admin exam 1 Flashcards
Inventory
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
Costs associated with inventory
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
Costs associated with inventory
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
Drug shortages
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
Implications of drug shortages
In community pharmacy
In institutional pharmacy
In ambulatory care
Effective inventory management
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
Purchasing objectives
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
In purchasing the pharmacy manager must consider
Past usage
Target market
Pharmacy image and goals
Formularies
Industry data
Industry representatives
Consumer information
When is the right time to order
In community pharmacy
- consumer info.
In the institutional setting
Technology can help determine
How much is on hand
At what point to reorder
How much to order
Determining stock depth
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)
Factors to consider in inventory management
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)
Right price
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
Inventory management
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
Methods of inventory management
Visual method
Periodic method
Perpetual method
Visual method
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
Periodic method
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
Visual and periodic methods
May utilize a hand-held scanning device that scans barcodes on the product packaging or shelves
- The order is then transmitted electronically
Perpetual inventory systems
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
Setting minimums and maximums
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
Other inventory methods
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
Current topics in inventory management
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
Current topics in inventory management
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
Integrity of the drug supply chain
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)