Case Study: RFID tags let Purdue Pharma monitor OxyContin's movement through supply chain.
Its difficult to find a more controversial prescription drug these days than OxyContin.
Legitimate users have hailed OxyContin, introduced in 1996, as a life-saving pain management drug. At the same time, it has become a highly counterfeited and highly abused drug because of its addictive nature, leading to numerous drug thefts and pharmacy robberies.
OxyContin has also been Purdue Pharma L.P.s most successful drug, garnering more than $1 billion in sales in 2000 and reportedly $1.2 billion in 2003. To help protect against counterfeiting and theft, Purdue last year kicked off a pilot program in which the Stamford, Conn., company started bundling tiny RFID (radio-frequency identification) tags on the labels of 100-tablet bottles of OxyContin and another drug, Palladone.
RFID technology puts small electromagnetic chips on productsranging from cartons to individual labelsthat can be read by another device. This enables the tracking of products as they make their way through the supply chain.
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"RFID technology will be a boon for companies in the pharmaceutical industry, particularly those who sell and handle Class II drugs, because of the amount of hand-checking throughout the supply chain mandated by the federal government," said Larry Blue, vice president and general manager of Symbol Technologies Inc.s RFID tag division
, in Holtsville, N.Y. "This allows for automation of that process and a greater amount of accuracy."
The technology helps Purdue create an electronic "drug pedigree," data that enables the company to follow products throughout the supply chain, from the manufacturer to the wholesaler to the pharmacy, said company CIO Chuck Nardi. That sort of information is normally kept in paper documents.
With RFID technology, Purdue can now scan and record the 48 bottles of OxyContin in each carton shipped to distribution centers for Wal-Mart Stores Inc.
and H.D. Smith Wholesale Drug Co., rather than a single tag on each case. The reader scans the chip and records the specific product and the serial number on each bottle.
That information is sent to Wal-Mart and H.D. Smith, which can then verify what products they received and when they received them.
The data gives Purdue greater scrutiny of the products trip through the supply chain and gives Wal-Mart and H.D. Smith better assurances that what ended up in their partners distribution centers is what was shipped out of Purdues facilities.
With regard to the placement of the tags on the bottles, Purdue and other pharmaceutical companies face two key challenges, according to Blue. The first is the small amount of space available on the bottle. The smaller the antenna and the tag, the less range is available for the data being scanned and read, Blue said. The second challenge is tagging bottles containing liquid drugs, since liquid can act as an inhibitor for UHF signals.
To overcome such obstacles, Symbol worked with Purdue and other drug manufacturers for two years to develop a chip that would fit with the label and be easily read by the scanner, Blue said.
The pilot programs encompass OxyContin that is shipped from Purdues manufacturing site in Wilson, N.C., and Palladone shipped from another facility in Totowa, N.J., Nardi said.
Getting the pilot programs up and running took Purdue more than a year. Through an extensive trial-and-error program, the company worked closely with its label maker to figure out a way to bundle a tiny RFID chip under the label of each pill bottle. Purdue is using a 1-inch-square 915MHz chip from Symbols RFID divisionformerly known as Matrics Inc.on each bottle of the drugs shipped.
In addition, Purdue is using ERP (enterprise resource planning) software from SAP AG that supports RFID information and is running the pilot programs on fault-tolerant servers from Stratus Technologies Inc. The SAP applications enable data captured by the tag reader to be input into Purdues business systems.
"With any new technology, you have your share of challenges, especially being on the leading edge of technology, like we are," Nardi said. "Weve implemented the technology, were using it, evaluating it. How does it work? How can we get improvements? Were also working with standards bodies [to streamline implementation and deployment]."
As the pilot programs continue, Purdue will look into not only expanding the RFID program to other distributors but also finding ways to share the data from the chips up and down the supply chain, Nardi said. He said there is no timetable for expanding the program.
Many companies are still unclear about the business case for RFIDif the results will justify the investment, said Mike Witty, an analyst with Manufacturing Insights, in Framingham, Mass. Right now, for companies such as Purdue that sell products priced at several hundred dollars per unit, paying 25 to 50 cents per tag is reasonable. For others with products in the $1.95-per-unit range, it makes less sense.
Businesses are also waiting for the next generation of tags, which promise reduced interference, improved distance reading and the ability to hold extra data. "Youre going to see slow and steady growth over this year, but you wont see a spike in adoption for the next 18 months to two years," Witty said.
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