The new model aims to stem the widespread problem of counterfeit drug distribution by enabling item-level authentication by a pharmacy in a non-internet-connected environment.
This means the drug industry, which is in the nascent stages of RFID implementation, would be able to verify a drug without having sophisticated RFID infrastructure throughout the supply-chain. At least in the short term, the model means pharmaceutical sellers and buyers will be spared the significant investment of new RFID systems and deployment.
“It provides a solution now instead of in the future,” said ABI Research analyst Sara Shah. “It’s important not only [in the US] in the short term, but also globally, because other countries don’t have government initiatives to stop counterfeiting, but counterfeiting is a global problem.”
In the longer term, the new model also would bookend sophisticated RFID supply-chains to validate transactions at any point along the chain, known as track-and-trace e-pedigree systems.
The push by TI and VeriSign into the pharmaceutical industry likely will pay off in the US, where RFID tracking of drugs has been all but mandated by the federal government. Last year, for instance, the FDA recommended RFID implementation in the industry by 2007. And about 15 states have passed or are working on laws that require “pedigree” documentation in each step of a pharmaceutical supply chain. The industry’s consensus seems to be that RFID is the best technology for the job.
Essentially, what TI and VeriSign propose is a two-step authentication approach at the drug-manufacturing level that combines ISO/IEC standard 13.56 MHz RFID and PKI (public-key infrastructure) technologies.
Firstly, a unique ID would be etched onto the silicon of an ISO-certified RFID tag, which would include a serial number and information about the drug company. This silicon-level ID would be difficult, if at all possible, to reproduce, said Joseph Pearson, TI’s pharmaceutical business development manager.
TI plans to release authenticated RFID tags in the coming months, certainly by year’s end, Pearson said.
The second layer is creating a digital PKI signature on the chip, which prevents the misuse of tags if they fell into the wrong hands, said Graham Gillen, a senior manager with VeriSign’s naming and directory service. The use of PKI would enable products to be authenticated by a third party and encrypt information sent between parties.
3M said it would produce RFID readers to authenticate the technology.
California-based VeriSign and Dallas-based TI obviously stand to benefit from the model, but since it is non-proprietary platform any PKI service provider and RFID tag maker can deploy it.
The overall cost of RFID implementation, even for a relatively low-priced model such as this, may be a barrier to adoption, said analyst Shah. Still, some larger pharma companies are already implementing RFID, including Pfizer and GlaxoSmithKline. And RFID costs will eventually go down, she said.
Another potential snafu is that TI’s tags are classed as high frequency, yet WalMart has mandated that its suppliers of class-2 drugs use ultra-high frequency RFID tags. “So there is some debate as to which way the industry will go,” Shah said. WalMart drug suppliers do not make up a significant portion of the market, she said. “But if you are buying equipment to do the tagging and verification of these items, it is going to be more expensive to do it for two different frequencies,” she said.
Whether VeriSign will be a major player in the broader e-pedigree RFID field is unclear, she said, since it is too early to say how the market will evolve.
US states, such as Florida, which has passed a law requiring pedigree supply-chain systems (either paper or electronic) for the drug industry, effective July 2006, have very specific requirements for e-pedigree systems. VeriSign’s market share in the space will depend on its ability to meet those requirements, Shah said.
VeriSign’s Gillen said the company is “currently working with several partners on the e-pedigree problem, which is essentially one of the main focuses of the pharmaceutical industry right now … to help solve the problem of misbehavior of distributors in the supply chain.”
The new model would compliment e-pedigree systems, since there is room on the tag to include track-and-trace time-stamps and data, Gillen said. “We’re interested in a broader strategy of helping people analyze and get more visibility in the supply chain.”