1. Inventory Management and Drug Accountability Where Are We Now Roles and Processes
Lynn C. Sanders, Pharm D., Director
PBM Clinical Informatics and
Pharmacy Re-engineering Pharmacy Benefits Management

2. Introduction – What is Inventory Management
Inventory Management is primarily about specifying the size and placement of stocked goods.
Inventory management is required at different locations within a facility or within multiple locations of a supply network to protect the regular and planned course of production against the random disturbance of running out of materials or goods.
The scope of inventory management also concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment.

3. VHA Directive 98-020 Drug Accountability 3.0
March 31, 1998
Mandatory use of Drug Accountability Software
Impact on E-pharmacy Claims
Prime Vendor Invoices
Updates NDC information
Alternative to manual edits.

4. Drug Accountability and Inventory Management Relationship
Purchasing
Product Control
Waste
Recalls
Returns

5. OIG Draft Report, Audit of VA Consolidated Mail Outpatient Pharmacies Inventory Accountability Project No R6-0169
Recommended Improvement Action(s) 1: Require the Deputy Chief Consultant PBM/CMOP enforce the annual wall to wall physical inventory requirement.
Recommended Improvement Action(s) 2: Require the Deputy Chief Consultant PBM/CMOP perform a complete inventory analysis to develop and implement a plan of action to mitigate significant variances.
Recommended Improvement Action(s) 3: Require the Deputy Chief Consultant PBM/CMOP develop policy and establish controls to monitor and control adjustments to pharmaceutical inventory records.

6. OIG Draft Report, Audit of VA Consolidated Mail Outpatient Pharmacies Inventory Accountability Project No R6-0169
Recommended Improvement Action(s) 4: Require the Deputy Chief Consultant PBM/CMOP enforce compliance with the policy for returned and expired pharmaceuticals.
Recommended Improvement Action(s) 5: Require the Deputy Chief Consultant PBM/CMOP establish and enforce procedures that restrict a single individual from ordering, receiving, and adjusting against the same pharmaceutical.
Recommended Improvement Action(s) 6: Disable all prime vendor generic user IDs and passwords and establish individual user IDs and passwords for ordering and receiving pharmaceuticals.

7. Audit of VHA's Management of Selected Non-Controlled Drugs All Pharmacies
Recommendation 1. We recommend the Under Secretary for Health develop procedures to identify high risk non-controlled drugs and require pharmacy managers to monitor those drugs by establishing standardized inventory discrepancy rates that if exceeded require further investigation.
Recommendation 2. We recommend the Under Secretary for Health develop appropriate internal controls to ensure pharmacy managers and staff accurately and consistently record drug dispensing activities in VistA.
Recommendation 3. We recommend the Under Secretary for Health require that information on drug stocks transferred within a VA health care facility and drugs dispensed by and returned to a facility’s stock is accurately and consistently recorded in VistA.

8. Audit of VHA's Management of Selected Non-Controlled Drugs
Recommendation 4. We recommend the Under Secretary for Health establish a policy on VA health care facilities’ use of drugs returned in the mail; and if returned drugs are restocked by facilities, develop procedures to ensure information on returned quantities of CMOP dispensed drugs that are restocked is consistently captured in inventory records using standardized procedures.
Recommendation 5. We recommend the Under Secretary for Health develops policy to limit access to the VistA label reprint function to appropriate pharmacy personnel and develop standard procedures to capture information on drugs dispensed using the reprint function.
Recommendation 6. We recommend the Under Secretary for Health develop standardized electronic annual physical inventory reporting formats; develop standards to ensure that annual physical inventory reports are reasonably accurate; and establish a procedure to hold VA health care facility pharmacy managers accountable for the accuracy of annual physical inventory reports.

9. How Do We Accomplish Inventory Management and Drug Accountability

10. What Resources Do We Have People
Pharmacist
Pharmacy Technicians
Procurement Specialists
Pharmacy Informaticists/ADPACS
Supervisors/Managers
Acquisition Management Staff
Purchasing Officers
Inventory Managers
Prime Vendor Staff (McKesson)
Inspectors

11. Resources - Systems Bar Code Technology
Prime Vendor Information - Mckesson
VistA Software Systems
Drug Accountability
Reports
AMIS
FileMan
PBM Proclarity

12. Resources Process Directives Policies Manuals Handbooks Procedures
Training

13. VHA Policy on Inventory Management
VHA is establishing goals for reducing inventory levels, with mandatory use of Generic Inventory Package (GIP), or its successor system, to manage all inventories. All recurring or repetitive stock items, defined as all items held for future use regardless of turn rate, and funded as operating supplies, must be in the Item Master File (IMF) and GIP. In addition, all purchase transactions must reflect the IMF, and National Item File number. This allows for a consistent inventory system and common source for data to support the VHA Standardization Program and the National Procurement History File, and to fully automate the management of all unofficial inventories. Annual wall-to-wall inventory audits are required to maintain accuracy.
GIP – generic Inventory Package

14. Inventory of Controlled Substances
A physical inventory of the pharmacy vault, including the Pharmacy Drug Cache, for all schedules of controlled substances must be maintained and verified by Pharmacy Service at a minimum of every 72 hours, excluding those weeks containing a Federal holiday when only two inspections are required. Documentation of the verification must be made on the appropriate VA Form , or electronic equivalent. Controlled substances in the emergency drug cache must be inspected every 72 hours, unless a waiver for weekly inspections is approved by the Pharmacy Benefits Management (PBM) Strategic Health Group (SHG). These inventories must be inspected during the monthly, unannounced narcotic inspections.

