RFID Pilot Raises Hopes and Red Flags

The first phase of a high-profile radio frequency identification (RFID) pilot program led by Accenture, Inc., did what it was supposed to do—provide some answers but raise even more questions about the use of RFID technology across a global supply chain with multiple manufacturers, distributors, and retailers.

The program, nicknamed Project JumpStart, was designed to test whether electronic product code (EPC) and RFID can actually secure the pharmaceutical supply chain while also satisfying regulators and providing business value. Companies currently participating include Abbott Laboratories, Barr Pharmaceuticals, Cardinal Health, Johnson & Johnson and Pfizer, as well as retailers CVS and Rite Aid.

The recently completed first phase of the project tracked and traced nearly 13,500 packages over the span of eight week. Phase 1 confirmed many key merits that have been promised with RFID, such as that it provides an efficient, paperless way of establishing drug pedigrees and meeting mandates. “We’ve been able to determine that indeed you can take an end-to-end supply chain view with RFID with many partnering firms,” says Jamie Hintlian, a partner in Accenture’s Health & Life Sciences practice.

Other good news after Phase 1:

• It confirmed RFID’s importance in developing more effective drug recall procedures. Several simulated exercises were done in reverse logistics, Hintlian says, providing some answers about how best to mitigate costs and effects of expired or tainted products.
  
• It provided evidence that RFID’s electromagnetic energy did not affect solid-dose drug products. Several participating firms put their RFID-tracked drugs through rigorous strength, potency and purity testing, and all found that there had been no impact from RF energy, Hintlian says.
  
• Phase 1 also provided insight that could be beneficial for the standardization of RFID equipment and tag placement on products.

On the other hand, Phase 1 raised a lot of questions about RFID that will need to be addressed going forward. One relates to costs of implementation. “We’re still trying to get our arms around costs,” Hintlian says. “There are just a lot of variables to deal with.” For instance, RFID-related expenses will correspond to how far and how deep companies want to go in using RFID.Another red flag raised by Phase 1 was that the rate of defective tag labels hovered around 20%, clearly unacceptable even in a pilot study. Hintlian says tag vendor firms are hard at work to rectify this problem.

Editor's Note: Several new companies have signed on for Phase 2 of JumpStart, including Merck, Novartis and Wyeth. The test scenarios have yet to be finalized for Phase 2, but will likely start early in 2005.