To set an inventory item as a euthanasia agent, first you open the gear menu and select "Inventory Settings",
In inventory settings you pop open the "Inventory" section.
Once open you can filter to the drug you are looking for with the filter control.
Once you have found the item, click on it to open the details. Here you will see that one of the options is "Euthanasia Agent".
Once you select this and save, any encounter going forward where this drug is added as a treatment will alter the status of the patient for you.