Pharma Industry Report ...
All about RFID systems for pharmaceutical distributors and the FDA
regulations.
By Sangeeta of Abhimas Software



Abstract:

The US FDA has decided to implement the "Pedigree provisions" of the
Prescription Drugs Marketing Act after December 2006, when the
current stay on it expires. There is a lot of concern that many
pharmaceutical supply chain participants, may not be able to meet
this deadline and hence risk non compliance with the provisions of
the act. This pharmaceutical article is excerpts from the RFID
technology white papers written by Sangeeta of Abhisam Software. The
RFID technology white papers attempts to present an RFID Systems
solution to ensure timely compliance and get added side benefits in
the process.

Problems with the present pharmaceutical supply chain:
There are two major problems with the present pharmaceutical supply
chain model of the pharma industry, as it exists today. The first one
is not of counterfeiting, but of diversion. More details will be
explained in in the background information below and in Sangeeta's
RFID technology white papers, but some highlights are below.

Drug diversions can be of two types.
Drugs meant for Medicare or Medicaid programs, public hospitals or
charitable institutions, are diverted to the open market.
Unscrupulous persons sell prescription drugs or "controlled"
substances to consumers, without proper prescriptions.
Counterfeiting (by FDA definition)
Dummies/ Placebos, which means that there is no active ingredient at
all
Products with a lesser quantity of active ingredient than stated
Products with the wrong active ingredient
Products with a packaging that wrongly suggests that it was made by
an FDA approved manufacturer
To give you an idea of the scale of the counterfeiting just one of
these cases involves $42 million of counterfeit Lipitor. Other high
value cases include a case involving a $200 million nationwide drug
diversion conspiracy and a $45 million Medicaid fraud involving
diversion of blood products.

The FDA's solution to the problem:
The FDA's vision of a safe and secure pharmaceutical supply chain is
based on transparency and accountability by all participants in the
(prescription drugs) pharmaceutical supply chain. The FDA had
nominated a task force to study whether this system could be
implemented with the currently available state of the technology.

They came to this conclusion after studying the various technologies
currently commercially available, which could meet the pedigree
requirements, including RFID or Radio Frequency Identification
technology. Amongst all technologies studied including bar coding,
RFID seemed to be the most promising and the committee felt that the
pedigree requirement could be met by easily leveraging something that
is readily available. (More details in the complete RFID technology
white paper "RFID-FDA-Regulations.pdf" referenced below)

How the pharma companies can approach this issue:
The million dollar question is "Who can ensure an ROI on this RFID
technology, especially after millions have already been spent?" Even
if a full scale RFID implementation were done now, how can it be done
fast, before the December 2006 deadline?

Rather than resist implementation of a pedigree system built on RFID
systems , pharmaceutical supply chain participants must realistically
estimate the costs of investment in the technology, the real cost of
counterfeits and the returns on a foolproof RFID based "track and
trace" system. The RFID systems will virtually eliminate the
counterfeit pharmaceutical market at one go. Secondly, it can ensure
that drug recalls can be done swiftly without any ambiguity. This has
been demonstrated many a times. Thirdly, the RFID systems need not
cost too much.

How wholesalers and traders can implement track and trace:
Ditto for other pharmaceutical supply chain intermediaries. They can
simply join the same global system outlined in the RFID technology
white paper that is currently in place and implement the electronic
pedigree system easily. The only investment would be in the RFID
readers and middleware. Even these can be bought in bulk by their
associations at negotiated prices and implemented. This solves the
issue of RFID standards too, since all participants would be using
similar kinds of RFID readers and RFID software.

Beneficial Side effects of the implementation:
In addition to combating pharmaceutical counterfeiting and diversion,
pharmaceutical wholesalers, traders and retailers, get the added
benefit of looking into their businesses and track the movement of
prescription drugs with full transparency. This will no doubt yield
added benefits of inventory optimization, demand forecasting and
increasing their knowledge of what is selling and how fast.

RFID Implementation issues:
To implement this system fast, before the deadline of December
approaches, it is essential to train all stakeholders (pharmaceutical
company personnel, wholesalers, traders, retailers and others) fast
but, at a competitive cost. However, the present cost of classroom
based training is expensive, besides having other related costs like
travel and hotel stay. A better system would be to go for a vendor-
neutral e-learning program, which can be deployed immediately and
across several locations simultaneously. See:
http://www.bin95.com/BarCode_RFID.htm

This has the effect of bringing up all staff, to a level necessary
for them to implement an RFID based pedigree system. The e-learning
program should cover all aspects of the RFID technology including the
history, advantages over traditional automatic identification like
bar codes, practical RFID systems, RFID standards and middleware as
well as other issues like RFID privacy and RFID security. It should
ideally also offer a self assessment and a glossary. We believe, that
deploying such a program, across many companies is the only option to
effectively train hundreds of people, in a cost-effective manner, so
that the actual implementation of the system can be done smoothly. It
is essential to bring all people on board, make them understand this
RFID technology better and only then talk of implementing it.

Conclusion:
RFID track and trace is a technology whose time has come. It not
only will meet the FDA requirements for compliance but also prevent
pharmaceutical counterfeiting (lost opportunity sales of genuine
drugs), prevent diversion, optimize pharmaceutical supply chains as
well as fulfill social responsibilities of the pharmaceutical
industry fraternity.

Training large numbers of people in a short time, is not a problem at
all since a vendor-neutral, technology and implementation focused e-
learning program is now easily available.

By Abhisam Software


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Some Additional Background Information ...

Pharmaceutical distributors Background :
The Prescription Drug Marketing Act (PDMA) was signed as a law, as
far back as 1998 but a number of amendments introduced later,
finalized the pedigree requirements only in 1999.

The pharmaceutical industry, essentially requesting them to the
act "put on hold" , citing several reasons for this, one of them
being "the technology required for this system is unproven and not in
place." The FDA patience finally wore thin. Therefore it was decided
that they will allow the current stay on this act, to expire in
December 2006.

This may not be a big problem for the pharmaceutical manufacturers,
but it could be a really big problem for supply chain intermediaries
like distributors, pharmaceutical wholesale suppliers and traders,
who may not know much about "electronic track and trace" technology,
which is necessary for the compliance. Sangeeta's RFID technology
white paper attempts to explain how this RFID track and trace system
can be implemented and how it will be beneficial in the long run to
all sections of society- pharmaceutical companies as well as
intermediaries and ultimately the end users.

Understanding the pharmaceutical supply chain:
The lay reader may assume that it is like any other supply chain,
which brings goods from the manufacturers' factories to the retail
shelves, but it is not so. The pharmaceutical supply chain is
inherently different in its organization. For the pharmaceutical
business, the pricing for each end user is different. Therefore a
typical hospital gets these drugs at lower rates than does a corner
pharmacy. There are programs like Medicare and Medicaid where the
procurement prices are different than for someone who buys the same
drug at a corner pharmacy. The pharmaceutical distributors diagram to
the right shows some of the various flows of prescription drugs
through the pharmaceutical supply chain. (More details in Abhisam
RFID technology white papers like "RFID-FDA-Regulations.pdf")