The Case Against RFID In Pharma

iStock_000001225482SmallerIt is pretty clear that there is not much interest in the use of Radio Frequency IDentification (RFID) in the pharmaceutical supply chain because every time I publish an essay in RxTrace about some aspect of it, there is a drop in readership.  So at the risk of taking another hit in readership, let’s take a look at the case against the use of RFID in the pharma supply chain.

Back in 2010 I published an essay that really rattled my friends in the RFID vendor community (see “RFID is DEAD…at Unit-Level in Pharma”).  Since that essay was published, the two or three drug companies that were previously shipping drugs with package-level RFID tags on them have ended that practice, replacing the RFID tags with 2D barcodes.  This includes Purdue Pharma and Pfizer, the two flag carriers for RFID in pharma back in the late 2000s (notice how none of the hits in this Google search are dated after 2012, except one that is based on outdated information).


To make matters worse for the RFID industry, the new Federal Drug Supply Chain Security Act (DSCSA)—enacted last November and defining technical requirements for drug identification in the United States for the next 10 years—explicitly mandates serialization encoded into 2D DataMatrix barcodes at the unit level.  In other words, the use of RFID to identify drugs in the U.S. will not comply…by an act of Congress and the agreement of the President.

But I guess it is not quite that bad for the RFID industry.  After an early draft of what eventually led to the DSCSA contained language that mandated only 2D barcodes, I included a taunt to the authors—and a heads-up to the RFID industry—regarding that point in my next essay (see “What If RxTEC Isn’t Adopted?”).  Almost every bill draft published after that—including the enacted DSCSA—contained additional language that allows the FDA to identify “other technologies” for carrying the serial number and other identifying data (see “The Federal Lot-Based Pedigree Before Congress”)—perhaps a hollow “win” for the RFID vendor community.  Or, for you eternal optimists out there, a seed planted, who knows?

The U.S. pharma supply chain is made up of three primary segments rather than just two, like most other major supply chains.  By that I mean that the vast majority of drugs move through three different types of companies, each forming a “segment”:

  1. manufacturers and their affiliates, including contract organizations like contract manufacturers (CMOs), contract packages (CPOs) and third-party logistics providers (3PLs);
  2. wholesale distributors, sometimes cascading through multiple companies;
  3. dispensers, including chain, independent, mail-order, and hospital pharmacies, but also including clinics, and even individual doctors and dentists.

Having three segments in a supply chain complicates the adoption of any new technology that must be deployed by all companies unless you have a powerful mandate.  I think it is unlikely that the FDA or anyone else from the U.S. government would require the adoption of RFID on drugs.  Why would they do that?  I also think it is unlikely that the FDA will even allow the use of RFID for the identification of drugs under the DSCSA for a long time.

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To make RFID useful to this supply chain, all of the companies listed above would need to deploy, not only RFID readers but also new software that works in a sequence of events that differs from those followed today with barcodes.  That might not be a big deal if you were starting from scratch, or if you introduced a new reason to read identifiers with RFID that doesn’t exist with barcodes, but in use cases that make use of barcodes today, adding in RFID causes more trouble than it addresses.  By adding a second sequence of steps that must be followed, users would need to first determine if the product is marked with a barcode or a barcode plus RFID, or just RFID.  Then they would need to follow the steps necessitated by the technology to capture the identifier on the drug package or shipping container.  A transition from all barcodes to all RFID would take years and the inefficiencies introduced by this fumbling around with each package would cost gobs of money, spread around the supply chain.


The bottom line is, for RFID to even begin to be accepted and deployed in the U.S. pharma supply chain there would have to be a new reason to use it, not just today’s supply chain identification use cases.  Take a look at what has been done in the apparel industry with RFID to see what I mean.  (Make sure you read that linked article and find the quote by Bill Hardgrave, dean of Auburn University’s College of Business “..when we look back, it almost seems silly that we started it as a supply chain tool.”)

RFID is increasingly being used in the apparel retail industry to monitor and continually adjust store floor inventory.  This brings on benefits that go way beyond the cost of the tags and it all runs in parallel with barcodes and outside of the supply chain, and so some chain stores have even decided to tag everything themselves.

