Drug companies toy with RFID tags

The US Food and Drug Administration is urging pharmaceutical companies to adopt RFID technology as a means to combat drug counterfeiting.

In a report the agency called for widespread voluntary use of the technology by drugmakers and distributors by 2007, and said it intends to facilitate the effort over the next few years. The report introduces guidelines rather than regulations that would require drug companies to adopt radio frequency identification systems.

A number of major drug companies are studying how RFID technology, billed as a next-generation bar code, can help them detect counterfeit drugs and reduce the costs of product recalls. Among them are Johnson & Johnson, Pfizer and Eli Lilly.

The FDA has seen an increase in drug counterfeiting over the past several years, the report said. The illegal activity harms consumers and slices into drug companies' profits.

Many drugmakers use serial numbers and bar codes to keep track of their products. But that system lets some counterfeits slip into the drug supply, said John Roberts, director of health care at the Uniform Code Council (UCC). The UCC is a nonprofit organization that administers bar codes and recently became involved in the development of RFID-based product code standards.

RFID systems could be a better tool to detect counterfeiting, because they're designed to keep closer tabs on the origin and authenticity of goods. RFID tags broadcast their whereabouts automatically when in the presence of a reader. By outfitting drug packages with RFID tags, companies could instantly trace the path the drugs take from the time they're produced to the moment they're dispensed, according to the FDA report.

The FDA endorsement highlights the growing interest in RFID within the pharmaceutical industry and may prove to be a major boost to the fledgling high-tech niche that supplies RFID chips, readers, software and computer hardware.

"It's a global boost," Roberts said. The FDA report "will just drive it. People will start pouring money into this."

RFID has existed for years, but many industries are finding new commercial uses for it. Led by Wal-Mart, retailers and consumer goods companies are starting to use the technology to reduce inventory errors and keep stores well stocked. The U.S. military plans to use RFID to keep supplies flowing to troops and military bases.

Alorie Gilbert writes for News.com