RFID and the Pharmaceutical Supply Chain: 'Is It Just About Pedigree?’

By Bruce A. Harder

In the pharmaceutical supply chain, it is almost impossible to mention RFID without getting into a discussion about drug pedigree and compliance with current and expected drug pedigree State and Federal regulatory requirements. VeriSign Inc. is a company that is right in the middle of the sometimes-confusing discussion.

Our expert this month is Bruce A. Harder, Sr. Manager, Healthcare and Life Science Solutions, VeriSign Intelligent Supply Chain Services. Harder shares his insights into the drivers behind the efforts to enable track-and-trace, chain of custody solutions like electronic drug pedigree, and RFID technology.

Q: The FDA issued its report on counterfeit drugs in February of 2004 stating: “The adoption and common use of reliable track-and-trace technology is feasible in 2007.” What is the status of this?

A: The first thing I would say is that thousands of work-hours and millions of dollars have been invested in researching, piloting, and exploring how to enable track-and-trace in the form of an “electronic pedigree.” Manufacturers, wholesalers, and retailers have worked individually, through trade organizations such as EPCglobal, Healthcare Distributors Management Association (HDMA), and National Association of Chain Drug Stores (NACDS) to collaborate on this issue. I have been to numerous multi-day working groups where well over 100 representatives from leading life science companies dive deep into the details of realizing the FDA vision of an electronic pedigree. It is a complex and complicated undertaking.

The FDA voiced concern about the pace of adoption last fall. Acting FDA Commissioner Dr. von Eschenbach reconvened the Counterfeit Drug Task Force to assess the progress that has been made in adopting electronic track-and-trace technologies, and to look at the obstacles that have been encountered and what measures should be taken to overcome them quickly. The Task Force organized a public meeting in Bethesda, MD, earlier this year to address issues regarding the adoption of electronic track-and-trace technologies such as RFID. The Task Force is preparing a report that they are hoping to make public in May.

Are electronic pedigree and RFID synonymous with regards to the pharmaceutical supply chain?

A: No, and frankly this is my biggest concern when it comes to discussing either of these issues. The terms “pedigree,” “electronic pedigree,” and “RFID” are often used interchangeability. They are not the same thing. A pedigree is a legal record of a drug’s chain of custody from sale by the manufacturer until the last wholesale drug distribution. An electronic pedigree is an electronic form of a pedigree. Pedigrees, whether in a hardcopy or electronic form, include detailed information on the source of the product, transactions and ownership, and certification authenticity.

State pedigree requirements, namely in Florida and California, have effective dates as early as July 1st of this year (Florida). Pedigree solutions, such as the Electronic Pedigree Management Service provided by VeriSign, will manage pedigree data long before RFID is widely adopted. RFID combined with item serialization will definitively make managing pedigree compliance easier and reduce the level of effort to ensure a complete and accurate chain of custody. RFID technology will provide a valuable link between physical products and pedigree information, but it is not required by any existing laws.

There are some within the community that are anticipating pedigree requirements expanding to the item level, and therefore have begun exploring RFID as a means of automating serialized identification. It is very important when discussing these issues to clearly state the difference between compliance with current pedigree legislation and RFID technology adoption.

What are the issues related to adoption of RFID technology to enable reliable track-and-trace in the pharmaceutical industry?

A:The pharmaceutical industry has a number of unique requirements that need to be addressed in the adoption process. Item-level tagging is where the payoff is in this supply chain. Products are very quickly broken out of pallet and case configurations and move in inter-pack and individual configurations. The potentially high value of pharmaceuticals and the need to control tightly their distribution also drive the business case for item-level tagging. Item-level tagging requires new standards for hardware and for software.

Tag frequency is also a significant issue. UHF and HF frequencies both have advantages depending on the event in the supply chain (case receiving vs. item dispensing, for example), and the physical characteristics of the drugs being tagged (liquid vs. solid dosage, for example). Supply chain players are aggressively debating which frequencies to use and where. Downstream trading partners are very concerned about having to deploy duplicate reader infrastructures to capture the expected benefits of RFID.

Serialization is also a big issue in the pharmaceutical industry. A majority of supply chain stakeholders agree item serialization, once in widespread use, offers significant product safety, brand security, and supply chain benefits. The issue with serialization is what to include in the serial number. Some players in the supply chain want the serial number to contain intelligence such as product identification information. Other players want the serial number to be completely random and contain no intelligence. My personal opinion aside, I will just say that this is an issue the industry must work out. We need standards in this area.

