5.1 Inventory Systems Overview

Pharmacy inventory is not just "what is on the shelf" — it is a regulated, audited asset that must be tracked from receipt through dispensing or destruction. The PTCB Supply Chain and Inventory Management Certificate outline names six inventory-tracking concepts directly: perpetual inventory, periodic inventory, the want book, par levels, just-in-time (JIT), and the formulary/non-formulary distinction. This section covers the first four and how they feed reorder decisions; JIT, par, and forecasting get their own sections later in the chapter.

Perpetual Inventory

A perpetual inventory system keeps a continuously updated record of the on-hand quantity for every SKU. Each event — receipt from a wholesaler, dispense to a patient, return to stock, wastage of a controlled substance, adjustment after a cycle count — immediately increments or decrements the balance. In a modern pharmacy the update is almost always driven by barcode scanning at receiving and at the point of dispense, or by automated dispensing cabinets (ADCs) and carousels that electronically record each withdrawal.

Strengths and Weaknesses

• Strength: Real-time visibility supports same-day reorder decisions, tight controlled-substance accountability, and accurate drug-shortage response. Cycle counts can be performed continuously on a rotating subset of SKUs rather than shutting down for a full physical count.
• Weakness: Requires scanning discipline at every transaction; a missed scan creates a perpetual-system balance that disagrees with the shelf. Capital and training costs are higher than manual systems.

Where It Is Used

Hospital inpatient pharmacies, health-system outpatient pharmacies, and any pharmacy that operates ADCs, carousels, or an integrated pharmacy information system (PIS) run a perpetual model. The real-time balance is what allows ADC override reports, diversion monitoring, and par-based automatic reorder suggestions to work.

---

Periodic Inventory

A periodic inventory system updates the recorded balance only at set intervals — weekly, monthly, or annually — through a physical count. Between counts, the system does not maintain a live on-hand quantity; the balance is inferred from the last count plus purchases minus an estimate of usage, and is corrected only when the next count is performed.

Strengths and Weaknesses

• Strength: Simple, low-cost, and workable where transaction-level scanning is not feasible.
• Weakness: Balances between counts can be badly wrong, leading to overstock of slow movers and stockouts of fast movers. Shrinkage (theft, miscounts, expired product not removed) is only discovered at the next count, which delays investigation.

Where It Is Used

Periodic inventory is most common in small independent community pharmacies, long-term care pharmacies with limited automation, and as a backup reconciliation method in larger pharmacies that run a perpetual system but still perform an annual or quarterly full physical count for audit and tax purposes.

---

The Want Book

A want book is a simple, low-tech manual log — paper or a basic spreadsheet — that staff write in whenever they notice an item is running low or out. Each entry is essentially a request: "Product X, strength Y, need N bottles." At order time, the buyer reviews the want book and consolidates the entries into a purchase order.

The want book is not a substitute for a count; it is a reorder prompt. It works best where the pharmacy does not have a live perpetual balance to trigger reorders automatically, or as a supplement to a perpetual system for unusual items (a non-formulary drug a patient needs monthly, a seasonal item, a backordered product being hand-tracked).

Practical Example

A community pharmacy keeps a spiral notebook at the dispensing counter. A technician notices the lisinopril 20 mg shelf is down to two bottles, writes "lisinopril 20 mg — 3 bottles" in the want book. On Tuesday's order day, the pharmacist-in-charge reviews the want book, cross-checks the lisinopril entry against the shelf, and adds three bottles to the weekly wholesaler order. The entry is then crossed off.

---

Formulary vs. Non-Formulary

The formulary is the list of drugs the pharmacy routinely stocks. A formulary drug has a standing shelf location, a par level (see Section 5.3), and an established reorder pattern. A non-formulary drug is not routinely stocked — it is ordered only when a specific patient need arises, almost always against a patient-specific prescription, and is dispensed when it arrives.

How Non-Formulary Items Are Special-Ordered

1. A prescription arrives for a drug the pharmacy does not stock.
2. The technician confirms the drug, strength, NDC, and quantity against the prescription and checks the wholesaler's availability and price.
3. A special-order purchase order is placed with the wholesaler (or, for compounded items, with a 503A/503B compounder), often with the patient's name or prescription number referenced.
4. When the product arrives, receiving reconciles it against the purchase order, DSCSA T3 transaction documents are retained, and the product is immediately dispensed to the patient rather than put into general stock.

---

How the Systems Connect to Reorder Decisions

The tracking method determines when and how a reorder is triggered:

• Perpetual → the PIS compares the live on-hand quantity to each item's par level, minimum (min-max), or JIT parameters and generates a reorder suggestion automatically.
• Periodic → reorders are computed at each count, using the counted quantity against par or min-max. Between counts, the pharmacy relies on staff observation.
• Want book → reorders are generated by manual review of the want book; there is no automated trigger, so timeliness depends entirely on staff discipline.

Common Pitfall on the Exam

A common distractor confuses perpetual with physical. A perpetual system still requires periodic physical counts for reconciliation (cycle counts or a full annual inventory); the difference is that the recorded balance is continuously maintained between counts. A purely periodic system does not maintain a live balance at all.