Counterfeit drugs are a huge problem worldwide, with the market estimated at between $75-$200 billion dollars. In fact, pharmaceutical counterfeiting has grown almost 20 percent a year for the last three years, according to Marvin D. Shepherd, director of the Center for Pharmacoeconomic Studies at the University of Texas at Austin. For drug companies this means lost revenues, increased costs and often irrevocable damage to their brand. For consumers, it could mean their lives.

There are already a plethora of strategies to try and combat counterfeiters—holograms, invisible ink, radio frequency identification, special codes on packaging, even magnetic threads—but they have figured out ways to mimic these or invade supply chains and get their fakes into the real drug's package. Now a start-up in Honolulu, TruTags, is upping the ante, putting a microscopic edible tag right onto the surface of each pill, something known as on-dose authentification.

TruTags is one of the companies nurtured by venture accelerator Skai Ventures in Honolulu, owned by Hank Wuh, an orthopedic surgeon and inventor and founder of Cellular BioEngineering, which makes bioengineered corneas.

The magic behind the micro-tags is nano-porous silica, tiny pieces of sand and glass. Holes are drilled into each particle so that when a white light hits the surface, it's reflected back in a unique pattern that can be read by a spectrometer. "You get a bunch of peaks and valleys," explains COO Peter Wong. "We can adjust that spectral pattern—changing the distance between the peaks or the height of the peaks—and create a trillion different patterns." Constantly changing patterns helps prevent them from being duplicated.

This type of silica—the kind of granule found in hourglass timers—has been used in food and drugs for decades, says Wong, and is considered GRAS—or "generally recognized as safe"—by the FDA, so doesn't need to be approved by the agency for use on pills. To get the silica tag on the pill, a pinch of the tags is put into a vat of the coating mixture a pharmaceutical company uses to coat pills; one gram of TruTags has more than 10 million silica particles, so every pill is coated with hundreds of particles. The code can be read from just about anywhere on the pill.

That spectral code is assigned a number. "It's like giving the pill a social security number," says Wong. That number has a profile associated with it, which tells where and when it was manufactured and what's in it.

Right now the company is targeting its technology toward pharmaceutical manufacturers' quality control teams, but there are applications beyond counterfeiting. Because a TruTag enables drug makers to trace a pill back to the place it was manufactured, if something goes wrong they can figure out where it happened and what batch of pills were affected.

It could also be used to monitor drugs returned because they are expired or because of a quality problem. Wong says TruTags could help manufacturers verify the authenticity of those returns. Right now, he says, "There's no quick, easy way to confirm that a pill being returned is the drug it's supposed to be." 

Skai Ventures spent $3 million initially funding TruTags, then raised a bridge round of about $2 million from Skai's network of angel investors. The company also received about a million dollars from the U.S. Army in 2009 to research the information capacity of the tags, says Wong. The next step is to tap into venture capital.

Although TruTags isn't the only company with a tagging technology—ARmark Authentification, NanoGuardian and CertiRx are others—Wong says many tags are embedded inside the pill, rather than on its surface, where it's easily readable with a handheld device. And none of them use silica. Launch: Silicon Valley 2011 named TruTags was "Most Likely To Succeed" in the life science category in early June. (Six start-up companies were chosen as winners out of 30 that presented.)

Steven Simske, a Hewlett Packard fellow and director of security printing and imaging for the company in Ft. Collins, Colo., says spectral bar coding on its own isn't new but the way TruTags is using it is. Simske cautions the company will need a way for its tags to be easily read out in the field by product security teams or U.S. Customs agents. Wong agrees. "We know ultimately we need to make the reader device smaller, faster and cheaper," he says.

Yet Heather J. McDonald, a partner at the law firm Baker Hostetler in New York City who specializes in trademark and anti-counterfeiting litigation, says the technology is promising. "When pills are out of their package, you can't trace them. But this would give law enforcement the ability to trace them by looking at the pills themselves." Because the tags constantly change, and because you can't see them without a special reader, they will be hard for counterfeiters to duplicate. When you look at how quickly counterfeiters have duplicated many security technologies, says McDonald, "it seems to me this one has a pretty good chance of sticking around."