Simon Holloway
EMEA Manufacturing Industry Solutions Architect
Microsoft EMEA

June 2006

Applies to:
   Enterprise Architecture
   Architecture Development

Summary: Describes the opportunities and business benefits of RFID in the Pharmaceutical and Medical Equipment sector. It looks at various scenarios where RFID is and can be used to solve business problems. (24 printed pages)

Contents

Executive Summary
Overview of the Pharmaceutical Marketplace
Implementation Challenges of RFID
Conclusions
Appendix A: More Information About the Microsoft RFID Solution
About the Author

Executive Summary

RFID, short for Radio Frequency Identification, is a rapidly evolving technology that can dramatically improve operational efficiencies and customer service. RFID will fundamentally transform the way information about products, equipment, animals, and even people, is gathered and analyzed in real time, thus providing new business opportunities.

This white paper describes, for C-level executives and line-of-business managers, the opportunities and business benefits of RFID in the Pharmaceutical and Medical Equipment sector. It looks at various scenarios where RFID is and can be used to solve business problems.

Highlights of this white paper include:

• The need for automation of the pedigrees, in order to solve the counterfeiting issue.
• The need for compliance to US state and federal drug agencies.
• The use of RFID technology to:
  • Provide visibility in the supply chain and production line.
  • Reduce risks in employee health and safety.
  • Verify plant maintenance.
  • Automate clinical trial processes.

To encourage widespread adoption of RFID technology, Microsoft is developing a layered RFID infrastructure called BizTalk RFID, using an open-building-block approach. The infrastructure described in this white paper enables independent hardware, software, and systems integration partners to offer a robust variety of cost-effective and standards-compliant RFID applications.

Overview of the Pharmaceutical Marketplace

There are many challenges facing the pharmaceutical industry of the 21st century. Patents on major drugs continue to expire, while companies struggle to produce innovative breakthroughs to offset the impact of generic substitutes. The regulative environment is becoming more intense, as the FDA looks to impose more stringent safety standards when approving new drugs. In addition, rising anger over the price of prescription drugs, and increasing outcries for legal importation of drugs across borders, looks to further reduce revenue growth (Source: Frost & Sullivan website).

Figure 1. Pharmaceutical industry driving forces (Source: Microsoft Corporation) (Click on the image for a larger picture)

As generics keep cutting into profits, and more patents on major drugs expire, pipeline innovation holds the key to success. Pharmaceutical companies continue to look to the biotechnology sector to renew their product lines. Successes witnessed in the biotechnology industry are expected to drive industry growth in the coming years, as more products reach the commercialization stage. As biotechs unveil more breakthroughs, they should attract more funding from pharmaceutical companies whose research labs are struggling to produce a significant number of innovative compounds. According to the Biotechnology Industry Organization (BIO), pharmaceutical companies formed 451 licensing and investment deals with biotechs in 2004 (compared with 314 in 2003), and this number should be much larger in 2005.

Best estimates put the current size of the global pharmaceutical industry at $492 billion. North America, Europe, and Japan together accounted for 88 percent of the worldwide sales last year (Source: Industrial Surveys, Global Pharmaceuticals, reportSURE, December 2004). The United States is the major market for drugs, accounting for almost half of all global drug sales. The global market grew by 14 percent last year.

So let us summarize these trends into a simple list:

• Stalled R&D productivity—Increased spending has not increased revenue.
• Bad press, analyst assessments, and public opinion
• Increasing regulatory scrutiny
• Dramatic increase in advertising, both traditional and online
• Increasing role of contract research organizations—This accounted for ~42 percent of R&D expenditures by 2004.
• Increasing role for smaller biotechs—350 drugs are currently in clinical trials.
• Expectation of seeing the first $10B/year drug soon—for instance, Lipitor is currently at $7.97B/year.
• Continuing mergers and acquisitions

All of this has lead to the following business challenges:

• Manage and capitalize on genomic data (that is, translation to opportunities).
• Ensure regulatory compliance in all aspects of the business.
• Manage collaborations and alliances.
• Improve productivity of the product pipeline.
• Demonstrate to customer and regulators the clinical value of products.
• Maintain financial performance in the face of patent expiration and mounting price pressure.
• Remain competitive in the promotional "arms race."

Figure 2. Pharmaceutical organizational anatomy (Source: Microsoft Corporation) (Click on the image for a larger picture)

The Authentication Drive in the Pharmaceutical Industry

There is much concern in the industry, and from its large healthcare clients and their patients, about whether a drug that has been prescribed is authentic or not. This degree of authentication not only applies to getting the drug as described on the packaging from the company that produces the drug, but also covers ensuring that the drug dispensed has not come from an allocation made to the Third World or from repackaged out-of-date stock. The pharmaceutical industry estimates that between 2 and 7 percent of all drugs sold globally are counterfeit. Pira International estimated that the cost in 2001 of worldwide counterfeiting was $300B, and that if growth rates continue, by 2013 counterfeits, look-a-likes, and so on will equal the legitimate world economy.

When a situation like this occurs, there is serious impact on the drug company's share price. This is well illustrated by what happened to Eli Lilly when an attack on Zyprexa occurred in 2002 (see Figure 3).

