The blockchain technology is well suited for use cases involving track-and-trace, product provenance and supply chain governance.
The pharmaceutical industry is actively exploring the blockchain technology to help with several real world use cases. Many of these explorations already have proof-of-concept implementations that have generated tractable interests in the Pharma industry.
In this post we will review the top 5 of these use cases.
Use Case 1: Verifying the Authenticity of Returned Drugs
In the Pharma industry, drugs are frequently returned to the pharmaceutical manufacturers. For instance, wholesalers may have ordered excess inventory and accordingly may need to return unsold stock to the pharmaceutical manufactures.
While the proportion of the returned drugs is small compared to the sales (about 2–3% of sales), the per year volume is in the range of $7- 10 billion.
In 2016, the US pharmaceutical manufacturer sales were $323 billion. The 2018 forecast revenue for the top ten global pharmaceutical companies (which represent half of the sales of the top fifty companies) is $355 billion. Based on these estimates, the saleable returns market at 2–3% of total sales is 7–10 billion.
Instead of destroying these perfectly good drug shipments, pharmaceutical companies instead opt to re-sell them. However before they can re-sell these returned drugs, the pharmaceutical companies have a legal obligation to verify the authenticity of the returned drugs.
In the US, the Drug Supply Chain Security Act (DSCSA) stipulates that all US manufacturers must implement serialization or barcoding of drugs at a package level by November 2018. Also, by the same time next year these serial numbers must be used to verify the authenticity of the returned drugs.
Europe has a similar regulatory enactment called the Falsified Medicine Directive (FMD), requiring all drugs to be serialized or barcoded by February 2019.
While the EU has opted for a centralized approach (allowing manufacturers to upload serial numbers to a centralized EU regulator’s database, and distributors to connect to this centralized database to verify drug authenticity), in the US there is no centralized database regulator.
Without such a centralized database, one option is for every distributor to integrate data with every pharmaceutical manufacturer, which is logistically prohibitive!
A far better and recommended approach is to have pharmaceutical manufacturers record the serial numbers of their packages on a blockchain, which serves as a decentralized and distributed ledger. Wholesalers and customers can then verify the authenticity of a drug package by connecting to the blockchain.
Currently, Merck in partnership with SAP has developed the SAP Pharma Blockchain POC app for this Use Case. SAP launched this first Proof of Concept in Q3 2017, and a second one in early 2018. The PoC for the Use Case works as follows,
- SAP’s existing solution (unrelated to blockchain) called ATTP (Advanced Track and Trace for Pharmaceuticals), generates unique identifiers for a drug package.
- When a manufacturer ships a package they register the item on the SAP Pharma POC blockchain, with the four pieces of information generated by the ATTP; the item number (based on GS1 standard), a serial number, a batch number, and an expiration date.
- The distributor can extract the four pieces information from the packaging’s barcode, using a simple scanner mobile app, allowing them to verify returns .
- Counterfeiter copies of barcodes can be avoided, since SAP has the added ability to track every time a package changes hands. A map view within the mobile app also helps ensure that the drugs are in the expected geographical region.
Use Case 2: Prevention of Counterfeit Drugs and Medical Devices
Blockchain’s ability to establish provenance of data makes it especially suited for this supply chain use case.
Drug companies that manufacture, ship and deliver products have a difficult time keeping track of their products, thereby allowing counterfeiters to introduce fake drugs into the system.
The problem of counterfeiting is not just limited to drug manufactures, but extends to medical instruments manufactures. The World Health Organization (WHO) estimates that 8 percent of the medical devices in circulation today are counterfeit copies.
Counterfeit drugs and medical devices pose a major risk to consumers, and also lost revenue for the legitimate manufacturers.
When the Drug Supply Chain Security Act (DSCSA) mandate goes into effect by November 2018 every drug package will be uniquely serialized or barcoded. This will provide a unique product identifier for each drug package, and allow the verification of the authenticity of every product sold.
As the drug moves through the supply chain the transactions can be recorded on a blockchain, thereby providing a distributed provenance ledger. This will make it possible for all parties to track drugs through the entire supply chain life-cycle.
This will make it harder for counterfeit drugs from being introduced into the supply chain, and distributed to unsuspecting consumers.
Novartis is experimenting with blockchain to identify counterfeit medicines and track temperature with real-time visibility for all participants in the supply chain, using Blockchain and IoT.
The initiative is led by Fritz, the Novartis’ Domain Architect Supply Chain, and Cuomo, Novartis’ Applied Technology Innovation Manager.
