Module 3 CE Impact

Question 1

Order when you dispensed a unit or empty a bottle

Answer 1

MANUAL Method! When a product is dispensed or a bottle is emptied, another one is ordered. Ensures that exhausted stock is replenished and that the pharmacy does not have too much of a product. Does not consider seasonal variations and can perpetuate an overstock situation if a high-volume drug is suddenly not needed, or cause delays in filling orders if there is a sudden rise in demand. Also, if an item is missed, it will not be known until a patient needs a prescription filled and the product is not in stock.

Question 2

Visual Method

Answer 2

MANUAL Method! The number of units in inventory is compared with a list of how many should be carried. When the number falls below the desired amount, an order is placed. A handheld electronic device into which item numbers and quantities are entered or a handheld scanning device that scans the bar codes on the product packaging or shelf labels is usually used to conduct inventory inspection. These devices then can be used to submit an order electronically.

Question 3

Periodic Method

Answer 3

MANUAL Method! This method follows the same process as the visual method, except inventory inspection is carried out at timed intervals (eg, weekly, monthly, annually).

Question 4

Inventory Turnover Ratio

Answer 4

ITOR number of times a pharmacy turns over its inventory in a given year.

reasonable ITOR ranges between 5 to 10.8 This means the business is selling and replenishing inventory every 1 to 2 months. The national average ITOR for independent pharmacy is 11.

Question 5

Inventory Turnover Ratio Formula

Answer 5

ITOR = COGS/Average Inventory

ITOR = $3,000,000/$300,000

ITOR = 10

Question 6

Cost of Goods Sold

Answer 6

COGS represents all costs associated with the sale of a product both direct (eg, cost of the product, inventory, or packaging) and indirect (eg, labor, equipment) and is usually found on the pharmacy’s income statement

Question 7

Days on Hand

Answer 7

which is the number of days it takes to turn the pharmacy’s inventory. This can be calculated by the following formula

DOH should be less than 37 days.

Question 8

Days on Hand Formula

Answer 8

DOH = 365/ITOR

DOH = 365/10

DOH = 36.5

Question 9

Days of Supply

Answer 9

measure the average time (in days) it takes for the pharmacy to sell its entire inventory.11 The following formula can be used to calculate DOS

Question 10

Days of Supply Formula

Question 11

Want Book

Answer 11

MANUAL Method! When a medication is dispensed or used up, it is written in a “want book” or the wholesaler sticker from the bottle is placed in the want book. The items are reviewed before entered into an order – this is a manual process that takes time to review, but it gives purchasers more control over the items ordered and allows for critical review of how much product should be ordered.

Question 12

Periodic Automatic Replenishment Levels

Answer 12

PAR Levels levels are set in the pharmacy’s computer system and alert pharmacy staff when product on-hand goes below a pre-determined amount or automatically adds the item to the order. The level is the amount set by pharmacy staff based on how much product is typically dispensed in a given period. PAR levels may be consistent throughout the year, or they may change if the demand is expected to change, such as an expected increase in allergy medication during the fall and spring.

Question 13

Electronic Data Interchange

Answer 13

EDI secure way to exchange electronic information between two trading partners. Allows the pharmacy computer system to talk directly with the wholesaler’s system.
Replenishment order is accumulated using on-hand quantities and set PAR levels, then the order is sent automatically.

Allows seamless, accurate, and efficient communication with the wholesaler, can confirm the purchase, and can update on-hand quantities in the computer when the order is received by the pharmacy.

This saves a lot of time! You are not calling in orders, manually punching in orders, entering orders into the wholesaler’s website ordering portal, or scanning barcodes to build an order that then must be transmitted to the wholesaler.

Question 14

Just-in-Time

Answer 14

products are ordered as needed. This method focuses on keeping a minimal amount of inventory on hand instead of keeping a certain amount of stock available in case a product runs out.

Question 15

Open-To-Buy

Answer 15

monthly buying budget is created based on the pharmacy’s planned sales.
Calculates how much inventory is needed each month to meet planned sales. This makes it a proactive rather than a reactive approach. The following formula can be used to calculate how much money can be spent on inventory

Question 16

ABC Approach

Answer 16

A category contains products that should always be on hand (ie, the top-selling, highest-turnover products). Category A products make up about 10% of inventory but 70% of sales
B category contains lower-demand products with slower turnover rates. B products make up 20% of inventory and 20% of sales
C category contains even lower-demand products with slower turnover rates as compared to B products. C products make up 70% of inventory and only 10% of sales

Question 17

Open-To-Buy Formula

Answer 17

(Planned Sales + Planned Markdowns + Planned End of Month Inventory) –
Planned Beginning of Month Inventory

Question 18

Min/Max

Answer 18

In this method, a pharmacy determines a minimum and maximum number of products desired to have in inventory at any given time. The inventory is designed to never drop below the minimum or go above the maximum. This method focuses on keeping inventory at consistent, economic levels.

