Blockchains in Pharma Supply Chains

Pharmaceutical manufacturing is a complex, burdensome, beast. The production of just one drug may involve complex chains of suppliers spanning different continents, while also necessitating large amounts of data management. This is so that the journey an agent has taken can be fully traced – not only for traceability and accountability, but also to weed out counterfeits amidst a growing black market. However, committing to a fully traceable life cycle when suppliers may have conflicting interests, can be rife with questions; blockchain is a technology that seeks to solve that.

While most people are familiar with the use of blockchain technology for cryptocurrencies, that is not its sole application. Blockchains are distributed ledger networks which can verify transactions or other information, without the need to have a centralized ledger holder that is privy to all the information. This ledger is held by all members of the decentralized network; when new blocks are added to the chain, they are added to all copies of the ledger, irreversibly. Tampering with one copy of the blockchain is ineffective; the rest of the blockchain will still show the genuine account of events. 

This makes falsification of the information held extremely improbable. Due to their distributed nature, blockchains can also bring together different parties that would not entrust their open information to one another – a clear advantage. Blockchains display clear potential for the enforcement of the FDA’s new Drug Supply Chain Security Act rules, which all manufacturers must adhere to by 2023.

Global Partnerships

One of the most obvious applications for blockchains in supply chains is to authenticate returned products. The Healthcare Distribution Alliance estimates that over 60 billion units are returned annually; wholesalers face the enormous burden of tracking down the manufacturers of these products to verify their genuinity. Blockchains can simplify and vastly accelerate this process – from taking days to mere seconds, through the use of distributed, instantly verifiable databases. 

A global consortium consisting of leading companies from the industries already aims to apply such technology: the MediLedger Network, which counts Pfizer, Gilead, Genentech, Amgen and others among its members. The network has completed a pilot scheme to show how blockchain can fulfill a further role of tracking changes of ownership across the supply chain with confidentiality, and in real-time. This allows products to travel with their own embedded, automatic “black box” to provide a paper trail of accountability, while concealing any business intelligence that may have otherwise been revealed, had more conventional ways of tracking been involved. 

Other partnerships are also emerging in the area. CEVALogistics has partnered with Maersk and IBM to provide blockchain-enabled solutions across a variety of shipping areas, including pharmaceutical supply chains. Their solutions also highlight the need for digitized inserts that are usually included in product packaging. The need to correct or update leaflets and inserts can result in unnecessary and otherwise avoidable product recalls – 13% of recalls are estimated to be for packaging information. Similar issues are observed with cargo and shipping information, such as bills of laden – 10% of which are estimated to contain incorrect information. Blockchains aim to ameliorate such issues.

Commercial Applications

Blockchain technology is already being leveraged for the monitoring of the environmental conditions across the supply chain of pharmaceuticals. This has happened in a collaboration between OCEASOFT, which designs atmospheric monitors, and Chronicled, an American blockchain firm. The monitors track the levels of carbon dioxide, temperature and humidity throughout the supply chain and record them on a database managed by the blockchain. Should any unacceptable or denaturing changes happen to these conditions, a smart contract is in place to automatically identify the infringed parties and compensate them – and also recall any defective drugs. 

Another company making waves through the use of blockchain has been VeChain. VeChain specializes in patient medical records, granting patients full control over their records and who they choose to share them with. In turn, this smart sharing can result in intelligent solutions such as NFC cards that can be used for identification on site, and improve the digitization – but also the security  of records. Their technology has been applied at the Intelligent Tumour Center in China and the Mediterranean Hospital of Cyprus. VeChain is also in a partnership with Bayer for the co-development of Csecure, which aims to bring blockchain technology to clinical trial supply chains.

Naturally, it may be tempting to consider the limitless applications of blockchain technology across vast numbers of areas in pharmacy. However, it is wise to remember that blockchains are an expensive, energy-intensive technology. Blockchains require nearly full connectivity of the entire supply chain to function properly – this comes with concomitant infrastructural costs. The cost that comes with storing information across hundreds of nodes – and the computing power expended in the processing of such data, makes blockchain a technology that is best applicable in areas where it displays very clear advantages over other technologies. Record-keeping, rules enforcement and data synchronization are two areas where this has become evident. Other areas may prove to be worth it in the future, as well. Additionally, the cost of employing blockchain technologies itself may become drastically lower as we see increasing adoption and improvements in computing.

The future remains clearly promising for blockchain technology in the industry however. With regulators pursuing increasing guidelines for supply chain transparency, the technology can provide an invaluable tool for meeting these demands. Creative applications of the technology can lead to cost savings while improving compliance. Another effect that cannot be underestimated is the forging of closer bonds between trading partners in the industry. Trust may be in short supply through conventional collaboration methods for the track and trace of supply chains, but blockchains can improve on that through their distributed nature.