Figure 3. Eli Lilly share price, 2001 to 2003 (Click on the image for a larger picture)

The US Food and Drug Administration's current anti-counterfeiting tasks include investigating new methods to secure the pharmaceutical supply chain, by examining new technologies that utilize RFID/EPC. This led to the sponsoring of an initiative called JumpStart. Participants in the JumpStart project included drug makers Abbott Laboratories, Johnson & Johnson, Pfizer, and Procter & Gamble; medical supplies distributor McKesson Corp; and retailers CVS and Rite-Aid. Accenture led a consortium of IT suppliers in putting together a system during July and August 2004. The technology used came from Matrics Inc. (now acquired by Symbol) and Manhattan Associates Inc. The FDA was involved in validating the processes. The project involved the drug makers in shipping individual bottles of drugs with RFID tags from manufacturers' plants to their distribution centers, then to distributors' facilities, to retailers' distribution centers, and finally, to their pharmacies (see Figure 4).

Figure 4. The JumpStart supply chain (Source: Manhattan Associates presentation on JumpStart Initiative) (Click on the image for a larger picture)

In an agency meeting on October 15, 2004, John M. Taylor III, associate commissioner for regulatory affairs at the Food and Drug Administration (FDA), acknowledged: "No single magic bullet will solve the counterfeit drug problem. Rather, we need a multi-pronged strategy. And many new technologies are available to counter the threat."

To address and combat the increasing occurrence of counterfeit drugs, US federal and state regulators are pursuing solutions that require the tracking, recording, and communication of a drug pedigree. A drug's pedigree represents the complete history of a given product's chain of custody, from the manufacturer to the point of dispensing. Much of the early work around implementing solutions has focused on support of the pedigree through electronic solutions, both in terms of applications for managing pedigrees and sensory technologies for capturing data—for example, RFID tags.

In November 2004, the FDA issued a report (Radiofrequency Identification Feasibility Studies and Pilot Programs for Drugs, Guidance for the FDA Staff and Industry, Compliance Policy Guides, Sec. 400.210, Radiofrequency Identification Feasibility Studies and Pilot Programs for Drugs, November 2004), recommending that drug makers use RFID to track individual bottles of the most-commonly counterfeited drugs starting in 2006, and most drugs by 2007. The FDA has come up with a policy around the use of RFID in the Pharmaceutical industry, which stipulates:

• RFID tags (chips and antennas) will be attached only to immediate containers, secondary packaging, shipping containers, and/or pallets of drugs that are being placed into commerce.
• The drugs involved will be limited to prescription or over-the-counter finished products.
• RFID will be used only for inventory control, tracking and tracing of products, verification of shipment and receipt of such products, or finished product authentication.
• The tags will not contain or transmit information for the healthcare practitioner or the consumer.
• The tags will not contain or transmit advertisements or information about product indications or off-label product uses.
• The policy will expire automatically on December 31, 2007.
• It is expected that RFID technology will be in widespread commercial use in 2007 as a means of preventing counterfeiting of drugs.

The FDA stated in 21 USC 353: "Each person who is engaged in the wholesale distribution of an Rx drug and who is not an authorized distributor of record of such drug shall, before the sale, provide to each wholesale distributor a statement identifying each prior sale of the drug". In addition, 21 CFR §203.50(a) states: "Before the completion of any wholesale distribution by a wholesale distributor [who is not an authorized distributor of record], the seller shall provide to the purchaser a statement identifying each prior sale, purchase, or trade of such drug". This pedigree, as it has become known, has to contain the following information:

• Proprietary and established name
• Dosage
• Container size
• Number of containers
• Drug's lot or control number(s)
• Business name, address, and dates of all prior transaction parties, starting with the manufacturer

The FDA has concluded that an electronic pedigree should accomplish and surpass the goals of PDMA, and thatit is potentially a more effective solution than a paper pedigree, because a paper process is:

• Ineffective, because it does not prevent counterfeit drugs from entering the healthcare system; it only assists in investigation and prosecution.
• Cost-prohibitive, because it adds a manual process to the millions of transactions that are already time-sensitive—for example:
  • Most orders hit the distribution channel in an end-of-day, four-hour window.
  • Service levels demand minute-by-minute responses.

However, the FDA has delayed the effective date of paper pedigree rule until December 1, 2006, "to allow stakeholders to continue to move toward this goal...."

Nevertheless, a number of states have produced legislation that requires pedigrees to be implemented sooner. At the state level, Florida is leading the way, with the adoption of legislation and rules that require detailed pedigrees for all drug sales to retail pharmacies and other dispensing parties. Florida requires that these pedigrees record the complete chain of custody—all the way back to the original purchase from the drug's manufacturer. The Florida regulations also include the following requirements:

• Every party engaged in the wholesale distribution of a prescription drug (except the manufacturer of that drug) must provide a pedigree.
• Pedigrees must be provided prior to wholesale distribution.
• A drug for which the required pedigree is nonexistent, fraudulent, or incomplete is considered "adulterated," and it cannot be sold. The law stipulates that parties involved with adulterated pedigrees are at risk for felony prosecution if they:
  • Fail to authenticate the pedigree and attempt to further distribute a drug.
  • Falsely swear or certify that pedigree papers have been authenticated.
  • Falsely represent factual content of a pedigree or knowingly omit required information.

California's regulations come into effect on January 1, 2007. They state that each wholesaler or pharmacy must pass a pedigree with each sale, trade, or transfer of a drug, and that each wholesaler or pharmacy must receive a pedigree with each acquisition of a drug. Nevada's regulations state: "A wholesaler, before each sale to another wholesaler or pharmacy, must provide a Statement Identifying Prior Sales (pedigree) with each sale to another wholesaler or pharmacy, if the wholesaler… Does NOT have an ongoing relationship with the manufacturer from which the drug was purchased; or the drug was purchased from another wholesaler."

