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What the FDA Announcement Means for RFID

Friday's announcement by the FDA caused a stir throughout the RFID industry, which is asking what this development means in the near term for e-pedigree and RFID adoption in the pharmaceutical supply chain. The answer: not much.
Jun 12, 2006This article was originally published by RFID Update.

June 12, 2006—Friday's announcement by the US Food and Drug Administration caused a stir throughout the RFID industry and the business technology press generally. The Wall Street Journal, New York Times, and Washington Post all covered the news. Given such attention, those in the RFID industry are asking what this most recent move by the FDA means in the near term for e-pedigree and RFID adoption in the pharmaceutical supply chain. The answer: not much.

The announcement did not include any bombshells -- an RFID mandate, for example -- and was in fact just about what insiders expected. Paul Chang, IBM's RFID pharma expert and advisor to the FDA, said, "I don't think this is a surprise to anyone in the industry." The FDA reiterated its commitment to RFID as "the most promising technology for electronic track and trace across the drug supply chain," but said that the technology's slower-than-anticipated adoption means a more immediate salve to the ever-growing problem of counterfeit pharmaceuticals is required. To that end, the FDA will begin enforcing in December paper pedigrees that have been stayed since the Prescription Drug Marketing Act was passed in 1987.

While not a direct boon to short-term RFID adoption in the pharma supply chain, the FDA announcement will probably have a positive, long-term effect, according to ABI Research's RFID and M2M research analyst Sara Shah. "This should get people moving with pedigrees at least," she said, noting that some stakeholders in the pharma supply chain were hoping the FDA would continue its stay on the 1987 regulations. Now, those stakeholders will be forced to understand and implement pedigrees, which will help pave the way for eventual RFID adoption. A quote in the New York Times from Dr. Randall Lutter, the FDA's associate commissioner for planning and policy, echoed this prediction: "This decision to lift the stay is intended to provide that push [for investment in RFID]."

One important thing to keep in mind is that today's major drug-tagging initiatives -- Pfizer's Viagra, GlaxoSmithKline's Trizivir, and Purdue Pharma's OxyContin -- are not e-pedigree pilots. "The RFID agenda for these companies is not necessarily linked to e-pedigree at this time," according to ABI's Shah. Indeed, most of the e-pedigree activity seen today is satisfied by barcodes. Conversely, therefore, "e-pedigree is not necessarily tied to RFID in the short term," she said.

So if not e-pedigree, what are those high-profile pharma RFID pilots really about? Business improvements, says IBM's Chang. "The innovative companies that are piloting are going to have advantages in their businesses," he said. Contrast this to the retail sector, where many manufacturers have deployed RFID because of mandate pressure. Pharma adoption then, especially in the absence of an FDA mandate, appears to be driven by manufacturer perception of real business benefit. "Instead of just being a mandate-driven adoption," said Chang, "it could be an ROI-driven adoption."
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