Health Industry Insights (HII) just released a very eye-opening survey of RFID adoption of pharmaceutical manufacturers. Eric Newmark, the report’s author, was kind enough to share the full report with me. Unless you are a customer of HII, I’m afraid you will have to pay to read it. Order it here.
Based on a survey of 143 "industry leaders" ("95% manufacturers," Eric tells me), the study found:
- Only one in five (16%) pharmaceutical companies are currently evaluating the benefits of RFID technology
- Only (15%) companies are adopting RFID in some capacity
- Tag cost/Lack of demonstrated ROI
- Lack of frequency standard
- Security/privacy concerns
Reality Bites
To date, the benefits of RFID appear to be greatest when used within a single company on specific projects. For example, independent research by professors at the University of Arkansas found that RFID reduced stock outs in Wal-Mart stores by 30% by improving shelf replenishment from the backroom to store shelves. (I discuss RFID in wholesale distribution in my new Facing the Forces of Change study.)
I encourage you to read The RFID Revolution Starts... Soon?, a nice overview article from Industry Week with a sober look at the real-world benefits from RFID. Key quotes:
- “RFID remains a niche technology, whose broader deployment has been stymied by the usual suspects: high equipment costs, low return-on-investment and a workforce skills shortage.”
- “RFID remains a finicky technology that can behave differently based on any number of factors, such as the orientation of the RFID tag on the box, carton or pallet; the type of products being tagged; and the environment in which the tagged product is stored.”
- “The bottom line for RFID is that it's all about process change and the business case. In the end, business owners, and not the IT department, will be the decision-makers when it comes to adopting RFID.”
Vendors really said that? How ... shocking. Check out An Odd RFID-Importation Connection to read how technology vendors will now be delivering the hype unfiltered to Senators now looking to push importation legislation.
Ready for Pedigree
Given the FDA’s statement above, I want to contrast RFID with e-pedigree, which is a functional technology/process that is ready to go.
California has set the pace for the pharmaceutical industry adoption by explicitly stating that pedigree must be "...in electronic form…" (See for yourself by perusing the fascinating Business and Professions Code – page down to section 4034.) Barring any unexpected delays, California’s pedigree law will take effect in 2009.
Note that RFID will not be required or mandatory to comply with CA code. The only requirement is electronic track-and-trace using a “standardized nonproprietary data format and architecture.”
At the Federal level, some people still think RFID and e-pedigree are synonymous, but that’s simply not true. The Prescription Drug Marketing Act is completely technology agnostic. The FDA was unambiguous on this point Last November: “Both paper and electronic documents and signatures may be used to meet the pedigree requirement of the Act, provided that the requirements of 21 CFR 203.60 are met.” (Neither the FDA nor CA have addressed retail pharmacists' desire or willingness to authenticate inbound product at the point of dispensation -- our demand-side problem.)
Like Norma Desmond, RFID may be ready for its close-up, but e-pedigree will turn out to be the real deal for technology-enhanced supply chain security.
P.S. See me at the TRAX Summit to hear more. You may also get to see RFID vendors throw tomatoes during my keynote...
