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Waiting in the wings

High costs and technical glitches have prompted European pharma to implement 2D barcoding to preserve the supply chain, while RFID looks on from the sidelines

Counterfeit drugs are big business globally, which not only endangers patients' health, but also results in huge losses and recalls by pharma companies.

According to the World Health Organisation (WHO) an estimated 10 per cent of worldwide pharmaceutical products are counterfeit; in the UK and Europe it has become an even bigger issue because of parallel trading. While it is unlikely that a solution to completely blot out this problem will ever come to bear, companies are making significant changes to their supply chains, and adopting new technologies can help to minimise the impact of counterfeit medicines on both the industry and patients. Pfizer aroused controversy in March 2007 when it announced it was appointing Alliance Unichem as its sole distributor in the UK.

Despite a bid by wholesalers, pharmacists and doctors to halt the deal, the new system was implemented. Subsequently, Novartis has revealed it is also considering similar plans and is debating a direct-to-pharmacy model and, most recently, AstraZeneca (AZ) has announced that it is appointing just two distributors - AAH Pharmaceuticals and Alliance Unichem.

Limiting the number of stakeholders in the supply chain has resulted in widespread condemnation and while it will ensure that pharma companies have greater control of their pipelines, more needs to be done. Enter electronic tagging. There are currently two methods of electronic tagging radio frequency identification (RFID) and 2D barcodes. While the former has received full backing from the Food and Drug Administration (FDA), which predicted that RFID would be used by most, if not all, pharma companies by the end of 2007, the explosion of RFID has yet to materialise, with many companies in Europe opting for 2D barcodes. So why is 2D bacoding more popular in Europe?

Whats the difference?
RFID is an automatic method of identification: the tag can be attached or incorporated into packaging and identified using radio waves, helping pharma firms comply with the FDA's mandate to have electronic pedigrees - a chain of custody - for their products. The FDA originally expected RFID to be in place in the pharma supply chain by 2007 following stakeholders' assertion in 2004 that this was a realistic goal. However, in August 2006 the FDA realised that this goal most likely will not be met and has declined to put in place another deadline, stating: We do not have enough information to do so at this time.

The US regulator says it continues to support RFID and believes it is the most promising technology for electronic 'track and trace' across the supply chain. While, Europe and the UK usually follow the US in terms of regulations and technology, this has yet to be seen in the case of RFID. Despite Pfizer's high-profile use of RFID on Viagra, and Purdue Pharma's use of it on Oxycontin, few other companies have taken a serious look at the technology. Most are adopting a wait-and-see policy, as many companies do not feel the technology is ready to serve the purposes of the pharma industry. RFID is not mature enough at this moment in time for unit level serialisation, says David Teale, director of product security at AZ.

AZ recently announced that it would use 2D barcodes to serialise its drugs at unit level in Europe and worldwide excluding the US: an example of a major player in the industry going for an alternative technology to RFID. The Anglo-Swedish firm will protect its gastrointestinal drug Nexium with unit-level, serialised, tamper-evident security seals, along with unique carton numbers (UCN). Unique serialised codes will be allocated to each blister pack via the carton, and will then be activated, validated and entered into a database where they can be checked against all serialised codes in the company's supply chain.

This follows a recommendation from the European Federation of Pharma Industries and Associations (EFPIA) that 2D barcodes be introduced across Europe to protect the supply chain. According to EFPIA, the adoption of a 2D system does not prevent the adoption of an RFID system at a later stage, nor does it represent a double cost. Experience has shown that RFID technology is not workable at present but would certainly be a natural progression of the system.

Although Pfizer is leading the RFID trials in the US, it also does not see a case for using the technology in Europe just yet. Pfizer supports the industry [EFPIAs] position on 2D data matrix bar- coding as an effective solution for traceability of medicines in Europe, explains Andrew Bonser, associate-director, policy and external affairs, European Trade Group at Pfizer. Despite all the immediate advantages 2D barcodes have over RFID, it is clear that for it to be an effective system it needs to be adopted by many companies across a number of countries. An industry-wide and pan-European solution would be more effective in securing the medicines supply chain in Europe and enhancing patient safety, says Bonser.

However, Pfizer is not ready to roll-out 2D barcodes in Europe, just yet. The company is working closely with EFPIA, and observers expect the industry body to carry out a 2D barcode trial of some sort in due course. While many companies may need to introduce new machines to put 2D codes on packs - at substantial cost - the main barrier to the full introduction of the technology is companies' ability to read, collate and analyse data.

