Chapter

12: Purchasing and Inventory Control Reviewing and Storing Pharmaceuticals

A poorly organized and executed receiving
Introduction system can put pts at risk and elevate health care
Purchasing and inventory control impact the costs
ability of the system to provide the right drug, to The Receiving Process
the right patient The receiving personnel verify that the shipment
is complete and intact
The Formulary System Begins w/ verification of boxes delivered by
The cornerstone of the purchasing and inventory shipper ( name, address on boxes )
control system Use rigid plastic boxes
Developed and maintained by a committee of o Products w/ cold storage requirements
medical and allied health staff: the Pharmacy and should be processed first
Therapeutics Committee (P&T) Shipper is responsible for taking
o Comprises physicians, RPh, nurses, & measures to ensure cold environment
administrators is maintained
The products on the hospital formulary dictate o Receiving personnel: critical role in
what the hospital pharmacy should purchase ( protecting phar from financial
for health care practitioners involved in responsibility for products damaged, not
prescribing, dispensing & monitoring meds 0 ordered, & not received
Third-party prescription drug benefit providers Next step: Checking of newly delivered products
will establish plan-specific formularies for against the receiving copy of purchase order
ambulatory patients o Purchase order complete list of items
Ambulatory (retail) pharmacy staff encounter that were ordered
insurance plan-specific drug formularies & Original file copy, copy for
adjust inventory receiving process, copy for
o Dependent on the dynamic needs of supplier
patient population o Person for checking products into
Should remain current ( updated every 12-18 inventory uses receiving copy
months at minimum ) o Purchase order copy signed & dated by
Loose-leaf formularies & online: can be updated person receiving shipment ( expiration
continuously in a timelier manner date is checked min shelf life of 6
Important information: months)
o Dosage form; strength; concentration; o Products expired before use should be
package size; common side effects; returned to supplier
administration instruction Sched II controlled substances to be completed
EMR - Electronic Medical Record system, have a on receipt & filed separately w/ a copy of the
real time access to online formulary invoice & packing slip

Managing the Purchasing and Inventory Control The Storing Process
System Products may be placed in a bulk, central storage
Limiting the number of indiv to a specialized few area or into the active dispensing areas
permits greater expertise and efficiency Stock rotation new products should be placed
o Can also keep the phar staff uninformed behind packages that will expire before them
and unengaged in inventory o Important inventory management
o Can be a problem if there is a turnover principle
in specialists o FIFO first in, first out
o Lead to lack of appreciation of the
importance of purchasing & inventory
control
Cross-training indiv in p&ic can help them better
understand the system
Computers & internet: includes bar-codes &
hand-held computer devices for online
procurement & purchase
o Up-to-the-minute product availability
information
o Comprehensive reporting capabilities
accuracy Product Handling Considerations
o Tighter inventory control & efficiency The Role of the Pharmacy Technician
o Helps in complying w/ phar. purchasing Spend more time handling & preparing
contracts, deadlines & contract pricing medications
deals
 Critical responsibility of assessing & evaluating o Shelf-stickers acts as a general guide
each product from content to labeling for staff to avoid running short on a
Play a vital role in minimizing dispensing errors product or overstocking
because of human fallibility A real-time inventory quantity is maintained, a
o Check expiration dates computerized database
o Color & clarity of liquid & injectable Requires pharmacy staff to routinely scan
Three main issues technician should check: inventory levels w/ a hand-held bar-code
o Look-alike/ Sound-alike (LASA) scanning device
products Each dispensing transaction is subtracted from
o Misleading labels sometimes the the perpetual inventory log (maintained
company name or logo is emphasized electronically)
instead of drug name o Record of inventory that is constantly
o Product Storage updated when items are
added/subtracted from inventory
Maintaining and Managing Inventory
Inventory management system an organized Economic Models
