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Cephalon Announces Item-Level Pilot

The drugmaker is working with ADT Security Systems and OATSystems to develop an item-level RFID tagging system for its pharmaceuticals.
By Mary Catherine O'Connor
Aug 09, 2005Cephalon, a pharmaceutical company that develops, manufactures and wholesales drugs to treat and manage neurological diseases, sleep disorders, cancer and pain, has announced plans to develop a pilot program for tracking individual containers of prescription pharmaceuticals. These containers hold bulk quantities of pills or liquids that pharmacists dispense to individual patients. Cephalon is working with RFID software vendor OATsystems and RFID hardware provider ADT Security Services to develop and execute the pilot.

The initial objectives of the pilot will be "to validate whether the business functions Cephalon is performing will function with RFID enablement, and…to tag and trace goods throughout our internal warehouses," says Brian Brown, Cephalon's senior manager of commercial operations.

Randy Bradway, Cephalon
The pilot will take place in Cephalon's warehouse in LaVergne, Tenn., which is operated by third-party logistics firm Cardinal Health Specialty Pharmaceutical Services (SPS), a subsidiary of Cardinal Health, headquartered in Dublin, Ohio. Once this initial work is done, Cephalon plans to extend the pilot to include some of its trading partners, with the help of Cardinal Health SPS.

Randy Bradway, Cephalon's vice president of commercial operations, says that because of Cephalon’s structure, he will need to work with many different partners to test RFID. "We've outsourced a lot of our manufacturing, packaging [and] distribution," he says, "so for me to make a change, I have to go back to another third party and have them integrate it into their facility. This makes it more complex, but I think it also makes it a much more realistic model." Bradway adds that Cardinal SPS will likely want to leverage what it learns from the RFID pilot to help its 50 other clients develop RFID tagging systems. He hopes that through the collaboration of all its partners, Cephalon will create an end-to-end track-and-trace system, from manufacturing all the way through to the processing of returned goods.

While Cephalon did not provide a detailed timeline for the pilot, it did say it will begin by tagging and tracing dummy bottles containing pharmaceutically inert substances similar to those used as placebos. The company stated, however, that it does not expect to being tagging real product until some time next year.

OAT's Foundation Suite platform will be used as the software backbone for the pilot. The platform includes a number of OATSystems products for generating EPCs, managing a network of readers and other devices, and analyzing and reporting on RFID data. The Foundation Suite will be deployed in combination with ADT’s Sensormatic Agile 2 readers and OmniPoint antennas. The Agile 2 reads both HF and UHF tags. However, Randy Dunn, director of RFID for ADT, says passive tags operating at 915 MHz, compliant with EPC Class 0 and Class 1-standards, will be placed on the drug containers, cases and pallets to be tracked.

According to Bradway, once the pilot is designed, the next vital step will be working with OAT to identify integration points between the RFID tag data and all of Cephalon's various software systems, such as its warehouse management and financial reporting systems.

Cephalon's Schedule II drugs are sold by Wal-Mart stores through a distributor that is responsible for applying RFID tags to comply with Wal-Mart's Schedule II drug-tagging mandate. However, distributors are pushing wholesalers to begin applying tags during the drugs' manufacturing process, to improve efficiencies throughout the supply chain. Plus, the U.S. Food and Drug Administration (FDA) is moving toward requiring manufacturers to create an electronic pedigree that will authenticate the validity and security of individual drugs throughout the entire pharmaceutical supply chains (see FDA Cites Progress for Drug Security).

Bradway says the company expects that over time, RFID will provide it with a number of benefits, including improved warehouse efficiencies, better use of inventory and better visibility of where individual drugs are during shipment, in real time. He explains that Cephalon wants a warehouse that "uses more intelligence than labor."

At least one other pharmaceutical company has already initiated pilots similar to Cephalon’s plans. In November 2004, Purdue Pharma began item-level tagging bulk containers of its OxyContin pain reliever tablets (see Purdue Pharma Tags OxyContin) and is currently using RFID to track and authenticate bottles of OxyContin as they move through the supply chain—from factory to pharmacy (see Purdue Pharma to Run Pedigree Pilot).
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