E-Pedigree's Evolution

By Ronald Quirk

Ultimately, Capitol Hill may mandate a universal e-pedigree. In 2006, the U.S. Senate and House of Representatives proposed companion bills, both entitled the Reducing Fraudulent and Imitation Drugs Act of 2006. These bills would require all prescription drugs to be tagged with RFID or similar technology to create an e-pedigree for tracking and tracing purposes. Both bills are currently pending in committees and are expected to be taken up again this year by the new congress.

In July 2006, the International Standards Organization (ISO) approved EPCglobal's second-generation Class 1 protocol standard for RFID devices operating in the UHF (860 to 960 MHz) band, as part of its ISO/IEC 18000-6 standard. EPCglobal has maintained that it will store data on servers beyond the firewalls of corporations, logistics providers and retailers all around the globe. The adoption of Gen 2 as a worldwide standard should go a long way toward driving down e-pedigree costs and protecting privacy.

Some large drug companies are now rethinking their initial resistance to implementing RFID. These companies have recently launched pilot programs for RFID-based e-pedigrees, based on the idea that a universally adopted RFID e-pedigree could have a favorable cost-benefit ratio because it would enable trading partners to share data, improve inventory control, facilitate recalls and withdraw products with expired use dates. These pilot programs are presently in their early stages, and at this point it is difficult to gauge their ultimate success.

Although e-pedigree implementation is still young, the handwriting is already on the wall. More than 10 percent of the global pharmaceutical commerce is counterfeit, with sales of fake drugs passing $40 billion last year. Without adequate safeguards, counterfeit drug sales could top $75 billion by 2010.

Drug companies certainly acknowledge what these staggering figures are doing to their bottom lines, and are coming to realize that the cost of implementing effective RFID-based anticounterfeiting systems is miniscule compared to the financial damage caused by the ever-increasing torrent of counterfeit drugs. What's more, with Gen 2's adoption as a worldwide standard, at least one initial reason for failure to implement RFID no longer exists. Congress is very interested in protecting the public from the dangers of counterfeit drugs, and could well mandate an e-pedigree if the industry does not do so voluntarily. Consequently, drug companies' experimentations with RFID are likely to evolve into a universal e-pedigree sooner rather than later.

Ronald Quirk is counsel at the law firm of Venable in Washington, DC. He can be reached at (202) 344-4677 or requirk@venable.com.