Drug counterfeiting may cost the worldwide pharmaceutical industry more than US$30 billion annually. Radio frequency identification – RFID – seen as one way to lower that cost, has its own defining characteristics. Issues of drug counterfeiting and patient safety differentiate it from RFID in retail markets.
To minimize this wastage, and to raise the level of safety for patients, some companies are embracing RFID tagging of drug shipments at the item level. At least three major manufacturers – Pfizer, GlaxoSmithKline and Purdue Pharma – have announced plans to tag their products.
A new ABI Research study, “The RFID Life Sciences Market” examines the forces driving pharmaceutical companies to implement RFID systems, as well as the benefits they will provide.
The FDA has recommended tracking in the pharmaceutical supply chain, and state governments in the U.S. – beginning with Florida and California – are starting to mandate “pedigrees”: verification of drug shipments’ integrity from manufacturer to retailer. While none of these initiatives requires the use of RFID, they do recommend it. According to analyst Sara Shah, the state pedigrees, which will take effect over the next two years, are pushing companies to adopt RFID.
“While RFID will address patient safety issues,” says Shah, “it will also bring down costs for pharmaceutical companies. Tagging items through the supply chain provides increased visibility and enables executives to make better and timelier business decisions.”
Now that the EPCglobal standard has been ratified, Shah believes, high-volume production will see tag prices start to fall in the third quarter of 2005.
“With the industry losing $2 billion due to overstock and expiry and $30 billion due to counterfeiting, there is an opportunity for RFID to right the ship,” she says. “Supply chain visibility and real-time data-driven supply chain information-sharing solutions can help troubled pharmaceutical makers, distributors, and retailers to strengthen performance.”