But the industry is way behind on adoption, and the Food and Drug Administration is expected to come out soon with a new, more vigorous RFID mandate.
In June, the Food and Drug Administration is expected to issue updated guidelines for pharmaceutical industry adoption of RFID (radio-frequency identification).
The agency has been in a flurry of activity of late, holding a public meeting earlier this year on strategies to address drug counterfeiting that prominently featured the discussion of RFID.
In early 2004, the FDAs Counterfeit Drug Task Force issued a report urging the adoption of RFID at the unit of sale level by 2007.
But the pharmaceutical industry is still barely even employing the technology; only two drug manufacturers are using RFID and each with a single product line, according to Paul Chang associate partner of IBM Business Consulting Services.
In a speech this spring, this lack of progress was characterized as "disappointing" by the FDAs Deputy Commissioner for Medical and Scientific Affairs Scott Gottlieb in a speech at a conference addressing drug counterfeiting.
"It has certainly been far slower than many envisioned when we set out on this original course," said Gottlieb.
He attributes the existing stalemate to a number of factors including cost and logistical difficulties in setting up and managing such a system.
"There is still no agreement about who would pay for what parts of the new RFID system, and who would own the data and provide it to other parties under what circumstances," said Gottlieb.
"And practical realities, including the diversity and sheer number of establishments involved in handling drugs as they move through the supply chain, as well as the cost of deploying new systems for electronically tracking medicines, have all remained factors."
Still, RFID deployment remains a top priority for the FDA and is seen as one of the only solutions to a burgeoning drug counterfeiting problem.
Globally, drug counterfeiting is a $32 billion a year business, according to the World Health Organization.
It has been estimated that 8 to 10 percent of the global medicine supply chain is counterfeit—a figure that rises to 25 percent or higher in some countries.
In the United States, counterfeit drugs are estimated to represent about 1 percent of the prescription drug supply.
And these fakes arent just at disreputable outlets: "You could go to a major retail chain and get counterfeit drugs," said IBMs Chang.
The FDA seems likely to soon renew its focus on RFID and push the biopharmaceutical industry into compliance.
Chang noted that at a recent conference the FDA announced that it would soon publish an update on the 2004 counterfeit drug report potentially mandating the implementation of RFID.
In addition, the FDA also announced that it is conducting internal testing over the summer to ensure that biologics—large molecule drugs derived from biological materials—will remain stable in the presence of radio frequency.
Beyond the issue of compliance with FDA guidelines, Chang argues that RFID will become a must for biopharmaceutical companies when they grasp the enhanced abilities to protect their brand name by quashing counterfeiting and, eventually, to extract greater efficiency from the supply chain.
Editors Note: This story was updated to correct a statement regarding the FDA report update.