Looming drug pedigree requirements lend urgent tone to RFID conference

WASHINGTON Spurred by growing demands among state and federal regulators for a drug-pedigree system to curb drug counterfeiting, the drive to adopt radio frequency identification and track-and-trace technology in the pharmaceutical supply chain quickly is evolving from a worthwhile but distant-future goal to a near-term necessity. And drug retailers, wholesalers and manufacturers all will have to overcome traditional barriers and work together to develop a common information and communications platform to make it work.

That’s the message being hammered home this week at the annual RFID/Track and Trace Health Care Industry Adoption Summit. The event, which concludes today, drew nearly 500 attendees from all three industries, all of them here to learn more about how RFID and track-and-trace technologies can tighten pharmaceutical supply chain security and enhance business processes.

Hosting the conference are the National Association of Chain Drug Stores and the Healthcare Distribution Management Association, with IBM serving as the keynote sponsor. The event included nearly 20 education sessions and an exhibit hall of product and service suppliers.

This year’s meeting has been conducted with a greater sense of urgency. California’s state board of pharmacy has announced that beginning Jan. 1, 2009, it will require that all drugs dispensed within its borders must have a fully established electronic pedigree detailing every aspect of its movement through the supply chain, from its point of manufacture and its movement through the distribution system to its final destination in the retail or institutional setting.

“We don’t have any time on this,” asserted NACDS chairman and retired Walgreen Co. chairman David Bernauer, who addressed the conference today. Despite the cost to be borne by manufacturers, wholesale distributors and pharmacy retailers, he added, “We have to get this done.”

Also addressing attendees was NACDS president and chief executive officer Steven Anderson. “We do need to come together and figure this out,” he said. “We do not have a lot of time. We need to be engaged with the FDA and the states, resolve our differences and develop a regulatory environment for the future that assures safety and promotes good business practices.”

The real question, added Bernauer, is “How can we maximize our ROI [return on investment] on something that’s inevitable?”

With a nod to California and Florida—which became the first state to require electronic pedigrees for pharmaceuticals in 2006—Bernauer called on supply-chain executives at the meeting to adopt a comprehensive, uniform system of RFID and track-and-trace technology that could ease all stakeholders into the new era of supply-chain management with as little cost and disruption as possible. He also asked his colleagues to advocate for a clearly defined federal mandate on drug pedigrees, to supersede what could emerge: a patchwork of differing state laws in the wake of Florida and California.

The cost of such a system has slowed progress on RFID, despite the hundreds of millions of dollars Wal-Mart Stores and some manufacturers have already invested to spur its adoption in recent years. According to industry estimates, the cost of embedding a microchip into each pharmaceutical unit dispensed at retail is still 18 cents. Also prohibitive is the cost that retailers and wholesalers will incur for the RFID chip readers they’ll have to install to make the inventory tracking system work.

Nevertheless, Bernauer, HDMA president and chief executive officer John Gray and other speakers at the event pointed out, the benefits of such a system go far beyond establishing a clear pedigree for the drug. RFID or other track-and-trace technologies could usher in a far more efficient supply chain, reducing shrink, out-of-stocks and returns of out-of-date product. Such a system, said Bernauer, would improve order accuracy and also reduce costly inventory levels.

In this morning’s general session, NACDS president and chief executive officer Steven Anderson also cited the benefits of such a system in the event of another crisis like Hurricane Katrina. “Imagine how much better our industry would be prepared to respond in the future should we have an RFID-enabled electronic track-and-trace system,” he told conference-goers. “Not only will we know where inventory is, but we will be able to track where it goes and get fairly reimbursed for the products we provide to those in their time of need.”

For more information on the event, visit www.rfidhealthcare.org.