Radio Frequency Identification (RFID) in the Pharmaceutical Supply Chain

By Joerg Zimmer

Summary: RFID is a technology that uses radio waves to automatically identify objects. RFID technology can deliver many benefits, from tracking work in process to speeding throughput in a warehouse. As the technology becomes standardized, it will increasingly be used to track goods in the supply chain. RFID can reduce administrative error, labor costs (associated with bar code scanning), internal theft, shipping errors and increase overall inventory control. Due to their form factor adaptability the RFID tags are well suited for pharmaceutical applications especially to authenticate and track products along the supply chain and thus be a tool against counterfeiting.

Technically, Radio Frequency IDenticifcation consists of the RFID tags, the RFID reader, and a computer system. The RFID tags (microchip and antenna) carry an electronic product code that identifies the manufacturer, the product and includes a unique serial number that identifies the individual container or case. Compared to barcode technology, RFID is a “no-line-of-sight” technology that eliminates the need for a person to present a reader to each tag. This increases efficiency and reduces labor costs. Furthermore, RFID also provides additional data capacity.

But it has another important advantage: RFID tag are difficult to replicate in contrast to barcodes which can easily be replicated. This is what makes RFID particularly interesting for the pharmaceutical industry. It is an effective tool against counterfeiting because it provides an accurate drug pedigree and an increase of the supply chain visibility.

For this reason, the FDA has shown strong regulatory interest in this technology. FDA wants to boost the adoption of RFID technology to help reverse the rise in recent years of counterfeit drugs entering the market. And, because of the increase in counterfeiting, (and the attendant impact on profits), several major pharmaceutical manufacturers are working on RFID pilot projects. FDA expects to learn enough from these RFID pilot studies and plans to propose or clarify policies and regulatory requirements. The FDA envisions that the common use of RFID technology throughout the pharmaceutical supply chain will be feasible at the unit level. Further, the adoption of RFID is currently being driven by another industry: the big retail companies. Walmart, for example, requires its top suppliers to have RFID technology implemented in their supply chains.

The costs of the RFID system are still an important issue. Due to the immaturity of the industry, these costs are still significant at this stage due. The costs for a simple RFID tag are currently between $0.20 and $0.50 depending on the features (e.g. frequency, amount of memory, packaging, and volume). The “5-cent tag” is still several years away. The RFID reader costs run from
$500 to $3000.

There are several reasons why the technology has not yet taken off in the pharmaceutical industry, including the high costs, the lack of significant market place experience in this industry, standardization issues, and technical limitations. These all need to be overcome in order to make this technology a standard in shipping logistics.

For our industry and customer base, there is another unexplored question regarding homeopathic medicine in particular: is there any effect on the efficacy of homeopathic drugs due to the constant and close presence of the transmission of the necessary radio frequencies?

The promise of a safer, more accountable and highly efficient supply chain combined with the FDA support for this technology is driving interest and demand for RFID in the pharmaceutical industry. Companies that import products from overseas especially might focus on RFID technology since it will support a smooth handling of their shipments through U.S. customs entry and allow a perfect monitoring along the whole supply chain.