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Cardinal Health Announces Plan to Deploy RFID Technology in California
05/03/2007
Following Cardinal Health’s industry-first, end-to-end RFID pilot, company leverages RFID technology to prepare for California pedigree legislation
DUBLIN, Ohio, May 3, 2007 — Cardinal Health announced today that it will integrate radio frequency identification (RFID) technology into the operations of its Sacramento, Calif. pharmaceutical distribution center by Fall 2007, to prepare for California’s pedigree legislation that will require all drugs distributed within the state to be tracked and traced as they move throughout the supply chain.
 
 
The announcement, which was made at the RFID Journal Live! conference, hosted this week in Orlando, Fla., is part of Cardinal Health’s ongoing efforts to protect the safety and efficiency of the nation’s drug supply.  
 
The announcement comes just months after Cardinal Health shared the results of its RFID pilot program, which was the health-care industry’s first end-to-end test of RFID in a real-world setting.  Data collected from the pilot confirmed that RFID technology using UHF as a single frequency is a feasible solution to track and trace the possession of pharmaceuticals at the unit, case and pallet levels. The pilot also confirmed that RFID technology offers significant promise to provide an added layer of safety within the pharmaceutical supply chain, by enabling item-level pedigrees to be tracked and traced as they pass from manufacturer to wholesaler to pharmacy.  
 
The recently passed state legislation in California requires pharmaceutical manufacturers to originate item-level pedigrees for drugs distributed within the state’s borders. This legislation also requires companies within the pharmaceutical supply chain (including companies that distribute drugs, like Cardinal Health) to update item-level drug pedigrees upon each change of ownership. 
 
Cardinal Health operates dozens of pharmaceutical distribution centers nationwide. The company will start implementing RFID technology in its Sacramento, Calif. distribution center, as a means to receive and produce the electronic drug pedigrees needed to meet the requirements of the California legislation.
 
 “While the Sacramento project is designed to support the pedigree legislation in California, it’s also an extension of the end-to-end RFID pilot that we completed last year,” said Steve Inacker, executive vice president of Global Supplier Services for Cardinal Health. “We look forward to leveraging this work to further validate the effectiveness and viability of RFID technology in real-world settings, should it be adopted as an industry standard.”  
 
As part of this effort, Cardinal Health will also leverage the new data, made available by RFID technology, to identify efficiency opportunities in key areas including returns and order accuracy; which can deliver value to the entire pharmaceutical supply chain.
 
Cardinal Health identifies next steps needed to facilitate industry-wide RFID adoption
As Cardinal Health integrates RFID technology into its California operations, the company also said that industry standards and technology issues need to be addressed by the health-care industry as a whole, before RFID technology can be adopted industry-wide.     
 
First, according to California law, product serialization must be initiated by the manufacturer, at the unit level, to allow tracking from the beginning to the end of the supply chain. For this to occur, Cardinal Health said the pharmaceutical supply chain industry must first agree on a standards-based approach and a single RFID protocol and technology. This will avoid the significant process and cost inefficiencies that would be created without such standards.
 
The company also said that technology and process improvements are needed to consistently achieve acceptable read rates at all packaging levels, and that industry acceptance is also needed for standard practices like accepting barcode technology as a complementary and redundant technology to RFID, and accepting unit-level “inference” when unit-level read rates are not possible.
 
About Cardinal Health
Headquartered in Dublin, Ohio, Cardinal Health, Inc. (NYSE: CAH) is a $80 billion, global company serving the health-care industry with products and services that help hospitals, physician offices and pharmacies reduce costs, improve safety, productivity and profitability, and deliver better care to patients.  With a focus on making supply chains more efficient, reducing hospital-acquired infections and breaking the cycle of harmful medication errors, Cardinal Health develops market-leading technologies, including Alaris® IV pumps, Pyxis® automated dispensing systems, MedMined® data mining software and the CareFusion® patient identification system.  The company also manufactures medical and surgical products and is one of the largest distributors of pharmaceuticals and medical supplies worldwide.  Ranked No. 19 on the Fortune 500 and No. 1 in its sector on Fortune's ranking of Most Admired firms, Cardinal Health employs more than 40,000 people on five continents.  More information about the company may be found at www.cardinalhealth.com.
 

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 any regulatory authority or any legal and administrative proceedings; difficulties, delays or additional costs in implementing the company’s global restructuring program; 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

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