Inventory Management and Drug Accountability Where Are We Now Roles and Processes

1. Inventory Management and Drug AccountabilityWhere Are We NowRoles 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 98-020Drug 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 PharmaciesInventory AccountabilityProject No. 2008-02730-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 PharmaciesInventory AccountabilityProject No. 2008-02730-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 DrugsAll 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 HavePeople • 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. ResourcesProcess • 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.

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 10-2320, 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 10-2638, 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. 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 Inventory Management with Automation

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

26. 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 Inventory Management with Automation

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#: C75002184A00 Invoice#: 7309505724 Invoice Date: Jul 03, 2007 ------------------------------------------------------------------------------- 50 *DISULFIRAM 250MG TAB Qty Invoiced: 1 UPC: 35128552302 Order Unit : EA NDC: 51285-0523-02 Unit Price : $234.62 VSN: 1898022 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 OversightInspections/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 ByFacility Name & NumberVISNReason for exclusionANNUAL prime vendor purchases. ANNUAL direct purchases. Total Facility Name & NumberVISN 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