Notes · DEA recordkeeping Published September 7, 2026 · Regaldi practice notes

Controlled-substance reconciliation in a compounding pharmacy: what 21 CFR 1304 requires

By the Regaldi practice · Reviewed by Veronica Taran, Florida-licensed pharmacist · This note is general information about a regulatory framework, not legal or pharmacy advice.

A DEA investigator does one arithmetic problem: opening inventory, plus everything received, minus everything dispensed or disposed of, should equal what is on the shelf. 21 CFR Part 1304 exists so that every term in that equation has a record behind it. What follows is the rule, section by section, and what it obliges the software to carry.

Who keeps the records

21 CFR 1304.03(a): "Every registrant ... shall maintain the records and inventories and shall file the reports required by this part." A compounding pharmacy registered with DEA as a dispenser is a registrant, and the dispenser paragraphs of Part 1304 apply to it. 1304.04(h) adds that a registered pharmacy keeps Schedule I and II inventories and records "separately from all other records of the pharmacy," and Schedule III, IV, and V records either separately or "in such form that the information required is readily retrievable from ordinary business records."

Inventory: 1304.11

What an inventory is. 1304.11(a): "a complete and accurate record of all controlled substances on hand on the date the inventory is taken," in written, typewritten, or printed form at the registered location, taken as of opening or close of business with that choice recorded on the inventory.
Initial inventory. 1304.11(b): on the date the registrant first engages in dispensing. A pharmacy that opens with no controlled substances records that fact as its initial inventory.
Biennial inventory. 1304.11(c): a new inventory of all stocks "at least every two years," on any date within two years of the previous one.
Newly scheduled substances. 1304.11(d): inventoried on the effective date of the scheduling rule.
Exact count versus estimate. 1304.11(e)(6) governs dispensers. For each finished form the inventory lists the substance, the form, the units per commercial container, and the number of containers. For an opened container: "If the substance is listed in Schedules I or II, make an exact count or measure of the contents," and for Schedule III, IV, or V, "make an estimated count or measure of the contents, unless the container holds more than 1,000 tablets or capsules in which case he/she must make an exact count."

Continuing records: 1304.21 and 1304.22

21 CFR 1304.21(a) requires every registrant to maintain, "on a current basis, a complete and accurate record of each substance manufactured, imported, received, sold, delivered, exported, or otherwise disposed of." The same sentence adds: "except that no registrant shall be required to maintain a perpetual inventory." DEA does not mandate a running balance. It mandates records complete enough that one can be reconstructed at any point. 1304.21(d) fixes the date of each record as the date the substance was "actually received, distributed, otherwise transferred, or destroyed."

21 CFR 1304.22(c) lists what a dispenser's records must contain by pointing to the manufacturer's list in 1304.22(a)(2): the name of the substance (i); each finished form and the units per commercial container (ii); receipts, with the date, the number of units or containers, and the name, address, and DEA registration number of the supplier (iv); distributions to other registrants, with the same particulars (vii); and any other disposal, including destruction, with the date, manner, and quantity (ix). 1304.22(c) then adds the dispensing record itself: units dispensed, to whom, the date, and "the written or typewritten name or initials of the individual who dispensed or administered the substance." Destruction goes on DEA Form 41 under 1304.21(e), signed by the two employees who witnessed it.

Schedule I and II orders: Part 1305

21 CFR 1305.03 requires "either a DEA Form 222 or its electronic equivalent" for each distribution of a Schedule I or II substance. On receipt, 1305.13(e) requires the purchaser to record on its copy "the number of commercial or bulk containers furnished on each item and the dates on which the containers are received." 1305.17(a) requires the purchaser to retain a copy of each executed form and all unaccepted or defective forms; 1305.17(c) requires the forms to be "maintained separately from all other records" and "kept available for inspection for a period of two years"; 1305.17(e) treats electronic copies as separately maintained if they are readily retrievable on their own.

Retention: 1304.04

21 CFR 1304.04(a): every inventory and other record required under Part 1304 "must be kept by the registrant and be available for inspection and copying by authorized employees of the Administration, for at least 2 years from the date of such inventory or record." 1304.04(c) confirms that no approval is needed to keep records on an in-house computer system.

Theft or loss: 1301.76(b) and DEA Form 106

21 CFR 1301.76(b) requires the registrant to notify the DEA Field Division Office "in writing, of the theft or significant loss of any controlled substances within one business day of discovery," and to file "a complete and accurate DEA Form 106" through the Diversion Control Division's secure network application "within 45 days after discovery." The same paragraph lists the factors for deciding whether a loss is significant: the quantity relative to the type of business, the specific substances, whether the loss can be tied to particular individuals or activities, the pattern of losses over time and what was done about them, and the diversion potential of the substance. A reconciliation that cannot show a pattern over time cannot answer 1301.76(b)(4).

State boards add their own layer

Florida is one example. Section 893.07(1)(a), Florida Statutes, requires a complete and accurate record of all stocks on hand every second year; 893.07(4) requires the records kept for at least two years; 893.07(5)(b) requires a theft or significant loss to be reported to the county sheriff within 24 hours of discovery, a separate clock from the federal one. Rule 64B16-28.140, Florida Administrative Code, incorporates 21 CFR 1304.04 by reference for a pharmacy using a data-processing system, requires that "records of controlled substances shall be readily retrievable from records of non-controlled substances," and requires an audit trail of drug usage for the preceding four years. Other states set their own counts and cadences. The federal rule is the floor.

What a software reconciliation must therefore do

Perpetual inventory per NDC and lot. DEA does not require it (1304.21(a)), but every record it does require is a movement: a receipt, a dispensing, a transfer, a destruction. Post each one to a running balance per NDC and lot, and the biennial inventory under 1304.11(c) becomes a count against a known expectation rather than a discovery.
Every movement tied to a person. 1304.22(c) requires the name or initials of the individual who dispensed. The software should require an identity behind every movement: receipt, count, adjustment, and destruction, where 1304.21(e) names two witnesses.
Dates from the event, not the entry. 1304.21(d). A receipt entered a day late shows both the receipt date and the entry date.
Count discipline by schedule. At inventory, the system asks for an exact count on Schedule II and on any opened container over 1,000 units, allows an estimate elsewhere (1304.11(e)(6)), and records whether the count was taken at opening or close of business (1304.11(a)).
Variance surfaced and investigated. The difference between expected and counted is a record of its own: who counted, who recounted, what was found, and whether the loss is significant under the 1301.76(b) factors. If it is, the one-business-day clock starts at discovery, so the system dates the discovery.
Form 222 receipts closed on the form. 1305.13(e): containers received and the date, recorded against the order, with executed forms retrievable separately (1305.17(c) and (e)).
Reports retrievable for the inspector. 1304.04(a): two years, longer where the state requires, with Schedule II reportable apart from everything else (1304.04(h)(1)). The reconciliation for any date range, per substance, with its supporting movements, prints in minutes at the registered location.

The paper reality

The Schedule II log is a bound book. Receipts live in an invoice file; Form 222 copies live in a drawer; dispensing lives in the pharmacy system; destruction lives on a Form 41 in a third folder. Nobody adds the columns until the biennial count or the investigator forces it, and then the sum is off by a few units, and nobody can say which month. The regulation asked for records. The pharmacy kept them. What it did not keep was the relationship between them, and the relationship is the reconciliation.