Purchasing and
Inventory
Control
GROUP 6
LORENZO, EIZED PATRICE D.
MALIBIRAN, ABEGAIL M.
MENDOZA, LESLIE JANICE M.
MENDOZA, MA. LAURA ISABEL D.
MOLINA, GERNALYN
INTRODUCTION
Purchasing and inventory are important to all
pharmacist because they are essential elements of the
medication use system.
Fundamental to patient safety/because they impact
the ability of the system to provide the right drug, to
the patient, in the amount, by the right route of
administration, and at the right time and frequently.
It applies to all types of pharmacy settings including
decentralized, centralized, home infusion and
ambulatory care pharmacy operations.
The Formulary System
Cornerstone of the purchasing and inventory control
system.
Developed and maintained by a committee of medical
and allied health staff called PHARMACY and
THERAPEUTICS (P&T) committee.
The products on the hospital formulary dictate what the
hospital pharmacy purchase and keep in inventory.
Most retail pharmacies do not rigidly restrict items in
their inventory, because in this setting, inventories are
largely dependent on the dynamic needs of their patient
population and to some degree, their patients
respective insurance plans.
The Formulary System
Available in print or online formats.
Exclusively for all health practitioners involved in
prescribing, dispensing, and monitoring medications
Formatted generally to inform user of product
availability, the appropriate therapeutic uses and
recommended dosing of medications.
Formulary publications should remain current typically
being updated every 12 to 18 months at minimum.
Important information available in the formulary
includes the dosage form, strength, and
concentration; package size(s); common side effects;
and administrations.
Managing the Purchasing and
Inventory Control System
State-of-the-art practice in purchasing and inventory
control uses computer and internet technology to
manage purchasing and receiving of pharmaceuticals
from a drug wholesaler.
This technology includes using bar codes and handheld computer devices for online procurement and
purchase order generation and for electronic receiving
processes.
The benefits of this are up-to-the-minute product
availability information, comprehensive reporting
capabilities, accuracy, tighter inventory control and
efficiency.
Receiving and Storing
Pharmaceuticals
Receiving
medication from suppliers is one
of the most important parts of the
pharmacy operation.
Table 12-1.
DEFINED STORAGE TEMEPATURES AND HUMIDITY
FREEZER
(-)25 to (-)10C
(-)13 to 14 F
COLD
2 to 8C
36 to 46F
COOL
8 to 15C
46 to 59F
ROOM TEMPERATURE
temperature prevailing in working area
CONTROLLED ROOM
TEMPERATURE
20 to 25C
68 to 77F
WARM
30 to 40 C
86 to 104F
EXCESSIVE HEAT
DRY PLACE
any temperature above 40C (104F)
A place that does not exceed 40 percent average relative humidity
at controlled room temperature or the equivalent water vapor
pressure at other temperatures.
Storage in a container validated to protect the article from
moisture vapor, including storage in bulk, is considered a dry place.
The Receiving Process
This process is especially important for controlled substances
because it effectively establishes a check in the system to
minimize potential drug-diversion opportunities.
Receiving personnel play a critical role in protecting the
pharmacy from financial responsibility for products damaged in
shipment, products not ordered, and products not received.
Departments will require that products received have a minimum
shelf life of 6 months remaining before they expire.
Controlled substances require additional processing on receipt.
Regulations specific to schedule II controlled substances require
Drug Enforcement Administration (DEA) form 222 to be
completed on receipt of these products and files separately with
a copy of the invoice and packing slip accompanying each
shipment
The Receiving Process
This is done by listing the product, dosage form,
concentration/strength, packing size, and quantity
on a blank piece of paper or the suppliers
packing slip/invoice and checking off the line item
receive.
The Storing Process
Once the product has been properly received, it MUST be
stored properly
Depending on the size and type of the pharmacy operation,
the product may be placed in a bulk, central storage area or
into the active dispensing areas of the pharmacy.
Products already in stock that have expired should be
REMOVED.
Stock rotation is a practice were products that will expire in
the near future should be highlighted and placed in the front
of the shelf or bin.
It is important inventory management principle that principle
that encourages the use of products before they expire and
helps prevent the use of expired products and waste.
