PURCHASING AND INVENTORY CONTROL INCLUDING CONTROLLED SUBSTANCES

FORMULARY

• Cornerstone of the purchasing and inventory control system 

• Dictates what the hospital pharmacy should purchase and keep in inventory

FORMULARY

arrangement

• Organized alphabetically by the generic drug’s name, typically cross-references with the trade name products 

• Drug storage areas in the pharmacy are arranged alphabetically by either the generic or trade name of the drug

FORMULARY

• should remain 

• current (being updated every 12 to 18 months at minimum)

• Through loose-leaf or supplementary updates or serial editions

FORMULARY

includes 

• the actual or relative cost to guide the prescribing of the most cost-effective alternatives

THE RECEIVING PROCESS

• The person who receives must be different from the person ordering

  • This effectively establishes a check in the system to minimize drug diversion opportunities

Verification Of The Boxes Delivered By The Shipper

• Complete

• Intact

• Name and address are correct

• Number of boxes

Products requiring cold storage:

Shipper’s responsibilities:

• Ensure cold storage during shipment

• Package items in shippable foam cooler (e.g. frozen cold packs)

Receiving Personnel

• Damaged products

• Products not ordered

• Products not received

• Breach in cold storage

• Delivery of incorrect product

Checking Newly Delivered Products (after the delivery person has left)

• purchase order 

• Original file copy 

• A copy used in the receiving process

• A copy for the supplier

Checking Newly Delivered Products (after the delivery person has left)

• receiving copy

• Name

• Brand name

• Dosage form

• Size of the package 

• Concentration of strength 

• Quantity of the product

• Shelf life (min 6 months before expiry

Schedule I

• HIGH potential for abuse 

• No accepted medical use/lacks accepted safety for use

Schedule I

examples

• Heroin

• Lysergic acid diethylamide (LSD)

• Marijuana

• Methaqualone

Schedule II

• HIGH potential for abuse 

• Has currently accepted medical use/with severe restrictions 

• Abuse may lead to severe psychological or physical dependence

Schedule II

examples 

• Pentobarbital

• Morphine

• Phencyclidine (PCP)

• Cocaine

• Methadone

• Methamphetamine

Schedule III

• Potential for abuse less than the substances listed in Schedule I and II 

• Currently accepted medical use 

• Abuse may lead to moderate or low physical dependence or high psychological dependence

Schedule III

• examples

• Ketamine

• Anabolic steroids

• Codeine and hydrocodone with aspirin or Tylenol®

• Some barbiturates (anti-seizures) such as phenobarbital

Schedule IV

• Low potential for abuse relative to substances in Schedule III 

• Has currently accepted medical use 

• Abuse may lead to limited physical dependence or psychological dependence relative to the substances in Schedule III

Schedule IV

examples 

• All the benzodiazepines, such as alprazolam and diazepam, etc. (otherwise known as Valium®, and Xanax®)

Schedule V

• Low potential for abuse relative to the controlled substances listed in Schedule IV 

• has currently accepted medical use

• has limited physical dependence or psychological dependence liability relative to the controlled substances listed in Schedule IV

Schedule V

examples 

cough medicines with codeine

THE STORING PROCESS

• May be placed in bulk, central storage area or into active dispensing areas 

• expiration date of the product should be compared with the products currently in stock

STOCK ROTATION

• Products that will expire in the near future should be highlighted and placed in the front of the shelf or bin

  • newly acquired products will generally have longer shelf lives 

  • should be placed behind packages that will expire before them

FIRST-IN, FIRST-OUT (FIFO)

• Encourages the use of products before they expire 

• Helps prevent the use of expired products and waste

Freezer

-25 to -10^o C

Cold (refrigerated)

2 to 8^o C

Cool

8 to 15^o C

Room temperature

The temperature of working area

Controlled room temperature

20 to 25^o C

Warm

30  to 40^o C

Excessive heat

Above 40^o C

Dry place 

does not exceed 40% RH

PRODUCT HANDLING

• Check product label 

• Read 

  • not rely on general appearance 

• Accurately place in storage location 

• Expiration date 

• Color and clarity

• Visible particles 

• Unusual appearance

• Broken seal

INVENTORY TURNS

• Products should be used and not remain on the shelf

• (in accounting terms) fraction of a year that an average item remains in inventory

EXCESSIVE inventory=

unproductive asset

High inventory turnover-

sign of efficiency because inventory is constantly at work and generating revenue

INVENTORY MANAGEMENT SYSTEMS

• maximize inventory turnover 

• minimize inventory carrying costs (holding costs)

