For three years, the center and its affiliates worked to conceptualize a numbering approach, an information management system,
and a governance/ privacy structure that could bring its vision to life. On November 1, 2003, the effort moved from concept
to initial implementation with the creation of a new international standards body, EPCglobal. The corporation is nonprofit,
jointly owned by UCC and the other main international bar-code administration organization, EAN International.
The shift of EPC/RFID from its research phase to initial implementation coincided with the emergence of drug counterfeiting
as a major issue in the United States and the resulting struggle to implement drug pedigrees. It's no surprise that a special
connection has grown between pharma and the EPC/RFID movement. EPC provides a nearly perfect solution for many of pharma's
problems with counterfeiting, diversion, and the like, while pharmaceuticals offer a somewhat price-insensitive application
for launching EPC/RFID systems.
EPC/RFID quickly became the anticounterfeiting focus of FDA, the pharma distribution industry, many manufacturers, and even
state regulators. The system holds transformational promise to bring safety and security benefits, as well as logistical efficiency
savings to the industry. A recent study by Cap Gemini Ernst & Young estimated that the five-year net present value of full
adoption in the US drug system would result in a $2.3 billion benefit to manufacturers, $8.2 billion to hospitals, and $660
million to distributors. And in its February 2004 "Combating Counterfeit Drugs" report, FDA said: "RFID tagging of products
by manufacturers, wholesalers, and retailers appears to be the most promising approach to reliable product tracking...[it
should] provide cost-reducing benefits in areas such as inventory control, while also...mak[ing] the copying of medications
either extremely difficult or unprofitable." The report goes on to call for "mass serialization for most packages of pharmaceuticals;
and...use of RFID technology...by all manufacturers, all whole- salers, all chain drug stores, all hospitals, and most small
retailers [by December 2007]." (See "What's the Timeline?")
The pharma industry is making a serious effort to move EPC/RFID from the drawing board into practice. FDA, the National Association
of Boards of Pharmacy (NABP), the National Association of Chain Drug Stores (NACDS), Johnson & Johnson, Pfizer, and many others
in the industry, as well as Wal-Mart and the Department of Defense, actively back the use of EPC/RFID.
The Healthcare Distribution Management Association (HDMA) is at the forefront of this effort. In November 2003, HDMA published
the white paper "Protecting Safety and Improving Efficiencies in the Health- care Supply Chain: Using Electronic Product Codes,"
which described the proposed system and background technology and sketched the potential benefits of the system. Around the
same time, it convened the Product Safety Task Force (PSTF), an industrywide coalition "to assess technological approaches
to combating the existence of counterfeit activity in the healthcare industry, specifically in pharmaceuticals." Early in
the process, PSTF identified EPC/RFID as its central focus. Several PSTF members have published studies, comments, and position
papers supporting the use of EPC/RFID.
There are several preliminary pharma-based EPC/RFID initiatives under way. Possibly the most developed is the Wal-Mart "C2
mandate" that required its suppliers of Schedule II drugs to begin EPC/RFID tagging individual units by March 2004. Although
the initiative has received less public attention than the retailer's top 100 supplier case/pallet tagging requirement, it
is essentially a small but functional prescription drug electronic tracking system, designed to facilitate inventory control
and Drug Enforcement Agency (DEA) audit requirements. Wal-Mart's application is a microcosm of the prescription drug marketplace,
involving only one customer and a limited number of products.