At least 22 states (AZ, AK, CT, GA, IL, IN, IA, KS, KY, ME, MD, MN, MO, NE, NV, NM, NJ, NC, OK, OR, UT, and TX) are reconsidering changes to licensing. While the functional requirements for each state regulation may differ, the need for authenticated data, secure communication, and comprehensive reporting are fundamental to a viable pedigree program. The challenges that arise from the need for an information and network infrastructure are different than those of any other electronic system in today's drug supply chain. By its very nature, a pedigree requires validated information to pass from one authenticated party to another, without any compromise to its integrity. The parties involved in the manufacture, distribution, and dispensing of drug products will be forced to rely on each other—and on a common network or infrastructure—in order to securely authenticate, record, store, and share pedigree information.

The objective driver for using RFID is return on investment (ROI), through the following:

• A higher rate of speed/fewer manual processes:
  • No line-of-sight required
  • FAST, R.A.S. data collection
  • Simultaneous reading of multiple items
  • Can operate in extreme environments
• Reduced asset pools:
  • Automated data collection (full track & trace)
  • Gathering of data while interfacing with databases
• Reduced losses:
  • Very challenging for criminals to copy/defeat
  • On-chip data security
  • Covert (embedded solutions)

Let us look a little more at the processes involved in product authentication. Figure 5 provides a high-level view of the process for using RFID to accomplish this.

Figure 5. The authentication process (Source: How to eliminate counterfeit pharmaceuticals: "Authenticate at the point of dispensing™," Rob Whewell, PA Consulting, RFID Network Forum, June 2004) (Click on the image for a larger picture)

The typical situational analysis encompasses supply chain and inventory shortcomings using barcodes. Required line-of-sight, labor intensive scanning (reading), unreliable and inaccurate database management, and multiple touch points in the supply chain (for example, packagers, distribution centers, and so on) with limited controls all contribute to a problematic scenario for conducting accurate asset inventories and maintaining efficient security measures. RFID offers secure on-board serialization and data, with additional writable data capabilities, no line-of-sight or orientation requirements, and rapid simultaneous multi-read interrogation of tags.

Figure 6. Authentication at all stages down the production line (Source: Tagsys website) (Click on the image for a larger picture)

The use of RFID in this scenario has already been proven, and it is now just a question of time before we see this being rolled effectively in different countries around the world, for the benefit of not only the pharmaceutical companies, but also the patient and the healthcare provider.

Using RFID to Solve Current Business Issues

Product Authentication and ePedigree

As was discussed in "The Authentication Drive in the Pharmaceutical Industry," there is a compliance demand for the support of pedigrees. Different advice is coming from advisory boards in the United States and Europe. However, the industry sees that RFID has more advantages over 2D barcodes, and although it understands that there are currently issues with RFID, there is a strong view that the industry does not want to go through technology changes but would rather make the one jump in technology. This means that pharmaceutical companies, wherever they produce, need to look at a solution for these pedigree requirements. Paper pedigrees are possible, but the use of an RFID tag to contain the information on its own, or in conjunction with a Product Information Management System (PIMS), is actively being put forward as a solution by a number of US-based ISVs.

For instance, Raining Data's ePharma solution tracks the individual pedigree of drugs throughout the Pharmaceutical supply chain, and allows the major trading partners, pharmaceutical manufacturers, wholesale distributors, pharmacies, and pharmacy benefit managers to act on this information. The system tracks the location of pills from RFID tags or barcodes, and the change of custody at all change of ownership points. Specifically, the system supports serialized and nonserialized pedigrees, as well as item-level and/or case-level serialization.

Figure 7. ePedigree in practice (Source: Cyclone Commerce, ePedigree and RFID/EPC, February 2005) (Click on the image for a larger picture)

The electronic pedigree is an ever-growing chain of custody, detailing the path of the drug through the supply chain. Each company adds to the pedigree. The seller identifies the drugs and the full chain of custody, and then certifies the pedigrees and transmits them in advance. The trading partner receiving the drugs authenticates the pedigrees. When the shipment arrives, the pedigrees are matched to the products and signed to verify their accuracy. The pedigree software maintains the product-to-pedigree match while the products are in inventory. If an inspector visits and selects a product, the company must be able to produce the pedigree for that product. Software application ePedigree solutions manage the pedigree documents of record in a compliant repository, and enable rapid retrieval of the corresponding pedigree.

Production and Supply Chain Visibility

As we have already seen in the previous section, "Product Authentication and ePedigree," RFID is being seen and used as a technology solution to provide companies with better visibility in their supply chains and also inside their own plants. Regulatory bodies in the US, including the FDA and a number of state legislatures, have also made the importance of visibility a compliance issue. The Pharmaceutical "Pedigree Papers" regulation requires histories that identify previous sales and product information dating back to the drug manufacturer. The "Credit for Returned Expired Drugs" regulations mean that wholesale drug distributors must make adequate provisions for the return of expired prescription drugs for up to six months after the labeled expiration date, for prompt credit or replacement.

