Concerned about counterfeit prescription drugs, the US Food and Drug Administration (FDA) is encouraging pharmaceutical companies to put radio frequency identification (RFID) tags on drugs by 2007.

RFID—similar to the technology used for tollbooth and fuel-purchasing passes would mean that tiny antennas and tracking computer chips would be placed on medication bottles to provide "electronic fingerprinting of drugs that are especially vulnerable to counterfeiting—such as Viagra and OxyContin.

Such measures would allow RFID to supplant bar coding as the "inventory control technology for the future," says William K. Hubbard, the FDA's associate commissioner for policy and planning. With RFID, packages could be scanned and tracked, making it easier to authenticate them throughout the distribution process.

Encouragement, Not Action

Pfizer Inc., among the first to jump on the bandwagon, says that because the RFID system is hard to copy, it will help protect the pharmaceutical supply chain and, ultimately, consumers from fake medicines." Its blockbuster pill to treat erectile dysfunction, Viagra, is among the most widely counterfeited medications.

For right now, the FDA's plan stops short of requiring any action, and consists of the publication of a guide intended to spur companies to conduct feasibility studies and pilot programs using RFID.

In the past, "certain pilot studies were inhibited, and may have been delayed while waiting for a response from us for those questions," says Dr. Paul Rudolf, the FDA's senior advisor for medical and health policy.

"Studies on chips and antenna can be used without special requirements or the FDA's authorization, and will not result in an enforcement action under existing rules governing labeling," says acting FDA commissioner, Dr. Lester M. Crawford. "The FDA has stepped up its efforts to protect safety and security of the US drug supply with the use of RFID technology."

Adds Hubbard, "We are providing guidance to assure companies that if they do use this tagging, that they won't be violating our labeling regulations. This compliance gives them the assurances they need to move ahead."

Not A Serious Problem...Yet

Although officials stated that counterfeit drugs are not yet a serious problem in the United States, they did acknowledge the problem is on the rise. "We know that counterfeit drugs around the world are endemic. In some countries, you are more likely to get counterfeit drugs than real ones," Hubbard says. "We think that the drug supply in this country is very safe now, and the chance of getting counterfeit drugs is very small," he adds. "But we have seen an increase in cases, and counterfeiters would love to break into our market. We believe the threat is real, and needs to be addressed in a real and strong way.

An electronic RFID tag essentially tracks a drug, allowing investigators to find out who might have stolen it or where it went from a specific store. The information on the tag also lets pharmacists authenticate the product, verifying that it is legitimate.

Officials admitted that privacy issues need to be worked out. "I believe the pharmaceutical industry is very well aware of those potential issues, and right now there are technologies being developed that will enable ID tags to be inactivated or killed in some way...once a purchase has been made that has a tag in it," Rudolf says.

Significant Costs Initially

Although the initial financial investment would be "significant," Rudolf says he also expects RFID prices to fall dramatically as demand increases. "Readers that may cost $1,000 may come down to $200, and tags that cost 20 to 50 cents may come down to 10 cents," he speculates.

"There will be some initial up-front costs, but over time it will save the drug distribution system hundreds of millions—if not billions of dollars," Hubbard says.

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