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VDC believes recent, high-profile cases of tainted pharmaceuticals in the US potentially could drive RFID adoption within the US pharmaceutical industry. For example, consider the fungal meningitis outbreak that has emerged during the past several weeks and, to date, caused 25 deaths. Ultimately, the meningitis cases were linked to steroids manufactured by a Massachusetts-based company. As a result of the national scale and severe consequences of this incident, the US pharmaceutical industry is under intense public and regulatory scrutiny—and we think new, more stringent legislation for pharma could be the result. Specifically, VDC expects new FDA regulations governing the manufacture and tracing of drugs—from the manufacturer to the end consumer—could be one of the near-term outcomes of this outbreak. Such legislation could include mandated use of RFID or other solutions to provide better visibility into—and control of—the pharmaceutical supply chain.
Should the FDA require RFID use in pharmaceutical manufacturing, it would not be an unprecedented legislative development. In fact, the South Korean government has implemented regulations mandating RFID use by its domestic manufacturers to reduce drug counterfeiting and its various negative collateral effects (e.g., loss of revenues, reduced drug efficacy, risk to consumers, etc.). RFID tagging of drugs at the point of manufacture has a number of potential benefits, depending on the applications for which the technology is used. The following objectives are common RFID adoption drivers among pharmaceutical manufacturers:
Considering the enormous size of the US pharma market (approximately $260 billion in 2011 revenues), increased adoption of RFID within this manufacturing sub-vertical would have material growth implications for the broader RFID market—especially if use of specific RFID solution types (e.g., track-and-trace, authentication) is mandated by future FDA legislation.
Regardless, bearing in mind the potentially dire consequences of tainted, counterfeited, or otherwise compromised drugs—both in terms of injury/death to consumers and the resulting liability claims, just to name two—VDC believes all pharmaceutical manufacturers are well-advised to evaluate all technology solutions (including RFID) that could improve patient safety and control of their supply chains, whether government mandated or not.