INVENTORY MANAGEMENT SYSTEMS

examples

• order book

• parlevel systems 

ORDER BOOK want book/ want list

• simple order list 

• writing the item in the list when needs to be reordered

ORDER BOOK want book/ want list

notes 

• simplest form of inventory 

• likely to lead to over- and under-ordering of inventory

ORDER BOOK want book/ want list

problem

• highly dependent on the active participation of staff

  • consider how much is used over a specified time 

  • forecast a need

PAR-LEVEL SYSTEMS minimum / maximum levels

• relies on a predetermined order quantity and an order point

• within a standard range

PAR-LEVEL SYSTEMS minimum / maximum levels

• notes 

• shelf-sticker is developed identifying the minimum and maximum quantities 

• computerized database may be employed

ECONOMIC MODELS TO PREDICT THE NEED FOR DRUGS OVERTIME

1. Pareto ABC Analysis

2. Economic Order Quantity

3. Just-In-Time Inventory Management

DRUG RECALLS

• pulling out pharmaceuticals by manufacturer, on its own or at the direction of FDA

DRUG RECALLS

• reasons 

• deviations in GMP

• sub potency

• stability data does not support exp date

• generic drug or NDA discrepancies

• dissolution failure

• label mix-ups

• content uniformity failure

• presence of foreign substance

• pH failures

• microbial contamination of nonsterile products

FDA

• coordinates drug recall information 

• helps manufacturers and distributors develop specific recall plans

• perform health hazard evaluations 

• decides on need for public warnings 

• assist with public notification

MANUFACTURER/ DISTRIBUTOR

• Implement voluntary recalls 

• sends written recall notices to pharmacies

PHARMACY

• Check all pharmaceutical inventory stores 

• “none in stock” is written if recalled products are not in stock file recall log

• if in stock, all products are gathered, packaged, and returned 

• document all activities regarding product recall

ORDERING PHARMACEUTICALS

1. Group Purchasing Organization (GPO)

2. Direct Purchasing

3. Drug Wholesaler purchasing/ Prime Vendor Purchasing

Group Purchasing Organization (GPO)

• health systems, hospitals, and ambulatory practices can join together in a purchasing group 

• leverage collective buying power 

• Take advantage of any lower prices manufacturers offer to large groups 

• can guarantee significant volume of orders over long periods of time

Direct Purchasing

execution of a purchase order from the pharmacy to the manufacturer instead of indirectly through a wholesaler

Direct Purchasing

• advantages

• no handling fees 

• infrequent ordering 

• less demanding in monitoring inventory

Direct Purchasing

• disadvantages 

• need to order large quantities 

• more storage capacity 

• more cash tied up in inventory 

• more complicated drug return and crediting 

• need more time to prepare, process, and pay

Drug Wholesaler Purchasing/ Prime Vendor Purchasing

• acquisition from different manufacturers through a single vendor 

prime vendor purchasing

when a pharmacy agrees to purchase 90 - 95% of its pharmaceuticals

Drug Wholesaler Purchasing/ Prime Vendor Purchasing

adv

• may offer high discounts 

• more timely ordering and delivery 

• less time spent creating purchase orders 

• fewer inventory carrying costs 

• less documentation 

• simplified credit and return process

PRODUCTS REQUIRING SPECIAL HANDLING

• Controlled Substances

• Investigational Drugs

• Compounded Products

•  Repackaged Pharmaceuticals

• Nonformulary Items

• Medication Samples

Expired Drugs

Wholesalers will not give full credit on returns that will expire within 6 months

Compounded and Repackaged Drugs

• cannot be returned and must be disposed of after they have expired 

• using the general trash removal system 

• cytotoxic products - hazardous waste removal procedures

Chemicals

disposed of in accordance with the pharmacy’s hazardous waste procedures

Controlled Substances

must be destroyed, and the destruction must be documented to the satisfaction of the DEA

Investigational Drugs

should be returned to the manufacturer of sponsor according to the instructions they provide

PARETO ABC ANALYSIS 80/20 principle

• 80% of problems can be attributed to roughly 20% of their potential causes

• a small number of drugs account for a disproportionate amount of drug usage (and cost) 

• groups drugs by aggregate value and volume of use in 3 groups (A, B, C)

ECONOMIC ORDER QUANTITY Minimum Cost Quantity Approach

• attempts to minimize inventory holding costs and ordering costs

• decides inventory order quantities through the use of an accounting formula 

• calculates the point where order costs and inventory holding costs are minimized

JUST-IN-TIME INVENTORY MANAGEMENT

• products are ordered and delivered at just the right time 

• minimizing wasted steps, labor, and cost

• neither overstocked nor under-stocked