admin exam 1

Question 1

Inventory

Answer 1

Usually represents a pharmacy’s largest current asset

Also the least liquid current asset (cannot be turned into cash until sold or distributed)

Value continues to rise due to increasing variety and expense of pharmaceutical products

Proper management has a significant impact on the financial and operational aspects of any pharmacy

Question 2

Costs associated with inventory

Answer 2

Acquisition and procurement – the act of obtaining or buying goods and services like drugs

Carrying – the cost associated with having inventory on the shelves

The above costs generally place little stress on pharmacy staff but can negatively affect operating margins if not monitored

Question 3

Costs associated with inventory

Answer 3

Stock-out or shortage
- Represent failure in customer service
- May lead to lost sales
- May lead to a decrease in the quality of patient care if you do not have the drug that they need
- Currently represents a large impact on pharmacy practice

Question 4

Drug shortages

Answer 4

Big issue currently in pharmacy practice
- when the manufacturer does not have the drug
- issue: consumers do not have the drug that they need and they may need to switch to another drug that may or may not work better

Question 5

Implications of drug shortages

Answer 5

In community pharmacy

In institutional pharmacy

In ambulatory care

Question 6

Effective inventory management

Answer 6

Decreases costs of goods sold and operational expenses

Results in increased gross margins and net profit

Important in meeting customer demands for goods and services

This means minimizing the investment in inventory while balancing supply and demand

Question 7

Purchasing objectives

Answer 7

To obtain the right product

To obtain products in the right quantity

To obtain products at the right time

To obtain products at the right price

To obtain products from the right vendor

Question 8

In purchasing the pharmacy manager must consider

Answer 8

Past usage

Target market

Pharmacy image and goals

Formularies

Industry data

Industry representatives

Consumer information

Question 9

When is the right time to order

Answer 9

In community pharmacy
- consumer info.
In the institutional setting

Question 10

Technology can help determine

Answer 10

How much is on hand

At what point to reorder

How much to order

Question 11

Determining stock depth

Answer 11

Stock depth: the point where it is reasonably certain that the item will be available on demand

Involves consideration of
- An item’s rate of sale (average demand)
- The length of time between stock checks (review time)
- The period of time between placing and receiving an order (lead time)
- A safety stock to account for variations in average demand during the buying time (review time plus lead time)

Question 12

Factors to consider in inventory management

Answer 12

Selection of brand vs generic products

Reduction of inventory size

Return-goods policies

Waste

Management of unclaimed prescriptions/unused patient-specific medications

Monitoring shrinkage (shoplifting, employee theft, waste, non-returnable products)

Question 12

Right price

Answer 12

Buying direct from manufacturers

Discounts

Selecting wholesalers
- Having a vendor that meets the needs of your pharmacy is important

Group purchasing organizations
- Use the purchasing power of hundreds of hospitals to negotiate the best acquisition costs

Question 13

Inventory management

Answer 13

Inventory: the stock of products to meet future demands

Acquisition cost: the price the pharmacy pays for the product

Procurement cost: the costs associated with purchasing the products

Carrying costs: refer to the storage, handling, insurance, cost of capital to finance the inventory, cost of loss through theft, deterioration, and damage

Question 14

Methods of inventory management

Answer 14

Visual method
Periodic method
Perpetual method

Question 15

Visual method

Answer 15

Requires a designated person to look at the number of units on hand for an item and compare them with a predetermined number of how many of the item should be carried

When the item amount falls below the desired quantity (min), the item is re-ordered(brought back to the max) max is predetermined

how many bottles of the drugs that we have and comparing to the minimum amount to order up to the maximum

Question 16

Periodic method

Answer 16

Requires the designated person to count the stock on hand at predetermined intervals and compare it with the minimum desired levels

If the quantity is below the minimum, the product is ordered

Question 17

Visual and periodic methods

Answer 17

May utilize a hand-held scanning device that scans barcodes on the product packaging or shelves
- The order is then transmitted electronically

Question 18

Perpetual inventory systems

Answer 18

Computerized inventory management systems(IMS)

The most efficient method to manage inventory

Allows inventory to be monitored at all times

The entire inventory must be accurately entered into the computerized system

All dispensing as well as inventory receipts must be accurately deducted or added to the inventory to maintain this system

Question 19

Setting minimums and maximums

Answer 19

Used in perpetual and visual inventory systems

Preset values that trigger inventory to be re-ordered

Assumes complete accuracy in the dispensing (electronic removal) of meds from inventory from all storage areas

Question 20

Other inventory methods

Answer 20

Many community chain pharmacies receive daily wholesaler orders and scheduled “warehouse” orders where these warehouses are owned by the chain pharmacy

Hospitals often have a “general store” supplied inventory in addition to daily wholesaler orders where the “general store” is a department within the hospital that does larger-scale ordering and purchasing

Question 21

Current topics in inventory management

Answer 21

The Food and Drug Administration Amendments Act (FDAAA) of 2007 increased the FDA’s responsibility with respect to postmarketing surveillance

The FDA can now require risk evaluation and mitigation strategies (REMS) for specific drugs or drug classes

Question 22

Current topics in inventory management

Answer 22

Risk evaluation and mitigation strategies

REMS strategies vary by drug product

Strategies aimed at ensuring safe drug use, including restricting drug distribution

Examples
- The FDA REMS program requires healthcare providers who prescribe OxyContin to receive training. Dispensers will have to be trained and authorized also and will be required to provide a Medication Guide about the product to each patient
- Onsolis FOCUS program
- Orphan drugs