approach designed to maintain just the right Attempt to use economic and statistical methods
amount of products to predict the need for drugs over time
o Maximize inventory turns products Pareto ABC Analysis based on the 80/20
should be used and not remain on the principle that states that approx. 80% of most
shelf problems can be attributed to roughly 20% of
Fraction of a year that an average potential causes
item remains in inventory. o Relatively small number of drugs
High inventory turnover is a sign of account for a disproportionate amount
efficiency because inventory is of drug usage
constantly at work & generating o Inventory products by aggregate value
revenue and volume of use into three groupings
o Minimize inventory carrying costs Products in A are the small
holding costs, all costs assoc. w/ percentage of items that make upon
inventory investment & storage the greatest amount of inventory
(interest, insurance, tax, storage costs
expenses ) B &C make up decreasingly less cost
o Divide the total purchases in that period Economic Order Quantity (EOQ) Minimum Cost
by the value of physical inventory Quantity Approach, decides inventory order
Assumes a relatively constant quantities through use if an accounting formula
volume of phar purchases & that calculates the point where the combination
constant residual inventory over of order costs & inventory costs are minimized
time o relies heavily on accuracy of data inputs
( annual product usage, fixed costs,
Order Book purchase order, invoices, freight costs )
Want list / want book ; simple order list o results in the most-efficient order
Simplest form of inventory control but may lead quantity if calculated accurately
to over and under ordering o difficult in pharmacy practice because
Provides the least amount of organized control of the wide variability of pt.
of inventory pharmaceutical needs
o Highly dependent on the active Just-in-time Inventory Management products
participation of staff are ordered and delivered at just the right time,
o Indiv may not notice the need for a drug with a goal of minimizing wasted steps, labor
or forget to note the need on order book and costs
(relies on peoples memories & indiv o Responsible financial management of
discretion ) pharmaceutical purchasing w/ aspects
Not the sole method of inventory & is often used of patient care
in conjunction w/ other systems Use of automated dispensing devices
o Repositories or pharmaceutical vending
Par-Level Systems machines ( Pyxis Medstation and
Relies on a pre-determined order quantity & an Omnicell )
order point Networked via a dedicated
Minimum/Maximum systems computer file server, & allow unit-
o Based upon the principle that indiv dose and bulk storage
inventory drug use falls w/in a Capable of tracking perpetual
predictable range inventory at product level
o par-level = w/in a standard range
 Limit access to only authorized o Manufacturers benefit from a steady
personnel; Record identities who demand for products
accessed it & the amt of drug Contracts:
removed o Sole-source ( brand-name drugs )
Allows automatically generated fill- available from only 1 manufacturer
list of what needs to be replenished o Multi-source products ( generics /
on the basis of par-level system substitute ) available from numerous
Drug Recalls manufacturers
Reasons for recall: PharTech: document any resulting off-contract
o Mislabeling purchases
o Contamination
o Lack of potency Direct Purchasing
o Lack of adherence to Good Execution of a purchase order from the
manufacturing practices pharmacy to the manufacturer of drug instead of
Role of FDA in Recalls indirectly through a wholesaler
Coordinates drug recall info, helps Advantages:
manufacturers develop specific recall plans o No need to pay handling fees to a third-
Perform health hazard evaluations to assess the party wholesaler
risk ; Initiating the drug-recall process o Ability to order on an infrequent basis
Classifies recall actions w/ the level or risk & o Less demanding system for monitoring
formulates recall strategies inventory
Decides on the need for public warnings Disadvantages:
Reasons for drug recall o Need to order larger quantities for
o Deviations in GMP discounts
o Subpotency ; pH failures o Need for more capacity to store
o Stability data does not support inventory
expiration date o More complicated drug return &
o Generic/new drug application crediting
discrepancies o Need to spend more time to prepare,
o Dissolution failure ; label mix-ups process & pay purchases
