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For drug makers and regulators today, radio frequency identification (RFID) is being evaluated as a technology enabler to fight drug counterfeiting. But this trend is about verifiable chain-of-custody data first and RFID technology second. Like the case in retail, drug makers face RFID directives that, done to their fullest extent, will result in significant transformation of their business processes and improvement to supply chain efficacy.

But the similarities between drug-maker and retail-supplier efforts end there. Drug maker implementations of RFID will begin at the point of the pedigree data and its validation that the Food & Drug Administration (FDA) will require; early retailer slap-and-ship experiences will be of little help.

"The FDA is encouraging RFID testing to determine an [anti-counterfeiting] approach," says Bert Moore, spokesman for AIM Inc. "At this point, it does not have sufficient information to even consider issuing a mandate."

Nonetheless, most drug makers view an FDA report issued in February 2004, which endorsed RFID technology as a key technology to investigate for anti-counterfeiting initiatives, as the writing on the wall. And those who also face a retail RFID mandate like Wal-Mart's must be careful to anticipate the requirements of forthcoming anti-counterfeiting regulations.

Purdue Pharma found itself in just such a position. The Stamford, Conn., maker of Oxycontin--the painkiller of choice among pharmaceutical thieves--has already met the retail giant's deadline for RFID-tagged shipments. Now, the mid-size drug maker has the anti-counterfeiting initiative in its sights.

Building on the Retail Effort

"We have a good foundation," says Sajan Idicula, senior systems analyst at Purdue. "But it's going to be more work. [The FDA anti-counterfeiting effort] will be another layer of application on top of the Wal-Mart [RFID] effort."

To meet the Wal-Mart mandate concerning Class II drugs, Purdue worked with software giant SAP (its enterprise resource planning software provider) and Northern Apex, an RFID hardware integrator. According to Rick Raber of Northern Apex, speaking at the recent RFID World conference in Dallas, the project involved Matrics Class 0 Electronic Product Code (EPC) read-only tags. The first step involved integrating the one-inch-square tag into the label and ensuring that it would be placed consistently.

Typical Scenario

Liz Churchill, director for industry solutions at Symbol Technologies, which recently acquired Matrics, describes a typical pharmaceutical scenario: The tag inlays are integrated into labels, which are put on an applicator on the packaging line and applied as they were before the use of RFID. To this point, the labeling process involves no change in the packaging line. But two RFID read stations are then added to the line. One is positioned after the point where the label is affixed, for verification. Another is placed at the end of the line, to read all bottles in the case and to associate those bottles with that case.

Those RFID readers represent additions to an already validated packaging line, and so they must also be validated.

Churchill says that some drug makers save data at that point on the packaging line. Others send the data on to the company's enterprise resource planning system. "I don't think anyone is actually using the data in decision-making yet," she says.

Hardware Integration

In Purdue's case, according to Raber, the second step involved integration of Apex hand-held scanners for incoming label/tag EPC lot verification. The Apex Hercules reader was integrated with the label applicator, which has only 350 milliseconds of processing time to ensure proper tag operation and EPC identification.

The Purdue application involved Oxycontin cases of 48 bottles each, all of which must be read within three seconds.

The Hercules reader was integrated with the case-packing station, and then the system was integrated into the inbound and outbound vault locations where the painkiller is stored in tamper-evident cases.

Data is sent to the SAP applications in real time. Purdue added RFID capability to its SAP R/3 environment, including MySAP enterprise resource planning, supply chain management, and other resources to help manage and share data within existing business processes, add business context to raw data, and integrate RFID data into existing IT systems and processes.

Pedigree-level Data

SAP software handles the pedigree data of the ingredients in each bottle. Associated functions include validation of the EPC code; EPC code association with lot/batch number; validation of no duplicates; and validation of EPC code association to delivery number.

SAP organized the Oxycontin pedigree data into three processes and applied the same data management techniques across all three: case packer, vault inbound, and vault outbound, according to Eric Domski at SAP.

Idicula admits there were internal difficulties early in the RFID project in determining who should take the lead. Packaging, engineering, IT, quality assurance, and others were all stakeholders. In the end, packaging and engineering were perceived as being most affected, and therefore designated leaders.

