Maybe Pharma Will Move Ahead with RFID in ’07

Sources say major pharmaceutical companies are planning to require RFID tagging to get out in front of regulations.
Published: January 11, 2007

In my Opinion column of Jan. 8, 2007, I predicted widespread adoption of radio frequency identification technology in the pharmaceutical industry would be slowed by concerns over the various pedigree laws being introduced by state governments. Sources tell me a couple of industry leaders might soon announce tagging mandates in an effort to get out in front of the regulations.

One problem for the pharmaceutical industry is that there are concerns over different pedigree laws under consideration by state governments. Given that, I expected the industry to wait until there is more clarity. But my sources say some pharmaceutical companies are concerned that several of the proposed pedigree laws would cost a great deal to comply with, while delivering few business benefits.

As a result, these companies are looking to implement electronic pedigrees, and they are joining together to require shipments to be tagged. That way, they can basically say to the U.S. Food and Drug Administration: “Hey, look, you don’t need to force burdensome regulations on us—we’re doing this on our own.” They plan to use RFID to collect the information in a cost-effective way. This is a smart move, one I’ve long advocated.

RFID is still not cheap, so there will be concerns about any mandates from big players in the pharmaceutical sector, just as there are in the retail/consumer goods sector, but it’s better for companies to implement e-pedigrees in a way that drives business benefits and secures the drug supply chain, than to have to comply with regulations that are costly and deliver no business value.

I also might have overestimated the concerns about regulations and the different frequencies (HF and UHF) being looked at in the pharmaceutical sector. I’ve recently heard of some big projects under way that companies aren’t yet ready to talk about. These involve tagging large numbers of items through thousands of different points in the supply chain. It’s interesting that the companies involved see enough benefit today to move forward without widespread agreement on pedigree regulations, or which frequency the industry will adopt. It looks to me like both HF and UHF will be used in the pharmaceutical supply chain, which makes a lot of sense.

I’m not sure this pharmaceutical mandate will, in fact, be announced. I’ve heard rumors like this before in different sectors, and the companies involved never actually introduced a mandate. But I’m reporting on what my sources say because I think it’s important for people to understand the current thinking of some of the big players in the pharmaceutical sector.