RFID to create more transparency in US pharmaceutical industry

To protect patients from counterfeit medications and keep tax income flowing as it should, US officials and some states are demanding complete transparency in the wholesale pharmaceutical trade. RFID (Radio Frequency Identification) technology is helping.

Whether it's hormone supplements, psychotropic medications, cancer and AIDS fighters or 'lifestyle' medicines – the pharmaceutical industry's high-profit mainstays attract brand pirates and other free riders to earn a living at the cost of others. High takings go into their own pockets – at the expense of industry, trade, end-consumers and finally, the economy – when they illegally smuggle counterfeits into the commercial chain, market these directly to consumers via spam or illegally re-import original products.

The USA has now started cracking down on illegal pharmaceutical commerce. No wonder, for in 2004, some 30 cases of medication counterfeiting and just as many cases of illegally introduced original preparations were uncovered. As the country's national governing body in this area, the Food and Drug Administration (FDA) is thus now demanding complete transparency in wholesale trade. The states are going along. Beginning in July, the first implementation step of the FDA's demand – documentation of all incoming and outgoing goods – is a requirement in the state of Florida. The FDA wants to introduce uniform technological standards and is counting on RFID for help, because this technology enables the supply chain to be both seamlessly as well as instantly monitored. By 2007, the FDA and leading RFID providers want to furnish all manufacturers, wholesalers, retailers and hospitals in the USA with RFID readers.

RFID tags provide great security

Another advantage of this technology is that RFID tags are very difficult to fake. Every tag contains its own unique ID, which its manufacturer only allocates once. Together with the medication's own ID, each product is uniquely identifiable. Encryption of the code during transmission adds yet another level of security.

In contrast to barcodes, RFID tags can be read at up to several meters away. High-performance systems can read up to 50 tags per second without a box being opened or a package being held by hand, although this is not true for all medications. Liquids and metals absorb radio signals, thus lessening transmission range and reading quality. This is why the various frequencies used by an RFID system must be individually determined according to the goods handled.

Pfizer paving the way with Viagra

Pfizer Pharmaceuticals was active in this area even before the introduction of official requirements. Viagra, which the company began marketing in 1998, found not only rapid acceptance with consumers – but triggered a boom in the counterfeiting business. Last December, Pfizer started protecting its potency pills with RFID tags, enabling packages without tags to be recognized immediately as counterfeits. But merchants can even identify counterfeit tags via an electronic proof of origin, a so-called "E-Pedigree". All they have to do is compare the tag's digital code on a secure website provided by the manufacturer.

In response to federal efforts, other companies are also beginning to test RFID, including the manufacturer Aegate, who is trying out the first reading devices with 40 pharmacies in New York.

It now seems only a question of time until European and other countries also begin more strictly monitoring the pharmaceutical industry's supply chains. After all, such companies lose up to 40 million euros in sales through piracy – circa 10% of their entire sales.