Pharmaceutical RFID Adoption Stalls

While it's already a hit for retailers, RFID may still have to wait in the wings a while before being embraced by pharmaceutical companies.

Analysts had been optimistic about the potential of using RFID technology to track pharmaceuticals, thereby curbing theft and counterfeiting while encouraging supply chain efficiency.

In fact, last year technology market research firm ABI Research estimated that the shipments of life sciences RFID transponders would more than triple by the end of this year.

But new state legislation has thrown a wrench into the mechanics of these predications; recently ABI dramatically re-evaluated their expectations. Now they anticipate that only about 10 prescription drugs will be tagged with RFID transponders on a large scale this year.

Analysts were originally so upbeat about the pharmaceutical application of RFID because legislation passed in 1988 requires biotech and pharmaceutical manufacturers to prove they have processes in place to prevent the diversion of drugs by being able to trace a shipments "chain of custody" at all stages from manufacturing to delivery.

/zimages/3/28571.gifThere are ways around RFIDs errors. Click here to read more.

Although the federal law was adopted almost two decades ago, a moratorium on enforcement to provide the pharmaceutical industry time to comply is set to expire early next year.

At that point, analysts expected the need for RFID adoption to comply with the federal legislation that would then be enforced by the Food and Drug Administration.

But several major states, including Florida and California, have adopted legislation that could prove to be an end-run around federal requirements. Given the pressing needs for deterring counterfeiting, these states enacted their own pedigree laws.

The state laws take effect sooner and set a lower, but more easily achieved, standard for security—one that can be satisfied using already widespread bar code technology.

Still, RFID does have certain advantages that cant be realized with bar code technology. Tracking is more automatic than with bar codes and you dont need line of sight to read multiple tags at once. Bar codes also dont allow tracking down to the product level, but RFID does.

"Initially, only high-value, frequently counterfeited or stolen drugs such as Pfizers Viagra and Perdue Pharmas OxyContin are likely to be tagged," said Sara Shah, ABI Researchs RFID analyst.

Despite the slower than expected adoption of RFID by the pharmaceutical industry, vendors of the technology arent too invested in this sector.

"Many vendors that serve the pharmaceutical market also serve the retail market," Shah notes. "Only a few companies, such as Raining Data, SupplyScape and Tagsys, have focused solely on pharmaceutical supply chain solutions."

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