Another issue is the cost of tagging, which although dropping, is still significant. In testimony offered to the FDA earlier this year, Pfizer identified its costs to be nearly $5 million to tag a handful of products on one line. Again, the adoption of standards is critical to drive costs down and realize maximum value.

You mentioned the importance of standards. Please elaborate.

The industry invests heavily in the standards setting process. This process is multi-dimensional and global in nature. Manufacturers, wholesalers, retailers, and their trade associations commit significant resources to the standards process. While this is taking place on a number fronts around the globe, I can speak specifically about the activities within the EPCglobal Healthcare and Life Sciences Business Action Group (HLS BAG).

The mission of the HLS BAG is to identify Healthcare and Life Science end-user business requirements to the EPCglobal standards development process and promote the adoption and implementation of the EPC and the elements of the EPCglobal Network. EPCglobal is leading the development of industry-driven standards to support the use of RFID. Over the past 18 months, the HLS BAG has developed and ratified pedigree management use cases, developed standards (in process of ratification) for pedigree messaging and item-level tagging, and developed requirements for serialization and decommissioning.

EPCglobal continues to move the industry forward in adoption. Unlike some standards that sit on the shelf for months, these standards are being piloted even before they are ratified. VeriSign is working with a number of large pharmaceutical clients who are using the evolving pedigree standards in their compliance programs. We are also working with a number of global clients on in-line tagging projects. In 2006, you can expect to see a dramatic increase in the number of in-line item serialization and tagging projects. Manufacturers are building practical RFID knowledge and standards help to make sure their knowledge pays future dividends.

Is compliance with pedigree regulations the only reason members of the pharmaceutical supply chain should be investing in track-and-trace technology and RFID?

A: Absolutely not! The only reason pedigree is front and center is because of the deadlines established by the FDA and by certain state laws. There are a number of significant opportunities pharmaceutical companies are looking to RFID and item-level visibility to realize. Patient safety is the primary concern in the industry. Enabling better pedigree compliance is only one area where this technology can be applied.

Product packaging authentication, where a unique number on a product package is authenticated against a database is another way this technology can be used. This is the model promoted by the Pharmaceutical Research and Manufacturers of America (PhRMA) in its May 2005 position.

RFID could also be used to help reduce the thousands of cases of drug dispensing and administering exceptions that occur in our healthcare system each year (though this will probably first be addressed with barcode technology).

While safety is a primary concern, cost of delivering pharmaceuticals is also a major concern. RFID combined with item serialization can also be the foundation for considerable cost savings and efficiency enhancements in the supply chain. Making sure that the right product is at the right place at the right time is the Holy Grail of all supply chains, and the pharmaceutical supply chain is no different. Given the impact on patient health and safety, the cost and consequences of not achieving this goal is considerably higher within the pharmaceutical market than in most other industries.

RFID at the item level may also be the platform for improving customer service and satisfaction at the pharmacy. It may also help increase the amount of time pharmacists have to deliver their trusted services to the public. There are many other potential opportunities for RFID beyond pedigree.

So what is VeriSign’s role in all of this?

Most people are familiar with VeriSign based on our work in providing security to online purchases and over 90% of the Fortune 500. But at its core, VeriSign focuses on the operation of intelligent infrastructure services that enable and protect billions of interactions every day around the world.

Within our Intelligent Supply Chain Services group, we have an infrastructure for information exchange and collaboration among global supply chain participants. This includes providing the backbone to the EPCglobal Network and facilitating point of sale information exchange for products valuing over $100 million on a daily basis. This same infrastructure is at the heart of our Electronic Pedigree Service, which enables distributors, manufacturers, and pharmacies to implement their compliance strategies.

VeriSign envisions a convergence of item-level demand, movement, and chain of custody information between enterprises. This will drive significant improvement in the safety, security, and efficiency of the pharmaceutical supply chain. So, while pedigree compliance and RFID item serialization are different and distinct initiatives today, their convergence is the first step of the transition from investing in compliance to investing in strategic value.

Bruce A. Harder is Senior Manager, Healthcare and Life Science Solutions, VeriSign Intelligent Supply Chain Services. Mr. Harder is an expert in the area of healthcare and life sciences supply chain, with over 15 years of experience in anti-counterfeiting, brand security, automated data collection, and automatic identification. He has been involved with addressing drug pedigree compliance for several years and is responsible for VeriSign's Electronic Pedigree Management Service. He can be reached at baharder@verisign.com.