The Storing Process
It is safe to assume that the first-in, first-out (FIFO) method of
inventory management is applied when it comes to
pharmaceutical products.
All stock should be sorted at temperature and humidity levels
recommended by manufacturers and defined by the United
States Pharmacopeia (USP)
Product Handling Considerations
Pharmacy Technicians usually spend more time handling and
preparing medications than do pharmacies
They the critical responsibility of assessing and evaluating each
product from both a content and a labeling standpoint.
It also provides the technician with an opportunity to confirm that
the receiving process was performed properly
The technicians play a vital role in minimizing dispensing errors
that may occur because of human fallibility
Generally the first in a series of checks involved in an accurate
dispensing process.
Pay close attention to the products expiration date.
Product Handling Considerations
The Role of the Pharmacy Technician
Pharmacy technicians usually spend more time handling and
preparing medications than do pharmacists. This provides the
technician with an opportunity to confirm that the receiving
process was performed properly.
The pharmacy technician should read product packaging
carefully, rather than rely on the general appearance of the
product.
Technicians play a vital role in minimizing dispensing errors that
may occur because of human fallibility.
The technician must pay close attention to the products
expiration date when performing purchasing or inventory
management roles.
Product Handling Considerations
Pharmacy technicians should also discuss their
concerns with coworkers and advocate changes to
products with poor labeling.
Product Handling Considerations
Look-alike/sound-alike (LASA) products Stocking products of
similar color, shape, and size could result in error if someone fails
to read the label carefully.
Misleading labels Sometimes the company name or logo is
emphasized on the label instead of the drug name,
concentration, or strength.
Product storage Storing products that are similar in appearance
adjacent to one another can result in error if someone fails to
read the label.
Maintaining and Managing
Inventory
An inventory management system is an organized approach designed to
maintain just the right amount of pharmaceutical products in the
pharmacy at all times.
Inventory turns products should be used and not remain on the shelf.
Define in accounting terms, are the fractions of year that an average
item remains in inventory.
A simple means of calculating inventory turns in a given period is to
divide the total purchases in that period by the value of physical
inventory taken at one point in time.
Total pharmaceutical purchases for fiscal year (FY) 2010 $10,243,590
Physical inventory value on 12/31/2009
Calculated inventory turns
$521,550
19.6 times
Maintaining and Managing
Inventory
Inventory turnover way of measuring the productivity of a
pharmacys inventory use of invested capital. High inventory
turnover is a sign of efficiency because inventory is constantly
at work and generating revenue. Low inventory turnover is a
sign that product (capital) is sitting unused on the shelf and is a
signal of operational inefficiency.
Inventory management systems include the order book, the
minimum/maximum (par) level, the Pareto (ABC) analysis, the
economic order quantity (EOQ), and just-in-time systems. Each of
these systems attempt to maximize inventory turnover while at
the same time minimize inventory carrying costs (or holding
costs).
Maintaining and Managing
Inventory
Carrying costs all costs associated with inventory investment
plus storage costs, which might include interest, insurance,
taxes, and storage expenses, among others.
Order Book
Also called a want list or want book.
Simplest form of inventory control.
Provides the least amount of organized control of inventory;
highly dependent on the active participation of staff.
Listed drugs are ordered periodically from wholesalers or other
suppliers.
It is common for the individuals to not notice the need for a drug
or forget to note the need on the order book (causing an
inventory shortage that is embarrassing and difficult to manage
in the course of urgent or routine patient care).
Order Book
Even the most diligent and attentive individuals can
make mistakes because the order list approach relies
excessively on peoples memories and individual
discretion.
If too much is ordered, at best, it may reduce inventory
turnover, while at worst, it may remain unused on the
shelf until it expires and must be returned to the
supplier. Therefore, the order book system is usually not
the sole method of inventory management and is often
used in conjunction with one of the other systems
mentioned previously.
