Thursday, February 19, 2004

RFID coming to the pharmaceutical supply chain

The US Food and Drug Administration (FDA) has just published a report that lays out its intention to require radio frequency identification (RFID) tracking in drug manufacturing and distribution within three years. With this move, the pharmaceutical industry will join the trend to RFID in other industries such as consumer products, led by Walmart's RFID mandate, and the defense contracting industry, led by the US DOD initiative.

FDA indicated that its intention is to implement "mass serialization" of prescription drugs, which it defines as "assigning a unique number (the electronic product code or EPC) to each pallet, case and package of drugs and then using that number to record information about all transactions involving the product." It appears that FDA intends to require implementation of RFID first at the pallet and case level, starting in 2005, and ultimately to the individual package level. The agency wants to see the ability to track pharmaceuticals at the manufacturer, distributor, retailer, and hospital.

From a information systems standpoint, FDA's direction would required drug manufacturers to implement serial unit control, in addition to traditional batch record or lot number control. Drugs are typically manufactured in batches, and finished pharmaceuticals are typically identified by their batch or lot number. The assumption is that all units within the batch are uniform. Tracking at the serial unit level is well beyond the capabilities of many enterprise systems implemented by pharma manufacturers. This may drive new investments in information technology by drug manufacturers who distribute in the U.S., especially in systems such as warehouse management.

In spite of the obvious costs that this direction will impose on the drug industry, supply chain participants are for the most part upbeat about FDA's intentions. Perhaps this is because drug manufacturers and distributors see something in it for them: ability to stop counterfeit drugs and unauthorized imports from Canada, which is costing the industry a fortune and can only get worse. It is no coincidence that FDA's report is entitled, "Combating Counterfeit Drugs." This would indicate that FDA's primary objective is not so much to improve efficiency but to provide the ability to authenticate pharmaceuticals. When fully implemented, the RFID scheme would stop both counterfeit drugs and drugs from Canada not authorized for distribution in the U.S., at least at the retail level.

Computerworld has a short summary of FDA's report along with reactions from industry.

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