PURCHASING, INVENTORY MANAGEMENT, AND DISTRIBUTION

The Department of Pharmacy Services provides oversight and direction of the pharmaceutical purchasing process for the Health System as well management of the drug inventory and clinic drug requisition distribution program.

Pharmaceutical Purchasing

Text Box: Larry Ligeski, RPh
Coordinator

In FY06, the Department of Pharmacy Services experienced a 25% increase in total pharmaceutical purchases compared to FY 2005. Pharmaceutical purchases for the year totalled $92,000,000. $51,000,000 spanning approximately 2400 line items was purchased by the hospitals and affiliated clinics and $41,000,000 of product was procured to support our ambulatory pharmacy and infusion operations.These purchases were made utilizing University and Federal Public Health Service (PHS) contracts that are administered by a contracted pharmaceutical prime vendor supplier.

Text Box: The Department of Pharmacy Services purchased $92,000,000 of pharmaceutical products to support the needs of the Health System.

Some of the purchasing challenges that were experienced in FY 2006 include:

· Brand product price increases in excess of CPI

· Negotiation of specialty distribution contracts for new products

· IV immune serum globulin and albumin product supply allocations.

· Ongoing IV antibiotic product extended backorders and product shortages .

Significant cost saving initiatives implemented in FY 2006:

· Continued conversion to various generic products due to patent expirations

· New pharmaceutical bid awards realized lower pricing on multi –source injectable products.

· Continued success in the negotiation of “inpatient PHS pricing” from various pharmaceutical manufacturers for product used in the inpatient areas.

Inventory Management

Text Box: Staff members supporting the purchasing, inventory and distribution services The Department of Pharmacy Services continued to focus on controlling pharmacy inventory costs in FY 2006 as well as improving work processes that would minimize errors in shelving and pulling product. Brand pharmaceutical product price increases, continued product shortages and the ongoing introduction of new pharmaceutical products contributed to a 15% increase in the value of the inpatient inventory. Brand pharmaceutical cost increases, the introduction of new oncology products as well as the expansion of ambulatory infusion services resulted in a 32% increase in the value of the ambulatory pharmacy inventory at the end of FY 2006.

Annual Department inventory turns calculated for activity

in all areas remained at 13.

Inventory cost reductions initiatives implemented in FY 2006 include:

· Installation of the Omnicell Pharmacy Central inventory management and product distribution system. This automated system combines vertical carousel technology along with customized bar coded inventory management software that will further increase inventory turns as well as decrease the rate of picking and stocking errors.

Pharmaceutical Distribution

The Department of Pharmacy Services experienced a 20% increase in pharmaceutical requisition activity in FY 2006 and supplied 795,332 pharmaceutical products to 445 clinic and research accounts totaling $16,000,000 in FY 2006.