Rumors of RFID’s Death at GSK Are Premature

Despite a news report quoting anonymous sources saying the pharmaceutical company is ditching RFID, the project continues.
Published: August 31, 2007

I was a bit surprised, but not shocked, to see this headline earlier in the week: GSK Plan to Beat Drug Counterfeiters May Be Scrapped. The article ran in The Times, a newspaper published in the United Kingdom, and also on the TimesOnline Web site.

The article claimed the GSK RFID program was “fraught with problems” and “riddled with technical hitches,” and quoted an unnamed spokesperson saying the project might be abandoned. It also quoted another pharmaceutical industry executive as stating, “Lots of people have looked at RFID and realized that the cost is just prohibitive.”

The reason I was not shocked by the headline was that the issues raised in the article are legitimate. To use RFID to comply with pedigree requirements is a challenging proposition, both from a technical and business perspective. It’s technically challenging because it involves putting RFID tags on a wide variety of drug containers, as well as guaranteeing 100 percent read rates at all points in the supply chain.

That’s not a simple matter today, and might never be possible to achieve because of the challenges facing the reading of passive RFID tags under all conditions. Of course, it will never be possible to read every bar code with 100 percent accuracy either, because people doing the scanning make mistakes.

The business challenge with using RFID for drug pedigrees is that manufacturers, wholesalers, distributors and retailers would all need to deploy RFID hardware, software and networking infrastructure throughout their operations to track drugs. There’s a big up-front investment before you can achieve even a penny in savings.

Unless companies are faced with a federal mandate, they tend to be reluctant to make such huge up-front investments. It is possible, of course, that companies might find the cost of complying with state mandates in the United States so high—you would have to employ people to pick up every bottle and every vial to scan a bar code—that they decide the investment in RFID is worthwhile.

When I saw the story in the Times, I asked our editorial team to look into it. Senior editor Beth Bacheldor spoke with GSK and found that the company is not ditching its RFID efforts, as the article claimed. The company hasn’t yet decided if it will adopt RFID, but it is still still investigating the technology. GSK spokesperson Mary Ann Rhyne told Beth, “RFID remains in place. In fact, we’ve extended the RFID testing, and no cut-off time has been determined” (see GlaxoSmithKline Remains Committed to RFID).

The Times story is yet another instance of journalists’ penchant to write negative stories about RFID today, just as they once liked to write stories about how RFID would one day revolutionize the supply chain. Any hint that a company might not be moving forward aggressively enough with RFID is spun into a story about how the technology is not living up to the previous hype—which the journalists themselves had fed in the first place.

RFID’s benefits have been proven in many areas. The technology can be used to create e-pedigrees with a high degree of accuracy, but putting transponders on every bottle of pills is a major undertaking and won’t happen overnight. For that to happen, there needs to be a compelling reason to do so. If the regulatory authorities decide the public health is at risk and drug pedigrees are the answer, then companies might be forced to overcome the technical and business challenges and adopt RFID.

Regardless of whether such regulations are in the offing, though, any drug company that abandons its RFID effort today is foolish. Why? Because it will likely have to pick it up again at some point in the future. RFID will become cheaper, more reliable and easier to deploy. And even without regulations, companies will find, at a later date, that it makes sense to tag shipments and, eventually, individual bottles. Knowing where your high-value goods are is good business.