A 2016 report from the U.S. Department of Health and Human Services has found that prescription medications account for nearly 17 percent of all U.S. healthcare spending, with drug prices rising 10 percent in 2015.
One of the reasons for this is the rising cost of bringing drugs to market that goes beyond pharmaceutical companies’ investments in research and development to also include complex and insecure — thus harder to manage — supply chains. Manufacturers have to spend millions on solutions to address this problem, which could be solved with the help of blockchain.
Securing the supply chain
The participation of various entities in a supply chain poses a variety of challenges in ensuring safety across all activities. In order to prevent instances of contamination or tainted drugs reaching the market, manufacturers must adhere to strict practices and regulations.
In the United States, drug manufacturers have to abide by the FDA’s Current Good Manufacturing Practices (CGMP), which include strict quality controls that force companies to run properly maintained facilities and employ properly trained personnel. Additionally, manufacturers must be able to securely track what goes on through the supply chain, as any unchecked error can have dire consequences.
One such case took place in 2008 when contaminated batches of the blood thinner heparin manufactured in China made their way to the U.S. and Europe, leading to several deaths due to severe allergic reactions from the drug’s tainted ingredients.
Furthermore, there’s also the Drug Supply Chain Security Act from 2013, which demands the creation of electronic systems that trace the movement of prescription medication in the country.
Finally, manufacturers are also facing problems with counterfeit drugs, which present a market worth anywhere between $75 and $200 billion. To fight counterfeits, pharmaceutical companies have been employing different tactics and technologies, like radio frequency identification (RFID), holographic labels, and chromatography to aid tracking and guarantee the authenticity of their inventories.
Blockchain can help make supply chain more secure by enabling manufacturers to more effectively share, on a permission basis, information that is relevant to every party involved in the process, from R&D phase to actually delivering drugs to pharmacies.
Decentralization helps all parties
Blockchain’s decentralized “nature” along with immutable record-keeping makes it a promising technology for supply chain tracking. The (public/permissioned) ledger can keep track of all transactions, making drugs traceable across the supply chain.
One of the companies working in this field is BlockRx, which aims to provide a framework to supply chain compliance as the laws and regulations take effect worldwide. It uses iSolve’s digital ledger technology to bridge legacy systems and get all stakeholders up to speed. The system even encourages patients to participate by offering them tokens (virtual currency) when they share their information.
Also “playing” with the technology are Pfizer and Genentech, both of which have embarked on their own blockchain project that, in this stage, is focused mainly on tracking.
After some tests are completed, the next phase would include getting other members of the supply chain to connect, and that will likely take time. Nevertheless, such integration could prove beneficial for them as they would get an equal footing in terms of the transparency of information.
Could blockchain deliver more affordable drugs?
That is one of those million dollar questions, but also the promise of any big technology advancement. There is a belief among technology enthusiast that blockchain could help streamline operations, thus at some point making the entire supply chain more efficient. This in turn could deliver the so much needed reduction in drug prices along with increase in drug safety, at least when it comes to supply chain-related issues.
We doubt that any blockchain-enabled effect will be visible in the next 1-3 years, but after that – we have high hopes for the technology to prove its worth. And we can’t wait to see it shine. 😉