Question 19

Economic Order Quantity Formula

Answer 19

EOQ = Square Root of:
[(2 × Annual Product Quantity × Ordering Costs per Order)/Holding Costs]

Question 20

Power of Attorney

Answer 20

POA Grants another person permission to obtain DEA Form 222s, and to sign a DEA Form 222 to order Schedule II controlled substances.

Does not have to be a pharmacist.

Must be signed by registrant and the person receiving the POA.

May be revoked by grantor and 2 witnesses

Question 21

Form 222

Answer 21

Used for ordering CII when doing so manually. was triplicate, but now DEA has and requires the single sheet format.

Keep for 2 years

Orders with errors or omissions will NOT be filled and still keep copy

Use a typewriter, computer printer, pen, or indelible pencil;
Enter 1 ordered item per line; Note the number of lines completed on the form; List the name and address from whom the controlled substances are being ordered on the form; Make a copy of the original form and submit the original form to the supplier; An authorized person or granted power of attorney must sign and date the form; When the items are received, document the date and number of containers received on the copied form; Do not correct a defective DEA Form 222; it must be replaced by a new form for the order to be filled

Question 22

Brown Bagging

Answer 22

This is when a patient has their prescription filled at their regular pharmacy and brings the medication with them to the facility or office to be administered.

These medications are typically injected or administered by IV infusion and may also include products specifically compounded for that patient.

This carries some risk because the patient must take care to properly store and handle the medication to avoid compromising its integrity.

Question 23

Controlled Substance Ordering System

Answer 23

CSOS Form 222 alternative. Must have digital certificate issued by DEA Certification Authority.

Electronic transmission must be secure and done through CSOS EDI. Must only use approved EDI.

Kept for 2 years.

Orders with errors or omissions will NOT be filled and still keep copy

Question 24

CSOS Digital Certificate

Answer 24

Valid until DEA registration under which it was issued expires. Certificates will be revoked if the certificate holder is no longer authorized to sign schedule II orders, if information on which the certificate is based changes, or if the digital certificate has been compromised, stolen, or lost.

Question 25

Ordering CIII-CIV

Answer 25

Invoices must be verified as accurate and retained by the purchaser for two years. State boards of pharmacy may require a longer retention time. These documents must be stored in a manner that makes them readily available for review.

Question 26

White Bagging

Answer 26

This is when a pharmacy outside the health-system facility or provider’s office (typically a specialty pharmacy) fills a prescription for a specific patient and sends it directly to the facility or office for administration to the patient.

Question 27

503A Compounding

Answer 27

Pharmacy may compound prescription products, but only for a specific patient on a prescription or order from a provider. Pharmacies may NOT compound any commercially available product unless there is a significant clinical reason to do so. Some examples include compounding a liquid medication for an infant when the commercially available medication is only available as a tablet and compounding a medication without dye when a patient is allergic to the dye in the available product.

If a commercial product is not available in the marketplace (there is an FDA-documented shortage), then a pharmacy may compound that product for the specific patient but only during the time the product is in shortage.

Question 28

503B Outsourcing Facility

Answer 28

compounds preparations for office use. An outsourcing facility may NOT compound any commercially available products unless the product is documented as being in short supply. This is to alleviate shortages.

Health systems and providers may obtain both sterile and nonsterile compounded products from an outsourcing facility for use and administration in the facility or office. There have been widespread shortages, for example, of IV fluids and many injectable medications.

An outsourcing facility can be authenticated if it is registered with the FDA. Authentication should also include checking with the state licensing agency or board of pharmacy in the state in which the outsourcing facility is located, and in the receiving state (if different) to ensure the facility is licensed and in good standing.

Question 29

Clear Bagging

Answer 29

This is when the health-system’s own specialty pharmacy prepares and delivers the patient’s medication to the facility or office for administration. Better control over the product is achieved and includes appropriate handling.

Question 30

Foreign Sourcing

Answer 30

may look to other sources for purchase of drugs that are unavailable or in low supply.

When looking at foreign source must evaluate is: source is registered with FDA, drug manufactured FDA-approved for use in the United States, is it eligible to be imported for resale.

Drugs imported for resale subject to tax and customs regulations. Foreign-sourced products that are FDA-approved and from an FDA registered facility are usually as safe and effective as domestic products, but the regulations relating to resale of a foreign-sourced product may be complex and heavily enforced.

