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For RFID, the devil is in the details


Pharmaceutical Executive


Even before FDA mobilized its anti-counterfeiting task force two years ago, companies began thinking about the potential of RFID (radio frequency identification) and EPCs (electronic product codes) in pharma. But instead of just formulating more white papers on the topic, Accenture, one of these forward-thinking companies, implemented a project that would take the technology for a test drive.

The company put together a cross-functional working group composed of several organizations: Johnson & Johnson, Pfizer, Procter & Gamble, Cardinal Health, McKesson, CVS, and Rite Aid, as well as trade associations, like the Healthcare Distribution Management Association and the National Association of Chain Drug Stores. In an eight-week test that utilized RFID and EPCs, nearly 13,500 units of real product coming from the different companies were electronically tagged, shipped, received, handled, tracked, and traced through the project's systems.

The impetus to join the project was clear: Companies had realized the error of their ways in jumping on the technology bandwagon—in previous years, firms have invested huge amounts of money into sales force automation (SFA) and customer relationship management (CRM) software, which, for many, didn't realize the promise it offered. Industry wanted to confirm the business value of RFID and EPCs, better understand what kind of equipment was needed to support the technologies, and gain a consensus around an operating model to ensure that the investments being made would be complementary to other partners' efforts in the supply chain.

Now that companies like Purdue Pharma are using RFID tags on Oxycotin, and Pfizer expects to be shipping RFID-tagged bottles of Viagra by the end of 2005—not to mention other companies, such as Wal-Mart and Boeing reporting great success with the technology—Accenture is diving deeper to begin helping companies implement some of the knowledge it picked up during the pilot project.

But avoiding a "VHS and Betamax environment" is just one of the many challenges pharma has, says Jamie Hintlian, lead partner for the Accenture Health & Life Sciences supply chain management practice, who was intimately involved in this project. Here, Hintlian discusses today's state-of-affairs regarding implementation of RFID and EPC technologies—and what issues continue to stand in the way of a more secure supply chain.

Pharm Exec: Where is the industry with its RFID- and EPC-tagging initiatives?

Hintlian: Most companies have at least thought about this, while a few have publicly announced that they have tagging initiatives under way. Pfizer, Purdue Pharma, and GlaxoSmithKline all have publicly stated that they intend to tag product to meet the objective of patient safety and product authentication. Companies are looking to this technology to help prevent leakage in the supply chain because of counterfeit products, or quite simply to allow some degree of authentication to take place in the supply network—ideally, at the point of dispensing.

What questions are companies still facing in regard to implementing this technology?

There are still a variety of questions and challenges. For example, examine the different value drivers in the businesses of branded versus generic companies. Generic products work on different cost models and operating margins; those companies need to take a more critical look at the value such an approach provides. There's also the question of the impact of RF [radio frequency] energy on the strength, potency, purity, and efficacy of biotech products. Although the drugs we tested in the pilot remained unchanged, biologics have not been as fully tested in terms of the impact of RF energy. There are also other challenges around cold chain logistics and supply networks that create challenges and opportunities for manufacturers.

What's the tipping point to RFID?

I'm not sure if there is one tipping point—but there are a few critical issues that still need to be resolved. The first includes the maturity of the technology itself. In our project, we learned that the technology is robust. It can withstand a lot of beating in a supply chain. But the readability of the tags needs to achieve a higher level so that all the partners in the supply chain can rest assured that 100 percent of the time they'll be able to read that innermost bottle of tablets that's nested deep inside a pallet.


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