What if, in their haste, they put the wrong tag on a product, or otherwise mess up the association between the product and its electronic identification?  What if the tag fails and cannot be read at some point?  No big deal.  These things are rare enough that the use case still works.  Nobody gets hurt.  In fact my bet is that some value would still be captured even if the tags applied and the information read were only about 75% accurate.  That would not work for drugs where a significant percentage of the regulations issued and enforced by the FDA are to ensure 100% accuracy in the identification of a given drug once it reaches the patient and everywhere between.  That is one of the reasons for FDA process validation of packaging systems.  And there is a huge gap between 75%—or 85%, or even 99%—and 100% accuracy when it comes to drugs.

For RFID to be used in pharma, the tags would need to be applied by the manufacturers.  Downstream trading partners like wholesale distributors and dispensers must not add their own drug identification technology—like RFID—to drug packages unless they too validate their systems and follow Current Good Manufacturing Practices (cGMP) just like the original manufacturer.  If they don’t, bad things are going to happen.

So what is that new reason to use RFID in the pharma supply chain?  Unless you can come up with one that brings significant benefits to all three segments, RFID is not going to make a dent in the pharma supply chain for a long time.

Disagree?  I know you do.  Let’s hear it.  Leave a comment below.


5 thoughts on “The Case Against RFID In Pharma”

  1. It may be difficult to justify the use of RFID in the supply chain for all types of pharmaceuticals, but there is at least one category of drugs that would benefit ALL three segments of the pharmaceutical supply chain: Controlled Substances, as regulated by the Drug Enforcement Administration (DEA). This includes many types of the drugs that have a significant abuse potential and therefore require a higher degree of regulatory control (e.g., narcotics, sedatives, hypnotics, etc.).

    Each of the three pharmaceutical supply chain segments spent a lot of effort keeping a precise count of every controlled substance manufactured, distributed, and dispensed. The use of RFID would allow this accountability aspect to be done using automation, not humans.

    An added bonus beyond supply chain efficiency is that the use of RFID tracking for controlled substances could bring a huge Patient Safety benefit by further preventing the “holes” in the current systems that make it too easy for at risk individuals in the supply chain to gain access to theses drugs. By making it more difficult for people to gain access to these drugs, fewer people will become impaired and the patients they take care of will not be impacted.

    If there was ever a place to begin the implementation of an RFID Supply Chain Solution, controlled substances is the obvious place to begin. It’s a winner for all segments and it will positively improve patient safety.

    1. Ray,
      Great point and well said. I agree with you. In that case, RFID tags should be added to all controlled substances while keeping the 2D barcode used for DSCSA compliance, just like the apparel use case. In that way the industry would not necessarily need the approval of the FDA since the 2D barcode would meet the existing requirements of the law and the RFID tags would be used to more efficiently meet the DEA inventory requirements. Companies could then test out supply chain RFID use cases (receiving/shipping) using a controlled subset of their product lines to determine if/when it makes sense to widen its use outside of class II drugs. How do we get manufacturers of class II drugs to put RFID tags on their drug packages in addition to the 2D barcodes, both with the same serial number encoded in them?


  2. Fully agree…. now if we could get the S. Korea regulatory agency to drop RFID as an product identification option… it would much help to convince some local CMOs that happen to also own IT subsidiaries from pushing their RFID products regardless of value… 🙂

  3. Dirk,

    While you could start with DEA Schedule II medications (e.g., the more potent narcotics like morphine, oxycodone, fentanyl), my opinion is that it should include ALL of the DEA scheduled controlled substances. My reason is because the accountability and precise record keeping requirements for the medications in all DEA schedules are quite similar and having a “common system (i.e., with RFID trackability and tracing) provides a solution that meets the needs for all of these types of medications. Most hospital pharmacies and many high-volume retail pharmacies use some type of secure storage cabinets. Adding RFID tags to all DEA Scheduled Controlled Substances would provide the needed justification to add the ability to use RFID Cabinets to store these items in pharmacies. This would greatly decrease the opportunity for common recordkeeping errors and create a system that would be much less prone to diversion than current systems. Adding RFID tags to DEA Scheduled Controlled Substance would be a “tipping point” in the management of controlled substances and the prevention of diversion.

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