Cardinal Health Releases RFID Pilot Results

Test data shows promise and gaps of the technology that will affect

widespread adoption across pharmaceutical industry



14 Nov, 2006, 00:00 ET from Cardinal Health, Inc.

    DUBLIN, Ohio, Nov. 14 /PRNewswire-FirstCall/ -- 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 & 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.
                                 Item-Level Read Rates    Case-Level Read Rates
                                 Product A   Product B    Product A   Product B
     Unit Encoding Yield During
      Packaging                    97.7%       94.8%         NA         NA
     Unit to Case Aggregation      96.9%       99.7%        91.8%      100%
     Case to Pallet Aggregation*   56.4%       80.8%       100%         99.7%
     Shipping Pallet from
      Packaging Facility*           9.2%       14.3%        82.3%      100%
     Receiving Pallet at
      Distribution Center*          7.8%        9.5%        76.3%      100%
     Receiving Case at
      Distribution Center          92.1%       97.1%        99.4%      100%
     Reading Totes at
      Distribution Center            NA        99.5%               NA
     Shrink Wrap Tote Carts at
       Distribution Center           NA        64.1%               NA
     Shipping from Distribution
      Center                         NA        46.1%               NA
     Receiving at Pharmacy           NA        85.8%               NA
 
     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:
        - Case-level reads in excess of 99 percent at all case reading
          stations;
        - 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(R) 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.
     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.
 
 

SOURCE Cardinal Health, Inc.
    DUBLIN, Ohio, Nov. 14 /PRNewswire-FirstCall/ -- 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 & 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.
                                 Item-Level Read Rates    Case-Level Read Rates
                                 Product A   Product B    Product A   Product B
     Unit Encoding Yield During
      Packaging                    97.7%       94.8%         NA         NA
     Unit to Case Aggregation      96.9%       99.7%        91.8%      100%
     Case to Pallet Aggregation*   56.4%       80.8%       100%         99.7%
     Shipping Pallet from
      Packaging Facility*           9.2%       14.3%        82.3%      100%
     Receiving Pallet at
      Distribution Center*          7.8%        9.5%        76.3%      100%
     Receiving Case at
      Distribution Center          92.1%       97.1%        99.4%      100%
     Reading Totes at
      Distribution Center            NA        99.5%               NA
     Shrink Wrap Tote Carts at
       Distribution Center           NA        64.1%               NA
     Shipping from Distribution
      Center                         NA        46.1%               NA
     Receiving at Pharmacy           NA        85.8%               NA
 
     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:
        - Case-level reads in excess of 99 percent at all case reading
          stations;
        - 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(R) 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.
     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.
 
 SOURCE Cardinal Health, Inc.