IBM Smartens Up Fight Against Counterfeit Drugs

IBM last week expanded its reach in health care, unveiling software that uses radio frequency identification technology to track drugs as they travel from pharmaceutical manufacturers to pharmacies to prevent counterfeit drugs from entering supply chains.

The pharmaceutical track-and-trace system also is expected to help manufacturers and wholesalers cut distribution costs by reducing inventory expenses, easing product recalls, and enabling faster response to changes in customer demand, IBM says.

The system, which uses IBM's WebSphere RFID Premises Server as its platform, collects and manages data from RFID readers, and then applies business logic to the information. This approach lets it make connections, such as identifying drug shipments that have been recalled. Businesses can build their own applications on top of the system, which also includes a data repository and other tools for communicating with high-frequency and ultrahigh-frequency RFID readers.

It's estimated that $30 billion to $40 billion of counterfeit drugs are sold every year, and that figure is expected to nearly double to $75 billion by 2010, according to the Center for Medicine in the Public Interest. That poses a major health risk to consumers if they unwittingly buy fake medicines that don't work or cause injury or worse. Then there are the billions of dollars in lost revenue for drugmakers.

The situation is spurring legislation at the state and national levels requiring that drugmakers and distributors take steps to ensure the pedigree of their drug shipments. "With legislation well under way, we see many major pharmaceutical companies investigating this," Forrester Research analyst Ellen Daley says in an e-mail. While the components of the IBM system aren't groundbreaking, she says, the end-to-end approach provides benefit because of its "breadth and depth" and related services.

IBM developed the system using experience it gained working with Cardinal Health, a drug wholesaler, and an unnamed pharmaceutical maker. The system is being sold through IBM Global Business Services and systems integrators.