Reading Between the Lines of FDA’s Counterfeit Drug Report

July 13, 2006
In June, FDA’s Counterfeit Drug Task Force issued a long-awaited report that signaled the Agency’s current thinking on RFID, drug pedigrees and other issues critical to supply chain security. ABI Research analyst Sara Shah has taken a fine tooth comb to the report, and tells us what FDA is really saying, and what it’s not.

The Prescription Drug Marketing Act (PDMA) was signed into law in 1988, but a number of amendments meant that its pedigree requirement was not finalized until 1999. At that time, the FDA received significant public comment from the pharmaceutical industry because it was considered nearly impossible to meet the law’s requirements given readily available technologies. This forced the FDA to hold back the law using stays. The current stay expires on December 1, 2006, and the FDA has decided not to renew it.

In its 2004 "Combating Counterfeit Drugs" report, the FDA stated that the expiration of the PDMA stay should coincide with widespread adoption of RFID for track and trace in the pharmaceutical supply chain. Today, it is clear that these events will not coincide. However the PDMA law does not require electronic pedigrees, permitting companies to use paper pedigrees instead. So even if it is not feasible to implement RFID by December, companies can use these other means to satisfy the PDMA requirements. Pharmaceutical wholesalers and distributors are already moving forward with pedigree systems based on bar code technology in order to comply with state legislation.

In addition to the PDMA, the "Combating Counterfeit Drugs" update discussed general RFID adoption for track and trace. The task force that drafted it noted several issues impeding RFID implementation, including the lack of standards, privacy, data ownership, serialization, technology accuracy, and the unclear impact of RFID on biologics. The report does not provide specific clarification regarding most of these issues, but it does recommend RFID as the best technology for track and trace. It also advises that companies should continue to deploy RFID technology and work with industry associations to resolve these issues.

What does this mean for RFID adoption?

In the short term, the industry will most likely use barcode technology to comply with state and federal pedigree regulations. Most companies in the industry agree with the FDA’s vision of using RFID to satisfy pedigree requirements in the long term, so the PDMA will spur adoption of RFID. Now that the law requires companies to provide pedigrees, they will have more incentive to begin implementing RFID. The "Combating Counterfeit Drugs" report’s strong language advocating RFID implementation has not spurred the level of adoption the FDA had hoped, so the fact that the agency is taking a stand on the PDMA should help move the industry forward.

Given that the industry has less than six months to comply with the PDMA’s requirements, implementing RFID-based pedigree systems will generally be impossible. This means that companies will use bar codes, and then strategically layer in RFID, starting with the most highly counterfeited drugs. Smaller companies may continue to work with paper pedigrees since the PDMA does not require an e-pedigree. However, such systems are much more difficult to manage than those based on RFID.

The updated report identified and discussed several pharmaceutical industry issues retarding RFID implementation. The FDA will remain involved, but has given the industry most of the responsibility for resolving these issues. Once again, the FDA has signaled that it is highly unlikely that it will specifically require RFID technology for track and trace.

Following publication of the "Combating Counterfeit Drugs" report update, the major pharmaceutical industry associations came together to comment publicly on it. They agreed with all the decisions in the report and cited unresolved issues as the main reason why the FDA is unable to formulate an RFID requirement. Although the report’s strong language has not fueled adoption as the FDA had hoped, no mandate or requirement from FDA appears to be on the horizon.

Ongoing issues

The FDA task force mentioned several continuing issues in the report. The topic debated most often is frequency: will the pharmaceutical industry choose HF or UHF for item-level tagging? In the first half of 2006, most major pharmaceutical manufacturers appeared to be choosing HF for item-level tagging. In the past two months, however, two announcements have disrupted that trend. The first was Cardinal Health’s decision to use UHF technology in its pilot at the item level, and the second was the release of the white paper entitled "RFID and UHF: A Prescription for RFID Success in the Pharmaceutical Industry," in which UHF technology vendors ADT/Tyco Fire & Security, Alien Technology, Impinj, Symbol Technologies and Xterprise came together to explain to the industry that UHF can perform just as well as HF at the item level.

This ongoing frequency debate is causing confusion which will only serve to slow down RFID adoption. As a result, a mixed environment is likely to develop in the pharmaceutical industry. Rather than fight a frequency war, vendors should turn their attention to facilitating the adoption of a dual frequency infrastructure. This strategy will help the market move forward rather than confuse and delay it.

Another recent development is a law that has been proposed in both the U.S. Senate and the House of Representatives. Titled the "Reducing Fraudulent and Imitation Drugs Act of 2006 (RFID)," it requires that prescription drugs be tagged with RFID or similar technologies for track and trace. In the "Combating Counterfeit Drugs" report update, the FDA task force recommends that the FDA provide assistance, if legislation is proposed by Congress. Perhaps now the spotlight will move away from the FDA and focus on Capitol Hill.

About the Author

Sara Shah is an RFID industry analyst at ABI Research ( She can be reached via ABI Research’s analyst relations manager, Beth Schechner, at 516-624-2542, or by email:

About the Author

Sara Shah | Industry Analyst