15. Inventory of Controlled Substances
The VistA Controlled Substances Software must be used for all controlled substances transactions. The forms mentioned in this Handbook apply to the electronic and the manual forms. A printed copy of VA Form , Controlled Substance Administration Record, may be used on rare occasions for documenting the administration of a single dose.

16. ORDERING AND RECEIVING CONTROLLED SUBSTANCES
Medical centers must establish written procedures for the ordering and receipt of controlled substances. These procedures must indicate the individuals from Acquisition and Materiel Management Service (A&MMS) and Pharmacy Service who have the designated authority to order, receive, post, and verify controlled substances orders (see VA Handbook 7127).

17. Bar Code Technology in Inventory Management (Ron Schneider)
Closed Loop Technology

18. Bar Code Technology Links Prime Vendor to VistA software
Product bar codes on shelves
enter # of items
transmit to Prime Vendor
Dispensing of items can be tracked by VistA software
Perpetual inventory
Add items into data dictionary as they arrive

19. Drug Accountability – Bar Code Technology
CS Perpetual inventory
Manually enter item as received
Added to total on hand
Dispense to patient
Dispense to drug cabinet
Dispense to ward stock
Reports: can sort by:
product
patient
drug cabinet
ward

20. Outpatient Dispensing Using Barcodes
Facility automation
Many vendors in use
Bar codes on labels
Checking pharmacist receives bar code daily
Picture of medication available for checking
Consolidated Mail Out Pharmacy
8 located across country
Fill 75% of prescriptions
Bar code scanned on arrival, before filled in automation, when checking
Error rate at 5 Sigma

21. Inpatient Dispensing Using Barcode
Automated packagers
Drug Dispensing cabinets
Patient profiling
All items bar coded
Utilize manufactures bar coded products
Quality Directive for unit dose packaging and bar code labeling ensures medication in data dictionary
Ensures medication will scan at the point of care
Repack items
Items not supplied with bar codes
Linear bar code-Internal entry number
IV Labels
Bar code unique to that patient

22. Automated Storage Dispensing Systems

23. Inventory Using Automation
Pharmacy
Outpatient
Inpatient
Inventory
Management
Automated
After Hours
Pickup
Automated
Prescription
Filling
Automated
Dispensing
Cabinets
Automated
Dispensing
Units
Remote
Tele-pharmacy
Units

24. Inventory Management with Automation
Omnicell Pharmacy Central
Items are scanned into inventory upon receipt
Must use password to pick medication
Can have different levels of access to medication
High capacity storage optimized use of space
Medication usage reporting available

25. Inventory Management with Automation
Pyxis Carousel with autoPharm
Support Accuracy of Picking with Bar Code Verification
Up to 50% reduction in floor space devoted to storage of medication

26. Inventory Management with Automation
MedCarousel
1900 to 3800 medication storage locations available to store medication using less floor space
Manages and tracks inventory, can increase inventory turns by up to 60%
Expiration Date Tracking Available
Supports accuracy of picking through bar code technology

27. Prime Vendor’s Inventory and Purchasing System

28. Prime Vendor Purchasing

29. Comparison of Product Information in McKesson vs VistA Drug Accountability

30. Drug Accountability Receipt of Product
<<< EDIT INVOICES TO BE VERIFIED SCREEN >>>
Order#: C A00 Invoice#: Invoice Date: Jul 03, 2007
50 *DISULFIRAM 250MG TAB
Qty Invoiced: UPC:
Order Unit : EA NDC:
Unit Price : $ VSN:
PV-Drug-Descrip: Not Available. Item is OTC or new after May 2006
Dispense Units: TAB
Dispense Units Per Order Unit: 100
Stock Level : 400
Reorder Level : 100
1. Drug
2. Quantity Received
3. Order Unit
4. Dispense Units per Order Unit
5. Stock Level
6. Reorder Level
Edit fields: (1-6):

31. Purchasing of Drug – McKesson Software

32. Purchasing Details - Mckesson

33. Methods to Assess and Control Inventory

34. Agency Oversight Inspections/Reviews
Organizations that provide oversight
Drug Enforcement Agency (DEA)
Office of Inspector General (OIG)
General Accounting Organization (GAO)
SOARS
VISN Level Reviews
National Center for Quality Assurance
Joint Commission on Accreditation (JCA)

35. VHA Pharmacy Annual Inventory Report
Created By Facility Name & Number VISN Reason for exclusion ANNUAL prime vendor purchases. ANNUAL direct purchases. Total
Facility Name & Number VISN
Reason for exclusion
ANNUAL prime vendor purchases.
ANNUAL direct purchases.
Total dollar amount of wall to wall inventory.
Inventory Turn
Was the inventory completed by inventory service?
What company was used?
If inventory service used what was the cost?
Estimated number of VA employee hours spent by facility on inventory process.
Was a inventory file submitted?
If the answer is "No" why? (Do not answer if you previously entered a reason for exclusion)

36. Inspections Identify waste, excess, and non-compliance
PBM Annual Inventory Audit and Report
Local Financial Reports and Analysis
Local Narcotic Inspections
Local Non-pharmacy inspections
Nursing/Clinics/ Surgery Unit Inspections

37. Reporting and Analysis
Tracking of Usage
Cost Management
Product Management
Usage Projections and Forecasting
Safety – Recalls
Patient Specific Utilization (compliance) – Returns
Auto Replenishment

38. The Importance of This Meeting - Going in Forward
Improve Technology Resources
Accountability, Inventory Management, Reporting
Identify Training and Skills Enhancement Tools for Our People Resources
Improve Efficiency
Improve Safety
Reduce Costs and Waste

39. Questions