Of all the industries with the potential to benefit from blockchain technology, many believe one of the best candidates is pharmaceuticals.
That’s because the pharma sector faces a number of unique challenges that distributed ledger technology seems tailor-made for.
1. Regulation and tracking the drug supply chain
The industry faces a variety of new regulations like the US Food & Drug Administration’s Drug Supply Chain Security Act (DSCSA), which requires “an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed”. Such laws recognise that – when dealing with substances that can be either life-saving or, if abused or administered improperly, deadly – it’s vital to be able to track and verify the provenance of pharmaceuticals from manufacture to consumption.
“This legislation requires the pharma industry to be interoperable,” Susanne Somerville, CEO of the blockchain company Chronicled, told Forbes earlier this year. “So, when a drug is passed from one party to another, there needs to be a way to record this. There hasn’t been a solid solution for this just yet, and blockchain technology can help track the drug supply chain.”
2. Combatting counterfeit drugs
Pharma has a serious problem with counterfeit drugs. Depending on the country in question, the proportion of counterfeit drugs on the market can be anywhere from one to 30 per cent. Globally, the counterfeit drug market is estimated to be worth $200bn per year. The problem is more than costly to the industry: it also harms, and sometimes, kills people who take those counterfeit drugs.
The pharmaceutical industry also faces another, related supply-chain issue: overprescription, which can lead not only to hospitalisation but worse.
Another challenge relates to payments. “Contract negotiations between drug manufacturers, wholesalers, hospitals, pharmacies and their group purchasing organisations (GPOs) are ever-changing, meaning B2B payments are often incorrect, and chargebacks and disputes are common,” PYMNTS.com reports. Insurance claims can also be difficult for patients and providers alike.
5. Clinical trials
The industry depends upon successful clinical trials to develop new drugs, but these can be “expensive, laborious, and inefficient”, according to Genetic Engineering & Biotechnology News: “Blockchain technology in combination with wearables and Internet of Things-based sensors can provide the correct mix of data integrity, data security, and data privacy required by US Food and Drug Administration (FDA) regulations and the Health Insurance Portability and Accountability Act (HIPAA). Blockchain solutions also provide smart contract technology to automatically ensure patient consent data is logged, digitally signed, and fully auditable.”
6. Development of personalised drugs
Blockchain technology could even help with the future development of personalised or 3D printed drugs made according to an individual patient’s biometric requirements. “Today, unfortunately, gaining access to these specific types of data for a particular patient is difficult because data is fragmented and siloed across many providers,” Genetic Engineering & Biotechnology News notes. “Centralised systems have not proven effective because data stored with many patient records present a single point of failure and a rich payoff to hackers. A blockchain-based PHR [personal health record] keyed to a person’s biometrics, however, could enable such a foundation, and an immutable blockchain ledger for logging transactions would minimise data tampering.”
Because of all of the above challenges, many in the pharma sector are looking to blockchain for solutions. For example, according to a 2018 survey by The Pistoia Alliance – a non-profit formed by AstraZeneca, GSK, Novartis and Pfizer – “60 per cent of pharmaceutical and life science professionals are either using or experimenting with blockchain today, compared to 22 per cent when asked in 2017”.
“As life science and pharmaceutical organisations are beginning to look at implementing or experimenting with blockchain, The Pistoia Alliance is working hard to inform organisations on how to implement it safely and effectively,” Pistoia consultant Richard Shute said in a September news announcement. “We are currently focusing on educating scientists and researchers about the potential uses of blockchain technologies outside of the supply chain, particularly in R&D.”
Other businesses, from Merck to SAP, are also working on blockchain technologies for pharma.
“While there are several solutions in the market able to provide track and trace-ability, and serialisation…, the industry still struggles to find a scalable solution which meets the ‘Verification’ requirement mandated by the DSCSA,” SAP noted in a 2018 blog post. A proof-of-concept launched by SAP and more than a dozen partners settled on blockchain “as the technology of choice due to its native transparency and ability to prove provenance of data”.
“Blockchain will greatly modernise the pharmaceutical industry, and I believe it will become the best way to handle certain initiatives that relate to transparency, privacy and traceability,” Mohamad Zahreddine, CIO of the clinical trial technology firm TrialAssure, wrote in Forbes last year. “One could make the argument that blockchain was built for the pharmaceutical industry, due to the industry’s strict privacy practices, laws and global regulations. Blockchain can help solve inherent problems that may arise because of this.”