FDA is recommending RFID tagging of item-level drugs that have a high probability of counterfeiting by 2006, and calling for all drugs at pallet, case and item level to be tagged by 2007. The Department of Defense began an initiative to tag all medical supplies and drugs in its supply chain with RFID to ensure global visibility and safety.

Several US states are heavily pushing this initiative for immediate implementation, and other states are sure to follow. Statewide legislation will undoubtedly require that any pharmaceutical material distributed through the supply chain in the United States have pedigree in place, and this could likely become a worldwide requirement.

RFID is the most robust and secure way to ensure serialization agrees most in the pharmaceutical business. Pedigree is a supply chain requirement that requires the tracking of the drug from the wholesale distributor, authentication and verification of its travel up to the pharmacy that sells the drug. Although pedigree is largely a compliance requirement, pharmaceutical companies can establish great business benefit by using RFID throughout the supply chain. In fact, return on investment is as much a reason for RFID as is the pedigree requirement.  Inventory reduction, reconciliation, warehouse automation and reduced out of stock conditions are among the top benefits.

While there are many possible variations, a basic vision proposed for the RFID in a manufacturer-to-retailer supply chain is depicted as follows: The manufacturer attaches RFID tags with EPCs on products or in packaging to enable item tracking, history file creation, and future trading partner use (e.g., retail point-of-sale).

The manufacturer references the EPCs for linking cartons or pallets for shipment building, package sorting, and Advanced Shipment Notification. Throughout the distribution lifecycle, RFID readers capture and publish time and location data (at the very least) to provide visibility to supply chain trading partners. Subject to implementation guidelines, the information would reside on servers accessed via queries using the Object Name Service.

The retailer or wholesaler receives the advance shipment notification containing the EPC information, and automatically posts the receipt upon goods arrival without human intervention.

At the retail store, checkout, inventory management and replenishment are automated because of RFID enabled capabilities. It is important to note that these types of automated processes are possible only if the trading partners involved have collaborated and designed their business processes accordingly. Because of the perceived benefits of these features, more companies are implementing RFID and experiencing tangible results.