Figure 8. Simplified Pharmaceutical supply chain (Source: Microsoft Corporation) (Click on the image for a larger picture)

Today's consumers are becoming increasingly demanding, and this is causing supply chains to have to adapt into "demand" chains. At the same time, there is increased complexity, with scope for new problems. Out of Stock is a major concern, with lack of visibility in the supply chain and increased pressure through lean manufacturing of less inventory/stock being held. Consumers—whether wholesalers, retailers, or healthcare providers—want to know where their goods are, because they are familiar with the experience they get from using Amazon, DHL, and other user-friendly environments. There are more participants in the supply chain, which is leading to more shrinkage, counterfeiting, copying, damage, and tampering. Most organizations see that these issues lie outside their boundaries with their suppliers or logistics companies. However, in practice, it has been found that these issues also lie inside organizational boundaries, particularly where plant-to-plant movements are concerned, or where a plant covers a large area. Therefore, production visibility is just as important to getting real data for management as visibility in the supply chain.

Modern warehouses have complex requirements. Fast product cycles, and the need to decrease inventory and increase the flow of goods through the supply chain means that warehouses cannot remain static. Virtual real-time data must match the supply to the demand. Furthermore, many light manufacturing operations, such as final assembly, customized packing, labeling, and engraving, have been moved from shop floors to warehouses and distribution centers (DCs).

Javed Sikander, Director of Industry Architecture at Microsoft, in his article "RFID Enabled Retail Supply Chain", states: "Businesses strive to make their supply chains more efficient by improving the information sharing throughout the supply chain. At each node in the supply chain, forecast and actual sales from the next node are collected, and planning may be done on what and how much to make, which drives what and how much to buy from the previous node. Today large demands are placed on manufacturers, distributors, and retailers along the chain to maximize efficiency, minimize cost, and provide the best value to the end-customer."

Figure 9. Supply chains are complex networks (Click on the image for a larger picture)

EPCglobal's stance is that RFID provided the mechanism to provide the visibility necessary in today's complex supply chains. They envisage a sharing of information between companies (see Figure 10).

Figure 10. EPCglobal network (Source: EPCglobal) (Click on the image for a larger picture)

However, to handle this network effectively, you have to tackle the biggest issue, which is that during the supply chain, the same product maybe referred to by different product codes. The benefits of synchronized data are far-reaching, both from an internal and an external perspective. The sharing of data between trading partners is now one of the most important supply chain processes, because the integrity of the information is critical for the uninterrupted flow of goods. The term used to describe this phenomenon is global data synchronization (GDS). (For more information on GDS, please refer to the Microsoft white paper entitled "Global Data Synchronization.")

In the Pharmaceutical sector, a key driver for investing in GDS is the need to comply with mandatory product traceability requirements from the FDA; the desire to support technologies such as RFID; and standards such as Collaborative Planning, Forecasting, and Replenishment (CPFR). The changes that will need to be made in aligning various systems and formats are considerable, but the benefits in terms of smarter operations, merchandising, accounting, and supply chains are enormous.

Health and Safety: Hazardous Conditions

All major organizations have a key corporate responsibility for the safety and health of their employees. Pharmaceutical companies also need to be aware of the potential risk of damage to environment, as well as the safety of their products. An example of the importance of employee health comes from the first two objectives of the Astra Zeneca Corporate Social Responsibility Report for 2000:

• Objective 1: We will aim to improve the safety, health and wellbeing of all our employees by introducing behaviour-based programmes at all locations.
• Objective 2: Our goal is to have no accidents or incidents and to minimize our environmental impact.

Let us look at how one organization, BP, has tackled this problem. In 2005, there was a major incident at a BP refinery, in which a number of people were killed or seriously injured. BP set out to see how RFID could be used to improve safety and operations efficiency at chemical plants, refineries, and E&P facilities by locating workers (Source: Sensory Networks in BP, Mike Haley, BP, Chief Technology Office, RFID Networking Forum, May 2005). They wanted the capability to:

• Track workers who perform tasks in large, remote, or dangerous environments, and to quickly locate workers in an emergency.
• Provide warnings to workers in hazardous environments.

BP set up some trials to prove the concept, with the aim of refining it to prove operational feasibility by addressing intrinsically safe, form factor, size, and cost issues.

One of these trials involved the use of RFID tags to check that protective clothing and equipment was being used correctly. This check occurred as the employee was about to leave the control (safe) environment and enter the hazardous zone. The RFID reader in the confined entry point checked for the following:

• Is the correct clothing being worn?
• Does the worker have the necessary safety equipment (hard hat, goggles, gloves, and so on)?
• Is the breathing apparatus detected?
• Is there a "permit to work"?
• Is there more than one person present, and who are they?
• Do those who are present have valid training certificates?

The trials also involved integration with local handhelds or backend systems.

I see this use of RFID in the pharmaceutical industry as one that would provide immediate returns in the employee side of corporate social responsibility, for little cost.

Plant Maintenance

Every manufacturing organization has to plan the maintenance of its plant resources. The maintenance of plant is a cost in terms of lost production time. The biggest issue is the amount of unplanned maintenance that can occur and its serious impact on tight production schedules. So how can RFID be used to help control and manage plant maintenance?

Once again, I will use the example of some work done in BP. BP tackled the plant maintenance issue at two levels. First, they have digitized operator rounds to improve efficiency and avoid unplanned maintenance. This supported the refining business's drive for a "highly reliable organization," by capturing the complex work rules into mobile applications. The processes followed are the same way each time, and were based on best practices. RFID is used to give a unique identification of the assets. As the operator checks the asset, an audit trail is automatically produced. The mobile applications are used to automatically generate work orders. The result is that, instead of the work being responding to breakdowns, it has been transformed into preventing them.

