RFID to combat counterfeit drugs

19 May 2004

Counterfeit drugs are costing the European pharmaceutical industry between €41.6m and €83.3m a year. According to Cap Gemini, this can be significantly reduced by deploying radio frequency ID (RFID) technology, the successor to today’s barcodes. The World Health Organisation (WHO) estimates that 10pc of all global pharmaceutical products are counterfeit.

In his keynote speech at a seminar in Cork today for the pharmaceutical sector, Ian Brodie, Cap Gemini’s expert in global life sciences, argued for the deployment of RFID. The technology can track and trace products by uniquely identifying each product electronically. It can not only tell the product type but the unique identity of the product, including date of manufacture, supply and handling details, from a distance.

It is understood that the Food & Drug Administration (FDA) is targeting counterfeiting and wants to see RFID as a very high priority for pharmaceutical products by 2007.

Brodie said: “The significant advantage of RFID for pharmaceutical companies is that drugs will be distributed under secure conditions so that counterfeit drugs introduced into the supply chain can be quickly detected. This will ultimately lead both to greater safety for patients and to increased sales for pharmaceutical companies. And I think I am under-estimating when I gave the above figure of US$50 to US$100m lost annually in counterfeit drugs.

“The hype so far in RFID has been in the retail and consumer manufacturing market where significant labour and cost savings can be reaped through the reduction in unpacking of warehouse goods as the pallets are remotely scanned electronically with RFID. Retail companies such as Tesco, Metro and Wal-Mart are pushing all their main suppliers, including over-the-counter pharmaceuticals, to introduce RFID by next year,” Brodie said, adding that the main benefit of RFID for pharmaceutical companies is not in the reduction of warehouse costs or stock taking, but in the unique identification and tracking of goods.

“By 2005 the FDA are advising that some products be tagged at case/pallet level leading up to 2007 when most products should be tagged. RFID can also lead to significant reductions in theft and a much better visibility of stock.”

By 2007 to 2009, Brodie continued, there will be significant improvements with on-shelf availability and stock-taking in retail stores or supermarkets. This technology will eventually be able to inform supermarket staff that an item is running low on the supermarket shelf. “Although the product has run out on the supermarket shelf there will usually be more of the product in the storeroom or warehouse and so this technology will warn staff early on so the items can be replenished quickly. This will be a major boon for retailers and the suppliers of their products.”

RFID will also be very important with the transportation of temperature sensitive drugs in the future. Brodie predicts: “This market currently costs the pharmaceutical companies $US10m to $US50m per year and this will be hugely reduced with RFID. The technology will be able to use a temperature sensor to give an early warning signal that the perishable goods are at the wrong temperature. This technology could also play a role in speeding up clinical trials by avoiding trial delays due to clinical supplies not being available.”

RFID tags cost 25 cents today when purchased in bulk, but in five or ten years time the price is likely to fall to as low as 1-2 cents per tag, according to industry forecasts. This will make it practical to tag even relatively low cost items.

Ian Brodie concluded: “Germany, through the Metro store chain, is already ahead of the rest of Europe in the speed of adopting RFID and in pharmaceuticals the Italians are already looking very seriously at RFID and other track and trace technologies to help implementation of the new Bollini law.”

By John Kennedy