Par-Level Systems
BASED
ON A PRINCIPLE THAT INDIVIDUAL
INVENTORY DRUG USE FALLS WITH A RANGE OR
PAR-LEVEL
THIS IS WHERE RANGE IS IDENTIFIED AND
MINIMUM AND MAXIMUM QUANTITIES ARE SET
MORE SOPHISTICATED THAN THE ORDER BOOK
RELIES ON A PREDETERMINED ORDER QUANTITY
AND ORDER POINT
ALSO KNOWN AS MINIMUM/MAXIMUM SYSTEMS
Par-Level Systems
Can be managed:
Manually
1.
Shelf Labels/Stickers
- developed for each inventory product
that identifies the par-levels of drug to be
kept on hand
- acts as a general guide for staff to avoid
running short on a product or overstocking
Par-Level Systems
2. Electronically
Perpetual Inventory
- a record of inventory that is constantly
updated when items are added or subtracted
from inventory.
- each dispensing transaction is subtracted from
the perpetual inventory
Par-Level Systems
Just-in-time Inventory Management
- a philosophy of inventory management where
products are ordered and delivered at just the
right time- when they are needed for patient
care- with a goal of minimizing wasted steps,
labor, and cost
- its goal is to neither over- nor under-stock
products
Economic Models
Economic
models of inventory control
attempt to use economic and statistical
methods to predict the need for drugs over
time.
1.
Pareto ABC Analysis
-based on the 80/20 principle that states that approximately 80%
of most problems can be attributed to roughly 20% of their
potential causes.
- highlights that a relatively small number of drugs account for a
disproportionate amount of drug usage
- essentially groups the inventory products by aggregate value and
volume of use into three groups
(A, B and C)
Economic Models
2. Economic Order Quantity (EOQ)
- another method that attempts to minimize inventory
holding costs and ordering costs
- also known as the Minimum Cost Quantity Approach
- relies heavily on the accuracy of various data inputs such
as annual product usage and annual cost per average onhand inventory unit.
- if calculated accurately, it results in the most cost-efficient
order quantity
- relatively difficult in pharmacy practice because of the
wide variability of the individual patients pharmaceutical
needs.
Drug Recalls
manufacturer, on its own or at the direction of
the FDA, will occasionally recall
pharmaceuticals for reasons such as
mislabeling, contamination, lack of potency,
lack of adherence to the acceptable Good
Manufacturing Practices, or other situations
that may present a risk to public health
a pharmacy must have a system for rapid
removal of any recalled products
Role of FDA in Drug/Product
Recalls
The FDA plays an active role in drug-recall process
The FDA also classifies recall actions in accordance
with the level of risk and formulates recall strategies
on the base of the health hazard presented by the
product being recalled
they decide on the need for public warnings and
assists the recalling agency with public notificaton
about the recall as needed
Top Reasons for Drug Recalls
1.
Deviations in good manufacturing processes at the
manufacturer
2.
Subpotency
3.
Stability data does not support expiration date
4.
Generic drug or new drug application discrepancies
5.
Dissolution failure
6.
Label mix-ups
7.
Content uniformity failure
8.
Presence of foreign substances
9.
pH failures
10.
Microbial contamination of non-sterile products
Role of Manufacturer/Distributor
in Recalls
MA. LAURA ISABEL D. MENDOZA
Because of their responsibility to protect the public
consumers, manufacturers/distributors implement
voluntary recalls when a marketed drug product
needs to be removed from the market.
method of recall is more efficient and effective in
ensuring timely consumer protection than an FDAinitiated court action
Recall notices sent in writing to pharmacies by the
manufacturer of the product or by drug wholesalers
indicates:
a) the reason for the recall
b) the name of the recalled product
c) the manufacturer
d) all affected lot numbers of the product
e) instructions on how to return the product
to the manufacturer
On receipt of the recall notice: pharmacy
technician will check all pharmaceutical
inventory stores to determine if any recalled
products are in stock
If none of the recalled products are in stock, a note
indicating none in stock is written of the recall
notice and filed in a recall log to document that the
recall was properly addressed.
If a recalled product is in stock, all products should be
gathered, packaged, and returned to the manufacturer
according to the instructions on the recall notice.
The package should be reviewed by the pharmacist in
charge before returning it to the manufacturer.
If patients have received a recalled product, the pharmacist in
charge take actions recommended by the institutions
policies and procedures
On completion of all activity regarding the product recall, a
summary of actions taken should be documented on the recall
letter and filed for later access.
