Item-Level Visibility in the Pharmaceutical Supply Chair: A Comparison of HF and UHF RFID Technologies

The numbers are astounding and the stakes couldn't be higher for consumers, pharmaceutical manufacturers, distributors and retailers. Up to 7 percent of all drugs in the international supply chain may be counterfeit. Retail and pharmaceutical markets must absorb more than $2 billion in product returns each year caused by overstocked or outdated products. Faced with some 1,300 recalls in 2001 alone, the industry is seeking ways to better monitor the international drug supply from "manufacture to medicine cabinet."

The pharmaceutical industry is looking to radio frequency identification (RFID) as a primary way of solving these problems. RFID technology's ability to ensure the validity of data in the pharmaceutical industry is providing many new opportunities for reducing costs, while improving product quality and drug safety. The Food and Drug Administration (FDA)'s main interest in RFID is as a technology that can keep the drug supply safe and secure. According to the agency, RFID provides the most promising approach for reliably tracking, tracing and authenticating pharmaceutical products, and it is recommending widespread use of RFID in the pharmaceutical supply chain at the item level by 2007.

Industry pilots involving several retailers, distributors and manufacturers have been launched, and some studies estimate that RFID-based solutions could save the industry more than $8 billion by 2006. In addition to anticounterfeiting, RFID benefits include improved inventory management through the reduction of out-of-stock items and safety stock, a decrease in shrinkage and diversion, and faster, more efficient product recalls.

There has been much discussion about the potential of RFID in the pharmaceutical market. Up until now, much of the focus has been on passive tags in the ultra-high frequency (UHF) band due to the Wal-Mart RFID mandate for case and pallet-level supply chain tracking, which requires the use of UHF technology.

In support of this mandate, the industry is on track in 2004 to have its first global UHF RFID tag standard, known as EPC Gen 2. Manufacturers are developing tag and reader technology based on the new standard and Wal-Mart suppliers are moving forward with RFID supply chain pilots. In addition, EPCglobal, Inc. is now turning its attention to continuing the development of existing EPC standards for high frequency (HF), 13.56 MHz technology. There are a number of other established global standards developed by ISO/IEC for HF, item-level tracking, including ISO/IEC 18000-3 and ISO/IEC 15693.

In the retail sector, many experts don't expect item-level RFID tagging of low-cost consumer goods to occur for five or more years. In the pharmaceutical market, there is a strong business case for item-level RFID tagging today due to the higher value of products and margins relative to retail products, in addition to the inherent concerns surrounding product safety.

Despite RFID's high-profile backing, industry momentum and indisputable benefits, there are still many obstacles, misconceptions and issues to be resolved along the way. This includes the choice of which RFID technology to implement, and in particular, which frequency would be most appropriate. This paper sheds light on the myths and confusion surrounding RFID and addresses the choice of HF versus UHF technology for item-level pedigree pharmaceutical tracking. It also provides an overview of some of the commercial pharmaceutical and healthcare field trials and implementations.

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