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Potential cost savings from the use of RFID tagging could spur increasing use of the technology within pharmaceutical supply chains during the next 18 months, according to new research from IT research and advisory firm META Group.

Although pharmaceutical organisations have been using RFID technology for years in niche applications (such as tracking laboratory samples), these companies have recently begun examining the potential benefits of using RFID to track finished products.

Because of the high value of pharmaceutical products, the cost barrier for tagging products within the supply chain is relatively low. In addition, the US Food and Drug Administration (FDA) has acknowledged the benefits of a universal 'electronic pedigree' that can identify and track individual pharmaceutical products throughout the entire supply chain.

Too optimistic?
In a recent FDA report the agency estimated that pharmaceutical companies would complete the full-scale pallet and case level RFID tagging of most pharmaceutical products within three years, using electronic product code (EPC)-compliant RFID tags. However, META Group's analysts believe that this anticipated timescale is too optimistic given the current immaturity of EPC tag technology; They suggest that the challenges surrounding EPC technology are likely to be the most limiting factors in the use of EPC-based RFID technology.

"The inherent problem with EPC technology, from a pharmaceutical perspective, is the lack of anti-cloning features in the EPC chip itself," explained Bruce Hudson, programme director with META Group's Enterprise Application Strategies service. "With current EPC specifications, it is possible to programme one chip with the exact data of another, effectively cloning the first chip. Without guaranteed authentication, the usefulness of RFID is significantly reduced."

Five ROI points
META Group analysts believe RFID usage within the pharmaceutical industry will be limited to a simple track-and-trace role until EPC specifications are revised, which they say could take up to two years. Once implemented, META Group predicts that RFID will prove very beneficial to the pharmaceutical industry, offering ROI in the following five key areas:

1. Inventory management: As well as enabling improved inventory visibility, RFID can merge identity with environmental information to create an individual or dynamic expiry date based on the environment's effects on the active ingredients.
    
2. Recalls: In the event that a product recall is initiated, pharmaceutical organisations would be able to respond more efficiently and quickly in identifying the recalled product.
    
3. Patient safety: By combining RFID-tagged drugs with other positive identification measures (such as patient identification and unit-of-dose bar coding) the FDA estimates that most of the 1.25 million adverse reactions and 7,000 patient deaths annually in the USA due to drug errors could be prevented.
    
4. Product diversion: Diverting drug shipments from low-cost regions to high-cost regions costs pharmaceutical organisations millions of dollars each year. Positively identifying shipments and tracking them to their intended destinations could significantly reduce the size of the 'grey market'.
    
5. Counterfeiting: Drug counterfeiting is a serious health issue, particularly in poorer regions of the world. Current recommendations are to deploy two forms of anti-counterfeiting measures - one visible (such as a hologram) and one invisible (such as an RFID tag) - to present real obstacles for counterfeiters.

More Info:

http://www.metagroup.com

Source: META Group Inc.