Use of RFID technology in pharmaceutical industry will rise in next 18 months, says survey

Pharmaceutical companies recently started looking at the potential benefits of using radio-frequency identification (RFID) to track finished products, though they have been making use of the RFID technology for years now in niche applications like tracking laboratory samples.
Radio-frequency identification (RFID) is the use of an object – usually referred to as an RFID tag – that is applied to, or incorporated into, a product, an animal, or a person for the purpose of identification and tracking, using radio waves.

Some RFID tags can be read from many metres away and beyond the line of sight of the reader.

Unlike optical-sensing in the case of barcodes, use of RFID enables passive object-tagging as well as automatic data capture.

Compared to barcodes, RFID is faster, more reliable, and it does not need physical sight or contact between a reader and scanner – thus eliminating the problems related to barcodes.

One of the most important advantages of RFID is that it allows participants in the supply chain to know where a particular product began its life, its current location, as also where it has been.

All the same, RFID tags are costlier than barcodes, and RFID cannot act as a replacement to barcodes. According to most experts, both the technologies will coexist to create an effective solution.

According to a research conducted by META Group, potential savings in costs from using RFID will lead to an increase in employing the technology within the supply chains of pharmaceutical firms in the next 18 months. (The META Group is a major provider of research in information technology, advisory services, and strategic consulting).

Since the value of pharmaceutical products is high, the cost for tagging the products with RFID within the supply chain is rather low.

Apart from this, the United States Food and Drug Administration (FDA) has recognized the benefits of a universal electronic pedigree (e-pedigree) that will identify as well as track individual pharmaceutical products all through the supply chain.

The FAA had, in a report published by it recently, estimated that pharmaceutical firms will complete full-scale, pallet-level and case-level RFID tagging of most products within a timeline of 3 years, using the electronic product code (EPC)-compliant RFID tags.

However, analysts at the META Group are of the opinion that the FAA’s timeline is “overly optimistic” since the EPC tag technology is in its early stages.

The annual sales by pharmaceutical companies in the United States are estimated at $200 billion.

And, the huge money involved in the pharmaceutical sector is attracting drug counterfeiters, who are increasingly getting techno-savvy in their illegal activities.

It has been estimated that the US-based pharmaceutical companies lose about $2 billion annually to counterfeiting.

Counterfeiting, apart from causing reduction in sales of the genuine drugs, does something worse – it taints the name of a trusted brand.

Pfizer, the biggest research-based pharmaceutical firm in the world and the maker of Viagra, has confirmed 3 cases of fake Viagra being sold in California.

By the use of electronic pedigree (e-pedigree), pharmaceutical companies can counter attacks on their reputed brand names.

Besides checking counterfeiting, e-pedigree enables targeted recalls of pharmaceutical product that have been affected in one way or the other. It has been calculated that, each year, pharmaceutical products worth $2 billion products are returned – or, over 1,300 recalls every year.

Absence of information on shelf-life and lack of inventory visibility usually lead to an excess of expired products and higher costs. The advantage of e-pedigree is that patients will get safe products even as the pharmaceutical industry can save on the costs of product-recall.

How does the RFID tag work in the case of a pharmaceutical product? When a manufacturer puts an RFID tag on the product, it stores all the static information about the product – like the lot number and the date of expiry – in the database. This information is linked to the company concerned.

And, when the product moves across the supply chain – from the manufacturer to the wholesaler – this observation is updated in the database that contains the initial information. This updating takes place at all phases of the movement of the drug – from the wholesalers to the distributors, to the pharmacies, and then to the hospitals.

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