While technology cost and lack of a demonstrated return on investment constitute the biggest barrier to adoption of radio frequency identification (RFID) in the pharmaceutical industry, lack of a frequency standard is the second major hurdle for adoption of RFID, according to a recent report.
"While many pharmaceutical companies are eager to begin their RFID pilot work, we're seeing a freeze on project funding until an item-level frequency standard is established," says report author Eric Newmark, senior research analyst, IDC company Health Industry Insights. "Evaluations are being hindered by corporate fear of investing in the wrong infrastructure," he adds.
Despite predictions of an RFID explosion in healthcare, with consultants IDTechEx forecasting that the global market for tags and systems will rise to $2.1 billion in 2016 from $90 million in 2006, a survey of 143 life sciences industry leaders by Health Industry Insight reveals that fewer than one in five (16 per cent) pharmaceutical companies are currently evaluating the benefits of RFID technology. Moreover, 75 per cent of those evaluations are carried out on an annual budget of less than $50,000, according to the report.
Even fewer companies (15 per cent of those polled) have actually adopted RFID, with 13 per cent doing so to a limited extent and only 3 per cent characterising their embrace of the technology as 'widespread adoption', the report says.
As per the report, the average life science company investment in RFID is around $25,000, although the survey respondents believe this figure will jump to $75,000 over the next 12 months.
According to Newmark, a number of reasons are commonly cited for the slow uptake of RFID in the pharmaceutical industry, despite the encouragement of the US Food and Drug Administration (FDA) and the support of industry associations. These include, concerns about the available level of read rates, security and privacy issues, orientation sensitivity, encode speeds, read ranges and the need for an actual FDA mandate. Yet, technology costs/ROI and infrastructure investment are the main impediments to RFID adoption.
"Drug safety is a noble cause, but it doesn't pay the bills. So companies await further financial results to be released surrounding the major initiatives underway at Pfizer, GlaxoSmithKline, Purdue and others," Newmark noted.
The second biggest hurdle - reluctance to commit to infrastructure investment - stems from the ongoing debate about the relative virtues of high frequency (HF) and ultra-high frequency (UHF) radio frequency identification for item tagging, the report says.
As per Newmark's report - Item-Level Tagging: Moving Beyond the Frequency Dilemma - both 13.56 MHz high-frequency and 915 MHz ultra-high frequency tags promise much for pharmaceutical applications, although each has its unique benefits.
Often, cost advantage is cited for UHF tags, although Health Industry Insights' research suggests that, at high volumes, UHF tags will be less than $0.01, cheaper than their HF counterparts. Advocates of high-frequency RFID claim tighter security (due to a shorter read range) and higher readability, specifically around metals and products containing liquid.
One factor that might swing the market behind HF is the globally harmonized frequency, while the less mature UHF technology operates on different frequencies from country to country, limiting economic efficiencies. Both frequencies are being used at item level by pharmaceutical manufacturers and distributors such as Purdue (UHF), Cardinal (both UHF and HF), Pfizer (HF) and McKesson (HF).
Eavesdropping concern
Another concern that figured strongly in the Health Industry Insight survey was security and privacy. Even though tags contain only a licence plate identifier, chances of security gaps are high as more detailed information is stored in a protected database, according to Newmark.
"Electronic product codes are logic-based, with sections of numbering that designate both the manufacturer and the drug type. So it is not difficult to decipher what licence plate serial numbers signify," he noted.
Assuming that RFID tagging eventually extends to the patient/consumer level, it would be very easy for someone with a reader to walk past a customer in a pharmacy aisle and identify the prescription they carry. Alternatively, someone from a rival retailer could use a pocket reader to scan medicines on a daily or weekly basis and check how products are turning over. This is another argument for shorter read ranges on tags in the pharmaceutical sector, although shorter ranges alone will not fix the problem, the report notes.
Newmark urges the pharmaceutical companies, which hang on for an item-level frequency standard to go ahead with their evaluations using whichever frequency they feel will deliver the best results. As an industry mandate for a particular item-level frequency is unlikely, the risks of investing in the wrong infrastructure are minimal. Frequency-specific hardware costs are only about 10 per cent of total RFID spend.
A more feasible scenario is that the vendors behind competing RFID frequencies will 'agree to disagree'. Implementing a universal RFID frequency is actually in everyone's best interests and both distributors and retailers should be moving in that direction, Newmark says. Most barcode readers have built-in intelligence for several algorithmic reading methods, he points out.
The incremental cost of building a dual-frequency network is insignificant in comparison with the potential returns that widespread RFID adoption will bring, not only by means of increased drug safety but more specifically through leaner distribution and improved chargeback and returns processes, the report comments.
- PackWire.com