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Story URL: http://www.silicon.com/research/specialreports/enterprise/0,3800003425,39123479,00.htm

RFID on drugs: Are cloning worries the major problem?
Or is it cost, hardware, integration, regulation, standards, business practices…

By Jo Best

Published: Wednesday 25 August 2004

RFID will start making its presence felt in the pharmaceutical industry within the next 18 months, according to analysts.

Research firm Meta Group predict that the potential cost savings RFID can bring will rapidly start luring US pharmaceutical companies into using the tags.

Unlike in some areas of the retail sector, the pharmaceutical supply chain is largely made up of high cost items, which means the ROI is far more apparent for businesses in the drug industry.

A recent report by the Food and Drug Administration (FDA) said: "The adoption and common use of RFID as the standard track and trace technology… is feasible in 2007." Meta Group, believes this to be "overly optimistic", predicting the current standards wrangle over the technology will delay rollouts.

Bruce Hudson, program director in Meta Group's enterprise application strategies service, said that under current EPC standard chips, the lack of cloning features will cause problems.

"With current EPC specifications, it is possible to program one chip with the exact data of another, effectively cloning the first chip. Without guaranteed authentication, the usefulness of RFID is significantly reduced," he said in a statement.

The FDA acknowledges several barriers remain to RFID adoption in the industry: "Costs that could hinder the adoption of RFID included purchase of tags and other hardware, integration into existing information systems and compliance with regulatory requirements (e.g. labelling, electronic records). Important unresolved issues included the need to develop standards and business rules for RFID, the need to address database management issues, and the need to determine the effect of RFID on product quality."

Meta Group also predicts counterfeiting in the industry will be a principal driver in greater adoption. US pharmaceutical company Pfizer is currently trialling the drug in its supply, for example, after counterfeit versions of one of its products - Viagra - were found in two California pharmacies and the drug maker resorted to taking legal action against dozens of online fake-pill peddlers.