RFID take-up by pharma will be rapid - eventually

But issues surrounding the Electronic Product Code (EPC) technology are among the most limiting factors to the adoption of RFID technology, according to the study, conducted by IT consultancy META Group. It notes that pharmaceutical organizations have been using RFID technology for years in niche applications such as tracking lab samples, but have only recently begun examining the potential benefits of using RFID to track finished products. "Because of the high value of pharmaceutical products, the cost barrier for tagging products within the supply chain is relatively low," according to META. And companies will also be encouraged by the Food and Drug Administration (FDA)'s acknowledgement of the benefits of a universal electronic pedigree, which will identify and track individual pharmaceutical products throughout the supply chain. In a report issued last year by the FDA, the agency estimated that pharmaceutical companies would complete full-scale, pallet- and case-level RFID tagging of most pharmaceutical products within a three-year timeline, using electronic product code (EPC)-compliant RFID tags. However, META claims that this timeline is overly optimistic, given the immaturity of EPC tag technology. "The inherent problem with EPC technology, from a pharmaceutical perspective, is the lack of anti-cloning features in the EPC chip itself," according to Bruce Hudson, programme director with META's Enterprise Application Strategies service. With current EPC specifications, it is possible to programme one chip with the exact data of another, effectively cloning the first chip, he points out. And without guaranteed authentication, the usefulness of RFID is significantly reduced. META's analysts believe RFID use within the pharmaceutical industry will be limited to a "track and trace" role until EPC specifications are revised to make cloning more difficult, which could take up to two years. However, once implemented, the study predicts that RFID will prove extremely beneficial to the pharmaceutical industry, offering return on investments in the following five key areas: Inventory management: Along with enabling improved inventory visibility, RFID technology can merge identity with environmental information to create an individualised expiration date based on the environment's effects on the active ingredients. Recalls: In the event that a product recall is initiated, pharmaceutical organizations would be able to respond more efficiently and quickly in identifying the recalled product. Patient safety: By combining RFID-tagged drugs with other positive identification measures (e.g. patient identification, unit-of-dose bar coding), the FDA estimates that most of the 1.25 million adverse reactions and 7,000 patient deaths annually in the US due to drug errors could be prevented. Product diversion: Diverting drug shipments from low-cost regions to higher-cost regions costs pharmaceutical companies millions of dollars annually. Positively identifying shipments and tracking them to their intended destinations could significantly reduce the size of the 'grey market,' a benefit to the companies but not to cash-strapped health services. Counterfeiting: Drug counterfeiting is a serious health issue, particularly in poorer regions of the world. Current recommendations are to deploy two forms of anti-counterfeiting measures - one visible (e.g. holograms) and one invisible (e.g. RFID tags) - to make drug faking difficult. "Because of the compelling ROI for pharmaceutical organizations and their distributors, RFID use in the pharma industry will surpass that of consumer packaged goods (CPG) companies within 18 months," according to Hudson. However, he stressed that major issues need to be addressed before full-scale deployment is seen. In addition to authentication issues, the industry must address the validation of RFID systems by the FDA, the unknown effects of radiofrequency energy on the active principles in drug products, and ensuring sensitive commercial data does not fall into the hands of competitors.