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RFID's Pharmaceutical Speed Bump
By DAVID SIMS
TMCnet CRM Alert Columnist
A new ABI Research study of RFID tracking in the pharmaceutical industry, anticipates that no more than about ten medications will be tagged on a large scale during 2006, according to company officials.
Quite a change from last year, when the evidence suggested a nearly 3.5-fold increase in life-sciences RFID transponder shipments between 2005 and 2006.
Not that it'll derail the industry: RFID technology in the retail consumer products goods sector reached $161 million in 2005, with hardware accounting for 41 percent, said an analyst firm.
According to Microwave Engineering Online, Venture Development Corp. estimates RFID will grow at a compounded annual growth rate of nearly 57 percent during the next four years, with revenue exceeding $1.5 billion in 2010.
"Once this market blows out it will become a multibillion business," said Tom Grant, chief executive officer at ThingMagic, a privately held RFID manufacturer of readers and equipment that closed a round of funding on Wednesday.
What slammed the brakes on the pharmaceutical side of things? According to Sara Shah, ABI Research’s industry analyst for RFID and M2M research, much of it’s cost, as well as to a retreat from the “irrational exuberance” of early market hype and a desire to execute small-scale pilots before committing to full deployments.
One important inhibitor of this market concerns legislation “on hold.” The United States Prescription Drug Marketing Act of 1988, ABI explains, requires biotech and pharmaceutical manufacturers to prove they have processes in place to prevent the diversion of drugs. This encompasses the idea of “pedigree,” or the ability to trace a shipment’s “chain of custody” at all stages from manufacturing to delivery.
"The PDMA caused an uproar,” says Shah, “because there was no way that companies could achieve that within the specified time.”
So the law was subjected to a temporary “stay,” and has not been enforced to date. Certain states then decided that they would enact their own pedigree laws, due to increased drug counterfeiting.
The first was Florida: its pedigree law is scheduled to commence in July 2006. California followed suit; its regulation goes into effect in January 2007.
Coincidentally, that is also when the moratorium on enforcement of the PDMA expires, and is the target set by FDA guidelines for widespread use of drug shipment tracking. It is clear that the FDA’s RFID expectations will not be met, as many companies plan to use barcodes to satisfy state pedigree laws.
“There is a potential that the market will slow more if state pedigree laws are pushed back,” says Shah. “Initially, only high-value, frequently-counterfeited or stolen drugs such as Pfizer’s Viagra and Perdue Pharma’s OxyContin are likely to be tagged.”
RFID suffered an embarrassing black eye last week, industry observer Dave White reports, as in the Netherlands a security firm partnered with a TV program to successfully decrypt a Dutch-prototype RFID passport:
"In just two hours, officials from Riscure and 'Nieuwslicht' intercepted, stored, and cracked the password encrypted on an RFID-tagged passport. The result was the virtual 'undressing' of the passport, allowing the hackers access to the digitized fingerprint, the photograph, and all other encrypted and plain text data on the passport."
David Sims is contributing editor for TMCnet. For more articles please visit David Sims' columnist page.
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