Sidebar: FDA Mandate Could Have $7B IT Price Tag

The U.S. Food and Drug Administration last week issued a final ruling that mandates the use of bar codes on drugs dispensed in hospitals. The FDA said the adoption of bar codes should save lives by reducing medical errors, but it repeated an estimate that the 6,000-plus hospitals in the U.S. will be hit with a $7 billion technology bill.

The ruling, issued after a year of deliberations, requires pharmaceutical companies to apply bar codes to thousands of prescription and over-the-counter drugs that they sell to hospitals. The FDA hopes that the mandate will encourage widespread rollouts of information systems that have helped reduce medication error rates by as much as 85% at some test-bed hospitals.

Gary Jump, CIO at Our Lady of the Lake Hospital in Baton Rouge, La., said he views the ruling as "a tremendous opportunity" to use technology to avoid medical mistakes. But he added that it will provide savings to hospitals only if the ruling requires drug manufacturers to apply bar codes to single-unit doses, not bulk packages.

That's one of the FDA's provisions, and Sutter Health CIO John Hummel estimated that the requirement would save his company $2 million a year in drug repackaging costs. Those savings could help offset the cost of a massive hardware upgrade that Sutter is undertaking to support the use of bar codes, including a deployment of 6,000 PCs mounted on mobile carts.

Kenneth Kleinberg, senior director of the global health care division at bar-code system maker Symbol Technologies Inc., predicted that the ruling also will spur big investments in wireless LANs at hospitals to support bar code readers. Kleinberg estimated that only 10% of U.S. hospitals have installed enterprisewide WLANs and that another 35% are running wireless networks on some of their patient floors.

The average large hospital would have to install hundreds of WLAN access points to pick up the signals from portable bar code readers, potentially costing about $200,000, he said.

The bar-code mandate, which finalizes an initial ruling issued last March, will take effect within 60 days for new drugs and in 2006 for existing ones. The announcement came one week after the FDA called for the use of radio frequency identification technology to track prescription drugs in pharmaceutical supply chains to prevent counterfeiting (see story).

But the FDA is concerned that RFID tags and readers could cause electromagnetic interference with medical devices used in hospitals. Hospitals also don't need the advanced track-and-trace capabilities built into RFID devices, the agency said. However, the FDA added that it would consider revising the bar-code mandate to accommodate new technologies like RFID in the future, if necessary.

Copyright © 2004 IDG Communications, Inc.

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