o Content uniformity failure o Manuf. May be distant to pharmacy
o Presence of foreign substance ; creating problems w/ long lead times &
microbial contamination of nonsterile product delivery
products For pharmacies, the disadvantages outweigh the
Role of Manufacturer/Distributor in Recalls advantages
Implement voluntary recalls ( more efficient in
ensuring consumer protection ) Drug Wholesaler Purchasing/Prime Vendor
Recall notices: Purchasing
o Reason; name of product; manufacturer; Contract between a health-system pharmacy &
all affected lot numbers; instruction on wholesaler where pharmacy agrees to purchase
how to return product most of its pharmaceuticals from a single
o PharTech will check inventory if any wholesale company in return for advantageous
recall products are in stock pricing, terms of delivery & support services
Results in more timely ordering & delivery
Drug Shortages Less time spent creating purchase orders
Inability of manuf to obtain raw materials Fewer inventory carrying costs
Equipment failure ; inability to produce Less documentation ; Computer-generated lists
sufficient quantities of purchased products
Supports just-in-time ordering philosophy
Ordering and Borrowing Pharmaceuticals
Pharmaceutical Purchasing Groups Borrowing Pharmaceuticals
Group Purchasing Organization (GPO) Restricted to emergency situations & limited to
o Collective buying power and take authorized staff & limited to commercially
advantage of any lower prices available products
manufacturers offer to large groups to Borrow/Loan form
guarantee order over long periods of
time Products Requiring Special Handling
o Negotiate purchasing contracts that are Most products will be handled in the inventory
mutually favorable to the group systems EXCEPT:
o Members benefit from lower drug prices o Controlled substances; drug samples
& reduced time to manage contracts o Investigational drugs ; Compounded
drugs ; Repackaged drugs
Controlled Substances Chemicals:
Have specific ordering, receiving, storage, o Sodium benzoate / sodium citrate
dispensing and inventory, disposal (preservatives)
The Pharmacists Manual: An Informational o Lactose or talc (excipients)
Outline of the Controlled Substances Act of 1970 o Buffers w/ active ingredients:
ASHP Technical Assistance Bulleting on hydrocortisone, triamcinolone,
Institutional Use of Controlled Substances neomycin, lidocaine
PharTech should know 2 principles: Expired controlled substances must be
o Ordering and receiving Sched II CS destroyed & documented to the satisfaction of
require special order forms & additional DEA
time o Registrants Inventory of Drugs
o These substances are inventoried & Surrendered
tracked continuously via perpetual Expired investigational drugs
inventory process o Returned to manufacturer / sponsor of
Investigational Drugs an inves. Drug study
Two distinct areas for use of ID: Prescription Drug Marketing Act mandates that
o Formal protocol approved by institution pharmacies authorize and retain records of
o For a single patient on a one-time basis returned pharmaceuticals to prevent potential
authorized by the manuf & FDA diversion
For pharmaceutical research activities
Compounded Products
Extemporaneously prepared in pharmacy as
indicated by scientific compounding formulas
and processes
Oral liquids, topical preps, solid dosage forms,
sterile products
Have short shelf lives
Repackaged Pharmaceuticals
Unit-dose tablets / capsules, oral liquids, etc
PharTech: identify & respond to production and
stock needs
Nonformulary Items
PharTech: monitor supply and determine when
and if additional quantities should be ordered
Have separate inventory mechanisms
Two common techniques to monitor & order NI:
Manual tracking mechanisms & computer
system queries
Medication Samples
MedSamples are not ordered by the pharmacy
Provided to physicians on request by drug
manufacturers ( free of charge )
Samples are not dispensed by pharmacy
Should be registered for tracking purposes

Proper Disposal and Return of Pharmaceuticals
Expired Pharmaceuticals
Prevents the inadvertent use of these products
while enabling the dept to receive full/partial
credit
Wholesalers will not give full credit on returns of
product to expire w/in 6 months
PharTech may assist the returned goods vendor
or perform these duties under supervision of
RPh
Compounded/repackaged cannot be returned
o Proper disposal prevents the use of sub-
potent products / products w/o sterility
General trash removal system: repackaged solids
Hazardous Waste Removal Procedures: cytotoxic
products