The FDA has been known the request documentation
of all recall activities to ensure compliance and,
ultimately, patient safety.
The pharmacist in charge should be notified because
he/she will need to decide which, if any, alternative
products may need to be placed into inventory as
therapeutic alternatives to the out-of-stock items.
DRUG SHORTAGES
Manufacturers will be unable to supply a pharmaceutical
because of various supply and demand situations.
involve the inability of the manufacturer to obtain raw
materials, manufacturing difficulties related to equipment
failure, or simply the inability to produce sufficient quantities
to stay ahead of the market demand for the pharmaceutical.
Drug shortages are a reality that must be dealt with to avoid
compromising patient care.
As with drug recalls, the pharmacist in charge should be notified
so he/she can communicate drug shortages and recommend
alternative therapies effectively to prescribers.
ORDERING AND BORROWING
PHARMACEUTICALS
Pharmaceutical Purchasing Groups
Group Purchasing Organization (GPO) -- Most are health system pharmacists
Health systems, hospitals, and ambulatory practices can join together in a purchasing
group to leverage collective buying power and take advantage of any lower prices
manufacturers offer to large groups that can guarantee a significant volume of orders
over long periods of time (typically 1 to 2 years).
Contracts may involve sole-source or multisource products.:
Sole-source products typically brand-name drugs
are available from only one manufacturer
Multisource products often generics or substitute products
available from numerous manufacturers
GPOs negotiate purchasing contracts that are mutually favorable to members of the
group and to manufacturers. Members benefit from lower drug prices and reduced
need for staff to spend time establishing and managing purchasing contracts with
product vendors. Manufacturers benefit from a steady demand for products from the
purchasing organization.
A GPO guarantees the price for pharmaceuticals over the established contract period.
With the purchase price predetermined, the pharmacy can order the product directly from
the manufacturer or from a wholesale supplier.
Occasionally, manufacturers are unable to supply a given product that the pharmacy is
buying on contract, which may require the pharmacy to buy or substitute a competing
product not on contract at a higher cost.
Most purchasing contracts will include language to protect the pharmacy from incurring
additional expenses in the event this occurs.
Generally, the manufacturer will be liable to rebate the difference in cost back to the
pharmacy when this occurs. Therefore, it is important that the pharmacy technician
documents any resulting off-contract purchases and shares these with the
pharmacist in charge for reconciliation with the contracted product vendor.
DIRECT PURCHASING
Involves the execution of a purchase order from the
pharmacy to the manufacturer of the drug instead of
indirectly through a wholesaler
Advantage
1)
not having to pay handling fees to a
third-party wholesaler
2)
ability to order on an infrequent basis,
and
3)
a less demanding system for monitoring
inventory
Disadvantages :
1)need to order larger quantities
to take advantage of
manufacture discounts
2) need for more capacity to
store the additional inventory,
more cash tied up in
inventory, more complicated
drug return and crediting
3)need to spend more time to
prepare, process and pay
purchase orders to many
different companies, and
4)the likelihood that the
manufacturer may be distant
Purchasing through a prime vendor
allows for drugs to be received shortly before use
Purchasing from a wholesaler is a highly
efficient and cost-effective approach
toward pharmaceutical purchasing and
inventory management.
Drug Wholesaler Purchasing/ Prime
Vendor Purchasing
When a health-system pharmacy agrees to purchase most(90% to 95%) of its
pharmaceuticals from a single wholesale company, a prime vendor contract
arrangement is established, and, customarily, a contract between the pharmacy
and the drug wholesaler is developed.
Usually wholesaler agree to deliver 95% to 98% of the items on acceptable
schedule and offer a 24hr/7day per week emergency service. They also provide
the pharmacy with electronic order entry/receiving devices, a computer system
for ordering, bar-coded shelf stickers, and a printer for order confirmation
printouts. They may also offer highly competitive discounts including those for
prepayment.
These wholesaler services make the prime vendor contracts appealing and
result in more timely ordering and delivery, less time spent creating purchase
orders, fewer inventory carrying costs, less documentation, computer-generated
lists of pharmaceuticals purchased, and overall simplification of the credit and
return process.
