Cardinal Health Readies Item-Level Pilot

May 31, 2006After about five months of planning, developing software and installing hardware, Cardinal Health is ready to flip the switch on its RFID pilot. Starting in late June, the $74.9-billion-a-year company will begin testing item-level RFID tagging to help improve the safety of medicine and other health-care products as they move through the supply chain.

Headquartered in Dublin, Ohio, Cardinal Health manufactures pharmaceuticals for nine out of the world's top 10 drug companies and distributes one-third of all pharmaceutical, medical, lab and surgical products in the United States. The company will use the pilot to collect data that could be utilized to populate drug pedigrees—documents authenticating a drug's source—and to better understand the implications of RFID on the company's business processes.

"We want to find out whether or not we are going to be able to operate at production speeds, what processes will change and what the RFID data reflects," says Renard Jackson, executive vice president of packaging services for Cardinal Health. "We're also going to try and parlay it into learning what other [return-on-investment] opportunities exist with this technology—whether or not things can be done with our inventory, returned goods or recalls."

Cardinal Health will use Alien Technology UHF 915 MHz Gen 2 tags affixed to individual packages of brand-name and generic prescription drug products. The RFID tags will be embedded into printed labels at Cardinal Health's Printed Components facility in Moorestown, N.J. The RFID labels will then be transferred to the firm's Philadelphia packaging plant, where they will be automatically applied to the individual product items and encoded with unique serial numbers. Cardinal Health has installed RFID interrogator antennas on packaging lines and RFID portals at dock doors at both the Philadelphia plant and a distribution center in Findlay, Ohio.

The RFID system will read tags and gather information in real time as each item travels through the production and distribution facilities to pharmacies, hospitals and other customers. The information will help verify the authenticity of the drugs by recording where the packages are at each step of the distribution process. Cardinal Health will analyze the data to help determine any bottlenecks that might be created in the supply chain during the encoding of the RFID tags, the moving of products from cases to smaller totes in distribution facilities, and other steps in the supply chain.

Although the RFID data will contribute to drug authentication, Jackson says health-care industry needs to do more than apply one kind of technology or process to improve drug safety. "We believe, from an authentication and pedigree standpoint, the best way to secure drugs from the outset is ensuring we do direct distribution by acquiring products [prescription drugs] directly from the manufacturer," he says. In a direct distribution model, wholesalers (such as Cardinal Health, McKesson and AmerisourceBergen) would buy goods directly from manufacturers and then distribute them to the customer, such as a hospital or retail pharmacy, rather than sell them to another wholesaler on the secondary market.

"RFID and other technologies are additional tools," Jackson explains. "RFID isn't the silver bullet."

The pilot is costing more than $1 million and will help Cardinal Health prepare for any regulations that may come from the U.S. Food and Drug Administration (FDA) or other government agencies. The FDA is actively studying RFID to combat drug counterfeiting. Once the pilot is complete in the fall, Jackson says, Cardinal Health will share its findings with regulatory agencies, customers and others in the health-care industry. Cardinal Health will also share its experience with Cephalon, a biopharmaceutical company running its own RFID pilot (see Cephalon Announces Item-Level Pilot).

Several other drug and health-care companies, including Purdue Pharma (see Purdue Pharma to Run Pedigree Pilot), GlaxoSmithKline (see GlaxoSmithKline Tests RFID on HIV Drug) and Pfizer (see Pfizer Using RFID to Fight Fake Viagra), have launched RFID pilots to tag individual containers of prescription drugs. In addition, Cardinal Health is working with Pfizer on a separate RFID pilot to authenticate Viagra shipments at Cardinal's Findlay facility.