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HealthBiz: RFID for drugs on the way

Posted - Nov. 16, 2004 at 3:20 p.m.



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WASHINGTON, Nov 16, 2004 (United Press International via COMTEX) -- Pfizer, GlaxoSmithKline and Purdue Pharma are the first drugmakers willing to take the plunge and use radio frequency identification technology to protect their U.S. drug supply chains from counterfeiters.

On the other end, Walgreens and CVS, the nation's biggest pharmacy companies, also are involved in testing RFID to see if putting the tiny electronic devices on pallets, packages and bottles of drugs can track them accurately through the supply and distribution chain.

Walgreens and CVS, like Pfizer, Abbott Labs, Johnson & Johnson, Procter & Gamble and others, have participated in Project Jumpstart, a demonstration program through which the pharmacies receive prescription products with RFID tags on bottles and cases. So far, the results have been positive in terms of the technology's ability to create an electronic pedigree for tracking purposes.

Pfizer said Monday it is going beyond testing and by 2005 will tag its highly counterfeitable Viagra; Purdue Pharma is tagging 100-tablet bottles of the powerful painkiller OxyContin, which has been used as a recreational drug, therefore making it a target for thieves and counterfeiters; while Glaxo still is deciding which counterfeit-prone product it will begin tagging in the upcoming 12 to 18 months.

The pharmaceutical industry is going to have to mount more of a response, however, to bring RFID technology to a scale where it is easily affordable. With estimates of counterfeiting drugs worldwide only in the 5 percent to 7 percent range, cost is a key issue for what is -- at least in the United States, where the supply chain is considered very safe -- a huge investment in protective technology.

The Food and Drug Administration's counterfeit caseload, while rising somewhat over the past couple of years, totaled just 76 cases from 1996 to 2003.

Accenture, a global management company, also participated in Jumpstart and noted in company documents on its Web site: "Many obstacles stand in the way before we can know where an object is all the time using tagging and sensor technologies. Cost is one big factor. Although the price of RFID tags is dropping quickly, they will never be as inexpensive as bar-code technologies. Increased functionality of the electronic tag is its primary advantage, but it remains to be seen how 'universal' such a system will be."

Startup costs for companies -- including IT and support services -- could run into millions of dollars. Then there is the cost of the hardware at each end of the chain -- tag readers at $1,000 or more, tag printers at several thousands dollars and the tags themselves at a range of 20 cents to 50 cents each.

Until the costs can come down to just a few pennies per tag -- and experts in the industry predict that could take years -- tagging drugs might be most economically feasible for the more expensive prescriptions, such as Viagra, that are most vulnerable to counterfeiting.

With a goal of 2007 for the industry to be using RFID, FDA said it will create an internal RFID working group to identify regulatory issues the technology raises and to work with industry on implementation. It also has issued a guidance to industry that spells out use of RFID will not violate regulations covering drug product labeling.

Dr. Paul Rudolf, FDA's senior adviser for medical and health policy, told reporters: "There will be some financial burden ... we're not sure how much it is or how it will develop. Once a lot of the technology issues are resolved ... readers that cost $1,000 will come down to $200 and tags down to 10 cents. As volume increases the price will go down."

FDA officials also think RFID will become a business tool for many types of administration, tracking and data collecting as prices go down and the technology becomes more widespread. At that point, it actually could start saving companies money.

Tom McPhillips, Pfizer's U.S. Trade Group vice president, echoed FDA's take, saying that at this point RFID is all about safety -- preventing counterfeiting -- and not about cost savings.

"Drug counterfeiting is a serious and growing problem and RFID offers the potential to be an important anti-counterfeiting technology in the future," he said. "It's certainly not the only solution. Changes to state regulations, more stringent licensing of pharmaceutical wholesalers, modifications of business practices, and increased enforcement also are very important. But RFID does offer great promise as an effective tool in the battle against counterfeiting."

PAY FOR PERFORMANCE -- THE CONSUMER DISCONNECT

The healthcare industry is moving steadily toward pay-for-performance but one new survey shows that consumers, who really have not been exposed to a lot of information on how such systems work, register mixed reactions based on what they think.

American Healthways commissioned the survey and it was released during a summit the company held recently on pay-for-performance in conjunction with Johns Hopkins University. Some 1,223 adults with insurance were asked about outcomes-based compensation -- an approach health insurers see as a way to manage healthcare costs better while at the same time getting physicians and other providers to adhere to practice guidelines and best practices in healthcare.

Some 60 percent of respondents said doctors already were following those best practices and guidelines, but studies have shown that only happens about half the time.

Physicians are not opposed to the pay-for-performance concept, but they worry about how performance data will be used in ratings reports or score cards.

The poll found 70 percent of consumer respondents did not think pay-for-performance programs would result in a better quality of care, even though 80 percent said they would like to see their community physicians rated in "Consumer Reports" fashion.

Other studies have shown, however, such scorecards created by insurers attract little consumer interest or use. Even physicians avoid using them when deciding which colleague to refer patients to for treatment.

Though 81 percent said bonus pay for meeting additional goals or doing superior work is a good idea generally, only 51 percent thought so when it was applied to physicians -- compared to 84 percent who supported it for teachers, 89 percent for line workers and 87 percent for sales clerks. Some people simply consider physician salaries to be high enough without bonuses.

About 55 percent said pay-for-performance should be linked to reducing medical errors -- even though the industry is trying to move away from the one-person blame game toward a more systems approach of removing the problems or environments that allow medical errors to occur.

Some 78 percent of consumers said patient satisfaction should be a key measure of success -- while the industry is focused on outcomes -- which may not be the same thing.

Dr. James E. Pope, chief medical officer of American Healthways, told UPI's HealthBiz people also may be reluctant to get into physician compensation again because of the bad rap it got during the more restrictive days of managed care in the 1990s, when incentives for physicians were linked to denials of care.

He said 21st century pay-for-performance models are still evolving -- a main reason for bringing together providers at the summit to talk about what works and what does not.

Many current pay-for-performance deals are structured so "doctors are not placing money at risk, but in fact are only involved in the upside" of receiving a benefit for standards achieved, Pope said. "At this stage, individual doctors do not yet appear to be receiving substantial sums."

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E-mail ebeck@upi.com

Copyright 2004 by United Press International.

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