3 ways blockchain will change the pharmaceutical supply chain
Written by Helen Blomfield and Kabil Ghhogra
In our previous blog post on blockchain, we gave a brief overview on what blockchain is, how it works, and why it might be useful for the pharmaceutical industry.
This post will focus on one of the potential major areas for use within the pharmaceutical industry: the supply chain. We will cover three use cases: logistics, counterfeiting, and patient usage.
The pharmaceutical industry has a particularly complex supply chain, with many varied stakeholders involved in the manufacture and distribution of a single drug. Blockchain offers an opportunity to simplify the logistical process and enable quality control throughout the supply chain.
By attaching documentation that travels digitally with the drug, it’s possible to include instructions for use (e.g. a scannable barcode that informs the different stakeholders as to how the product should be treated at different stages of the process).
Additionally, it can provide proof that the correct manufacturing process has been followed and has included the right people (e.g. that manufacturing has not been passed off to a lower cost facility). In China, where there have been widely-publicised failures in food safety, Walmart is using blockchain to improve the tracking of food; and ZhongAn Technology uses blockchain to trace chickens from hatching to the supermarket shelf. There are many opportunities to take the learnings from other industries and transfer them into Pharma.
Blockchain also brings in the opportunity for additional quality assurance along the supply chain – for example, linking drugs requiring temperature control to a temperature sensor, and connecting everything using the Internet of Things. If the temperature exceeds a certain threshold (maybe the drugs are left too long on an airstrip outdoors on a hot day) the sensor could automatically log a violation of temperature controls that could not be overturned by the supplier. In this way, the pharmaceutical company can ensure that substandard products are not being sold under their brand.
In 2017, Interpol Operation Pangea X led to the seizure of over $51 million of counterfeit medicines. Materials seized included fake anti-malarial tablets and epilepsy medication. Increasing sophistication on the part of counterfeiters makes detection more and more difficult, and online purchase and delivery of medication makes substitution more common.
Estimates suggest that in Europe alone the pharmaceutical industry is losing revenues of approximately EUR 10 billion a year. However it is the human cost of counterfeiting that is the most concerning aspect of the practice. A recent study, covering 2007-2016, suggested that one in 10 drugs sold in developing countries is fake or substandard. The University of Edinburgh calculated that this could have caused 116,000 additional deaths from malaria alone in sub-Saharan Africa.
Facing these concerns, governments across the world have been regulating on serialization requirements as a method to improve traceability across the supply chain. The US Drug Supply and Chain Security Act (DQSA) requires electronic track and trace capability to be enabled for all stakeholders in the supply chain by 2023. In Europe, the Falsified Medicines Directive (FMD) requires pharmaceutical companies to include “safety features” on their products and to be connected to a central EU data repository. Brazil requires a database of all transactions along the supply chain and serialized transaction data to be reported to the manufacturer.
While implementing a database capable of meeting FDA requirements is not necessarily problematic, keeping everything in sync and communicating changes down the supply chain could remain a challenge as product and system changes occur frequently. Blockchain provides a solution to the challenge of interoperability across suppliers and systems, as well as providing a verifiable change log, held in a secure electronic environment. It’s no surprise that Pfizer and Genentech are working on a blockchain-based solution to meet their requirements.
At the end of the supply chain, we reach the patient. Tracking the use of medication is valuable from a supply-chain perspective to enable agile supply and manufacture, reducing the need to hold large amounts of potentially labile stock. Using a centralized ledger that traces when a drug moves from stock to patient means that pharmaceutical companies can not only supply, but also produce products “just in time”, significantly improving efficiency in the supply chain.
Beyond logistics, tracking product usage volume by location can also enable an early-warning system during the development of pandemics – a vital tool in the globalisation of healthcare provision. Blockchain can enable increasing reactivity to real-time events and patient needs, reducing the human cost of a slow-moving supply chain in potential disaster situations.
Finally, better traceability and accountability of medication enhances patient safety and confidence in the brand. The potential for immediate recall of faulty medication based on origin or batch failure will ensure that patients face minimal risk from a product that they can trust meets quality assurance across all stages of the process.
In today’s post, we discussed the incentive for pharmaceutical companies to explore the use of blockchain across the supply chain in logistics, counterfeiting, and patient usage. In our next blockchain post, we’ll be discussing the potential uses for blockchain in clinical trials.
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