The power is obviously lost on the way back, but this doesn't actually factor into the distance you can read from, practically speaking. If you can get power to the device, you can use a super high-gain antenna to receive its transmission. Same thing goes with NFC chips; the one I have implanted can only be powered feasibly from about 10 inches away (physically impossible beyond about half a meter, due to flesh and the fact that it's magnetic coupling), but if something else powers it, you can read it from an exceptionally large distance.
Well, yeah, by the same logic you could could power it with a high gain antenna as well and boost your distance. The falloff is still 1/R^4 without a third power source, you've just multiplied it by a constant.
The limiting factor is (afaik) getting enough energy into the tag to run its components. If you were working with much higher distances and powers then the transmission strength of the tag might matter, but in this case it's basically a one-way transmission problem.
