupulous manufacturers can made counterfeit counterfeit medications, medications, which may look like an established which may look like an established drug, but have little or no active ingredients. They drug, but have little or no active ingredients. They can sell them to lesser known wholesalers or can sell them to lesser known wholesalers or suppliers.suppliers.

Inventory SystemsInventory Systems

Track inventory, forecast needs, and generate Track inventory, forecast needs, and generate reorders reorders to maintain adequate inventory. to maintain adequate inventory. Too many drugs on hand involves unnecessary cost Too many drugs on hand involves unnecessary cost

and maintenance and may result in spoilage. and maintenance and may result in spoilage. Too few drugs means that medications won’t be Too few drugs means that medications won’t be

available when needed. available when needed. To maintain an adequate supply of medication, To maintain an adequate supply of medication,

pharmacies use apharmacies use a perpetual inventory system perpetual inventory system.. This is a requirement for Schedule II substances. This is a requirement for Schedule II substances.

Order Entry DeviceOrder Entry Device

Portable hand held devices used to order and transmit Portable hand held devices used to order and transmit orders via a telephone line.orders via a telephone line.

The Turnover RateThe Turnover Rate The Turnover Rate The Turnover Rate

The number of days it takes to use the complete The number of days it takes to use the complete stock of an item. stock of an item.

Besides quality and spoilage issues, there is also a Besides quality and spoilage issues, there is also a financial consideration. financial consideration.

““Thirty days net“Thirty days net“ The supplier must be paid by the day #30 from The supplier must be paid by the day #30 from

the date of delivery.the date of delivery. Lower the cost of the stock.Lower the cost of the stock.

When stock turnover averages less than thirty When stock turnover averages less than thirty days, the stock is be sold before the supplier days, the stock is be sold before the supplier must be paid.must be paid.

Inventory SpoilageInventory Spoilage Time or storage conditions may cause chemical Time or storage conditions may cause chemical

compounds to break down.compounds to break down. Use of such medications may be Use of such medications may be dangerousdangerous.. Check all stock for their expiration date.Check all stock for their expiration date. DO NOT DO NOT dispense drugs whose expiration date is dispense drugs whose expiration date is

approaching. approaching. Expired drugs must be appropriately disposed of or Expired drugs must be appropriately disposed of or

returned to the supplier for credit.returned to the supplier for credit.

Fast Movers and Slow MoversFast Movers and Slow Movers

A general rule is that A general rule is that 20% 20% of your stock will account of your stock will account for for 80% 80% of your orders or prescriptions. of your orders or prescriptions.

To keep inventory dollars low, focus on keeping a 1–To keep inventory dollars low, focus on keeping a 1–2 week supply of fast moving drugs and a month’s 2 week supply of fast moving drugs and a month’s supply of slower moving drugs.supply of slower moving drugs.

Tools for Perpetual InventoryTools for Perpetual Inventory Point of sale system (POS)Point of sale system (POS)

An inventory system in which the item is deducted from An inventory system in which the item is deducted from inventory as it is sold or dispensed. inventory as it is sold or dispensed.

Reorder points Reorder points The minimum and maximum stock levels which determine The minimum and maximum stock levels which determine

when a reorder is placed and for how much. when a reorder is placed and for how much. Automated ReportsAutomated Reports

As the minimum reorder point of a medication is reached, As the minimum reorder point of a medication is reached, most computer systems will generate an automatic most computer systems will generate an automatic purchase order. purchase order.

Order Entry Devices Order Entry Devices Portable hand-held devices used to enter ordering data.Portable hand-held devices used to enter ordering data.

Computer and InventoryComputer and Inventory Computer inventory systemsComputer inventory systems

Automatically adjusts inventory and generates Automatically adjusts inventory and generates orders based on maintaining set inventory levels. orders based on maintaining set inventory levels.

Entering correct informationEntering correct information Reports are printed out and reviewed for any Reports are printed out and reviewed for any

errors. errors. User passwordsUser passwords

Protect against possible abuses. Users are given Protect against possible abuses. Users are given passwordspasswords to access different features of the to access different features of the system.system.

Automated Dispensing SystemsAutomated Dispensing Systems

Baker Cells®Baker Cells® Contains cells to hold each Contains cells to hold each

medication.medication. When a drug is ordered, the device When a drug is ordered, the device

quickly counts the appropriate quickly counts the appropriate amount of capsules or tablets in the a amount of capsules or tablets in the a prescription vial. prescription vial.

Technicians keep the cells stocked Technicians keep the cells stocked and must record all lot numbers of and must record all lot numbers of drugs used.drugs used.

Pyxis Supply Station®Pyxis Supply Station®

Example of an Example of an automated point-of-use storage automated point-of-use storage systemsystem for making for making floor stock floor stock items available to items available to nurses in the hospital setting.nurses in the hospital setting.

