Tuning in to RFID

Packagers and logistics professionals put together their wish list for RFID. 

�We provide medicines to improve patient lives. Anything that we can do to guarantee that what the patient purchases is exactly what we produce is something that we are going to strive to do.� 

� D. Bruce Cohen, director of packaging technology

With domestic counterfeiting on the rise, improving supply-chain visibility has become a priority for the pharmaceutical industry. In its February 2004 report, �Combating Counterfeit Drugs,� FDA urges drug companies to secure drugs during distribution to ensure that they arrive at their intended destinations safely and securely, with some means of authentication. To do so, FDA suggests the use of radio-frequency identification (RFID), among other solutions, to develop an electronic pedigree for each drug. 

But is the pharmaceutical industry ready to adopt RFID? Or, is RFID ready for the pharmaceutical industry? In our annual pharmaceutical packaging roundtable, we bring several professionals together to discuss the industry�s prospects for RFID implementation. Sharing their progress and concerns are D. Bruce Cohen, director of packaging technology for GlaxoSmithKline for U.S. products; Steve Hess, senior director of packaging technology for Merck; Rich Hollander, senior director of packaging services for Pfizer; Dennis Kim, senior manager of supply-chain operations for TAP Pharmaceuticals; Greg Pendell, global regulatory affairs for Eli Lilly & Co.; and Mark Seitz, global consultant for logistics at Eli Lilly & Co. 

Before retailer and government interest in RFID, how interested were pharmaceutical professionals in RFID? 

Cohen: About five years ago, NCC MERP [the National Coordinating Council for Medication Error Reporting and Prevention] and PhRMA met to talk about putting bar codes on hospital packs. At that time, the discussion was on preventing medical errors from happening in hospitals. The conclusion was that bar coding was the way to go. There was certainly interest in RFID, but at that point we decided to go with bar codes because it was a known technology. It was readily available at hospitals at reasonable costs, and it was something we could get into in a very short time period. Had we decided to go the other way with RFID, we probably would have been unable to accomplish what we set out to do with bar codes. 

�RFID is an enabling technology that can help create the electronic pedigree to facilitate track and trace. That is what FDA is asking us to do.� 

� Steve Hess, senior director of packaging technology

Seitz: We have looked at RFID on and off over the years on a very select basis. One project involved the launch of a fairly expensive product whose supply availability we were concerned about at launch. So the tracking of each and every vial seemed to be a big concern at the time. We looked into RFID about a year and a half ago, but we truly could not justify the cost involved and issues with standards and everything else. We also have been looking at it for anticounterfeiting. 

Hess: We have used RFID internally for captive systems where the standard didn�t have to go outside the Merck walls. We have had some success, but we haven�t had the opportunity to export it outside the company yet. That is still a big challenge. 

Cohen: Within our R&D group, we have been using RFID technology for about six years internally for a number of uses. It is certainly held within the R&D group, and they have been very successful in their use of RFID technology. 

Hollander: Prior to 2001, Pfizer had no active research going on in the area of RFID. In 2001, we made the commitment to join the Auto-ID Center to understand how the technology would be used at all levels of packing. Not necessarily just for pharmaceuticals, but also for any product, such as consumer products. So we have been following the technology somewhat passively through that consortium of organizations, looking for opportunities to use RFID to present themselves. The first opportunity has been compliance with Wal-Mart�s initiatives. Not for Class II drugs, as Pfizer has no drugs of this type, but for consumer goods and subsequently at the item level for track and trace as part of FDA�s initiative. In 2001, we knew that RFID offers supply-chain automation opportunities�labor savings, inventory management, inventory visibility, potentially all the way down to the retail setting for theft deterrence and stock-out avoidance. But within the last year, we have seen the possibilities this technology offers as an enabler to track and trace. 

Is RFID now a packaging function? Or will it be left up to those on the supply-chain side? 

�It�s really about the quality of your solution and your ability to validate or qualify it. Otherwise, you compromise the integrity of everything you are trying to do.� 

� Rich Hollander, senior director of packaging services

Seitz: I don�t know that it will fall into any camp exclusively. Certainly, we have a lot of interest from packaging development. And likewise, we have a lot of interest from supply-chain, distribution, and manufacturing engineers. We have a cross-functional task force that is trying to determine how we approach RFID. How do we meet both external standards as well as internal ones so we are all singing from the same hymnal as we move forward? 

