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- FDA has quadrupled its counterfeiting investigations from 1998 to 2002
- $12 Billion annual loss to counterfeit pharmaceuticals
- Pharmaceutical counterfeiting range from 2-7% rising to 80% in some countries
- Approximately 1300 recalls were processed in 2001
- Distributors and Manufacturers cited out-of-stock for 8% that could not be fulfilled
- Industry-wide returns worth $2 Billion occurs annually
- Cost of diverted medications: $1 Billion annually
- Number of online pharmacies registered and verified by the National Board of Pharmacy’s VIPP’s program: 1.3%
“The rapid adoption of RFID technology in the healthcare market is a major strategic initiative for HDMA and its members,” said Lisa Clowers, Vice President of Supply Chain Processes & Technology at the Healthcare Distribution Management Association (HDMA).
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The FDA is not only responsible for the protection of the citizens/consumer protection, but is also an active partner with industries such as food, pharmaceuticals, medical devices, etc. in pursuit of industry best practices.
Forty nine billion dollars in imports of pharmaceuticals enter this country every year.
The pressure is on from consumers and industries to protect their own interests. These represent sometimes-conflicting goals of protection. Protect the consumer, yet protect brand integrity and the more political objectives (protect my profit margins). FDA and its stakeholders and lobbyists, and the eco-systems of industries around it have been actively pursuing how various information technology initiatives can enable and mutually support these goals.
Consider these:
- Feb. 18, 2004-The U.S. Food and DrugAdministration released its final report today on ways to reduce the counterfeiting of prescription drugs. The report’s recommendations include the use of RFID technology to create a “pedigree”-a secure record documenting that the drug was manufactured and distributed under safe and secure conditions.
- FDA said: “The adoption and common use of reliable track and trace technology would help secure the integrity of the drug supply chain by providing an accurate drug “pedigree” which is a secure record documenting that the drug was manufactured and distributed under safe and secure conditions” The Implication? The industry needs to track information like drug name, dosage, container number/size, lot/control numbers, transaction history, etc.
- HDMA said: “The Healthcare Distribution Management Association (HDMA) strongly supports the U.S. Food and Drug Administration’s Final Report on combating counterfeit drugs, particularly the agency’s recommendations for technology-based solutions for the electronic tracking, tracing, and authenticating of pharmaceuticals”.
- Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Title III, Subtitle A Protection of Food Supply) requires establishment and maintenance of records to identify immediate previous sources and immediate subsequent recipients of food.
The whole industry, from manufacturers, distributors, providers, retailers, and even patients, has a world of value that can be addressed from RFID solutions:
- FDA mandates for Non-tampering of products
- Brand protection- Big Pharmaceutical concern about US imports of drugs from cheaper overseas sources
- Product Pedigree Tracking- Life time tracking of product from batch/lot through final sale/use/ disposal
- Supply Chain efficiencies such as ordering and replenishment, stockroom management, FIFO use of expiring products, disposal of medical damaged, spoiled and expired products.
- Information quality
- Medical Grade Network and Healthcare provider effectiveness and costs which includes keeping expensive equipment repaired and in use (and locatable!!); doctor productivity (the average doctor touches 600 documents a day!), and moving paper work and information through the entire healthcare network to speed up admin processes.
- Worker Productivity and efficiencies
- Patient care and protection
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Figure 2-Healthcare Value Chain
(click on image to view larger)
Think about it. The government ‘inspection process’ has always been a bit scandalous, with inspection processes being years behind. But RF enabled business processes allow the ‘item count’ and scope of what can be inspected, understood, etc., to go exponentially higher, protecting citizens, and yet adding value to business as well.
RFID Power in the Value Chain
The real power of RFID is unleashed in industry wide implementations . And healthcare products-FDA regulated products-are sold through retailers as well, so these food, pharmaceutical, and device companies have multiple value chains and customers to serve, and are already getting on the band wagon, from supply chain applications, to deal with FIFO effectiveness and product pedigree issues. New FDA mandates will just enhance and escalate the interest and value for this industry.
