Drug Industry Experiments With Item-Level RFIDDrug Industry Experiments With Item-Level RFID

A group of pharmaceutical manufacturers, distributors, and retailers are experimenting with item-level radio-frequency identification technology, attaching RFID tags to individual bottles of drugs and shipping them through their distribution channels.

The project, described by participants at a pharmaceutical industry supply-chain conference in Washington, D.C., on Tuesday, is testing the feasibility of using RFID to track individual bottles of drugs as they travel from manufacturer to retailer to guard against drug counterfeiting, improve inventory management and prevent retailers from running out of stock, and make it easier to trace drugs that have been recalled.

Participants in the "Jumpstart" project include drugmakers Abbott Laboratories, Johnson & Johnson, Pfizer, and Procter & Gamble; medical supplies distributor McKesson Corp; and retailers CVS and Rite-Aid. The Accenture IT-consulting firm is playing a leading role in the project and the federal Food and Drug Administration is also involved, according to participants.

Discussions among the companies about how to handle item-level use of RFID began last year and evolved into the pilot project. Using technology provided by Matrics Inc. and Manhattan Associates Inc., the participants recently began shipping individual bottles of drugs with RFID tags from manufacturers' plants to their distribution centers, then to distributors' facilities, to retailers' distribution centers and, finally, their pharmacies. The plan is to continue the experiment until September, then evaluate the results.

Although there are many pilot projects using RFID to track pallets and containers of goods, widespread use of RFID at the item level is generally considered several years away. But pharmaceutical companies are expected to be among the earliest adopters of item-level RFID tagging given the high value of their products and the problem of drug counterfeiting.

"As a distributor, we're very interested in making sure that every single product in our warehouses is an authorized product," said Ron Bone, senior VP of distribution support at McKesson Pharmaceutical.

Earlier this year the Food and Drug Administration issued a report recommending that drug makers use RFID to track individual bottles of the most commonly counterfeited drugs starting in 2006 and on bottles of most drugs by 2007. The pharmaceutical industry estimates that between 2% and 7% of all drugs sold globally are counterfeit.

Adding impetus to the pharmaceutical industry's RFID efforts is legislation passed in Florida and proposed in other states that mandates drug shipments be accompanied by documents assuring their safety. Bone says such documentation requirements are unworkable for the drug industry and that RFID is a viable alternative.

Some issues have yet to be worked out, however, such as how the costs of RFID technology will be shared among supply-chain participants and what frequency the RFID tags will use.