Kim: This is a massive undertaking that needs a tremendous amount of collaboration across many different functions. The impact is so huge operationally that it is not necessarily one particular camp. Rather, it is a concerted effort among several different functions to implement RFID.

Do you see that kind of collaboration? 

Cohen: Initially, I became the de facto point person as calls or inquiries came in. Packaging technology seemed to be where RFID was going. Not solely a packaging function though, it is also a logistics function, and it impacts all areas of the company. It is an IT function, it is a distribution function. It can be used in manufacturing. So it has become everybody�s issue. We have put together a task force within the company to look at all the opportunities. 

What are RFID�s benefits? 

Hess: RFID is an enabling technology that can help create the electronic pedigree to facilitate track and trace. That is what FDA is asking us to do. Now, are there other benefits that we are going to realize from RFID? Probably. But we have not been able to quantify them yet. We expect that they will come, such as supply-chain visibility. 

Hollander: Benefits come from track and trace technologies, not just from using RFID. RFID is the enabling technology in the vision that FDA has put forth. FDA has made it fairly clear in its report as well as in public appearances that the agency is not tied to a particular technology in the short term and is willing to allow bar codes to be used to serve the same function as RFID at particular levels in the packaging hierarchy. 

Cohen: We all have made the case to FDA that a number of things it is looking for could be accomplished with a bar coding system. Certainly the cost of that would be less than what we are looking at for an RFID system because of the difference in technology. There are benefits to both. Each brings its own things to the table as to what is good and what is not as good. But we have issues. How do we define a business case for going forward on a mass scale with RFID technology? Where do we get benefits as a company? At what touch points do we gather data? What happens with the data? All of these things have to be investigated. I know FDA was leaning on RFID as a very strong point in its anticounterfeiting campaign. We do not see it as a silver bullet. We do not see it as the answer to everything. It will be part of a system that will create the electronic pedigree. It will be part of a system that will allow track and trace on a distribution level. It will assist in identifying some unit products that can be suspect in a marketplace. 

�The way our global supply chain has been established is that we have to be able to have product that can be read in Germany and in Ireland and here in the United States.�

�Mark Seitz, global consultant for logistics 
Eli Lilly & Co. 

Kim: If industry can harmonize its efforts regarding RFID, in theory there are tremendous benefits that can be achieved. So if everyone, manufacturers all the way to pharmacy retail chains, can harmonize their efforts, we can drive inventory levels down and see a substantial savings. We can perhaps even be able to run manufacturing lines more efficiently having visibility down the supply chain. It would be difficult for RFID to move forward at the expense of any single link in the supply chain, because there will be resistance and it will be very difficult to continue the momentum. 

Some industry observers fear that companies will just begin slapping and shipping RFID tags rather than looking deeper into what RFID can do. Is that likely if there is no industry harmonization? 

Seitz: At conferences, many vendors are constantly telling us, �Do not go down that route.� But frankly, in the interim period between now and when we have the infrastructure set up across the entire supply chain, a slap-and-ship solution may be an interim answer for us. Maybe for other companies, too. Until we get to the point where we can apply RFID at the unit level for all our products, whether they be in vials or bottles or blisters or whatever, putting an RFID label on a carton or a pallet as it goes out the door may make a lot of sense. As part of enterprise resource system, we have a warehouse management tool that sets up different SKUs for products with RFID tags and products without. It causes our IT people a lot of sleepless nights trying to figure out how they are going to deal with product that is tagged and product that is not. In the event that we only have to meet requirements from the DOD, Wal-Mart, and a few others for the next few years, we may be in a position where it is better to slap and ship until we have enough requesting RFID. 

Cohen: I agree. This is going to be very similar to the UPC codes back in the 1970s. The retail market needed 80% saturation of product to make the investment worthwhile to put readers in grocery stores. We are going to see the same thing. If we don�t have enough customers able to read RFID and we use the technology, it is a waste of time to tag units or cases for customers that have no means of reading them. So slap and ship may be a good starting point for specific customers for specific products. 

What challenges are there? 