The second area in which BP has used RFID and wireless technology to reduce unplanned maintenance by using wireless technology to gather information is in a trial of mote technology in a refinery, to capture "secondary readings" and environmental data. Mote/sensors cost a fraction of the cost of wired sensors. Drawing on BP's experience in using this technology in one of their ships, the Loch Rannoch, they worked out how to bring motes and sensors together with intrinsically safe requirements into a fully packaged solution (Source: Sensory Networks in BP, Mike Haley, BP, Chief Technology Office, RFID Networking Forum, May 2005).

Both of these solutions could be applied inside a pharmaceutical plant. Although the second—using mote technology—would be applicable mostly when liquid was involved, rather than on a tablet line, I could see a use in the production of such products as baby milk concentrate.

Hazardous Waste Disposal (RoHS and WEEE)

The European Commission worked for a number of years to understand the environmental impact of electrical and electronic waste, and concluded that the volume, the toxic content, and the relative ease of recovering and recycling important materials justified EU-wide action. The environment is defined as the "surrounding in which an organization operates, including air, water, land, natural resources, flora, fauna, humans and their interrelation (Source: ISO)."

The WEEE Directive and the RoHS directives passed into law throughout the EU in August 2004. In spite of the fact that this process is well advanced in the UK and elsewhere, many commentators have observed that there is a lack of understanding of the issues for EU businesses. There are also key details of the legislation that, even at this stage, are not fully finalized; however, the legislation effectively contains retrospective elements, so that many businesses are already substantially affected!

The practical upshot of this is that the equipment you are purchasing now is already adding to your problems under WEEE legislation, unless you have established asset management programs to ensure that every major asset is fully tracked and every minor asset is trapped at time of disposal. The cost of implementing such policies at the last minute will be prohibitive for most companies, and the recycling industry is predicting major problems as companies that have left it until too late find themselves on the front page, portrayed as environmental vandals. The scope of WEEE includes:

• Medical devices (with the exception of implanted and infected products).
• Monitoring and control instruments.
• Automatic dispensers.

Under the directive, there is a dual focus: the producer pays the cost of recycling schemes (a producer is, for instance, a computer hardware or medical equipment manufacturer), and businesses are obliged to implement appropriate disposal policies or face penalties. WEEE and RoHS affect any pharmaceutical company that provides products that contain electronic components (such as dispensing units). Note that this will include ePedigree RFID tags.

What is required is the creation of automatic systems that provide the user organizations with both the process of disposal and also the ability to prove compliance. Using RFID either when the goods are produced (to show when end of life occurs), or when goods are returned to the original supplier, can help with the tracking and tracing of the goods through this special version of reverse logistics. There is a major requirement to prove that a company has complied with procedures for the safe disposal of material. Therefore, RFID, in conjunction with workflow management and document management, provides a solution to this problem.

Figure 11. RFID with document management and workflow management solutions to WEEE and RoHS compliance (Source: Microsoft Corporation) (Click on the image for a larger picture)

RFID Packaging for Clinical Trial and Patient Monitoring

The Swedish company Cypack has been the innovator in the use of RFID within packaging for use in the Pharmaceutical industry. Their business is to license and sell a patented set of high-end RFID and low-cost computer technologies for turning paperboard packaging, cards, and other static objects into secure data collection devices that are capable of interacting with the user. The solutions that they have worked are:

• Pharmaceutical packaging with medication monitoring, patient diary, and reminding capability.
• Packaging with tamper detection, secure data storage, and damage detection;
• A system for self-diagnosis, with a blood bio-sensor and questionnaire integrated into the paperboard packaging.
• A contactless smartcard, with integrated PIN-pad for secure verification on the card

Pharmaceutical Packaging with Medication Monitoring, Patient Diary, and Reminding Capability

By integrating technology into paperboard packaging, Cypack has created the Intelligent Pharmaceutical Packaging (IPP), initially designed to support data collection in clinical trials. The IPP automatically records each dosage event with a time stamp. If required, it can also be designed with an integrated electronic patient diary and sound signal reminders.

The IPP increases data quality and supports the overall IT automation efforts in the development of new pharmaceuticals, enabling the secure data flow from an individual dosage to an analysis database. The key benefits are that the solution enhances the quality of data, and reduces time and cost in clinical trials.

This solution has been technically validated in patient trials. Volume production has been initiated by the US company Meadwestvaco Healthcare Packaging.

Figure 12. Cypack Intelligent Pharmaceutical Packaging (Source: Cypack website)

Courier Packaging with Tamper Detection, Secure Data Storage, and Damage Detection

By integrating technology into courier packaging, Cypack has created SecurePak (SP), which features electronic data storage, and tamper and damage detection. A courier package can pass various instances (post terminals, delivery firms, and so on) before arriving at its final destination. If a package has been tampered with, it is often difficult to locate where and when the event occurred in the logistics chain.

The SP provides the receiver with digital information about the sender, package contents, designated receiver, and any possible tampering events—all before the package is opened. Quality is assured, and liability issues are resolved with the help of an accurate time stamp, ensuring a shipment's integrity.

An integrated temperature sensor can continuously monitor temperature-sensitive items in order to ensure that the contents are not compromised by temperature extremes.

This Cypack solution has been technically validated, and it is in use by Swedish Post and Deutche Post.

System for Self-Diagnosis with Blood Bio-Sensor and Questionnaire Integrated into Paperboard Packaging

This solution is based on Cypack's Intelligent Pharmaceutical Packaging. It is targeted for screening diabetes and cholesterol scenarios. The key benefits are low cost and the convenient system for self-diagnosis.

Currently, this is a working prototype developed for a UK-based biotech company.