Borrowing Pharmaceuticals
There will be times when the pharmacy MUST BORROW
DRUGS FROM OTHER PHARMACIES!
Most institutional pharmacies have policies and procedures
addressing this situation
Borrowing or loaning drugs between pharmacies is usually
restricted to emergency situations and limited to authorized staff.
limited to commercially available products
Most pharmacies have developed forms to document and track
borrowed or loaned merchandise. These forms also help staff
document the details imperative to error-free transactions.
CONTROLLED SUBSTANCES
Have specific ordering, receiving, storage, dispensing, inventory,
record-keeping, return, waste and disposal requirements established
under the law.
The Pharmacists Manual: An Informational Outline od the Controlled
Substances Act of 1970
ASHP Technical Assistance Bulletin on Institutional Use of Controlled
Substances
In some pharmacies, pharmacy technicians work with pharmacists to
manage inventory and order, dispense, store, and control narcotics and
other controlled substances.
Two principles: 1.) Ordering and receiving Schedule II controlled
substances requires special order forms and additional time (1-3 days)
2.) these substances are inventoried and tracked continuously via a
perpetual inventory process, whereby each dose or packaged unit is
accounted for at all times.
INVESTIGATIONAL DRUGS
Also require special ordering, inventorying, and handling procedures
Generally, the use of investigational drugs is categorized into two distinct
areas:
1.) in a formal protocol approved by the institution
2.) for a single patient on a one-time basis that has been authorized by the
manufacturer and the FDA
In both cases: Physician ordering
Pharmacy Staff inventory management
Some pharmacies associated with academic affiliations or institutions
conducting clinical research are managed by
Investigational drug service pharmacist responsible for ordering,
dispensing, and inventory management of investigational drugs according to
the research protocol
COMPOUNDED DRUGS
Extemporaneously prepared in the pharmacy as indicated by
scientific compounding formulas and processes
May include oral liquids, topical preparations, solid dosage
forms or sterile products
Requires that prescribing patterns and expiration dates be
monitored closely because many compounded products have
short shelf lives
Pharmacy technicians monitor patient use of compounded
drug, product expiration dates and identifying additional stock
needs
Specific pharmacy technicians may initiate compounding
activities, but this may vary according to departmental
procedures
REPACKAGED PHARMACEUTICALS
Unit-dose tablets and capsules, unit-dose oral liquids, and some bulk
packages of oral solids and liquids
Each pharmacy establishes stocking mechanisms for these products and
relies on pharmacy technicians to identify and respond to production and
stock needs.
Generally, designated technicians coordinate repackaging activities, but
some pharmacies may integrate repackaging with other pharmacy
technician responsibilities.
Knowledge of the departments procedures for repackaging is required to
prevent disruptions in dispensing activities
MEDICATION SAMPLES
Storage and use of medication samples in institutions is
controversial and requires special handling procedures
Traditional inventory management and handling practices do
not work well with medication samples for 2 reasons:
1. Medication samples are not ordered by the pharmacist; they
are usually provided to physicians on request by the drug
manufacturer free of charge. This often occurs without the
pharmacys knowledge.
