The present invention provides a HIPPA compliant monitoring system for drug distribution and decreasing drug diversion. Incorporating electromagnetic tag technology, such as RF ID and other applicable technology, a system is provided to track movements of a dispensed drug, from the manufacturer to the end use. A central unit processes information received from a number of different tracking units, stores such information and processes the information with pre-determined conditions including but not limited to drug abuse, diversion, and other compliance related events. Once an abnormal event is detected by the central unit, an alert may be sent to the authorities or relevant personnel. The system also includes a one or multilevel authentication code system, to further ensure the protection of a patient's privacy during the tracking process, and to make the system HIPPA compliant.