Question 23

Integrity of the drug supply chain

Answer 23

The distribution of drugs from the manufacturer to the pharmacy has to be scrutinized

The potential for counterfeit products is real and needs to be discussed with all pharmacy staff

The FDA requires drug distributors to provide documentation of the chain of custody for drug product packages, especially those with the highest risk for counterfeit (expensive brand name drugs)

Question 24

need to know about inventory

Answer 24

costs
- acquisition & procurement cost - the cost associated with getting the product
- carrying cost - the cost of carrying the product so it includes, storage, handling, expiration etc

methods (visual, periodical etc)
- visual: looking through the shelves at what we have
- periodic - looking through the shelves at set intervals to determine what products we have
- perpetual - the best kind of inventory where a computerized inventory management system (IMS) is used to keep track inventory. It must be entered in correctly

what pharmacy manager needs to consider
- selection of brand vs generic products
- Reduction of inventory size
- Return-goods policies
- Waste
- Management of unclaimed prescriptions/unused patient-specific medications
- Monitoring shrinkage (shoplifting, employee theft, waste, non-returnable products)

what are mins and maximum
- mins: the least amount of a product we can have
- max: the most amount of product we have
- these values determine if we need to make another order or not

Question 25

Case 1

Answer 25

In small rural acute care hospitals, the patient is admitted with very expensive non-formulary eye med on their med rec order. Eye drops are not an emergent med and you know it will not harm the patient to go without them for a few days.

What methods are available to procure this medication?
- let the provider know that this is nonformulary and that we do have it cause we usually do not order nonformulary meds

What are the pros and cons of different approaches?

What would you choose to do and why?

-

Question 26

Case 2

Answer 26

Community pharmacy, one of your patients has a chronic med that costs the pharmacy about $3000 per prescription fill.
What are some strategies to manage carrying costs but still allow you to meet the needs of the patient?
- in the community: reorder after the patient picks it up. do not let it sit there and expire
- for independent pharmacy: ask for a 5 days notice from the patient for what they need it

Question 27

Merchandising

Answer 27

The main objective of all merchandising efforts is to attract customers to the store and invite them to make purchases while they are there
- A proper mix of convenience, price, and service will benefit the store’s appeal to customers

Given the decline in profit margins in the prescription department, the success of a pharmacy’s “front end” is crucial to the overall success of the business
- Important to keep in mind that most of the items sold in a pharmacy can also be purchased online or in other retail outlets

Question 28

Pharmacy design and size

Answer 28

Commonly determined by industry averages or by evaluating sales per sq. ft. of various pharmacy depts.
- Industry information can be obtained from wholesalers and other vendors, as well as professional organizations (e.g. NCPA, NACDS)
- The ideal size of a dept. can be calculated by taking an estimate of total sales from that department and dividing it by its expected sales per sq. ft.

don’t need to memorize but know that there are industry standards for the size of pharmacy?

Question 29

Pharmacy design – ADA considerations

Answer 29

The Americans with Disabilities Act (ADA) of 1990 is a federal mandate that prohibits discrimination based on any form of disability
- Allows for reasonableness in designing stores without undue hardship on daily operations

The goal is to have a store that offers equal access for all customers

Pharmacies may be required to adjust:
Counter heights
Aisle widths
Telephone equipment
Doorways
Almost any other physical aspect of their operations

Question 30

Pharmacy design – HIPAA considerations

Answer 30

The Health Insurance Portability and Accountability Act (HIPAA)
- Federal mandate designed to protect the confidentiality of patient information

The design and layout of a pharmacy need to ensure (through reasonable efforts) that disclosure of protected health information is minimized

Such efforts include:
- Installation of a partition extending the height of the pharmacy counter
- Redesigned storage areas for prescriptions that are waiting to be picked up by customers
- Designated staging areas for patients waiting to be served by pharmacy staff
- Private patient consultation areas
- Disposal bins for PPI

Question 31

Pharmacy layout

Answer 31

The arrangement of fixtures should be designed to move patrons around

The prescription department should be prominent and visible from all parts of the store, as it’s what makes pharmacies unique from other retail stores

Question 32

Pharmacy layout

Answer 32

Grid layout

Free-flow layout

Theft reduction
- Items that may be liable to theft (such as high-cost items) generally are placed in open areas where staff can observe both the items and shoppers easily
Avoid placing such items in corners or near exits
- Tools to prevent theft
Security personnel
Video surveillance equipment
One-way mirrors
Security sensors on products
Locked cabinets
Lower aisle height

just know that they are different between stores

Question 33

Merchandising the prescription department

Answer 33

Front of the prescription department is typically used to highlight:
- Vitamins and herbal products
- Products that commonly require a pharmacist’s advice for proper use (e.g. glucose monitors)
- High-priced specialty items that would be at risk for theft if stocked in a less visible area (e.g. smoking cessation)

• Patrons feel more comfortable approaching the pharmacy staff with questions when the prescription department is designed to be open
• Pharmacy design should also include a:
  Patient waiting area
  Patient consultation area
  Drive-through window (in some cases; when feasible)

Question 34

Case 3

Answer 34

As the manager of record of a busy community pharmacy in a rural area you have the responsibility of merchandising the areas adjacent to the pharmacy department. What items would you choose to place in the area? Why did you choose these items? What measures would you utilize to prevent theft of the items in the area you are responsible for?

smoking cessation
vitamins
diabetic supplies