White Paper: Item-Level Visibility In The Pharmaceutical Supply Chain: 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and pharmaceutical markets must absorb more than $2 billion in product returns each year caused by overstocked or outdated products.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.