2.5 CS Inventory, Theft/Loss Reporting & Destruction

Inventory, Security, and Accountability

The DEA demands rigorous accountability for every milligram of controlled substances that enters and leaves a pharmacy. This is achieved through strict physical security requirements, mandatory routine inventories, immediate reporting of missing drugs, and heavily regulated disposal procedures.

Physical Security Requirements

Pharmacies must implement physical security controls and operating procedures to guard against theft and diversion. Under federal law, pharmacies may secure controlled substances in one of two ways (or a combination of both):

1. Secure Cabinet: Store all controlled substances in a securely locked, substantially constructed cabinet or safe.
2. Dispersal: Disperse controlled substances throughout the stock of non-controlled medications in a manner that obstructs theft or diversion. (This makes it harder for a burglar to sweep a single shelf and steal all the highly addictive medications).

Note: Some states have stricter laws requiring all Schedule II drugs to be locked in a safe regardless of dispersal. Always apply the stricter law on the state MPJE.

Controlled Substance Inventory

An inventory is a complete, accurate, and current record of all controlled substances "on hand" in the pharmacy on a specific date. "On hand" includes drugs on the shelf, in the safe, waiting in the will-call bin for patient pickup, and expired/damaged drugs awaiting return or destruction.

Initial and Biennial Inventories

• Initial Inventory: A complete physical inventory of all controlled substances must be taken on the very first day the pharmacy opens for business, even if the count is zero.
• Biennial Inventory: Following the initial inventory, the pharmacy must take a complete inventory every two years. The inventory can be taken on any date that is within two years of the previous biennial inventory date.
• Newly Scheduled Drugs: If the DEA schedules a previously non-controlled drug, or changes a drug's schedule, an inventory of that specific drug must be taken on the effective date of the new scheduling.

Inventory Counting Rules

When conducting the inventory, the pharmacist must follow specific counting protocols based on the drug's schedule:

• Schedule I and II: An exact count or measure is required. You cannot estimate the volume of a liquid or the number of tablets in an open bottle.
• Schedule III, IV, and V: An estimated count or measure is permitted, UNLESS the container holds more than 1,000 tablets or capsules. If an open container holds >1,000 units, an exact count is required.

Documentation Requirements

The inventory record must include:

• The date the inventory was taken.
• Whether it was taken at the beginning of business (BOB) or close of business (COB).
• The name of each controlled substance inventoried.
• The finished form of each substance (e.g., 10 mg tablet).
• The number of dosage units of each finished form in the commercial container (e.g., 100-tablet bottle).
• The number of commercial containers of each finished form (e.g., four 100-tablet bottles).
• The total count of the substance.

Inventory records must be maintained in a typewritten or printed form and kept at the registered location for at least two years. Crucially, the inventory records for Schedule II drugs must be kept separately from all other records (including C-III through C-V inventory records).

Reporting Theft or Significant Loss

When a pharmacy discovers a theft or a "significant loss" of controlled substances, they must act immediately.

The One-Day Rule

The registrant must notify the local DEA Field Division Office in writing within one business day of the discovery of the theft or significant loss. This initial notification can be a short fax or email stating that a loss was discovered and is being investigated.

Note: Local state board of pharmacy regulations and local law enforcement must typically be notified as well, often immediately or within a similar tight timeframe.

Determining "Significant Loss"

The DEA does not define a strict numerical threshold for a "significant loss." It is a judgment call made by the pharmacist based on several factors, including:

• The actual quantity lost relative to the type of business (e.g., a loss of 50 tablets of oxycodone is highly significant for a small retail pharmacy, but might be considered a small counting discrepancy in a massive automated mail-order facility).
• The specific controlled substances lost (a loss of fentanyl is always significant).
• Whether the loss can be associated with access to those substances by specific individuals, or whether there is a pattern of losses over a specific time period.
• Whether the specific controlled substances are likely candidates for diversion.

If in doubt, it is always safer to report the loss to the DEA.

DEA Form 106

After the initial one-day notification, the pharmacy must conduct an investigation. Once the investigation is complete (or if it takes longer than a couple of months), the pharmacy must submit a formal report using DEA Form 106 (Report of Theft or Loss of Controlled Substances). This form details the circumstances of the theft/loss and precisely lists the drugs and quantities missing. If the investigation reveals that no significant loss actually occurred, a Form 106 does not need to be filed, but the registrant must write to the DEA explaining why they are not filing the form after their initial alert.

In-Transit Losses

If controlled substances are lost or stolen while in transit from the wholesaler to the pharmacy, the responsibility to report the loss using Form 106 rests with the supplier (wholesaler), because the pharmacy has not yet taken custody or signed for the shipment. However, if the pharmacy signs for the delivery and later discovers a shortage upon unpacking the totes, the responsibility shifts to the pharmacy to report the loss.

Disposal and Destruction of Controlled Substances

Pharmacies cannot simply throw expired or adulterated controlled substances in the trash. The DEA dictates specific disposal methods to prevent environmental contamination and diversion.

Reverse Distributors

The most common and practical method for a retail pharmacy to dispose of controlled substances is to transfer them to a DEA-registered Reverse Distributor.

• The reverse distributor acts as the purchaser.
• For C-IIs, the reverse distributor must issue a DEA Form 222 to the pharmacy.
• For C-III through C-V, the transfer is documented via an invoice.
• The reverse distributor then handles the physical destruction of the drugs (usually via incineration) and submits the DEA Form 41.

DEA Form 41

If a pharmacy chooses to destroy controlled substances themselves on-site, they must use DEA Form 41 (Registrant Record of Controlled Substances Destroyed). This requires requesting prior permission from the DEA Special Agent in Charge, outlining the proposed method of destruction, and usually having two authorized witnesses observe the rendering of the drugs "non-retrievable."

Breakage and Spillage

If a bottle of liquid controlled substance is dropped and shatters on the floor, this is considered a breakage or spillage, not a loss or theft. The spilled substance is unrecoverable. The incident must be documented in the inventory records, and two individuals who witnessed the breakage must sign the record. A DEA Form 41 is used to document the disposal of any recoverable, contaminated portions of the spill (like sweeping up crushed tablets).