Hollander: What we need is for technology suppliers to meet our technical design criteria requirements. So we need tags that can be successfully written to on our packaging lines at speeds of more than 400 a minute. They need to come in the door with six sigma quality and function with six sigma or better quality once they are out in the field. Most importantly, they need to be able to work irrespective of the dosage form that we are packing, be it a solid-dosage-form blister, a liquid, or an ointment in a tin tube. 

Are you finding that? 

�There is more to the cost of RFID than just the tags and the hardware. We get into the cost of systems integration, which is huge.� 

�Greg Pendell, global regulatory affairs
Eli Lilly & Company

Hollander: No. It does not exist. 

Kim: RFID was really designed for the consumer packaged goods industry and has not been adapted to the needs of pharmaceutical companies. The requirements that Rich outlines are the realities of what pharmaceutical manufacturers are facing in an attempt to implement RFID. Many of the RFID tag suppliers are just beginning to learn that the needs of pharma are much different from the needs of consumer packaged goods companies. 

Cohen: I applaud DOD and FDA and Wal-Mart and all the other retail folks who have really pushed the issue. Without them, this level of information exchange and frenzy in the industry would not have happened at this point in time. But we are going to have a difficult time delivering it at this point in time. The technology is not there; the robustness is not there. Rich was being very kind in talking about the quality of the tags in six-sigma terms. Somebody I talked to a couple of weeks ago said that about 60% of their tags were not working. The tags were okay when they left the manufacturer, but by the time they got to the end-user, a lot of them no longer functioned. Or they were so fragile that when they were placed on a small vial or a small package they bent, disconnecting the antenna from the chip. So there�s a lot of things that are going to have to happen before this becomes a very robust operation. 

Hollander: It is really required for track and trace down to the item level. Otherwise, the integrity of your whole operation is compromised. It is not just pharmaceutical companies� high expectations of quality. It is essential in order for anticounterfeiting solutions to be effective. 

Pendell: We have not addressed cost. There is more to the cost than just tags and hardware. We get into the cost of systems integration, which is huge. There are also stability studies, because we have to validate that our products are still stable, which in other industries may not apply. Then we must determine what happens to these data that are collected, and where the data are stored and distributed. 

Given these challenges, are you getting any slack from retailers or the government? 

Hollander: Right now we have DOD, Wal-Mart, Albertsons, and Target. All have requirements. To this date, they are only asking us to tag pallets and cases. At least in Wal-Mart�s consumer products trials, some of the requirements have been reduced since Wal-Mart�s original goals were stated. They have made it clear to us that the tags only need to work when the case is on a conveyer, and not necessarily when buried inside of a pallet. 

Cohen: For Class II drugs, Wal-Mart has asked for tagging down to the unit level, which initially was going to be due in March of this year. They pushed it to June of this year. That�s going to be a struggle also. 

Hollander: Bruce, is the requirement that tags must work when buried or will they work with line of sight for Class II drugs?

Cohen: Down to the unit level, it depends on the tag. But if you are tagging down to the unit level and the products will be read at the pallet and case level, it depends on tag frequency. But there is a lot of speculation here. There are also concerns about Class II products. Are they injectibles? Are they solid dose? Where do you put the tag on a vial, and how many vials are in a carton, and how many cartons are in a pack? How do you read all of those tags? 

�We will be stuck until the industry can really mobilize itself and start to answer some of the basic, fundamental questions, such as what frequency are we supposed to be using?� 

�Dennis Kim, senior manager of supply chain operations for TAP Pharmaceuticals

Also, FDA has asked us to test to ensure that RFID presents no harm to our products. Certainly with solid-dose products, there is probably minimal risk, if any. FDA has said no to using RFID for biologicals at this point in time. So we need a tag design that does nothing to the product and provides all the information we need. 

The National Boards of Pharmacy has listed 31 products with a high potential of being counterfeited. It would like to see tags on those units in 2005. That is going to be a challenge to any of us who have those products. 

Where do you see hope? 

Kim: There are some emerging technologies that may be of assistance. Will they present the entire solution? I am not sure. But it goes back to the statement I made about harmonization within the industry. We will be stuck until the industry can really mobilize itself and start to answer some of the basic, fundamental questions, such as what frequency are we supposed to be using? 

Hollander: Those things are going to evolve as the technology matures. Quite frankly, what it will likely be is different frequencies and antenna designs for different levels of packing. 