2. Samples are not usually dispensed by the pharmacy
These factors make it difficult to know whom to contact if a
medication sample is recalled and to ensure that medication
samples are not sold
MEDICATION SAMPLES
If an organization allows samples, they will probably be stored
outside the pharmacy, and pharmacy personnel will be required
to register and inspect the stock of medication samples
Pharmacy technicians often responsible for determining if a
sample is registered with the pharmacy, stored in acceptable
quantities, labeled with an expiration date that has not been
exceeded, and generally stored under acceptable conditions
PROPER DISPOSAL AND RETURN OF
PHARMACEUTICALS
EXPIRED PHARMACEUTICALS
Each
year, approximately 2% of all drugs shipped to
pharmacies are returned to the manufacturer
Generally,
wholesalers will not give full credit on returns of
products that will expire with 6 months
To
return products, pharmacy personnel must complete the
documentation required by the products' manufacturer or
wholesaler and package the product so it can be shipped
Technicians
often perform these duties under the
supervision of pharmacist. Some pharmacies contract with
an outside vendor who completes the documentation and
coordinates the return of these products for a fee
Expired repackaged pharmaceuticals
Disposal of expired compounded or repackaged pharmaceuticals by the
pharmacy technician should be completed under the supervision of the
pharmacist
Pharmaceuticals compounded or repackaged by the pharmacy
department cannot be returned and must be disposed of after they have
expired
Proper disposal prevents the use of sub-potent products or products
without guaranteed sterility
Expired repackaged solids can be disposed of using the general trash
removal system
Expired compounded cytotoxic products must be disposed of according
to hazardous waste removal procedures
Expired repackaged
pharmaceuticals
Other products requiring disposal rather than return are
chemicals used in the pharmacy laboratory
Examples:
sodium benzoate or sodium citrate (preservatives)
lactose or talc (excipients)
Buffers and active ingredients such as hydrocortisone,
triamcinolone, neomycin or lidocaine powders
They should be disposed of in accordance with the pharmacys
hazardous waste procedures
Expired controlled substances
Expired controlled substances are disposed of uniquely
May not be returned to the manufacturer or wholesaler for
credit
They must be destroyed and the destruction must be
documented to the satisfaction of the DEA
DEA- provides a specific form Registrants Inventory of
Drugs Surrendered for recording the disposal of expired
controlled substances
Ideally, the actual disposal of expired controlled substances
should be completed by a company sanctioned by the DEA
or by representative of the state board of pharmacy
Expired investigational drugs
Should be returned to the manufacturer or sponsor of an
investigational drug study according to the instructions they
provide
Investigational drugs that expire because of product stability
or sterility issues should never be discarded. These doses
should be retained with the investigational drug stick and be
clearly marked as expired drug products because the
investigational study sponsor will need to review and account for
all expired investigational drug products
Expired investigational drugs
Pharmaceuticals that need to be returned because of a ordering error
require authorization from the original supplier and the appropriate
forms
The Prescription Drug Marketing Act mandates that pharmacies
authorize and retain records of returned pharmaceuticals to prevent
potential diversion of pharmaceuticals
A pharmacy will have a process for returning mis-ordered medications
to the prime drug wholesaler on a routine basis, which prevents the
need for storage in the pharmacy of overstocked or mis-ordered
products
Pharmacy technician is responsible for relevant documentation, filling
paperwork, and packaging returned products under the supervision of
the pharmacist
QUIZ :
1) The ________________ is developed and
maintained by the P & T committee and
the cornerstone of the purchasing and
inventory control system.
a)
Inventory turns
b)
Prime vendor contracts
c)
Order Book
d)
Formulary
QUIZ
2) The process of placing newly acquired
products behind currently stocked
medications of the shelf is called
____________.
a)
b)
Formulary System
Electronic Medical Record System
c)
Stock Rotation
d)
Inventory Turns
QUIZ:
3) Which of the following systems of inventory
control system is known as the
maximum/minimum method of inventory control?
a)
b)
Par-level
EOQ approach
c)
Pareto ABC analysis
d)
Order book
QUIZ:
4) Which of the following inventory control
systems is the least sophisticated and most
prone to poor inventory control?
a)
Par-level
b)
EOQ approach
c)
Pareto ABC analysis
d)
Order book
QUIZ:
5) Which of the following drugs can be
returned to suppliers after expiration?
a)
b)
Prepackaged drugs
Chemical grade products
c)
Investigational drugs
d)
Controlled substances
TRUE or FALSE
6) Purchasing drugs direct from the
manufacturers saves the pharmacies money
in comparison to ordering from wholesalers.
7) Voluntary recalls of products initiated by
the FDA are more efficient and effective in
ensuring timely consumer protection than
FDA recalls or seizures initiated through
court action.
TRUE or FALSE
8) A group purchasing organization (GPO)
guarantees the price for
pharmaceuticals over the established
contract period.
9) A key goal of inventory management is
to minimize inventory turns, meaning
simply that products shouldnt be used
and must remain on the shelf.
QUIZ: TRUE or FALSE
10) Compounded products are
extemporaneously prepared in the
pharmacy as indicated by scientific
compounding formulas and
processes.
