As hospitals get comfortable with the idea of bar-coding at the bedside, a long-awaited study makes a compelling business case for next-generation technology: electronic product codes with radio-frequency identification tags.
RFID is the modern technology that allows cars to zip through toll plazas -- chips that are embedded in products and emit radio signals so they can be tracked. When embedded in packaging for single-unit doses of drugs, the benefits of EPC/RFID outweigh the costs, potentially saving pharmaceutical manufacturers as much as $1 billion and healthcare distributors as much as $400 million annually, according to the study recently released by the Healthcare Distribution Management Association's Healthcare Foundation. The report, conducted by A.T. Kearney and sponsored by Pfizer and six Johnson & Johnson units, found another $400 million could be saved in the avoidance of counterfeit drugs.
Innovators such as Wal-Mart and the U.S. Defense Department are already adopting the technology and alerting top suppliers that RFID tags will be a requirement for doing business with them. But hospitals are just now facing the reality that the Food and Drug Administration expects bar-coding to be at the patient?s bedside by Jan. 1, 2007.
Additionally, in mid-November, the FDA announced an initiative to stimulate the use of RFID to secure the nation's drug supply, bringing the industry a step closer to a 2007 target date for adopting the technology. The FDA has backed RFID as a way to ensure that drugs are authentic and to ease product recalls because the technology creates an "electronic pedigree" of a drug's movement through the supply chain. More information can be found at fda.gov. The initiative includes publishing a compliance policy guide to make it easier for drug companies to pilot RFID without fear of violating labeling regulations and good manufacturing practices.
All this raises the question whether it might be more practical to leapfrog over the older technology directly to RFID. Though the cost benefits are striking at the manufacturing and distribution levels, the study did not drill down to the hospital level.
"Bar-coding will be around for quite some time, especially at the unit-dose and patient point-of-care level," says Tracy Casteuble, vice president of research and information for the Healthcare Distribution Management Association and executive director of the group's Healthcare Foundation. "For the near to medium term, (bar-coding and RFID) are going to coexist in some fashion for quite some time."