RFID problems
Why is RFID seen as not workable in Europe according to EFPIA? Teale at AZ says RFID will not be ready for between five and 10 years, and many analysts agree. The cost of tags is a major issue. RFID is fantastic for tagging pallets with a tag that costs USD 3.00 or USD 4.00 and is also great for tagging clothes in store, but they donít lend themselves to mass serialisation, says Teale. Read rates and efficiency are a problem. Although RFID does not need line-of-sight, which is a significant advantage, there are still problems.

There are issues with that working - once you bundle all the packs together RFID doesn't work yet reading them all, continues Teale. There is also continuing debate as to whether high frequency (HF) or ultra-high frequency (UHF) RFID should be used. It was thought that HF was the best option to tag drugs at item-level, but trials of UHF have also been successful.

Analysts at Frost & Sullivan say the return on investment on RFID is most likely to be in the form of regaining lost revenues from counterfeiting and gaps in the supply chain. Apart from this, an automated supply chain reduces labour costs from wholesalers, distributors and finally to retailers. However, the benefits will only be evident after some years of adoption, since a substantial investment is expected to go into employing the potential of RFID, says industry analyst, Paljit Mudhar.

Cost is not the only issue. A lack of standardisation continues to be a major problem, with different standards being used in different countries. The vastly differing supply chains in Europe and US are also hampering the roll-out of RFID. In the US it is more about supply chain efficiency - patients tend not to get unit-use packs as pharmacists put pills in a bottle. Only 30 per cent of packaging reaches the patient in the US, so it is more important to see every step which RFID will be able to provide, explains Teale. In contrast, European patients do receive their medication in packs and the supply chain is much more complicated thanks to parallel trade. This means tracking packages is very complex, although it is something we want to do eventually, says Teale. As a result it is more important that packs in Europe can be authenticated. The supply chain is secure even though not every step is tracked, assures Teale.

Several European countries chose to go down the barcode route, even before EFPIA's guidance was issued. However, these countries, such as Italy, France and Belgium, are each introducing their own coding system, ranging from pre-printed stickers to EAN-13 codes. Europe is still grappling with issues relating to standards, frequencies and lack of government-driven initiatives, says Mudhar at Frost & Sullivan.

EFPIA is now taking steps to ensure standardisation and stated that it wishes to address this system urgently, in order to prevent the continued fragmentation of coding standards across the EU, the fracturing of the supply chain, and in order to realise the patient safety benefits. Many observers are lobbying for one global standard before RFID can be used effectively worldwide. EPCglobal is a not-for-profit standards organisation the main focus of which is to create a worldwide RFID standard. Pharmaceutical manufacturers and distributors, as well as retail pharmacy chains, are already working with EPCglobal in the US to develop standards for EPC technologies to form the basis of a universal 'track and trace' system that would comply with the FDA's request to secure this critical supply chain.

Dual approach
Many companies are working on the premise that using 2D barcodes does not preclude the future use of RFID, as the technology matures and demand increases. Anything we do now, we have in our mind that we will need to migrate to another technology in the future, which will probably be RFID. It is also usual to use RFID in conjunction with 2D barcodes so we are doing preparatory work now and this will not add extra cost in the future, asserts Teale. Indeed this dual approach has already been demonstrated by Pfizer, which also puts 2D barcodes on its RFID-tagged packs of Viagra in the US. Although previously the FDA has taken a strict approach to RFID, it is warming to the 2D alternative. Some observes believe the FDA is being pragmatic and taking a softer approach to RFID- and are maybe starting to look at 2D barcodes.

Indeed, in the FDA's recommendations regarding RFID, published in June 2006, this approach was demonstrated. We continue to believe that RFID is the most promising technology for electronic track and trace across the supply chain. However, we recognise that the goals can also be achieved using other technologies such as 2D barcodes, the FDA stated in its Counterfeit Drug Task Force Report. The Prescription Drug Marketing Act (PDMA) came into force on January 1 2007 in the US, which mandates that wholesale pharma distributors show a paper or electronic pedigree for every drug, which can be achieved using barcodes.

Future outlook
Although Europe and the US look as though they are going down very different avenues to protect pharmaceutical supply chains, they are adopting compatible technologies, which can be used together, side-by-side. Pharma companies are only too aware of the harm that counterfeit medicines can do and while the technologies available are not perfected, they need to implement the technology as soon as possible, rather than wait five to 10 years.

RFID has fantastic potential benefits for the pharma industry, but it is clear the technology simply is not ready, whether you're in Europe or the US. In contrast, 2D data matrix barcodes are ready to be used now and are easier and cheaper to implement. That said, RFID is not out of the running, many companies are exploring the prospect of implementing the technology over the next few years. But until such time, RFID will have to be content to wait in the wings.

9th May 2007

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