Inventory Management and NDC Numbers

Quick Answer: The NDC (National Drug Code) is an 11-digit identifier with three segments: labeler code (5 digits), product code (4 digits), and package code (2 digits). Effective inventory management uses par levels, FIFO rotation, and perpetual inventory systems to ensure medication availability and minimize waste.

Proper inventory management is critical for pharmacy operations. This section covers NDC numbers, stock management, ordering systems, and handling expired medications.

National Drug Code (NDC)

The NDC is a unique identifier for every drug product in the United States.

NDC Structure (11 digits)

Format: 12345-6789-01

NDC Examples

Important: Different manufacturers of the same generic drug will have different NDC numbers because the labeler code differs.

NDC Format Variations

Original NDC assignments used 10 digits in various formats:

• 4-4-2 format
• 5-3-2 format
• 5-4-1 format

These are converted to 11 digits by adding leading zeros:

• 1234-5678-90 becomes 01234-5678-90
• 12345-678-90 becomes 12345-0678-90

Inventory Management Systems

Perpetual Inventory

• Definition: Continuous tracking of inventory in real-time
• Method: Computer system updates stock levels with each transaction
• Benefit: Always know current stock levels
• Used for: Controlled substances (legally required), high-value items

Periodic Inventory

• Definition: Physical count at scheduled intervals
• Method: Manual counting of all stock
• Frequency: Monthly, quarterly, or annually
• Purpose: Verify perpetual inventory accuracy

Point-of-Sale (POS) System

• Updates inventory automatically when prescriptions are dispensed
• Generates reorder alerts when stock reaches par level
• Tracks purchasing patterns and seasonal demands

Par Levels

Par levels define minimum and maximum inventory quantities.

Factors Affecting Par Levels

• Usage rate: How quickly medication is dispensed
• Lead time: How long it takes to receive order
• Seasonal variation: Flu season increases demand for certain medications
• Storage constraints: Refrigerator space, shelf space
• Cost: Balance between stock-outs and capital tied up in inventory

Stock Rotation: FIFO

First In, First Out (FIFO) is the standard method for stock rotation.

FIFO Principles

1. Place newer stock behind older stock
2. Dispense from the front (oldest first)
3. Check expiration dates during stocking
4. Move short-dated items to the front

Why FIFO Matters

• Reduces waste: Medications used before expiration
• Cost savings: Less expired medication to return or discard
• Patient safety: Ensures medication potency
• Regulatory compliance: Required practice

Managing Expiration Dates

Expiration Date Rules

Beyond-Use Dating (BUD)

Different from manufacturer expiration date:

• Repackaged medications: Usually 6 months or manufacturer expiration (whichever is sooner)
• Compounded preparations: Depends on USP guidelines (days to weeks)
• Multi-dose vials (opened): Usually 28 days unless otherwise specified

Returns and Recalled Medications

Drug Returns

Drug Recalls

Ordering and Receiving

Common Ordering Methods

Receiving Orders Checklist

1. Verify order against invoice/packing slip
2. Check for damaged items
3. Verify quantities received
4. Check expiration dates (refuse if too short)
5. Verify controlled substance counts (DEA 222 forms)
6. Store refrigerated items immediately
7. Sign and date receiving documents
8. Enter into inventory system