DELRAN, N.J.-- Big pharmaceutical companies are testing new tracking technology they hope will help them spot counterfeit drugs before they reach consumers' medicine cabinets. By putting tags that transmit radio waves on medicine bottles sent to drug stores, company officials think they will be able to detect fake drugs that aren't moving through usual supply chains.
The drug companies' concerns about counterfeiting have aroused skepticism among some who see the issue as a way to scare Americans away from buying cheaper drugs from foreign countries. Still, efforts to implement radio frequency identification technology, or RFID, are gaining momentum.
A distribution center in Delran, owned by wholesaler McKesson Corp., is one of a number of centers nationwide involved in a pilot project shipping small quantities of RFID-labeled drug bottles from manufacturing plants to pharmacies.
There, a worker sets a box of tagged drug bottles on a table where a radio-wave scanner and computer run through a list of scenarios involving theft, recalled drugs, outdated drugs or other logistical errors.
"The track record has been pretty good with it," said Lon Mietka, the operations manager in Delran.
The $3 million project includes drug makers such as New Jersey's Johnson & Johnson, Barr Pharmaceuticals Inc., Merck & Co. and Wyeth. Distributors, such as Cardinal Health Inc. and McKesson Corp., and retailers, such as CVS Corp. and Rite Aid Corp., are also participating.
"We think it could have a variety of purposes, such as tracking products through our distribution network, seeing where products may be diverted or stolen, thereby reducing incidence of theft, and creating a reliable tag that could help identify counterfeit products and prevent their distribution," said Johnson & Johnson spokesman Marc Monseau.
The RFID tags look like ordinary labels but are really computer chips with antennas wrapped around them. Sensors at distribution centers use radio waves to activate the tags, which are read electronically and stamped with a record of where they have been.
"It's as though every bottle of tablets has an EZ-Pass on it, so that every time it is going through a portal it is registered," said Jamie Hintlian, a partner with consulting firm Accenture Ltd., the company leading the RFID study.
Since pharmacies receive drugs through specific distribution centers, alarms would be raised when an incomplete or incorrect set of locations is listed on a tag, Hintlian said.
The U.S. Food and Drug Administration earlier this year urged the industry to adopt RFID, citing an increase in counterfeiting cases from six cases of fake prescription drugs in 2000 to 22 cases in 2003.
The agency is concerned about the increased sophistication seen in some cases, such as the discovery of fake versions of the cholesterol drug Lipitor that caused the recall of more than 150,000 bottles in 2003.
In a report last February, the agency said drug counterfeiting is widespread outside the country, but its prevalence within the United States is not known.
Some groups wonder if the FDA and drug companies have ulterior motives with the counterfeiting issue, which has grown in prominence as more Americans order less expensive drugs from Canada and other foreign countries.
Dr. Sidney Wolfe, co-founder of consumer advocacy organization Public Citizen's Health Research Group, says congressional hearings two decades ago brought up the danger of counterfeit drugs. But only in the past few years has the FDA acted, at the same time questioning the safety of foreign drugs, he said.
"This is an issue that has been purposely confounded by the (Bush) administration with the issue of drug importation," Wolfe said.
The Canadian International Pharmacy Association, which represents 48 mail-order pharmacies in the country, estimates that 2 million Americans are buying $1 billion-worth of Canadian medications every year.
David MacKay, the association's executive director, said he thinks anti-counterfeiting and tracking measures will disprove the pharmaceutical industry's main argument against drugs from Canada: that the supply chain is unsafe.
"We have nothing to hide. We've always been transparent. Bring it on," MacKay said.
Meanwhile, Hintlian at Accenture insists the issue hasn't been considered during the pilot project. He said the company hasn't examined how the technology would work with mail-ordered drugs.
For now, the Accenture pilot project is limited to four pharmacies, two owned by CVS and two by Rite Aid, and the distribution centers serving them. Each pharmaceutical company in the study has selected two medications to label. The names of the drugs and locations of the pharmacies were not disclosed.
Hintlian believes widespread use of RFID is possible by 2007 to 2008, though the tags may be limited to specific drugs that are in high demand and therefore prone to counterfeiting.
"The fact that we've started to embark at this pace and this focus suggests this is the direction we're going," Hintlian said.