Contactless Smartcard with Integrated PIN-Pad for Secure Verification on Card

Cypack has developed a smartcard with an integrated PIN keypad and a PIN that is impossible to steal, even over the Internet. The PIN-on-card features a robust contactless interface, data storage capabilities, powerful encryption, and a PIN keypad, all integrated into the card. Two-factor authentication is performed without the need for external input devices, thus eliminating traditional concerns about PIN-code eavesdropping.

Leveraging the Cypack data exchange technology and the fact that the keyboard is integrated into the card also provides an unparalleled cost advantage.

A fully operational security system installed and verified in Sweden and Norway, and is available from the Swedish company Nodex.

RFID can be enhanced with more functionality and security:

• Sensors to detect events—for example:
  • When the package is open/closed
  • When the package is broken
  • Temperature changes
• Timestamp of events
• Interaction with user
• Authentication of user directly on the object
• Microprocessor that enables strong encryption and endpoint authentication.

Active and intelligent packaging technologies are largely aimed at improving supply chain efficiencies. Future developments will be increasingly directed toward assisting the consumer.

Figure 13. RFID business case examples (Click on the image for a larger picture)

Implementation Challenges of RFID

Implementing RFID involves a multitude of challenges. Multiple goals of an RFID deployment can lead to a complex project. It's better to focus on a few clear objectives. In an interview, Overby of Forrester Research said, "The fragmentation of the business case is forcing people to be more cautious and more analytical in how they approach the technology."

The other big challenge, Overby says, "continues to be cost," although she predicted that the adoption of the EPC Class 1, Gen 2 standards will put downward pressure on pricing. The Gen 2 standard makes the use of one secure tag possible worldwide, and it is expected to aid adoption of RFID across all industries. Other challenges include:

• Resistance to change—Many organizations today rely heavily on manual processes or barcode scanning to track goods. In any organization, moving from a familiar technology to a new technology poses a challenge, especially when it requires process change.
• Established barcoding infrastructure—In many manufacturing facilities and distribution centers, barcode systems have been used for many years. Since barcode systems are efficient and represent a substantial investment, it can be difficult to justify a change to RFID.
• No one size fits all—Today's RFID systems are customized for each deployment. "In fact, a successful implementation typically requires considerable experimentation to achieve adequate read rates and the delivery of actionable information to appropriate recipients," according to Alok Ahuja, Senior Product Manager of RFID at Microsoft.
• Environment—The physical properties of the products to be tagged, the antenna design, and other environmental factors can make it difficult for readers to work reliably. Liquids absorb radio frequency signals, and metal reflects them. As a result, performance can be affected by the item on which the tag is attached. External factors such as RF noise from nearby electric motors can also impact performance. However, as RFID technology matures and experience increases, tag and reader placement will become less an art and more of a science.
• Lack of integration—Lack of integration and isolated islands of automation can pose other problems for those considering RFID. Manufacturers' enterprise resource planning systems may not be linked in real time to shop floor systems. Currently, integration with back-end systems generally requires the creation of custom interfaces, which is often a time-consuming and expensive undertaking.
• Lack of skilled personnel—RFID-knowledgeable IT personnel are hard to find. Many organizations, regardless of size, will discover they have no qualified IT personnel in certain locations.
• Evolving standards—Managing multiple readers and related hardware can be a challenge, especially across multiple facilities. That's because global standards governing how RFID devices communicate with higher-level systems are evolving. At present, communication between hardware and software requires custom configuration. The situation is similar to that found in the early days of personal computing, when a specific vendor driver was required in order to link a printer to a PC and print documents. For those moving forward with RFID deployments, the fluid standards situation makes it imperative that system components provide an easy, inexpensive upgrade path.
• Data overload—An RFID reader will continuously scan each tag several times per second, for as long as the tag remains in its read range; therefore, the potential for data overload must also be considered. Some readers can be programmed to eliminate duplicate information, but data volume still can be overwhelming to the network. The reason is that RFID systems can capture information at more points than was practical with manual or barcode systems. Because few ERP systems were originally built to accept a high volume of low-level data, RFID system designers typically include some data filtering at the edge (device level).
• Data noise—The torrent of RFID data (called "noise") can overwhelm readers or cause ambiguity, especially in dense reader environments where scanning areas may overlap. Read rates are improving, but often they are not anywhere near 100 percent, due to unreadable, damaged, or missing tags. In addition, because reading is based on proximity, mistakes can happen. For example, a reader may read the tag on an item passing by on a forklift, rather than the tag on a stationary target. To prevent inaccurate data from being transmitted to enterprise applications, a successful RFID solution must be able to deal with erroneous or missing information.
• Multiplicity of vendors—No single vendor does it all, and therefore most RFID systems must be assembled from multiple sources. This can create integration obstacles if hardware and software don't work together.
• Resistance to information sharing—In systems that depend on information from various trading partners, information sharing issues must be resolved in order to achieve maximum benefit.
• Privacy issues—Finally, some privacy advocates claim that RFID will violate consumer privacy, and they have become vocal opponents of the technology. Although much of what they fear isn't currently practical (or, in some cases, technically feasible), these critics are being heard. Of particular concern is the use of RFID technology without advising the consumer of its presence and how it is being used. Vendors and users of RFID should be committed to using the technology responsibly, and to being vigilant about any perceived or actual misuse of personal data.

When you look through all the scenarios described in "Using RFID to Solve Current Business Issues," it becomes very apparent that the solutions involve more than just the use of tags and readers: they also involve support for integration with ERP solutions that run the company's businesses; collaboration with supply chain partners, both up and down the chain; and security/privacy support. This requirement, plus all the issues discussed earlier, means that the architecture in question must be both agile in nature, as well as heterogeneous in nature.

