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Drug companies,
retailers adopting RFID for drugs
Ellen Beck
UNITED PRESS INTERNATIONAL
November 16, 2004
WASHINGTON -- Pfizer, GlaxoSmithKline and Purdue Pharma are the first
drugmakers willing to take the plunge and use radio frequency
identification technology to protect their U.S. drug supply chains
from counterfeiters.
On the other end, Walgreens and CVS, the nation's biggest pharmacy
companies, also are involved in testing RFID to see if putting the
tiny electronic devices on pallets, packages and bottles of drugs can
track them accurately through the supply and distribution chain.
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Walgreens and CVS, like Pfizer, Abbott Labs, Johnson & Johnson,
Procter & Gamble and others, have participated in Project Jumpstart, a
demonstration program through which the pharmacies receive
prescription products with RFID tags on bottles and cases. So far, the
results have been positive in terms of the technology's ability to
create an electronic pedigree for tracking purposes.
Pfizer said Monday it is going beyond testing and by 2005 will tag its
highly counterfeitable Viagra; Purdue Pharma is tagging 100-tablet
bottles of the powerful painkiller OxyContin, which has been used as a
recreational drug, therefore making it a target for thieves and
counterfeiters; while Glaxo still is deciding which counterfeit-prone
product it will begin tagging in the upcoming 12 to 18 months.
The pharmaceutical industry is going to have to mount more of a
response, however, to bring RFID technology to a scale where it is
easily affordable. With estimates of counterfeiting drugs worldwide
only in the 5 percent to 7 percent range, cost is a key issue for what
is -- at least in the United States, where the supply chain is
considered very safe -- a huge investment in protective technology.
The Food and Drug Administration's counterfeit caseload, while rising
somewhat over the past couple of years, totaled just 76 cases from
1996 to 2003.
Accenture, a global management company, also participated in Jumpstart
and noted in company documents on its Web site: "Many obstacles stand
in the way before we can know where an object is all the time using
tagging and sensor technologies. Cost is one big factor. Although the
price of RFID tags is dropping quickly, they will never be as
inexpensive as bar-code technologies. Increased functionality of the
electronic tag is its primary advantage, but it remains to be seen how
'universal' such a system will be."
Startup costs for companies -- including IT and support services --
could run into millions of dollars. Then there is the cost of the
hardware at each end of the chain -- tag readers at $1,000 or more,
tag printers at several thousands dollars and the tags themselves at a
range of 20 cents to 50 cents each.
Until the costs can come down to just a few pennies per tag -- and
experts in the industry predict that could take years -- tagging drugs
might be most economically feasible for the more expensive
prescriptions, such as Viagra, that are most vulnerable to
counterfeiting.
With a goal of 2007 for the industry to be using RFID, FDA said it
will create an internal RFID working group to identify regulatory
issues the technology raises and to work with industry on
implementation. It also has issued a guidance to industry that spells
out use of RFID will not violate regulations covering drug product
labeling.
Dr. Paul Rudolf, FDA's senior adviser for medical and health policy,
told reporters: "There will be some financial burden ... we're not
sure how much it is or how it will develop. Once a lot of the
technology issues are resolved ... readers that cost $1,000 will come
down to $200 and tags down to 10 cents. As volume increases the price
will go down."
FDA officials also think RFID will become a business tool for many
types of administration, tracking and data collecting as prices go
down and the technology becomes more widespread. At that point, it
actually could start saving companies money.
Tom McPhillips, Pfizer's U.S. Trade Group vice president, echoed FDA's
take, saying that at this point RFID is all about safety -- preventing
counterfeiting -- and not about cost savings.
"Drug counterfeiting is a serious and growing problem and RFID offers
the potential to be an important anti-counterfeiting technology in the
future," he said. "It's certainly not the only solution. Changes to
state regulations, more stringent licensing of pharmaceutical
wholesalers, modifications of business practices, and increased
enforcement also are very important. But RFID does offer great promise
as an effective tool in the battle against counterfeiting."
PAY FOR PERFORMANCE -- THE CONSUMER DISCONNECT
The healthcare industry is moving steadily toward pay-for-performance
but one new survey shows that consumers, who really have not been
exposed to a lot of information on how such systems work, register
mixed reactions based on what they think.
American Healthways commissioned the survey and it was released during
a summit the company held recently on pay-for-performance in
conjunction with Johns Hopkins University. Some 1,223 adults with
insurance were asked about outcomes-based compensation -- an approach
health insurers see as a way to manage healthcare costs better while
at the same time getting physicians and other providers to adhere to
practice guidelines and best practices in healthcare.
Some 60 percent of respondents said doctors already were following
those best practices and guidelines, but studies have shown that only
happens about half the time.
Physicians are not opposed to the pay-for-performance concept, but
they worry about how performance data will be used in ratings reports
or score cards.
The poll found 70 percent of consumer respondents did not think
pay-for-performance programs would result in a better quality of care,
even though 80 percent said they would like to see their community
physicians rated in "Consumer Reports" fashion.
Other studies have shown, however, such scorecards created by insurers
attract little consumer interest or use. Even physicians avoid using
them when deciding which colleague to refer patients to for treatment.
Though 81 percent said bonus pay for meeting additional goals or doing
superior work is a good idea generally, only 51 percent thought so
when it was applied to physicians -- compared to 84 percent who
supported it for teachers, 89 percent for line workers and 87 percent
for sales clerks. Some people simply consider physician salaries to be
high enough without bonuses.
About 55 percent said pay-for-performance should be linked to reducing
medical errors -- even though the industry is trying to move away from
the one-person blame game toward a more systems approach of removing
the problems or environments that allow medical errors to occur.
Some 78 percent of consumers said patient satisfaction should be a key
measure of success -- while the industry is focused on outcomes --
which may not be the same thing.
Dr. James E. Pope, chief medical officer of American Healthways, told
UPI's HealthBiz people also may be reluctant to get into physician
compensation again because of the bad rap it got during the more
restrictive days of managed care in the 1990s, when incentives for
physicians were linked to denials of care.
He said 21st century pay-for-performance models are still evolving --
a main reason for bringing together providers at the summit to talk
about what works and what does not.
Many current pay-for-performance deals are structured so "doctors are
not placing money at risk, but in fact are only involved in the
upside" of receiving a benefit for standards achieved, Pope said. "At
this stage, individual doctors do not yet appear to be receiving
substantial sums." |
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