6.3 Controlled Substance Inventories

Controlled Substance Inventories

Controlled-substance inventory is the backbone of DEA compliance. The PA MPJE tests whether you can identify when an inventory is required, how it must be counted, how it is documented, and how theft or loss is reported. The rules are largely federal (21 CFR 1304.04, 1304.11, 1304.12) with a Pennsylvania notification overlay through 49 Pa. Code §27.18 and the pharmacist-in-charge's responsibilities under §27.11.

Initial Inventory

Every registrant must take an initial inventory of all controlled substances in stock upon registration — that is, when a new DEA registration is issued for a pharmacy. The inventory is taken on the date the registrant first engages in dispensing, and it must be retained for 2 years (21 CFR 1304.12). A separate initial inventory is required when:

• A pharmacy transfers ownership (new DEA registration issued to the new owner);
• A pharmacy relocates to a new registered address (new registration at the new location);
• A new additional location is added under a separate registration.

The PIC must sign and date the inventory, list each drug by name, dosage form, strength, and quantity; for Schedules I and II, the exact count must be recorded. The inventory becomes the baseline against which the next biennial count is compared.

Biennial Inventory

After the initial inventory, every DEA registrant must take a biennial inventory at least once every 2 years (21 CFR 1304.04). The registrant may pick any date, but the same date is typically used in successive cycles. Counting rules depend on schedule:

• Schedules I and II — an exact count (each unit) is required.
• Schedules III–V — an approximate count is permitted, but an exact count must be taken if the container is opened or the approximate count is otherwise insufficient.

The biennial inventory is recorded on DEA Form 222 records, or a similar inventory record, and includes:

• Name, address, and DEA registration number of the registrant
• Date and time the inventory is taken
• Signature of the person taking the inventory
• For each drug: name, strength, dosage form, and quantity
• Whether the count is exact or approximate

The biennial inventory is retained for 2 years and must be available for inspection. PA does not set a different biennial date; the federal date governs.

Inventory at a New Location

When a pharmacy moves, the old location's inventory does not 'carry over.' A new initial inventory is taken at the new registered location on the date of opening. The PIC records the controlled substances physically transferred and the quantities received, and that record becomes the new baseline. A similar fresh inventory is required when ownership changes, even if the pharmacy stays at the same address — the prior owner's inventory is not the new owner's baseline.

Perpetual Inventory — PA Practice

A perpetual inventory is not federally required for Schedule III–V drugs, but Pennsylvania Board inspectors treat it as standard practice. The PIC is expected to maintain a written policy that:

• Reconciles Schedule II quantities monthly and Schedule III–V quantities quarterly (or more often);
• Documents every dispensing, return, and destruction;
• Investigates and resolves any discrepancy over 5% or any discrepancy exceeding a threshold the PIC sets;
• Trains all authorized personnel on reconciliation.

A discrepancy that cannot be resolved may indicate theft or loss and triggers a Form 106.

Theft and Loss Reporting (DEA Form 106)

When a registrant discovers a theft or significant loss of any controlled substance, the registrant must:

1. Report the theft or loss on DEA Form 106 to the DEA Field Division Office in writing within 1 business day of discovery (21 CFR 1301.76(b)).
2. Notify the PA State Board of Pharmacy in writing within a reasonable period; the Board expects notice within 1 business day as well.
3. Notify local law enforcement if a theft is suspected.
4. Retain a copy of the Form 106 for 2 years.

A 'significant loss' is not numerically defined by the DEA — the registrant uses judgment based on the quantity lost, the drug's diversion potential, and whether the loss is recurring. A single missing Schedule II tablet is typically reported. The Form 106 captures: drug name, strength, quantity, the date of discovery, a brief description of the incident, and the corrective actions taken. A registrant who fails to file Form 106 faces civil penalties up to $25,000 per violation and possible registration revocation.

Inventory Types Table

Exam Traps

• “A pharmacy relocates 3 miles away and keeps the same DEA number.” — A relocation to a new registered address requires a new initial inventory even if the DEA number does not change.
• “May the biennial inventory of a Schedule III drug be approximate if the bottle is sealed?” — Yes; approximate is permitted for unopened SIII–SV stock.
• “When is Form 106 due?” — Within 1 business day of discovery of theft or significant loss, with PA Board notice in parallel.
• “Does the PIC have to sign the biennial inventory?” — Yes; the person taking the inventory signs, and the PIC is responsible for ensuring it is taken.