How Does the Microsoft RFID Architecture Address Business Needs?

To encourage widespread adoption of RFID technology, and to address the customer pains of managing multiple devices, smoothing the data, translating data into meaningful events and combating costly integrations, Microsoft is developing a layered RFID infrastructure, using an open-building-block approach. It relies on the Microsoft Windows Server system, related Microsoft applications platform products, and a growing number of integrated partner solutions. This approach provides a wealth of solutions for any size of organization or industry vertical, including manufacturing, pharmaceutical, or aerospace. Also, the combination of the Microsoft technology platform and partner solutions offers a multiplicity of applications, reflecting the broad potential of RFID.

The Microsoft RFID infrastructure enables compliance, automation, and business process transformation, while shielding users from changing standards/regulations. Toward this end, the company is developing core infrastructure components to support RFID applications and solutions. It is also RFID-enabling select systems within its family of Microsoft Dynamics enterprise applications products. The infrastructure provides a base set of tools for device abstraction and management, event processing, and applications integration.

Independent hardware, software, and systems integration partners play a key role in developing RFID applications based on the Microsoft .NET foundation technologies and Microsoft applications platform products such as BizTalk Server, which provides data integration services for supply chain operations. The Microsoft RFID technology can be embedded within third-party applications, or used on its own, to capture and interpret data from sensors, and to manage business events in an easy-to-deploy, user-friendly environment.

The Microsoft Layered Approach

The Microsoft RFID infrastructure platform consists of layers (see Figure 14). The architecture incorporates:

• Devices, such as readers and sensors.
• The Device Service Provider Interface (DSPI).
• Event processing engine.
• RFID application programming interfaces (APIs).
• Tools and adapters.

Figure 14. The Microsoft Real Time Enterprise Platform (Source: Microsoft Corporation, 2006)

Because the layers are tightly integrated, applications and devices can seamlessly interconnect. Here's how the layers work together:

Devices Layer

The bottom Devices Layer consists of hardware such as RFID readers, printers, sensors, barcode scanners, 802.1X access points for wireless local area networks, handheld terminals, and Pocket PCs, which are provided by partners. Data transmissions from EPC readers and other devices from multiple vendors are processed through a Device Service Provider Interface that is included in the Microsoft RFID infrastructure. It provides a platform for independent software vendors and system integrators to install hardware in a plug-and-play fashion, resulting in a complete and seamless RFID solution.

Data Collection and Management Layer

To accommodate the potentially large variety and number of devices that could be resident in an RFID implementation, a Device Service Provider Interface provides a consistent way for devices from multiple hardware vendors to expose their device services to the Microsoft platform. DSPI provides a scalable, extensible infrastructure that allows customers to read data through any standards-based or non-standards-based sensor, regardless of format, thereby reducing dependency on a specific technology and protecting RFID investments long-term.

Event Processing Engine

This layer includes event and workflow management, messaging, and a business rules engine. The Event Processing Engine enables context-based or rules-based processing of RFID data, to provide information directly to line-of-business applications. Information also can be delivered to business processes that span applications, by means of Web services integration and orchestration products such as BizTalk Server. This layer provides the structure for integration across multiple facilities and partners. It also includes device management, in order to convert data into business process relevant information.

Figure 15. The Event Processing Engine (Source: Microsoft Corporation, 2006) (Click on the image for a larger picture)

Services Layer

The Services Layer includes product information resolution lookup, business process management, analytics/reports/notifications, and enterprise content solutions. The Microsoft RFID infrastructure makes it easy for partners to embed functionality directly into their application, or to build applications on the infrastructure. Open APIs and .NET-centric tools allow partners to quickly create specialized vertical solutions across a wide range of applications. The Services Layer also provides lookups to EPCIS servers where data about a tagged object resides.

Application Solutions Layer

This uppermost layer relies on services, data, and tools from the lower layers to implement application solutions that drive business processes for the end user. Microsoft relies on its partners to build out many of the solutions, which are divided between two classes of applications: real-time enterprise/point applications and batch-oriented enterprise applications. In addition, the RFID infrastructure also supports the Microsoft Dynamics family of enterprise applications.

Business Benefits

The Microsoft RFID infrastructure offers many potential business and technology benefits to those considering RFID systems today. In all cases, careful attention has been placed on open standards, and on overcoming the shortcomings of today's custom systems. Thus, the Microsoft RFID infrastructure is designed to lower total cost of ownership; simplify integration end-to-end, from the device level to back-end applications; convert data into actionable information; and provide a platform where Microsoft and its partners can build applications that take advantage of the volume and real-time nature of RFID data.

• Lower total cost of ownership—One of the most significant potential benefits is helping clients leverage existing investments in Microsoft Windows Server 2003, SQL Server, and BizTalk Server, as well as popular ERP and CRM systems, including Microsoft's own ERP systems, Microsoft Dynamics. These familiar tools also shorten the learning curve and make the applications easier to use.
• Simplified integration—The Microsoft RFID infrastructure allows for seamless integration of devices, with provisions for discovery, configuration, communication, and management. Essentially, it provides ways to integrate data from disparate sources from the physical layer, such as the shop floor, warehouse floor, and trading partners, and it governs how information flows through the stack and ends up in business solutions provided by partners or Microsoft Dynamics.

