By Dr. Sushil Bhatia Contributing Editor

The Food and Drug Administration (FDA) is taking serious steps towards the problem of counterfeit drugs, and has issued regulations for compliance. It is committed to promote the use of RFID by the U.S. drug supply chain by 2007. In addition, Florida has required that all drugs sold on July 1, 2006 and onward will require an electronic pedigree. California has a similar requirement starting January 1, 2007; eight other states have similar legislation pending.

RFID technology makes it easier to authenticate drugs, and it also creates an electronic pedigree, or record of the chain of custody, from the point of manufacture to the point of dispensing. Electronic pedigrees improve patient safety and protect public health by allowing wholesalers and retailers to rapidly identify, quarantine, and report suspected counterfeit drugs and conduct efficient, targeted recalls.

The ultimate goal in these pursuits is to come up with a method or methods by which to track and trace drugs, from boxes to individual item marking, which could include the boxes, cases, and laminated pills and tablets as they are dispensed and used by patients.

These requirements present enormous challenges as well as opportunities. In the past, rubber stamps, hand stamps, mechanical coders, ink-jet coders, laser coders, 3-D labels, and holograms all have been used to help solve the problem of drug counterfeiting, yet the problem still persists.

On the RFID front, though efforts are afoot to reduce the cost of tags by developing conductive printing inks, these measures do not yet address the issue of counterfeiting and reliability. The two big problems right now with RFID applications as a whole are high cost and low reliability levels (25% failure rates).

Regarding cost, the creation of an antenna using copper or other conductive metals, then the application of it onto a PS adhesive, adds up due to the fact that it contains multiple layers. It also requires the use of an applicator, and of course the processor chip and other materials that go with it. These issues require new and innovative approaches to help solve the problem.

One of the most innovative approaches is to develop an inseam RFID tag that uses a conductive adhesive.

This solution would be applied in the seam of the box before it is formed. In the next stage of manufacturing, the chip would be attached to this applied adhesive before the adhesive is dry, and the whole tag embedded inside the box before it is folded over.

A similar approach can be applied to the laminates for packing of tablets. In this way, they will be equipped with an embedded RFID tag, which not only can help with tablet-level tracking using the conductive adhesive, but in turn also will help with prevention of pharmaceutical counterfeiting.

The advantages of this approach are numerous. As outlined above, no extra steps are needed in the manufacturing process. As boxes and laminates have to have a glue to be sealed or laminated, boxes could be pre-glued with the conductive adhesive, and then the laminate/box could be heat-sealed just before packaging.

Further, this application could generate both active and passive tags, reduce the cost of manufacturing, and provide more reliability since fewer parts and fewer steps are involved in the creation of the tag.

The tag also would be created using non-toxic, non-hazardous chemical materials, which will eliminate the waste of copper and other metals currently used to produce antennas. Their use already is causing a problem in Europe because of the lack of recyclability with these metals.

Further benefits include the elimination of two steps (embedding and applying the RFID label being converted into an RFID tag), the provision of readability and reliability over a wider wavelength and longer distances, and the use of existing coating, converting, and application methods with no new major investment needed.

The project will take following steps:

• start gathering raw material information
• order samples of the raw materials for conductive formulations
• start formulating the conductive adhesive
• focus to work with water-based, non-toxic components
• select the coating method and equipment
• select drying and testing equipment
• study the properties of the corrugated and other materials, and find out what needs to be done so that they accept conductive adhesive as a material for antennae
• create a team comprising a packaging chemist, and mechanical and electrical engineers
• assess competing technologies
• consider printing methods like gravure printing for applying a small quantity of adhesive.

As stated earlier, the biggest problem with RFID tags is the attachment of chip to the antenna. Poor manufacturing yields are factors in keeping the costs at a high level. Costs arise from scrap chips/antenna assemblies, as well making the effort to test and sort assemblies. This is a challenge in itself, and the industry needs to develop a better approach for the latter.

There also are some laws of physics that should not be violated. Foil used for tableting affects radio frequency signals–it reflects to its surface like a mirror. Foil also generates interference patterns on the incident side, and substantially attenuates on the opposite side. Here again, as an industry, I believe we need to avoid foils, or find substitute materials where foils are required (such as moisture barriers).

Finally, do not overlook freezer-grade adhesive, as many times the product will be exposed to and stored at very low temperatures.

Pharmaceutical companies have locations all around the globe. A company should create global teams representing different disciplines and functions according to where the least cost is involved, and where the maximum amount of expertise is available.

It also is necessary to usher in partners who will bring together the required expertise of different disciplines. As it is very difficult to develop everything in house, the best approach is to take an international outlook in the development of sources of supply, information, and expertise.

The “creative destruction” unleashed by technological changes makes it critical that a firm stay on the leading edge of technological change, lest it lose out to a competitor’s innovations. This not only requires that companies invest in R&D, but also that firms establish R&D in those locations that are the most competitive, and where the expertise is concentrated.