Kim: It seems that 915-MHz tags are better suited for a case in the pallet level and a 13.56-MHz tag would be better for unit of use, because you can get down to a smaller tag. 

Cohen: Well, let�s go even further than this. Most of us are global companies, and we have demands throughout Europe and the rest of world. We are looking for a single answer to these questions: What can we do on our unit products globally? What can we do on our cases and pallets globally? How do we set a single standard in the company that allows us to handle all of those markets? The last thing we want to do is start segregating all of our finished goods into market populations because of requirements for RFID tags and not have the ability to move things around. 

Seitz: We tend to think about RFID as if the United States were an island. But the way our global supply chain has been established is that we have to be able to have product that can be read in Germany and in Ireland and here in the United States. We don�t need to divide Wal-Mart material from Department of Defense material from UK material. It is just going to cause all kinds of consternation. 

Hess: Having some global standard would be ideal. Then a lot of the technical issues that Rich brought up are the next ones to be solved. 

Cohen: All of us have gone through this on a consumer level with theft-deterrent tags that are placed in retail packs at the consumer level. There are multiple frequencies and multiple tag suppliers. Those of us who put them in our packs are constantly being asked to maintain multiple inventories because one does not read the other. That is what we are trying to avoid with RFID. 

Hollander: Yes, and I think that is the role of EPC Global, which we really have not talked about yet. Its role is to facilitate standards development for all aspects of utilization of the EPC [Electronic Product Code] within the RFID tags. 

How is that going? 

Hollander: Slower than anticipated, given the attention received in the last 12 months. I think everybody in the industry would agree to that, including EPC Global. 

Cohen: Do you see the industry joining as members of EPC Global? 

Hess: At some point everybody is going to have to join, if we are to become users of RFID. 

Cohen: Let�s talk about tags. If all of us, not just on the call, but all of us in industry, were to start tagging tomorrow, we couldn�t buy tags. There is not enough capacity. So the industry itself has to evolve in order to supply what is required in the form that we need. Anybody disagree with that? 

Hollander: No, I don�t disagree, but I know enough about the two suppliers to know that they will be way ahead of us. It is not driven by our industry�s needs. 

Seitz: Even if they have the tags available, I am more concerned here at Lilly about the quality of those tags. A 60% or 70% or even a 95% accuracy is not good enough. 

Cohen: Yes. Let�s say the tags are 95% good and you have 5% that are not. That is a lot of product that you are going to have to deal with in the marketplace one way or the other, because they are not going to be read at a portal. Somebody is going to say they are not genuine, and you are usually going to get them back as returns. Or you are going to have to investigate whether they are counterfeit or not. 

Hollander: When we approach anticounterfeiting technologies, we put a plan in place to validate that every single package that we intended to mark is marked. If we ever have a suspected counterfeit product, we never have to doubt ourselves as to whether or not it was one of those three per million that didn�t get marked. So it�s really about the quality of your solution and your ability to validate or qualify it. Otherwise, you compromise the integrity of everything you are trying to do. 

Hess: Right. If one touch point is missing, you have lost the security of the system. 

Hollander: From Pfizer�s perspective, we are committed to track and trace. We also believe that solutions beyond technology, such as changes to business practices, high diligence by all, and new and enhanced regulations and oversight, are needed. We are committed to getting RFID to work. But track and trace does not need RFID in the short-term. Industry needs to come up with a practical migration strategy to get to full RFID track and trace functionality at some point in the future, be it 2007. I don�t know for sure if that will happen, but it is a lofty goal. What can companies like Pfizer and others do? Well, we can work together to see how we can get track and trace to work with the EPC until the time that RFID tags are really ready for prime time. Every package produced must be traceable. That is the cornerstone of a good anticounterfeiting strategy. We will still need other technologies to support that, but ultimately tracking and tracing will give us the electronic pedigree to manage the complexities of the current product supply chain in the United States. 

Cohen: We are providing medicines to improve patient lives. Part of that is the supply chain and how we get from manufacturer to patient. Anything that we can do to guarantee that what the patient purchases is exactly what we produce is something that we are going to strive to do. 

Seitz: We are committed to track and trace, and we will be participants as we move toward RFID.  

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