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FDA Prescribes RFID for Drug Safety

The U.S. Food and Drug Administration set guidelines for the use of radio frequency identification (RFID) technology to reduce drug counterfeiting this week, codifying a huge movement within the industry.

The FDA published what it calls "Compliance Policy Guides" for pharmaceutical or "pharma" companies to use as they test ways to keep good drugs from being diverted from their supply chains while blocking the introduction of counterfeits.

RFID tags are tiny transponders that can be embedded in tags or packaging. They automatically transmit a unique ID code when they come in range of a reader. The code can be matched to a database entry containing information relating to the item that bears the tag.

"The FDA is saying, 'Here are the standards to comply to,'" said Tim Ryan, an Aberdeen Group analyst. "There's a certain amount of risk with any project, but the regulatory uncertainly is being removed."

But Big Pharma hasn't been holding its breath, waiting for the FDA.

Ryan said that pharmaceuticals companies already are implementing RFID, because as large suppliers to Wal-Mart Stores, they were affected by its mandate to begin shipping RFID-tagged products by January 1, 2005.

The pharmaceuticals industry is one of the quickest moving sectors toward RFID for a couple of reasons.

First, its goods are relatively expensive -- and the potential for harm is huge.

"[Pharmacies] are looking at RFID to control their bulk inventory in the dispensary," said Cliff Horwitz, CEO of Samsys, a vendor of RFID reader technology and services. "We are talking about tracking the bulk drugs in their dispensary location, as clearly distinct from the individual vial dispensed to the consumer." One RFID-tagged, pint-sized container stored in the pharmacy may contain a thousand pills worth thousands of dollars.

Jack Grasso, an EPCglobal spokesperson, said that, aside from the greater ability to track shipments, RFID tagging will make product recalls a lot easier. "Implementation will definitely help save lives and improve quality of life," he said. "These will be realized very early." EPCglobal is a trade organization working to define standards for the electronic product codes used in RFID.

"It's impossible to counterfeit an electronic product code," Grasso said, "so once a counterfeit entered the drug supply, it would immediately be detected and able to be quarantined and traced to... where it entered the supply chain." EPCglobal's Healthcare and Life Sciences Action Group is working to identify key business issues around "track and trace" methods for drugs.

Horwitz said RFID tagging could provide greater control of entire batch lots of drugs, making it possible to trace and recall a contaminated batch even if it was distributed and repackaged at multiple distribution points.

Secondly, RFID tracking is relatively easy to introduce in pharmacy operations. Aberdeen's Ryan pointed out that pharmacies are tightly controlled and relatively small environments, "So the expense for retailers to do something on the shop floor is realistic."

The FDA's release of RFID guidelines this week follows a February 2004 endorsement of RFID to combat counterfeit drugs.

The FDA said it had seen a fourfold increase in sophisticated criminal activity in this area, such as introducing drug products that are contaminated or contain inactive ingredients, incorrect ingredients, improper dosages, sub-potent or super-potent ingredients.

At that time, the agency recommended "mass serialization," a process of supplying a unique ID number for each item of a product -- a stratagem that EPCglobal was already in the process of implementing.

"We believe that use of RFID technology is critical to ensuring the long-term safety and integrity of the U.S. drug supply," this week's guide stated.

But Gartner analyst Jeff Woods said that RFID is no silver bullet for the drug-counterfeiting problem. "RFID is just one of many technologies drug companies will have to deploy to reduce counterfeiting and diversion," he said.

Woods said RFID tagging should be combined with a "pedigree" system that establishes where the drug originated and every place it passed through, as well as tactics such as marks on packaging that correspond to the RFID tags.

The problem with RFID or any other technology, he said, is that it requires 100 percent compliance, while readers may only be able to read 80 percent of the tags on a pallet that comes within range.

"RFID by itself probably can be easily defeated," he said. "Combined with other technologies and marks, it starts to be a more sophisticated system -- and more difficult to compromise."