The system keeps record of inventory and tracks The system keeps record of inventory and tracks patient medication.patient medication.

Homerus® Robotic DeviceHomerus® Robotic Device Individually packages and stores large amounts of Individually packages and stores large amounts of

medications from bulk supplies.medications from bulk supplies. Delivers bar-coded medication to 24 hours patient Delivers bar-coded medication to 24 hours patient

specific medication bins.specific medication bins. Returns medication to storage after a patient is Returns medication to storage after a patient is

discharged. discharged. Some hospitals have Some hospitals have mobile robots mobile robots that travel that travel

throughout the facility delivering drugs to various throughout the facility delivering drugs to various nursing units and departments. nursing units and departments.

Automated OrderingAutomated Ordering

Orders can be generated using a Orders can be generated using a order entry device order entry device or or automatically generated automatically generated by the system based on stock by the system based on stock levels and reorder points. levels and reorder points.

When the order is ready, the ordering system is sent When the order is ready, the ordering system is sent over the pone lines over the pone lines to the wholesaler. to the wholesaler.

If the order can be filled as ordered, If the order can be filled as ordered, a message will a message will automatically confirm the order automatically confirm the order to the ordering to the ordering system. system.

Material Safety Data Sheet (MSDS) Material Safety Data Sheet (MSDS) is sent for is sent for hazardous substances such as chemotherapeutic hazardous substances such as chemotherapeutic agents. agents.

OrderingOrdering Each supplier has a policy and procedure for Each supplier has a policy and procedure for credits credits

and returnsand returns that must be followed in order to receive that must be followed in order to receive the credit. the credit.

There are There are companies that specialize in returns companies that specialize in returns to the to the manufacturer of expired drugs and drugs removed manufacturer of expired drugs and drugs removed from a formulary. from a formulary.

The The documentation must be carefully checked item by documentation must be carefully checked item by itemitem to make sure the order is accurate. to make sure the order is accurate.

A printed copy and any electronic version must be kept A printed copy and any electronic version must be kept on file.on file.

FormsForms Online Order ScreenOnline Order Screen

The system automatically assigns a The system automatically assigns a purchase order numberpurchase order number. . The confirmation printout The confirmation printout

A hard copy print out of a confirmed online purchase by the supplier. A hard copy print out of a confirmed online purchase by the supplier. Indicates which items will be shipped, which will not (due to Indicates which items will be shipped, which will not (due to

unavailability) and what the cost of the items. unavailability) and what the cost of the items. Shipping InvoiceShipping Invoice

The list of items in the shipment and the cost of items provided by the The list of items in the shipment and the cost of items provided by the supplier. supplier.

Any inconsistencies from suppliers must be notified immediately. Any inconsistencies from suppliers must be notified immediately. ReReturn form turn form

A preprinted multipart form. It contains purchase order number, item A preprinted multipart form. It contains purchase order number, item number, quantity and reason for return.number, quantity and reason for return.

Stocking and StoringStocking and Storing Most of medications are received from the supplier in Most of medications are received from the supplier in

bulk “stock bottles” bulk “stock bottles” that contains a large amount that contains a large amount (usually 30 or 100 tablets). In hospitals, some drugs (usually 30 or 100 tablets). In hospitals, some drugs come in individual doses called come in individual doses called Unit dose packaging. Unit dose packaging.

TTechnicians prepare unit-doseechnicians prepare unit-dose packaging under the packaging under the supervision of a pharmacist. supervision of a pharmacist.

Most pharmacies shelve drugs Most pharmacies shelve drugs by their generic namesby their generic names along with the brand names. along with the brand names. If generic cimetidine is on the shelf, Tagamet which a If generic cimetidine is on the shelf, Tagamet which a

brand name may be placed there along with the brand name may be placed there along with the generic..generic..

Point of use stationsPoint of use stations are supply stations, med-stations, are supply stations, med-stations, or dispensing machines that stock medication.or dispensing machines that stock medication.

Community Pharmacy Community Pharmacy Inventory ManagementInventory Management

• Prescription vials returned by the patient Prescription vials returned by the patient CAN CAN NOTNOT be returned to stock, even if they are be returned to stock, even if they are unopened.unopened.

Terms to RememberTerms to Remember1. Automated dispensing 1. Automated dispensing

system system 2. Closed formulary 2. Closed formulary 3. Database 3. Database 4. Formulary 4. Formulary 5. Inventory 5. Inventory 6. Material safety data sheets6. Material safety data sheets7. Open formulary7. Open formulary

8. Perpetual inventory 8. Perpetual inventory 9. Point-of-sale system9. Point-of-sale system10. Purchase order number 10. Purchase order number 11. Reorder points 11. Reorder points 12. Therapeutic equivalent 12. Therapeutic equivalent 13. Turnover 13. Turnover 14. Unit-dose packaging14. Unit-dose packaging