"A major hassle was validation," says Idicula. Adding RFID hardware to an already validated production line required rigorous effort. "I wanted to say 'quit' at that time," he concedes.

Quality assurance was another sticking point. "We received one [RFID] tag roll that was wound too tight," says Idicula. "Some of the tags had pierced the roll, so [quality assurance] rejected the whole roll."

Still another issue was how to divert one wrong bottle out of a case of 48--a key component of line validation, says Idicula. "These were important issues to determine and then handle appropriately." Purdue also encountered 40% false rejects for tags initially, but this rate has been improved to acceptable levels today.

Identifying the Team

From a pharmaceutical industry perspective, Purdue is well along the RFID learning curve and ahead of many. Its pilot, trial, and implementation experiences are being repeated at an increasing rate throughout the pharmaceutical supply chain.

Like those who are following them, Purdue developed an RFID implementation team with representatives from several functional areas, usually packaging, engineering, IT, and security, at a minimum.

"Packaging has to be involved," says Churchill at Symbol. "The work has to be done on a packaging line."

Data First

For drug makers who are driven to RFID by something other than a retail mandate (e.g., FDA's anti-counterfeiting initiative), the early steps of implementation will likely be different than those taken by Purdue. Anti-counterfeiting initiatives will drive a data-first orientation rather than a successful-tag-read orientation. Ironically, a data-first orientation positions drug makers to capitalize on RFID's supply chain benefits--and the EPCglobal vision of the technology's implementation--more quickly than their retail-supplier counterparts, whose relatively quick mandate deadlines pushed effort toward tag-read success before data sharing. While many retail suppliers will migrate from slap-and-ship to data integration and sharing, these drug makers will be developing and transitioning existing chain-of-custody pedigree information to an RFID infrastructure and then migrating to the physics level.

"Pedigree information will be most effective in electronic format," says Tony Ross, director for the Drug Security Network Lab project at Cap Gemini Ernst & Young. At the state level, "Florida alone has 10 pedigree efforts in process, and the number jumps to several hundred next year." Paper pedigree isn't going to cut it.

Data Fuels Business Improvement

But even beyond the volume issue, Ross points out that across manufacturing, distribution, and retail, there's gold in the data that RFID tags can store and transmit. "The information is of benefit to trading partners. If they can come to agreement to add data beyond what's required for a pedigree, it may lead to business improvement," he says. More accurate sales data is one example; another is a tighter cycle of inventory and production.

There are traditional ownership issues with such data, however, and Ross believes this will eventually become a negotiated item between trading partners--price could be set based on the amount of visibility offered.

Cap Gemini's Drug Security Network Lab opened in November 2004. The lab includes Sun servers, a beta version of Supplyscape, Tyco/ADT scanners, and Alien Technology RFID tags. Users can try out this hardware without committing to buy it. They can also test how well it transfers data between trading partners. "It gives them a long-term demo," says Ross. Verisign is another technology partner.

Competitive Advantage

Ross adds that drug supply chain trading partners who use the lab are in it for competitive advantage. "Two of our clients who are also involved with EPCglobal have said recently that we're several months ahead of what EPCglobal is doing now," he says.

The lab provides a setting for "real collaboration," says Ross: It is used by both manufacturers who partner and those who compete; wholesalers; and other links in the drug supply chain. They use the lab to iron out data-sharing and operational-process issues.

Ross says that a goal of the lab is to help drug makers find that anti-counterfeiting efforts represent not just another cost of compliance, but rather an opportunity to improve supply chain processes and even find some return on investment. "Many had chalked it up to a compliance cost," he says.

The lab provides clients with four concurrent "workstreams" from day one, says Ross: data security and sharing; operational business process change; serialization; and the business value opportunity. Focusing on all four simultaneously is key, he says, to getting a return on an RFID investment as quickly as possible.

Improving Proposition

The ROI proposition improves as state and federal regulators issue pedigree mandates. "Today, if you do a lot of business in Florida, you might be looking at less than two years" for an RFID pedigree ROI for a particular drug, says Ross. "It will be less as state regulations become more prevalent. As use increases and the volume of data grows, the ROI comes more quickly."

