RFID—Best Hope for Quashing Counterfeiting and Diversion

AUGUST 01, 2005
Jamie Swedberg

According to the FDA, counterfeit drugs represented 10% of the global pharmaceutical market in 2004. At the same time, while no hard figures on drug theft exist, law enforcement reports an increased availability of diverted prescription drugs over the past 3 years. That means a significant proportion of legitimate pharmaceuticals are disappearing during the wholesaling process or once they reach the pharmacy. Unfortunately, it is hard to tell exactly what medicines are going where, because one pallet of pills looks more or less like every other. These alarming facts have spurred the federal government and the pharmaceutical industry into action. In 2004, as part of its multilayered approach for combating counterfeiting, the FDA's Counterfeit Drug Task Force laid out a plan for implementing mass serialization of prescription drugs in the United States. It recommended the unique identification of every pallet, case, and individual package by 2007. The technology it anointed to accomplish this feat is radio-frequency identification, or RFID.

RFID has been implemented in hightech warehouses in other industries for several years, but it is relatively new to the pharmaceutical industry. To the uninitiated, an RFID tag might seem like a glorified bar code. It differs from a bar code, however, in 2 important respects.

A bar code contains information about the type of object in the package. It might tell you, for example, that a vial contains insulin manufactured by a particular company. An RFID tag, though, is a tiny silicon microchip that carries a unique identifier: a serial number distinguishing that vial from every other vial in the world.

The second difference is that an RFID tag does not need to be "swiped" with a scanner the way bar codes do. It is a passive radio emitter, meaning that it emits a signal but requires no batteries because it obtains its power from the signal of a reading device. It can be scanned just by being within several meters of a reader. A vendor with an RFID reader could walk into a room filled with pharmaceuticals, send out a scanning signal, and instantly record the electronic product codes of all the drugs in the room.

RFID, then, offers extremely accurate and fine-grained control over the whereabouts of pharmaceuticals. Although the equipment and implementation costs are high (the readers currently cost around $2000), the technology promises to pay for itself by making the handling process much more efficient.

Purdue Pharma LP, Stamford, Conn, is an early adopter of RFID technology. Last November, it began placing RFID tags on 100-tablet bottles of OxyContin (oxycodone HCl controlled-release) tablets shipped to 2 of its largest customers, Wal-Mart and H.D. Smith.

"Wal-Mart was the one who first declared its intent to implement RFID at various stages within its own organization," says Aaron Graham, Purdue Pharma's vice president and chief security officer. "They want RFID for all cases and pallets from their top 100 vendors in 2005. But even in 2004, they wanted C-II-scheduled medications at the item level. It was quite an aggressive timeframe, but I thought it was where the industry should be. I applaud them for using their horsepower to make it happen."

Other manufacturers are taking similar actions. New York City-based Pfizer Inc plans to use RFID tags on all bottles of Viagra (sildenafil citrate) sold in the United States as soon as possible in 2005. Meanwhile, GlaxoSmithKline, London, has said it will implement the technology on at least one of its products within the next year.

Graham says RFID offers an opportunity to close the loop on drug distribution. "RFID, for the first time, gives the pharmaceutical industry the ability to partner with law enforcement and make a difference in pharmacy and supply chain theft," he says. "For example, a trooper calls from Nebraska and says he has a guy in the back of his car with 2 bottles of OxyContin and wants to know where it came from. Before, we couldn't tell him. Even the lot number didn't help, because the lot might be 1000 bottles."

Now, he says, Purdue Pharma is donating handheld RFID scanners to the FBI, FDA, and other law enforcement agencies so they can scan bottles in the field and telephone the company with the electronic product code. They will know the entire pedigree of the drugs immediately: where they were manufactured, where they traveled, and what pharmacy received them.

"Now, for the first time ever, the police can arrest the person in their car for possession of stolen goods," he says. "In a better scenario they can take that person back to the scene of the crime, get a positive ID, and make them for pharmacy robbery."

The plan is not without its difficulties. Analysts estimate that in order to handle RFID-tagged pharmaceuticals, the approximately 34,000 chain-owned pharmacies in the United States will need to install 170,000 readers. The financial impact may be especially heavy on small independent pharmacies. Many say that with increased demand, however, the price of the readers could fall by as much as 50%.

At any rate, pharmacies and wholesalers may have little choice in the matter. According to Graham, more than 30 states have approved or are in the process of approving legislation that will mandate better tracking of prescription drugs. RFID will be a necessary means of complying, whether or not it is explicitly specified in the new laws.

Graham sees the adoption of RFID as an advantageous move for everyone from manufacturer to patient. "There are wholesalers and pharmacy chains in federal court today being sued by patients who, unfortunately, received counterfeit drugs," he says. "The litigation may prove to be more expensive than the technology. Where's your return on investment on that, and where's your goodwill to the patient and the industry? I think it behooves everybody to get on the right side of this issue."

Ms. Swedberg is a freelance medical writer.