Controlled Substance Inventory Management Best Practices

Introduction: Compliance Starts at the Cabinet

If your practice stores or dispenses controlled substances, your inventory management system is a direct reflection of your compliance culture.

The DEA, state boards, and payers will expect precise, secure, and verifiable records—at all times.

Inventory mistakes aren’t just administrative—they can become legal problems.

Step 1: Maintain a Written Inventory Policy

Your policy should:

• Clearly outline who is responsible for managing inventory.
  
• Specify how often counts occur (DEA requires at least every 2 years; best practice is monthly or weekly).
  
• Define procedures for receiving, storing, dispensing, and disposing of controlled substances.
  
• Include corrective actions for discrepancies.
  

Step 2: Perform Regular, Documented Counts

• Initial Inventory – Required before you begin dispensing or storing.
  
• Ongoing Counts – Best practice: daily counts for high-risk medications; weekly counts for others.
  
• Two-Person Verification – Reduces the risk of error or diversion.
  
• Always record date, time, drug name, strength, quantity, and signatures of those counting.
  

Step 3: Keep Records in Compliance With DEA Rules

DEA inventory records must include:

• Drug name, strength, and form (e.g., tablet, capsule, liquid).
  
• Number of units/containers on hand.
  
• Date and time of the count.
  
• Whether the count was done at opening or close of business.
  
• Names/signatures of counters.
  

Keep these records for at least two years (longer if state law requires).

Step 4: Secure Storage

• Store controlled substances in a locked, substantially constructed cabinet or safe.
  
• Limit access to authorized personnel only.
  
• Use key control logs or electronic access tracking.
  
• Keep storage areas under video surveillance if possible.
  

Step 5: Track Movement of Every Dose

• Log every transaction:
  
  • Date and time.
    
  • Patient name (or ID if de-identified).
    
  • Prescriber.
    
  • Quantity dispensed or removed.
    
  • Remaining balance.
    
• If a dose is wasted, record the reason and have it witnessed.
  

Step 6: Reconcile Regularly

• Compare dispensing logs to inventory counts.
  
• Investigate any discrepancies immediately—document findings and corrective actions.
  
• Notify DEA and state authorities promptly if significant loss or theft occurs (Form 106).
  

Step 7: Manage Expired or Unusable Stock

• Remove expired meds from active inventory immediately.
  
• Store separately in a clearly labeled “Quarantine” area.
  
• Dispose of through DEA-approved reverse distributors or destruction procedures.
  
• Document disposal with date, method, and witnesses.
  

Step 8: Audit Yourself Before the DEA Does

• Conduct internal inventory audits quarterly or more often.
  
• Have an uninvolved staff member verify counts to catch errors.
  
• Review logs for completeness and accuracy.
  

Common Mistakes to Avoid

• Infrequent Counts – Waiting until the DEA’s biennial requirement is risky.
  
• Single-Person Counts – Increases potential for error or diversion.
  
• Incomplete Logs – Missing signatures, dates, or details can be seen as violations.
  
• Unsecured Access – Leaving cabinets unlocked or keys accessible to unauthorized staff.
  

Benefits of Strong Inventory Management

• Reduces the risk of diversion.
  
• Ensures DEA and state compliance.
  
• Protects staff and providers from legal exposure.
  
• Improves operational efficiency.
  

Final Thoughts: Precision Is Protection

Controlled substance inventory management is a high-stakes responsibility.

By combining clear policies, consistent processes, and rigorous documentation, you protect your patients, your staff, and your license.

If your counts are always accurate and your logs always complete, an audit becomes just another day at the office.

About the Author

Douglas J. Jorgensen, DO, CPC, FAAO, FACOFP

Dr. Doug is a physician, consultant, and national educator on healthcare compliance, controlled substance management, and DEA readiness. He works with practices to build airtight inventory systems that withstand regulatory scrutiny.