It's no accident that process change is discussed so early in efforts at the lab. Key to the use of RFID in any supply chain is understanding and capitalizing on the process improvements it enables.

This view is held not just by Cap Gemini, but also by IT service provider Unisys in its work with the pharmaceutical community. "This is more about process and behavioral change than anything else," says Todd Skrinar, partner, enterprise transformation services, at Unisys. Like the case in the Cap Gemini lab, "we start talking about it on day one," Skrinar says.

The first step is road-mapping, he explains. He counsels clients in workshops to begin by "prioritizing strategic capabilities that are both effective and easy to implement. That's a starting point.".

Testing New Processes

Transforming the capabilities into their business process implications is the next step, which involves the modeling of existing and "could be" processes. Following that, clients experiment with the changed processes in a lab environment, allowing them to see how they will work in the collaborative supply chain while considering tracking technology, computing hardware, software, and network topology.

"The facility looks like a finished goods manufacturing warehouse," says Skrinar. It contains the infrastructure for RFID tracking for a variety of business uses. "It allows you to visualize the 'could-be' processes in the physical world before a lot of money is spent on deployment."

Initiatives underway involve manufacturer-wholesaler-pharmacy collaborative efforts, with teams of three to five members each. Team members include some information management people and business people, including such titles as chief information officer and chief operations officer, vice presidents, and senior directors, as well as packaging, supply chain, and quality assurance operations. "You need both [executive and operations-level] perspectives to make sure you have the sponsorships but also that you can address the devil in the details," says Skrinar.

Fighting the Silver-bullet Myth

A common misperception that he sees among clients is the view of RFID as a silver-bullet solution to pedigree and supply chain problems. "There's a lot of risk in the supply chain now in counterfeiting and diversion. In an effort to move quickly, some companies are trying to simplify processes," says Skrinar, and are listening to overstated "turnkey" marketing messages. These messages "create the impression that it's all worked out--plug and play. But we're still talking about new territory here."

Perhaps the biggest process-change issue that clients face is that the data must be shared not just within the company in ways that it wasn't before, but more importantly across the supply chain. "How will a like-minded network come to the definition of win/win for data sharing? In the supply chain, data is owned. People want to get paid for it," says Skrinar.

This is new thinking for the drug supply chain, a supply chain that has been shaped more by regulators than the forces of supply and demand. "The pharmaceutical supply chain doesn't have nearly as much information sharing as in consumer packaged goods," says Daniel Engels, executive director and research director of the Auto-ID Labs at the Massachusetts Institute of Technology. Regulations having the force of law, the extent of repackaging, and the consequences of counterfeiting and theft all make for a supply chain that is very different than retail's, he says. "Regulations force a different model and thinking," he adds, one that is traditionally reactionary.

A major issue now being addressed at the Auto-ID Labs concerns tradeoffs between the use of high-frequency (HF) and ultra-high-frequency (UHF) RFID tags. Engels and his team are studying the effects of radio-frequency radiation on pharmaceutical stability, to learn how it affects active drug ingredients. The work is geared toward developing a test protocol that drug makers can use in their development work.

Thermal effects are understood, says Engels, in terms of their impact on molecular structure and the corresponding impact on drug efficacy. The lab's focus is therefore non-thermal effects.

"You have to understand what the impact is," he says. "We're not so worried about solid dosage forms (e.g., aspirin in pill form) of drugs, but rather biologics. Engineered pharmaceuticals have weaker [molecular] bonds. Energy can break bonds and affect a drug's efficacy."

So the testing underway is to determine safe levels. "At 3 watts, we may know we have no problem. But what about 5 watts? We don't think there's a problem. But until we test, we don't know," says Engels.

Engels adds that a big part of the Auto-ID Labs work today is keeping industry partners informed. "We talk at least every two weeks informally with the FDA," he says. "We make sure they are well informed of what we're doing and we seek their advice on our activities."

Extra! Extra!

For further reading on this and related topics, see these articles, available at www.frontlinetoday.com/102003links:

"State Pedigree Laws Take on Counterfeit Drugs" February 2005

"Capgemini Teams With SupplyScape to Combat Drug Counterfeiting" August 2004

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