Also, as is well known, leading-edge technology on its own is not enough for a firm’s survival. The company must develop products using the technology that satisfies customer needs, but also must develop products that can be manufactured in a cost-effective manner. To do that, firms must create links between R&D, manufacturing, and marketing on a trans-national basis.

So, what are pharmaceutical companies doing wrong on these fronts? A lot (see sidebar on this page). They are all reacting to the rulings from the FDA, which is in a mess of its own.

Instead, pharmaceutical companies should look at what makes business sense to them. They can learn a lesson from software companies, which, as a result of suffering from pirated copies of software, were losing billions of dollars annually. These software producers have gotten together and formed alliances, which are helping them control the piracy, thereby saving themselves and their enterprises a lot of headaches and related revenue-loss pain.

In my estimation, instead of reacting to and waiting for regulations from the government, pharmaceutical companies should get together the same way automotive companies did when they set up joint Web sites to reduce the costs of parts. They use the Internet as an effective tool to manage these costs successfully.

An example of pharmaceutical manufacturers partnering to solve a problem can be seen in the area of drug development cases from Eli Lilly and Amgen.

In 2001, pharmaceutical giant Eli Lilly was anticipating a big drop in sales. That was the year its patent expired on its blockbuster drug Prozac, which accounted for 34% of Eli Lilly’s annual sales. But rather than launch a new drug, Lilly launched an Internet business called Innocentive LLC.

Innocentive, as the name implies, provides incentives for innovation. It does so by providing a platform for scientists from around the world to work in communities to solve complex problems. The effort does not just benefit Eli Lilly, but provides an open-source R&D organization that any member company can use.

Here’s how such a system works. Drug companies, called “seekers,” put up “wanted” posters describing problems that need to be addressed. Bounty-hunting scientists, labeled “solvers,” sign confidentiality agreements that gain them admission to a secure project room, where they can access data and product specification related to the problem. If they solve the problem, they get a reward–around $25,000-$30,000, depending upon the problem.

According to Innocentive president and chief executive Darren J. Carroll, what Lilly has done is very unusual for two reasons. “First,” says Carroll, “by creating a global community of scientists, we are punching a hole in the side of the laboratory, and exposing mission-critical problems to the outside world. We’re using the Internet to communicate, collaborate, and innovate.”

Second, it makes it possible for scientists to become freelancers. According to Carroll, “Free agency had never been an option in the hard sciences until now.” (1)

Similarly, collaboration in biotechnology has benefited a variety of firms.

For example, Amgen collaborates with a number of smaller firms, including ARRIS, Environgen, Glycomex, and Interneuron, among others. The company works on joint marketing projects as well as brings R&D scientists together to explore opportunities for new pharmaceutical product development. In exchange for the expertise of the scientists and marketers at the smaller companies, Amgen provides financial clout and technical assistance when new product opportunities are identified.

Another biotech company that utilizes collaborative relationships with competitors is Biogen. There was a time when this large pharmaceutical firm outsourced clinical trials of its new drugs. But now, the company brings in experts from other firms to Biogen labs to work with its own scientists.

Chiron – one of the largest pharmaceutical firms, with over 7,500 employees–makes extensive use of collaborative efforts with its competitors. The company currently collaborates with 1,400 companies, tapping into the knowledge base of R&D experts with a wide variety of skills and expertise in the field. Chiron considers this network of one its core competencies. (2)

1
Sources: B. Breen, “Lilly’s R&D prescription,” Fast Company, no. 57 (2002). www.innocentive.com. Sawhney, “What lies ahead: Rethinking the global corporation,” Digital Frontier Conference 2002.

2
Sources: W.W. Powell, “Learning from Collaboration, Knowledge and networks in the biotechnology and Pharmaceutical Industries,” California Management Review, 40, no.3 (1998). E. Williams and R. Langreth, “A bio tech wonder grows up,” Forbes, September 3, 2001. Strategic Management 2e, Dess, Lumpkin and Taylor.

Dr. Sushil Bhatia has founded several companies and currently is president of JMD Manufacturing Inc. He also serves as executive in residence at Suffolk University, Boston, where he teaches courses on global innovation, new product development, and strategic management. Bhatia has won several innovation awards, has been named the Business Person of the Year by various groups, and has appeared in publications such as The Wall Street Journal and The Boston Globe for his inventions. He has also been interviewed on ABC and CNN, and various radio programs. Bhatia received his Ph.D in chemistry from Universite de Liege (Belgium) and MBA from Suffolk University, Boston. Bhatia also acknowledges Dr. Sanjay Sarma for contributing to this article. Sarma, a co-founder of the Auto-ID center at the Massachusetts Institute of Technology (MIT), is a professor of Mechanical Engineering at MIT. He also is the founder and chief technology officer of Oat Systems.