April 1, 2005
vertical focus | Pharmaceuticals

Just what the doctor ordered?

just what the doctor ordered?

Is it real? Or just a very clever fake? It's practically impossible to tell real drugs from the adulterated or counterfeit. Now one drug maker is using tiny radio-frequency tracking chips to assure pharmacists they're getting the genuine article.

By John R. Johnson

To the long list of weapons in the war on drugs—trained dogs, undercover agents, spy planes—we can now add the RIFD chip. And if that sounds improbable, consider this: One of the world's most renowned drug cops, Aaron Graham, says that when it comes to thwarting counterfeiters and deterring thieves, RFID is the most promising technology he's ever seen.

Graham should know. He spent years tracking and buying counterfeit drugs, first as an undercover agent smuggling prescription drugs for the Food and Drug Administration (FDA), and later in a similar role for Pfizer. Today, as vice president and chief security officer for Purdue Pharma LLP, Graham is using what he's learned during his 20 year career to protect his employer's theft-prone painkillers while in transit.

He's counting on RFID to drive a stake through the heart of the shadowy black market drug business. Under Graham's direction, Purdue Pharma has begun attaching RFID tags to bottles of its narcotic painkiller OxyContin. In November, it began shipping batches of tagged products to two pilot customers, Wal-Mart and drug wholesaler H.D. Smith. In January, Purdue Pharma outfitted a manufacturing plant in New Jersey with RFID technology so it could start tagging its newest product, another potent painkiller called Palladone.

Lots of identifying markings
As for how a tiny label could deter drug rings, it's all about the indelible tracking information that label is now able to provide. The RFID tag applied to each 100-count bottle of OxyContin in the manufacturing process bears an electronic product code (EPC). That EPC, in effect, provides each bottle leaving the plant with a portable database containing such information as when and where the pills were packaged. That "pedigree" then accompanies the bottle as it moves from the manufacturer, to the wholesaler, and on to the pharmacy. When the bottle arrives at a drug store, the pharmacist can easily confirm the drug's origin—and therefore, its legitimacy—simply by scanning the tag.

It's worth noting that the bottles Purdue Pharma tags are the bulk bottles provided to retailers, not the smaller bottles dispensed to individual customers. In addition, the company only tags the 100-count bottles, not their shipping cartons. Carton tagging has proved unnecessary because the manufacturer is recording 100-percent tag read rates on all outgoing shipments, and Wal-Mart and H.D. Smith have recorded 100-percent read rates on their end as well.

Once that tiny read-only RFID tag is applied to a bottle, tracking it is a cinch. "We know when the RFID tag goes on the bottle in the manufacturing line," says Graham. "We know when the bottle comes off the line, we know when it goes into our vault, we know when it comes out of our vault, we know when it goes to the dock, and we know when it gets to the customer."

But is that enough to thwart thieves and counterfeiters? "I've been a cop for over 20 years and I've been studying the movement of prescription drugs since 1994, and clearly this is the most progressive technology I've ever seen," says Graham. "RFID is the first technology I've seen that will give our industry the ability to distinguish counterfeit from authentic, and to track the product from the manufacturer to the drug store and determine when somebody tries to introduce a counterfeit drug into the distribution channel."

Purdue Pharma has been so successful in creating its anti-counterfeit track and trace program that another major retailer and a second drug wholesaler have asked the company to ship RFID-tagged product to their facilities as well.

Can't touch this!
Of course, no technology is failsafe; and Purdue Pharma isn't relying solely on RFID to curb thefts of OxyContin. The drug manufacturer also has a security program in place that the U.S. Mint would envy.

For example, as an added deterrent to thieves and counterfeiters, the company has adopted what Graham calls fully integrated anti-counterfeiting packaging. Under the system, the RFID tags are strategically concealed behind the bottles' existing labels. In addition, those labels—at least in OxyContin's case—feature a variable-effect, color-shifting ink, similar to the technology used to deter the counterfeiting of U.S. currency.

Purdue Pharma has also configured its manufacturing sites to double as distribution centers, which cuts an entire leg out of the transportation process. "We distribute product straight from our manufacturing sites," says Graham, "because [shipping it to] a distribution center would be one additional step that we don't want to worry about from a transportation perspective. Our facilities are very Fort Knox-like."

Once a shipment is under way, Purdue employs armed guards and uses armored transportation carriers to discourage holdups. It has invested in GPS (global positioning system) tracking devices so it can track the movement of its product at all times. In addition, undercover agents follow each load once it leaves the dock.

"We have the most progressive transportation security protocol in the country for pharmaceutical drugs," says Graham, adding that the FBI has told him Purdue's system should be considered the gold standard for U.S. drug makers. "It's a very sophisticated and integrated transportation security protocol that is redundant in order to protect the load."

Other than a couple of minor incidents in 2001 when fake OxyContin showed up from overseas, Purdue hasn't had any major problems with counterfeiting. However, OxyContin continues to be a prime target for theft. But now when product is stolen, Graham believes the RFID tags will help police and drug enforcement agents track down and convict the thieves. In fact, Purdue Pharma has plans to donate 100 hand-held scanners from Symbol Technologies to law enforcement officials. When authorities recover stolen drugs, they can simply scan the label to determine where the supply chain was breached.

What price safety?
Of course, all this comes at a price—a price reportedly in excess of $2 million when the costs of the RFID tags and infrastructure are totaled up. What does Purdue Pharma stand to gain? Well, to begin with, by using RFID tags, it stays in Wal-Mart's good graces. As a top 100 supplier to Wal-Mart, Purdue comes under the retailer's mandate to include RFID tags on Class II drugs. The tags also keep it in compliance with FDA track and trace requirements for prescription drugs. And Graham adds that Purdue Pharma is also the first pharmaceutical company to comply with a multi-layered approach to combating counterfeit drugs recommended by the FDA's Counterfeit Drug Task Force last fall.

Still, Graham admits that other than some discounts issued by insurance companies because of the strong security protocols in place, the only other return on investment is the solace of knowing that its customers are buying authentic products.

"Usually corporate security isn't the place to demonstrate ROI," he says. "But when you're talking about human safety, it's a pretty [worthwhile] commitment. And as word gets out that the cops are solving some of these crimes, it'll act as a deterrent. It's all about [keeping] the bad guys [away] from your brand."

About the Author

John R. Johnson
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.

More articles by John R. Johnson

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