Cracks in the Pharmaceutical Supply Chain

Cracks in the Pharmaceutical Supply Chain

Faced with a rising tide of counterfeit and mispriced drugs, pharmaceutical companies are turning to technologies such as RFID to better track medications through a convoluted supply chain

Robert Cowie, CIO at biotech company Genzyme, says he believes RFID is a good idea for improving efficiency in the consumer product supply chain. However, he also does not think the technology is mature enough for his company to start using it. "The cost of the unit and its level of reliability doesn't make RFID economical for us right now," Cowie says. Forrester Research VP Laura Ramos agrees that most pharmaceutical companies should wait on RFID until the technology matures. Typical tag failure rates are not uncommon, and placing tags near certain metals and liquids can cause reader interference rates to climb higher, Ramos notes.

For now, companies that are taking the lead with RFID are those that sell either high-profile or very expensive drugs. Whereas it may not be economically feasible to buy a 30-cent RFID tag for a bottle of Tylenol, it would be more appealing for a $50 or $100 prescription.

The Big Brother Issue

Privacy concerns relating to RFID could also cloud the picture for the technology's easy adoption. Privacy groups such as the American Civil Liberties Union and Consumers Against Supermarket Privacy Invasion and Numbering, or CASPIAN, have raised concern over RFID use in the retail sector, fearing a loss of privacy if the technology is used to track what people buy and bring into their own homes. In the pharmaceutical industry so far, RFID tags are placed on the large bottles that pharmacies buy, but not on the bottles of pills that consumers take away from the pharmacies. Still, "privacy could be the killer issue that seriously limits the potential value of RFID in product tracking", says Forrester's Ramos.

Examples from outside the United States underscore how collecting data from medication down to the vial could raise concerns from privacy advocates. In Italy, for example, a law requires that each vial of a prescription drug have a unique ID. The vials, marked with bar codes, are read at each stage of the supply chain until they reach the pharmacy or hospital. Italian law requires that the data captured go directly to a central government database. While such an intrusion of privacy by the government would probably not be permitted in the United States (or Australia, for that matter), pharmaceutical companies have already gained access to individual prescription information from some pharmacy chains, and RFID tags on individual medications could accelerate that trend. (Under pressure from a recent class-action lawsuit, CVS was forced to stop its practice of sharing patient prescription information with major pharmaceutical companies.)

"Security and privacy will have to be addressed more fully than they have been, because when we create a network information system that spans the globe — as the pharmaceutical supply chain does — the data won't always be protected by VPNs or other secure networks," Engels says.

Despite such issues, Purdue's Graham believes that tracking and tracing technology represents the best chance so far to solve the problems he helped expose back in 1995. "Operation grey pill" ultimately led to more than 100 convictions and $US25 million in fines from drug wholesalers. An executive at the country's fourth-largest wholesaler at the time, Bindley Western, pled guilty to two federal felony and fraud charges after the sting operation revealed he had been directing people to buy from Graham and his colleagues so they could get a discount themselves. Ten years later, however, such fraudulent practices remain common.

"The system hasn't changed, and the loopholes remain in place," Graham says. "That's why track-and-trace accountability is so important."

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