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Small Tech Firm Seeks Fees From Pharma

Avante claims drugmakers will need to license its new patent if they want to use RFID to authenticate their products.
By Bennett Voyles
Jun 22, 2005Prompted by state mandates to create secure electronic drug pedigree systems, many hardware, software and service providers are now hard at work developing RFID-enabled drug supply chains. A small technology company with a newly granted patent for a secure article-tracking system, however, may complicate their efforts.

In late April, Avante International Technology, located in Princeton Junction, N.J., was issued a broad patent— "Article Tracking System and Method," U.S. Patent No. 6,883,710—regarding a way to secure RFID-enabled supply chains. The company's CEO, Kevin Chung, says he is now writing to a number of pharmaceutical companies, the names of which he will not specify, informing them of the patent and asking the firms to enter into a license agreement with Avante if they intend to roll out an RFID-enabled drug-tracking system.

Avante CEO, Kevin Chung
Chung says he plans to follow up those letters with similar ones to companies providing pharmaceutical supply chain solutions, such as Texas Instruments, VeriSign and 3M. Database software providers IBM, SAP, Microsoft, Sybase and Oracle will eventually be contacted as well, he says, as they would be "the best people to collect royalties for us" since anybody using Avante's patented tracking system would need to run it in conjunction with a standard database.

Chung's patent lawyer, Clement Berard of Dann Dorfman, Herrell and Skillman in Philadelphia, would not comment on his client's business strategy.

Avante, which holds more than 20 patents and patent applications, including RFID-enabled trade show identification badges and a system for verifying electronic election results, is little known within the pharmaceutical industry. Of the four pharmaceutical radio frequency identification experts interviewed for this story, none had more than a vague knowledge of the company or its solutions.

Avante's recent attempt to win licensing agreements from drugmakers is not its first. In 2000, the firm approached pharmaceutical companies with its ideas, Chung recalls, but no one in the industry seemed to care about a secure RFID-enabled drug-authentication system at the time. "When we proposed this solution, nobody had interest. It was too early–much too early," Chung explains with a laugh.

Five years later, Big Pharma is suddenly very interested in RFID. Several states, including Florida and California, have mandated that pharmaceutical distributors create electronic pedigrees for drugs to guarantee drug authenticity. In addition, counterfeit and substandard drug sales continues to grow. The U.S. Food and Drug Administration (FDA) estimates that sales of counterfeit and substandard drugs now represent a $32 billion global business, a full 10 percent of the global medicine marketplace. To address this, the industry is looking for help from the tiny RFID chip.

Most current approaches to the use of RFID as an anticounterfeiting technology seem to fall into two categories—unique ID numbers or electronic pedigree systems—or employ a combination of both.

The first approach depends on authenticating each bottle of drugs by providing that bottle with an RFID tag bearing a unique identification number, notes Sara Shah, an analyst at ABI Research in Oyster Bay, NY. VeriSign, Texas Instruments and 3M stepped forward in May with a joint solution that takes this approach, providing unique, encrypted identifiers to authenticate drugs at the points of manufacture and dispensing (see TI, VeriSign Devise Drug-Protection Plan). The VeriSign-TI solution is based on a tag that would incorporate a 1024-bit encrypted key used in a public key infrastructure (PKI), the same encryption technology used for smart cards and secure, digital form-signing.

A space to burn in an identification number at the time of manufacture is a property of all EPCglobal Generation 2 tags, according to Sue Hutchinson, director of product management for EPCglobal US, based in Lawrenceville, N.J. "If I combine that burnt-in number with the serialized [electronic product code]," she says, "I've got a good two-step [authentication process] so that I know that the tag that's going onto those goods at point of manufacture is an authentic tag with an authentic number."

The second major approach to counterfeit prevention, according to Shah, uses an electronic pedigree in which the movement of a tagged bottle of drugs generates a record as it travels through the supply chain. Counterfeits would be difficult to introduce, she explains, because a unique serial number encoded on a bottle's RFID tag is tracked all along the chain of custody.

Avante's patent, Chung maintains, utilizes concepts employed by both approaches to secure the supply chain. The patent would seem to parallel the VeriSign-TI solution, as it includes "a permanent number, application specific data and a relational check number representative of the permanent number and/or the application specific data," according to the application on file with the U.S. Patent and Trademark Office.

The patent also claims to covers a process used by a variety of e-pedigree solutions. An abstract of the filed patent states: "A smart tag is associated with each article to be tracked, e.g., by being attached to the article either directly or indirectly, e.g., to a container containing the article. The smart tag includes at least an electronic memory coupled to an antenna by which information from the memory may be transmitted and/or information may be received and stored in the memory."
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