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IBM's Tonic For Drug-Tracking Blues

The latest version of IBM's WebSphere RFID Information Center software includes a new ePedigree feature that lets pharmaceutical companies create an electronic certificate of authenticity for every bottle, vial and package that wends its way through their supply chains.

While the Food and Drug Administration thus far has only encouraged drug companies to incorporate an electronic pedigree, or ePedigree, certification process in their supply chain management (SCM)  systems, California lawmakers have set a January 2009 deadline for companies to provide an electronic, serialized pedigree of all drugs sold, manufactured or distributed in the state.

Along with meeting the new compliance requirements, drug companies are desperate for new technologies to help fight rampant counterfeiting of their top brands. The World Health Organization estimates that more than $40 billion worth of counterfeit drugs were sold in 2006 alone.

Along with counterfeit drugs, pharmaceutical firms can use the software to reduce diversion -- when are sold in one location and then resold in another at a higher price -- theft and the sale and consumption of expired drugs.

IBM's  ePedigree function can be used with SCM systems using radio frequency identification  tags, 2D barcodes or a mix of both, meaning pharmaceutical companies that haven't converted to RFID tracking systems can still use the software to meet the new regulations. Oregon, New York and Florida are also considering similar electronic certification legislation.

"[IBM's] product is an important development because it takes into consideration those companies that are looking into RFID to satisfy these requirements," Michael Liard, an analyst with ABI Research, told internetnews.com. "It looks at effective ways to leverage data that's coming into enterprise systems while also dealing with the serialization requirement."

Liard said IBM's updated software might spur undecided drug companies to give RFID a shot. Others, who don't manufacture or distribute sexy, high-margin drugs, can still fulfill their regulatory obligations without spending millions to transition to an RFID system.

"RFID makes more sense from an ROI perspective if you're selling blockbuster drugs like Viagra or Oxycontin as opposed to penicillin," Liard said. "But I'd still like to know that my penicillin is safe and isn't counterfeit or expired."

Christian Claus, IBM's director of sensor information management, said AmerisourceBergen , a large drug distributor based in Sacramento, Calif., as well as a large drug manufacturer, which he wouldn't identify, are already using the updated software. IBM is also working with European Union officials to track and trace ocean-going shipping containers with the software.

"The goal with this software is to gather data that can solve multiple use cases at the same time," he told internetnews.com. "Besides satisfying state or federal laws, it gives both the shipper and the recipient the information they need to understand everything about the product and what happened to that product between them."

Liard said SAP , Oracle and other software vendors have been working on similar ePedigree products with limited success.

"IBM definitely is ahead of the others, because they're actually out there co-inventing with the customers," he added.