WASHINGTON — About seven out of ten Americans takes a prescription drug. Though most of us don’t think twice about the journey our medicine takes from factory to pharmacy, the drug supply chain is in trouble.
About 10% of the world’s drugs are tainted or unsafe, and the counterfeit drug market is now a $217-billion industry. Because drugs are manufactured all over the globe, products change hands dozens of times before ending up on pharmacy shelves. That creates plenty of opportunity for fake, expired or contaminated drugs to infect an increasingly chaotic supply chain.
The FDA and other regulatory bodies have tried to fix this problem by asking companies to employ audit trails and barcode-based tracking systems, all with limited success. But according to healthcare experts gathered at the 2018 Blockchain Health Summit here last week, a new technology called blockchain is poised to fix the fractured drug supply chain problem.
Blockchain rose to prominence as the backbone of the cryptocurrency Bitcoin, but it is now finding a home in healthcare. In essence, it’s a turbo-charged accounting system that encrypts and stores transactional data across multiple computers, making it virtually tamper-proof. Better yet, blockchain provides a coherent record for all participants to see — akin to a shared Google Drive document.
Within the highly regulated drug industry, blockchain could bring regulators, manufacturers, distributors and pharmacies on the same page and provide a verifiable record of a drug’s journey across the globe. Eventually, the federal government could use blockchain to prepare for drug shortages, predicted Jim Nasr, vice president for technology and innovation at Certara’s Synchrogenix unit.
Blockchain exploded onto the healthcare scene about 5 years ago, just as Congress passed the the 2013 Drug Supply Chain Security Act (DSCSA) — a new regulation designed to fix the broken supply chain.
DSCSA lays out a set of requirements around tracking and tracing drug products over a 10-year period. That means by 2023, pharma companies will be required to have an “interoperable, electronic tracing of product at the package level,” according to the regulation.
Since then, a handful of startups with names like Cryptowerk, Ambrosus, FarmaTrust, Spiritus and LinkLab have sprung up to offer blockchain platforms for supply-chain management. Their clients are pharmaceutical companies, raw ingredients suppliers, wholesalers and pharmacies.
In the U.S., blockchain is taking off because of the top-down regulatory pressures imposed by DSCSA. But in some developing countries, where counterfeit products may represent up to 30% of the drug supply, blockchain is being adopted as a way to combat rampant fraud.
Garbage In, Garbage Out
Blockchain wouldn’t fundamentally alter the way drugs move through the supply chain, said John Bass, founder and CEO, Hashed Health. Instead, Bass said, it’s all about monitoring the system that already exists.
“You’re creating a fingerprint for that asset and you’re registering that on a distributed ledger, or blockchain,” Bass said. “Once you’ve identified it, you [can] monitor the state of it as it moves through all the supply-chain actors.”
Blockchain won’t solve all fraud right away, because even a blockchain-fueled track-and-trace system relies on company employees to manually enter data into a computer or scan a barcode, notes Pradeep Goel, CEO of the Solve Care Foundation.
“We can trace a product from A to Z, but that means at the point of creation, you have to have enough sensors in this product that it cannot be altered,” Goel said.
Bass agreed that in the future, the system will work a lot better when all drug products are rigged with tiny wireless sensors that automatically write data to the shared blockchain system, rather than relying on employees to enter that data.
“All blockchain solutions — supply chain or otherwise — don’t solve the ‘garbage-in, garbage out’ problem,” said Heather Flannery, co-founder of Blockchain in Healthcare Global. But, she added, the key difference is that today, any company can alter its records after the fact to cover up fraud and deception.
Today, “the ability to cover up fraud or criminal activity is infinite,” she said. “The fundamental thing that blockchain brings is that everything is persisted [with] little to no possibility of tampering by stakeholders.”
As well, a shared blockchain network could be audited by regulators trying to verify product authenticity, and to recover every single lot of drug implicated in a product recall.
Low Hanging Fruit
Though blockchain has been proposed as a panacea for a wide range of healthcare woes — including fixing the tangled mess of electronic health records — experts agree that it’s not ready for prime time for the majority of its potential applications.
The supply chain is one of the few areas where blockchain is being used now, and shows real promise for the future.
“Supply chain is a really exciting use case for blockchain in general because it’s very low lift,” said Jake Dreier, director of growth and operations for SimplyVital Health, speaking at the 2018 Blockchain Health Conference here. “It’s what blockchain’s initial use case was — an immutable audit trail. You can track anything from point A to point B.”
“Supply chain to me is so obviously perfectly attuned to this technology,” said Flannery.
“There’s just no comparison between a value chain that that had a [blockchain] ecosystem … and one that did not — not in speed, not in efficiency, not in compliance, not in track and trace.”
“There’s no benefit to not using blockchain in supply chain,” she said. “It’s such low hanging fruit.”