The next big thing in pharmacy supply chain: Blockchain


The next big thing in pharmacy supply chain: Blockchain

blockchain has the potential to transform healthcare in general and the Pharmacy supply chain in particular.

The distributed ledger technology could offer legislative, logistical and patient safety benefits for pharmaceutical supply chain management. From a regulatory perspective in the United States, blockchain technological and structural capabilities, in fact, extraordinarily map to the key requirements of the Drug Supply Chain Security Act.

The DSCSA outlines a 10-year timeframe that will require elements including medication track-and-trace, product verification and notification of stakeholders about illegitimate drugs. A shared ledger of information to enable each of these steps is a foundational aspect of blockchain technology.

“Logistically, blockchain aligns well with federal efforts like the National Strategy for Global Chain Security,” said Kevin Clauson, Associate Professor in the College of Pharmacy and Health Sciences at Lipscomb University. “One of the most promising benefits of blockchain from a patient safety perspective is to help stem the tide of the so-called SSFFC medicines – substandard, spurious, falsely labeled, falsified and counterfeit – that continue to plague the pharmaceutical supply chain.”

Counterfeit drug prevention is a major use-case for blockchain in healthcare, said Tapan Mehta, market development executive, healthcare and life sciences services practice, at DMI, a mobile technology and services company.

“With an estimated global annual loss of $200 billion due to counterfeit drugs, pharmaceutical supply chain integrity may be one of the most relevant and demanding use-cases for blockchain,” Mehta said. “A blockchain-based system could ensure a chain-of-custody log, tracking each step of the supply chain at the individual drug or product level.”

Potential applications for blockchain in the pharmaceutical industry already are being explored. Take the BlockRX initiative, for example, that has been set up to address the drug supply chain integrity problem by leveraging the distributed digital ledger to support and manage the drug development lifecycle.

“Add-on functionality, such as private keys and smart contracts, could be leveraged as part of this process for seamless supply chain integrity,” Mehta said. “Smart contracts feature software on a blockchain that defines agreement terms and execution that could help to mitigate fraud and lower costs.”

Mehta also said transparency and traceability are key to blockchain in the pharmacy supply chain.

“In the event that a drug shipment is disrupted or goes missing, the data stored on the common ledger provides a rapid way for all parties to trace it, and determine who handled the shipment last,” Mehta explained. “The public availability of the ledger would make it possible to trace every drug product all the way back to the origin of the raw material used to make it.”

The decentralized structure of the ledger would make it impossible for any one party to hold ownership of the ledger and manipulate the data to their own advantage, Mehta added.

Shahram Ebadollahi, vice president of innovations and chief science officer at IBM Watson Health, said he sees four use-cases for blockchain that are especially well suited for the pharmacy supply chain.

“First, Drug Quality and Security Act compliance and track-and-trace,” he said. “DSCSA regulation requires an electronic, interoperable system to identify and trace prescription drugs distributed in the United States. Other countries are implementing similar programs. All manufacturers, distributors and dispensers of prescription drugs in the U.S. market are required to comply.”

Second, controlled substance monitoring. The federal government increasingly is holding the pharmaceutical industry responsible for monitoring the supply chain for the illegal and out-of-pattern ordering of Schedule II drugs (opioids) and is penalizing distributors.