Watching the Supply Chain

May 10, 2006

Paul Chang is an associate partner at IBM Business Consulting Services. He leads the company's Radio Frequency Identification initiative for the life sciences. He has worked closely with FDA at IBM and in previous jobs to explore the technical possibilities and limitations of RFID in the pharmaceutical industry. PharmExec Direct spoke with him recently about FDA guidance on RFID. The agency is expected to release a paper later this month, detailing the guidelines for new anti-counterfeiting technology.

PharmExec Direct: What do you think FDA's guidance will look like?

Paul Chang: In my dealing with the FDA in the past two and a half years, one thing that struck me is that they are singularly focused on consumer safety. So my sense is they are going to fall back on a position where their primary concern is consumer safety. The counterfeiting problem is not going away; in fact it's probably increasing every year. So I think they're going to provide some guidance on how to begin adopting technology, not just RFID, but just serialization in general. But I believe they're more interested in RFID [than other technologies] because they know it can't easily be counterfeited. I think they're going to be providing guidance in terms of which products they might want to start tagging and what's the timeline associated with those implementations. I'm not sure if "mandate" is the right word, but I think they're going to try to enforce some deadlines on the industry to adopt the technology.

Would you hazard an educated best guess about the timeline?

That I have no idea. They're playing it very, very close to the vest. No one in the industry really has an idea, and I?ve talked to other pharmas who meet with them. It's really typical of how FDA makes their announcement. No one even knows when it's coming out, so I don't think I'll be able to provide you with any estimate of what that timeline might look like.

Can you give us your estimate of what FDA has to accomplish, what stand they have to take in order to be credible on this issue?

At the FDA, the primary objective is to secure the US supply chain so that the US consumers are getting the authentic product being produced at FDA-approved sites. But then I believe they may also be interested in gaining visibility into the supply chain themselves. So that if there are counterfeit cases, they can actually start to investigate and figure out where the counterfeits are being introduced.

How will the investigative side look?

When a counterfeit occurs, FDA doesn't know where it was infused into the supply chain right now. But with some type of a system, a network that shows the visibility along the supply chain, they can perhaps say, "Hey, we didn't see the [counterfeit] product on this part of the supply chain, but then all of a sudden we started to see it further down the supply chain. How did it get in?"

Wouldn't that only work if there were some kind of a reporting requirement or mechanism so that FDA could see into manufacturers' supply chains?

There are a couple of ways to do that. I'd have to go into a little more technical detail, but there could also be a very thin database in the sky that tracks the movement of goods. So it's not like a pedigree, but basically the thin database could allow more or less full visibility to agencies or organizations that have access to that database.

How would that work?

How this is going to work is still in development. So I don't want you to think that this is already in place. Basically the concept is to have a distributed database and have the partners share the data. But as you said, the FDA may not have access to this data. So there are some discussions around having a thin database in the sky, that the FDA and perhaps different states like Florida or California might have access to. Perhaps some industry associations might have access as well to really figure out product movement.

This would be frightening for a marketer, to think that other people out there can track a product. It's a competitive advantage to know where other people?s products are going, right?

Right. So the beauty of this infrastructure is you only get to see the data that you [are granted] access to. For example, Pfizer would only have access to Pfizer-related data because the [RFID] code knows who the manufacturer is. That's the concept at the high level. The state legislators or the FDA should have access for a broader perspective because they want to make sure that the entire supply chain is safe. But individual companies, if they were to do this, they may not have any [access to the broader view]. This is a thin database, which means it only has very, very limited information, because this database could obviously be rather large. So basically you would only hold event-captured information, not the entire product information: Perhaps just an [RFID] number, a record of where it was seen, and perhaps when it was seen.

For an additional discussion with Paul Chang, see the June issue of Pharmaceutical Executive.