Researching and adhering to these regulations may be worthwhile to supply chain entities that purchase large quantities of an item but are typically found to be overly onerous for pharmacies who are trying to fill a prescription.

Question 31

Austria, Croatia, France, Italy, Malta, Spain, Sweden, and the United Kingdom.

Answer 31

European drug regulatory authorities as capable of conducting inspections of manufacturing facilities that meet FDA requirements

Question 32

Gold Bagging

Answer 32

This is like clear bagging except the health system’s specialty pharmacy controls the chain of custody of the product, shares medical records documentation, and notes, and coordinates delivery times to specific destinations to coincide with the patient’s appointment for administration.

Question 33

Drug Transfer Between Pharmacy

Answer 33

Unless state regulations prohibit it, pharmacies within the same health-system network or chain are permitted to transfer drugs from one site to another, being sure to document the gain or loss of inventory.

not in the same network or chain are permitted to transfer drugs in an emergency situation, and in an annual amount not to exceed 5% of the transferring pharmacy’s annual dispensed amount of that drug.

An emergency situation means that the pharmacy needing the medication has a prescription for a specific patient needing to be filled immediately..

Question 34

Class I Recall

Answer 34

reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.

Question 35

Class II Recall

Answer 35

situation in which the use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.

Question 36

Class III Recall

Answer 36

situation in which the use of or exposure to a violative product is not likely to cause adverse health consequences.

Question 37

Market Withdrawal

Answer 37

product has a minor violation that would not be subject to FDA legal action. The firm removes the product from the market or corrects the violation. For example, a product removed from the market due to tampering, without evidence of manufacturing or distribution problems, would be a market withdrawal.

Question 38

Drug Wastage

Answer 38

CS wasted/spilled must be properly disposed of and documented on a DEA Form 41 and signed by two people who witnessed the wastage or spill. Wasted controlled substances may be destroyed onsite if approved by the DEA as part of an approved destruction method, or they may be sent to a DEA-registered reverse distributor for destruction.

Either method must be done promptly, so drug intended for waste is not taking up space in a safe or waiting outside of a safe and subject to theft or diversion. Both methods must be documented, and the documentation must be stored and readily available for at least two years.

Drug that is intentionally wasted, such as excess drug from compounding, should also be accounted for in a pharmacy’s compounding documentation.

Question 39

Medical Device Safety Alert

Answer 39

A medical device safety alert is issued in situations where a medical device may present an unreasonable risk of substantial harm. In some cases, these situations also are considered recalls.

Question 40

Returned Product

Answer 40

Salvage. must be filed with the invoices to account for the drugs.
For controlled substances, these documents must be filed in the appropriate C-II or C-III-V invoice files.

Additionally, for C-II medications, there must be a DEA-222 or CSOS document generated and filed.

Question 41

Hazardous Waste

Answer 41

documented by the pharmacy. Typically contractor comes for it.

Question 42

Security requirements

Answer 42

safe/cabinet weighing less than 750 pounds must be bolted to the floor so it is not easily removed. Safe/cabinets should be equipped with 30 man-minutes against surreptitious entry, 10 man-minutes against forced entry, 20 man-hours against lock manipulation, and 20 man-hours against radiological techniques. If necessary, depending upon the quantities and types of controlled substances stored, a safe/cabinet should also be equipped with an alarm system. If inventory will not fit in a safe or cabinet, a vault is required for storage purposes

Question 43

Recordkeeping requirements

Answer 43

Required for all pharmacies and kept for at least 2 years: Executed DEA Forms 222 or the electronic equivalent; Power of Attorney authorization to sign DEA Form 222
Receipts and/or invoices for Schedules III-V controlled substances; All inventory records of controlled substances, including initial and biennial inventories; Records of controlled substances distributed (e.g., sales to other registrants, returns to vendors, distributions to reverse distributors for disposal); Records of controlled substances dispensed, including prescriptions or a logbook of controlled substances which may be lawfully dispensed without a prescription (e.g., some Schedule V controlled substances); Reports of theft or significant loss (DEA Form 106); Registrant Record of Controlled Substances Destroyed (DEA Form 41); DEA registration certificate; Self-certification certificate and logbook/electronic equivalent as required under the Combat Methamphetamine Epidemic Act of 2005; logbook must include information entered by the purchaser (name, address, signature, date, and time of sale) and the quantity and form of the product sold

Question 44

CS theft or significant loss

Answer 44

experiences theft or significant loss of any controlled substance, they must notify the local DEA Diversion Field Office in writing by using DEA Form 106 within 1 business day of discovery.19 DEA recommends notifying local law enforcement and state regulatory agencies, but this is not required by federal law.