Novartis is also currently engaged in developing a consortium blockchain network between the European pharmaceutical industry and the EU, called the Innovative Medicine Initiative(IMI) Blockchain Enabled Healthcare program. The consortium will comprise SME blockchain companies, universities, clinical labs, hospitals, patient representatives and others; and aims at exploring use cases in counterfeit drug detection, supply chain, patient data, and clinical trials.
Use Case 3: Compliance in Pharma supply chain
As drugs move through the supply chain, logistics companies need to adhere to drug handling, transport and storage guidelines. Several operating constraints may need to be tracked. These may include maintaining temperature range, humidity, air quality within specified limits etc.
Environmental conditions within the supply chain may have a direct impact on the quality and efficacy of the drug. For example temperature sensitive products like vaccines need to be properly monitored throughout the supply chain.
Today drugs are monitored throughout the supply chain using smart IoT devices and temperature, humidity and other factors can be recorded using smart devices throughout the supply chain life-cycle.
However since each participant of the supply chain i.e. the manufacturer, the logistics company, the stores and the pharmacies etc, maintain their own separate ledger, a problem within any particular segment of the supply chain is difficult to track.
Blockchain technology provides the pharmaceutical supply chain a better way to add compliance and governance within the supply chain.
Due to its inherent transparency, immutability and distributed nature, Blockchain technology provides a mechanism that allows any participant in the supply chain to ensure that the supply chain logistics and transportation guidelines (including handling and storage conditions of the drugs), were adhered to.
Additionally smart contracts can be programmed that automatically execute when compliance conditions are not met, there by alerting the relevant parties in the supply chain.
So for example suppose, if there is a temperature excursion during a transportation, with blockchain technology the consumer can easily see at what point the event occurred. Additionally, smart contracts may be automatically invoked within the blockchain, which will reduce the invoice amount due to the logistics company, based on its level of non compliance of storage conditions.
Use Case 4: Transparency and traceability of consent in Clinical Trials
Informed patient consent involves making the patient aware of each step in the Clinical Trial process including any possible risks posed by the study. Clinical trial consent for protocols and their revisions need to be transparent for patients and traceable for stakeholders.
However, in practice the informed consent process is difficult to handle in a rigorous and satisfactory way.
The FDA reports that almost 10% of the trials they monitor feature some issues related to consent collection. These include: failure to obtain written informed consent, unapproved forms, invalid consent document, failure to re-consent to a revised protocol and missing Institutional Review Board approval to protocol changes; among others. Frequently also there are reported cases of document fraud such as issues of backdating consent documents.
Blockchain protocols in clinical trials can provide transparency and traceability of consent.
Blockchains provide a mechanism for unfalsifiable time-stamping of consent forms, storing and tracking the consent in a secure, and publicly verifiable way, and enabling the sharing of this information in real time. Additionally, smart contract can be bound to protocol revisions, such that any change in the clinical trials protocol requires the patient consent needing renewal.
Use Case 5: Improving the quality and reliability of Clinical Trials data
Since the passage of the Prescription Drug User Fee Act in 1992 (which allowed the FDA to receive funding from pharmaceutical companies), the FDA has collected $7.67 billion in user fees from pharmaceutical manufacturers. This trend of annual funding to the FDA from drug manufacturers is expected to continue to increase.
Patients and physicians have begun to question the current standards for Clinical Trial funding, leading to growing concerns due to the conflict of interest and the high stakes involved.
Blockchain with its decentralized, immutable ledger and a mechanism to ensure transparency provides a solution.
Clinical trials data can be stored in a secure, unfalsifiable and publicly verifiable manner on the blockchain. This prevents tampering with clinical trials results, thus improving the reliability of the clinical trials data.
Blockchain technology can also be used to directly increase the quantity and quality of patients recruited for clinical trials in a number of ways.
Using blockchain individual patients can store and control access to their medical data, and make it visible to trial recruiters, who could then reach out to the patients if their data qualifies for the clinical trial. The decentralized nature of blockchain gives to the patients, control over their data, and consent and its revocation.
Pfizer, Amgen, and Sanofi are currently working side-by-side to leverage to blockchain technology. Use cases range from storing patient health data safely, to speeding up clinical trials, and ultimately lowering drug development costs.
Exochain (a blockchain Pharma startup) manages secure storage of patient health information on the blockchain. Exochain allows individuals to control how clinical trial researchers may interact with their medical data. This can potentially lead to increased quantity and quality of patients recruited for clinical trials, while at the same time giving individuals precision control over their medical information.