  Because the DSPI basically makes hardware such as readers and printers plug-and-play, it helps system builders assemble the optimum solution and focus on larger project issues, without worrying whether a driver exists. Meanwhile, organizations deploying RFID are better positioned to take advantage of the hardware innovation and falling prices that DSPI promotes.

  Firmware updates can be performed remotely across an enterprise, eliminating the need for physical intervention. Hardware health can also be monitored remotely. If a reader does not respond as expected, an administrator receives an alert so that corrective action can be taken.

• Converting data to actionable information—Above the Microsoft Devices Layer, an Event Processing Engine filters incoming noise while providing alerts and transformations. It reduces the data "noise" created by the volumes of redundant data it receives, and converts it into actionable information. This functionality is enhanced by the use of English-like vocabularies for rule creation, and a high degree of built-in configurability, thus making it easy for users to modify it. Similarly, performance and scalability are built-in, so that large volumes of irregular event streams can be handled and deployment can be distributed.

  Built-in edge processing includes a highly flexible and configurable rules engine that addresses potential business problems. For example, if a shipment of 24 cases is expected, but only 20 tags are read when it arrives, the system can send an alert so that the operator can check the pallet. The operator can then confirm the presence or absence of the four unread cases, and transmit accurate receiving information to the enterprise application. Whether done at the edge or centrally, processing of data is transparent to the user.

  Data management also requires context. Is the object arriving? Departing? This information can be provided by sensors on the Devices Layer that show the direction of movement. Or, it can be done by a combination of history and rules. For example, if the system has seen an object before, this would suggest it is departing rather than arriving. Adding the context of pending orders provides further confirmation of status.

• Application platform—Open APIs and a rich object model make it easier for partners or users to build new RFID-enabled applications, or to integrate RFID data with back-end applications. Tools include a centralized dashboard for device monitoring and configuration, and a Tag Data Simulator that permits RFID events to be simulated without input from actual devices. Tight integration with BizTalk Server and existing enterprise software makes it possible for partners and clients to convert RFID events to BizTalk Server messages, and to build closed-loop "RFID-aware" business processes.

For details of a sample of key Microsoft partners who are developing RFID-based solutions, go to www.microsoft.com/partners.

Conclusions

The pressure of the FDA and the US states over product authentication through pedigrees, and the inefficiencies of using paper-based systems, means that pharmaceutical companies will need to introduce RFID-based solutions. These will most likely be purchased off-the-shelf applications. Those organization that are looking to exploit technology will look at other uses of RFID technology to assist in visibility and identification, as illustrated in this paper.

RFID offers new levels of visibility for companies that want to track physical items between locations. In the supply chain, goods tagged at the point of manufacture can now be traced from the factory to the retail shop floor, thus providing a real-time view of inventory for all supply chain partners.

The potential of RFID technology is enormous. Realizing the value however, requires a business-wide approach:

• Maximize the value through understanding the full breadth of the implications and opportunities presented by the technology.
• Minimize the risk of failure through appreciating the pitfalls involved in RFID technology selection, integration, and implementation in the end-to-end supply chain.
• Bring the right skills to bear, including:
  • Supply chain process reengineering.
  • RFID physical layer implementation.
  • Technology integration.
  • Enterprise systems.
  • Finance and tax planning.
  • Regulatory implications.
  • Program management.
  • Change management.
  • Corporate and social responsibility.

Awareness of RFID technology and the benefits that it delivers is increasing across the industry globally. By playing a key role in developing the infrastructure required for RFID, Microsoft is contributing to the momentum of mass deployment.

The fully-integrated Microsoft architecture for RFID embraces a vision for increased operational efficiency and reduced costs. It enables the exchange of RFID-related data, in near-real time, across disparate systems and corporate boundaries. It also supports standards for global data synchronization and interoperability with EPC, which is a prerequisite for global adoption of RFID.

Microsoft is playing a leadership role in RFID, data alignment, and traceability, through participation in a number of industry initiatives and involvement in the development of standards for RFID. Our RFID Council is also contributing to the development of the technology by helping organizations track items more effectively.

Through a network of world-class partners, including ISVs, hardware vendors, and systems integrators, Microsoft is delivering RFID solutions that add value to businesses and enable fast returns on technology investments.

The key to realizing the benefits of RFID technology is treating it as a true enabler of business reengineering—a step change in improving both integrity and efficiency.

Appendix A: More Information About the Microsoft RFID Solution

For more information about the Microsoft RFID solution, please call:

• US: +1 425-707-4637, or send an e-mail message to Alok.Ahuja@microsoft.com.
• EMEA: +44 118 909 3521, or send an e-mail message to simon.holloway@microsoft.com.

Also, more information about the Microsoft RFID solution is available on the Web, at msdn.microsoft.com/canada/rfid/.

The following organizations provided invaluable research and insights for this white paper, and the author would like to thank them for their contributions. Industry officials interested in obtaining more information about the research cited in this report should contact the organizations at these websites.

Table 1. Research firms and Microsoft solution partners mentioned in this white paper

About the Author

Simon Holloway is Manufacturing Industry Architect at Microsoft EMEA. He is responsible for defining and developing solution-based architectures within the manufacturing sector. He is the EMEA Manufacturing lead on RFID and Shop Floor Security.

Simon's background spans some 20 years as an IT consultant specializing in IS/IT strategy planning, information management, corporate data and process modeling, business process reengineering, structured business analysis, software selection, and project management. He has worked in a wide variety of industry-based and service-based companies. Simon is the author of eight books on the subject of data management, development approaches, and open systems.