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Cardinal Health Releases RFID Pilot Results
11/14/2006
Test data shows promise and gaps of the technology that will affect
DUBLIN, Ohio, Nov. 14, 2006 — Cardinal Health, Inc., the leading provider of products and services supporting the health-care industry, today announced the results from the first end-to-end test of a technology that could further improve the safety and efficiency of the nation’s pharmaceutical supply chain.
The pilot program tested whether ultra-high frequency (UHF) radio frequency identification (RFID) tags could be applied, encoded and read at normal production speeds during packaging and distribution of pharmaceuticals. Verifying the authenticity of medications along each step of the distribution process adds an additional layer of security to lessen the chance of counterfeit pharmaceuticals entering the supply chain. It is also hoped that RFID data could improve efficiencies in the supply chain.
“Cardinal Health’s test of RFID under real-world conditions has demonstrated that the technology has real promise to provide an added layer of safety,” said Renard Jackson, vice president and general manager of global packaging services for Cardinal Health. “While our pilot demonstrated that using UHF RFID technology at the unit, case and pallet level is feasible for track and trace purposes, a great deal of additional work needs to be undertaken by stakeholders across the industry to address significant challenges including global standards, privacy concerns and the safe handling of biologics. Until those challenges are addressed, direct distribution of medicine continues to be the best near-term approach to maintain the highest levels of security and efficiency in the pharmaceutical supply chain.”
RFID Labeling and Online Encoding
Data collected from the pilot suggest that it is feasible for RFID tags to be inlaid into existing FDA-approved pharmaceutical label stock, and the tags can be applied and encoded on packaging lines at normal operational speeds. Online encoding yields were 95 percent to 97 percent, and fine tuning of the process is expected to produce yields that approach 100 percent. The RFID tag application and encoding requires minimal adjustments to current labeling and packaging lines.
RFID Read Rates
Unit-level read rate data varied widely depending on the locations and type of reading stations throughout the supply chain. Highly reliable unit-level read rates in excess of 96 percent were found when reading individual cases one at a time and when reading units mixed with other products in tote containers prepared for delivery to a pharmacy. However, as expected, unit-level read rates were not found to be reliable when attempting to read units within a full pallet of product.
While not 100 percent in all situations, case-level data were found to be more reliable during full pallet reads. The combination of business process changes, and further hardware tuning is expected to improve the reliability of case tag reads to 100 percent, however further tests are needed to prove this hypothesis.
In preparation for delivery to the pharmacy, individual bottles are “picked” and placed in tote containers with other products that did not have RFID tags. The unit-level read rates from the tote containers being read during the quality control phase were acceptable for track and trace. Additional unit-level read rates while the product was in the tote containers were not found to be reliable during subsequent reading stations at the shipping dock of the distribution center and the receiving doors at the pharmacy.
Pilot Program Read Rate Data
Cardinal Health’s RFID pilot program tested many different possible reading stations throughout the supply chain. While the company expected that some reading stations would not achieve acceptable read rates, the lack of hard data in the marketplace led program planners to measure all possible scenarios. Read rate data for item- and case-level tags are included in the chart below.
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Item-Level Read Rates
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Case-Level Read Rates
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Product A
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Product B
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Product A
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Product B
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Unit Encoding Yield During Packaging
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97.7%
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94.8%
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NA
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NA
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Unit to Case Aggregation
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96.9%
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99.7%
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91.8%
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100%
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Case to Pallet Aggregation*
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56.4%
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80.8%
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100%
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99.7%
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Shipping Pallet from Packaging Facility*
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9.2%
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14.3%
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82.3%
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100%
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Receiving Pallet at Distribution Center*
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7.8%
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9.5%
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76.3%
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100%
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Receiving Case at Distribution Center
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92.1%
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97.1%
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99.4%
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100%
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Reading Totes at Distribution Center
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NA
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99.5%
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NA
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Shrink Wrap Tote Carts at Distribution Center
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NA
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64.1%
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NA
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Shipping from Distribution Center
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NA
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46.1%
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NA
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Receiving at Pharmacy
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NA
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85.8%
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NA
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RFID Pilot Program Conclusions
Overall data collected by Cardinal Health supports the theory that RFID technology using UHF as a single frequency at the unit, case and pallet levels is feasible for track and trace. However, several challenges remain before it can be adopted industry-wide. Some of those challenges include:
· Technology and process improvements to achieve:
o Case-level reads in excess of 99 percent at all case reading stations;
o Unit-level read rates in excess of 99 percent when reading from tote containers at the distribution center and pharmacy locations;
· Allowing unit-level “inference” to become acceptable practice in the normal distribution process at stages where unit-level read rates are unreliable, but case level reads approach 100 percent (*Three stages marked in chart above);
· Barcode technology to be used as complementary and redundant technology to RFID;
· Management of the cost impact to implement and sustain the technology; and
· Improved collaboration across the industry to identify opportunities to significantly improve efficiency.
Pilot Program Background
In conducting the industry’s first end-to-end pilot program, Cardinal Health used new technology to place RFID tags on the labels of brand-name solid-dose prescription drugs, then encoded the electronic product code (EPC) standard data at the unit, case and pallet levels during the packaging process. The products were shipped to a Cardinal Health distribution center in Findlay, Ohio, where the data was read and authenticated as products were handled under typical operating conditions. Normal procedures were enhanced with RFID hardware and software from Alien Technology Corporation and IBM along with project management support from VeriSign.
From Findlay, the tagged product was sent to a pharmacy to further test read rates and data flow using the same technology as the distribution center. The product dispensed to patients was not in the RFID packaging.
The company launched the pilot in February and completed the test in the fall. In addition, Cardinal Health is working with Pfizer on a separate RFID pilot to authenticate Viagra® shipments at its Findlay facility.
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is an $81 billion, global company serving the health-care industry with a broad portfolio of products and services. Through its diverse offerings, Cardinal Health delivers health-care solutions that help customers reduce their costs, improve safety and productivity, and deliver better care to patients. The company manufactures, packages and distributes pharmaceuticals and medical supplies, offers a range of clinical services and develops automation products that improve the management and delivery of supplies and medication for hospitals, physician offices and pharmacies. Ranked No. 19 on the Fortune 500, Cardinal Health employs more than 55,000 people on six continents. More information about the company may be found at www.cardinalhealth.com.
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Except for historical information, all other information in this news release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: competitive pressures in its various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by or settlement discussions with any regulatory authority or any legal and administrative proceedings, including shareholder litigation; difficulties in opening new facilities or fully utilizing existing capacity; the costs, difficulties and uncertainties related to the integration of acquired businesses; and general economic and market conditions. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement.