Issue #172 | Dec. 5, 2008 | by Andy Kowl

The health industry calls them ADEs – Adverse Drug Events – and in hospitals, "preventable ADE's" occur 0.5% per inpatient-day, according to Billie Whitehurst, Chief Nursing Officer of McKesson, the drug distribution giant.

The math is not difficult. Multiply all the Hospital Patients in the U.S. by the number of Days each stayed and divide: HP x D/ 200 = an incredible number of sick people who got an ADE that was preventable. This harms 1.5 million Americans a year, costing $3.5 billion.

I do not know how to factor into this $3.5 billion the fact that "approximately 100,000 drug-induced deaths per year (make this the) fifth leading cause of death" in the U.S., according to Curt D. Furberg, MD, of Wake Forest University med school.

Auto-ID addressing real needs
Preventable ADE deaths are just a small part of that scary number. Using RFID and barcodes, Concord Hospital in New Hampshire has reduced administrative errors 79% and virtually eliminated wrong patient, wrong medications, wrong or omitted dose errors, according to McKesson's Whitehurst. It also improved charge capture and coordination between pharmacy and nursing, and provided immediate physician access to medication administration.

Add to this counterfeit drug sales estimated to reach $75 billion by 2010, according to the Center for Medicine in the Public Interest. With both lives and money at stake, and RFID the silver bullet, raise your hand if you think RFID may be a passing phase in medicine.

Government mandates: the tail wagging the dog
"Sure, but pharmaceuticals will only use RFID when the government mandates it," you say? RFID-powered ePedigrees will indeed play a major role in combating counterfeits entering the supply chain. But before California or the Feds finally mandate anything – and they are the two that count for all practical purposes – they may have less to say about it than you think.

In the U.S., McKesson, Cardinal and AmerisourceBergen distribute virtually all of the drugs that end up in retail and healthcare pharmacies. They all support and/or promote the use of RFID not just in the pharmaceutical supply chain, but also within the various warehouses and dispensaries along the way. At least two of them sell RFID.

We knew something was up when we began gathering candidates for the RFID Honor Roll. The qualification was you had to show specific ROI benefits in a completed implementation. A clear plurality of all the true RFID success stories we found were healthcare-related implementations. (Right side on home page www.RFIDswitchboard.com )

At RFID Switchboard, we recently conducted research with Alien Technology to study the benefits of RFID in the pharma industry. Doing due diligence, ace contributing editor David Sostman began reviewing the pharmaceutical landscape with a fresh perspective. He ran across all sorts of literature that led him to believe the question of HF vs. UHF was a burning issue.

The results are in: UHF is the choice
The three companies that control the entire pharmaceutical distribution business in the United States have already voted and UHF RFID is the unanimous conclusion. Johnson & Johnson, the leading manufacturer of healthcare products, is now committed to a UHF future, as is mega pill seller Walmart. Who else do you think gets a vote?

There are many reasons to use HF, LF and other auto-ID technologies in certain pharmaceutical applications. But in a retail distribution environment, ignoring the other advantages, why would you not go with the near-universal UHF standards for other products sold in drug chains, today's "Five and Dimes."

In September, Walgreen's began rolling out UHF-based RFID system-wide. Designed to replace all paperwork and barcode scanning, the system leverages RFID in day-to-day production towards the goal of achieving 100% shipment accuracy from distribution center to retail store. The nation’s fastest growing drug retailer recently launched the first of its next-generation DCs, located in Anderson, S.C., and is in the process of tagging more than 170,000 assets there. At full capacity, they will ship approximately 80,000 cases daily, making it one of the largest RFID deployments to date.

A disinformation campaign tries to put the brakes on
In June, the press picked up "news" claiming the cost for each pharmacy to implement RFID would range from $84,000 to $110,000, or "nearly 2% of a retail pharmacy's total annual pharmacy sales, which is significant in an industry which averages an annual net profit of about 3%."

Yikes! What company in its right mind would want to spend almost all their profits on RFID?!

The study was performed by consulting firm Accenture, who chose not to include any specific costs and to not factor in operational savings. They also added on the cost of a separate system to read 2D barcodes, again without breaking down the costs. The National Association of Chain Drug Stores and National Pharmacists Association paid to have this study done.

This is all a bunch of nonsense. Having spoken with three experts who each know far more than me about what could cost all this money, none of them had a clue. With the costs of RFID readers now in the hundreds of dollars and suppliers, not pharmacies, paying for the tagging, these estimates are wrong by a factor of 2-3x or more.

There are only three logical conclusions why this false information would be broadcast. Either the associations ordered a study "proving" absurdly high costs in order to slow the mandate momentum; those doing the study were incompetent; or Accenture itself, which sells RFID services, charges far more than anybody else and wanted to keep the "benchmark prices" artificially inflated.

The real information
For any pharmacy shoppers who do not want to pay such ridiculous rates for RFID, most of our sponsors can help you at a fraction of the reported cost: Solution Provider Directory.

And be the first on your block to get the most up-to-date white paper available on this topic, sponsored by Alien, and learn how to get huge savings now – without ePedigrees – if you manufacture, distribute or retail pharmaceuticals. Ask for your copy at info@rfidsb.com, which will be available in about a week.