Revolutionizing Pharma — One Blockchain Use Case at a Time

Published in

Linum Labs Blog

11 min readDec 6, 2018

Exploring the most prevalent blockchain-pharma use cases

Introduction

The pharmaceutical industry is one of the largest and most critical industries that society relies on. Yet, despite our fundamental reliance on the products and treatments provided, we still face challenges across the entire supply chain from the initial research of drugs to the end-consumer.

In this article, we will explore a number of the most prevalent blockchain use cases, specifically for the pharmaceutical industry.

As a basic definition, blockchain is a distributed ledger. Multiple stakeholders form part of a blockchain network that stores digital records. These digital records are synchronous across all parts of the network and are linked by means of a consensus algorithm, which is governed through math and code. Records are permanently stored by all parties, whereby information can only be created or read (unlike traditional databases where it’s usually CRUD — create, read, update, delete).

Use Cases, Challenges and Blockchain Opportunities

The use cases highlighted in this article will be explored through 3 categories. The diagram below shows a typical pharmaceutical supply chain. This should provide a visual overview of each independent stage and the process flow.

The first category is Research and Development, the next Manufacturing and Distribution and the last one is the actual Consumers and Patients.

Blockchain in Pharma Categories of Use Cases

Research and Development

The development of a new therapeutic product (i.e. a new drug or biologic) from product identification to commercialization is a long, complex and expensive process, with high risk. Typical time and costs are:

Time: 8–12 years (sometimes more)
Cost: $800 million — $2.5 billion per drug
Success Rate: 1 in 5 drugs make it to market
Return: ~3.2%; only 1 in 3 drugs reaching the market recoup investment costs (is “profitable”)

A significant contributing factor towards these high costs is a result of clinical trials, which are used to evaluate the safety and efficacy of a product in humans.

Blockchain provides for an opportunity to decrease these costs and increase transparency and trust for all participants in the process.

#1 | Intellectual property rights and data sharing

Use cases: Facilitation of patent processes, storing of patent/intellectual property information and rights, electronic data capture

Current challenges: Intellectual property protection in the form of filing and storing patents, and protecting proprietary data, is a slow and expensive process. Furthermore, it is challenging to facilitate and monitor this process globally.

Current intellectual property systems have hindered cross-collaboration, and hence, the rate of development and innovation between pharmaceutical companies and individuals. Current systems do not make provision for a multitude of participants, across various industries, to provide valuable input into the development process.

Blockchain opportunities: Blockchain may be able to provide a platform for the protection and facilitation of intellectual property, including the facilitation of royalties, payments, and incentivization models that could encourage participants to provide input into the research and development process. Decentralization, an immutable ledger and the ability to build in the necessary controls and governance, while linking to the right authorities, would provide the required trust and transparency to unlock cross-collaboration amongst network participants in the drug development process.

This collaboration of synergized development, as well as the tracking and reporting of results, would lead to quicker breakthroughs and fast-track the overall process while saving time and money for all participants.

#2 | Clinical trials consent

Use cases: Data management across clinical trial sites, consent traceability and transparency, clinical trial drug supply management

Current challenges: The clinical trial process requires informed patient consent and mandatory regulatory traceability. This includes, but is not limited to, transparency and input of:

Approved written consent
The clinical trial end-to-end process
Possible risks involved
Revisions to a protocol
Institutional review board approval

This process has been met with significant challenges. Invalid consent (for example no written consent, unapproved forms, incorrectly completed forms and lack of re-consent upon revisions) has led to many clinical trials not meeting these criteria.

Monitored trials often encounter issues surrounding consent. Additionally, fraudulent documentation, which includes falsified patient details and backdating, is prevalent.

Blockchain opportunities: There are 3, if not more, core areas of blockchain that can be utilized to address a few of the challenges encountered during the informed consent process. The first is the secure management of consent, the second are triggers (real-time actions) and the third is the ability to verify identity.

Improving identity management, through a system that better verifies and ties a person’s identity to their consent, can be achieved through blockchain. One consideration could be to use a platform like uPort to enable a patient to manage their own identity. Similar projects, such as the Zug ID or the Swiss Federal Railway ID pilots have shown to be highly successful in using an open source, cost-effective solution like this.

A digital identity enables traceability each time a patient’s identity is verified and would improve data quality as the tracking of patient data, linked to a specific drug trial, would be more secure.

Shifting the ownership of data back into the hands of the patient and giving individuals the power to store, control and access certain aspects of their medical data, would further incentivize participation in clinical trials.

Patients could enable visibility of their medical data to trial recruiters, while still maintaining control. This would increase the number of participants and quality of trials as each trial would be better matched to a greater number of available participants.

Manufacturing and Distribution

Currently, the pharmaceutical supply chain involves a number of intermediaries from the initial manufacturing to the end distribution of pharmaceuticals to patients. A blockchain solution would establish the provenance of products along this entire part of the supply chain, with updates at each intermediary until the sale is registered and the product is handed to the patient.

The advantages of multiple blockchain solutions are further explored across categories of track and trace, pricing, payments, discounts, rebates and refund tracking, governance, risk, regulatory and credentialing, and reducing fraud and counterfeit drugs.

#3 | Track and trace — Reducing fraud and counterfeit drugs

Use cases: Prevention of counterfeit drugs and medical devices, verifying the authenticity of returned drugs

Current challenges: Current pharmaceutical manufacturing and distribution partners often span across multiple countries and jurisdictions, which makes it difficult to track and trace each drug or medical device. Due to current shortfalls of real-time tracking, records are relatively easy to alter, and the lack of transparency between intermediaries results in a significant number of counterfeit drugs and medical devices being introduced into the supply chain.

Global supply chains are becoming increasingly more complex, with alternative non-legitimate vendors contributing towards a pharmaceutical black market. Both the end patient and manufacturers are impacted negatively, incurring losses to both revenues and to safe and reliable healthcare.

PwC estimates that $163 billion to $217 billion in counterfeit drugs were sold worldwide in 2015, where about 1 percent of all drugs in circulation in Western markets (and about 10 percent on average globally) are believed to be fake. The World Health Organization (WHO) estimates that 8 percent of the medical devices in circulation today are counterfeit copies.

To try address this issue of fraud and counterfeit goods, both the US (Drug Supply Chain Security Act or DSCSA) and EU (Falsified Medicine Directive or FMD) have introduced legislation that requires an electronic system to trace and authenticate medication as it moves through the distribution network.

Additionally, tracking and tracing returned pharmaceutical goods is a challenge.

Blockchain opportunities: Blockchain can be used as a single source of truth in tracking drugs, products, and medical devices across all points in the supply chain. The sharing of a unique identification number could be used to not only track provenance and provide authenticity, but could also address many of the requirements from the EU and DSCSA in the US.

The ability to build in data privacy of sensitive data, while still providing necessary verifiability with a blockchain solution, ensures greater security between intermediaries. A blockchain solution makes it more difficult to introduce counterfeit drugs and medical devices into the supply chain and even provides a method for end customers to check the authenticity of the product.

#4 | Financial facilitation

Use cases: Pricing, payments, discounts, rebates, and refund tracking

Current challenges: Managing the contracting and pricing (which should include current and historical records of terms of trade agreements, payments, discounts, rebates, and refunds) of multiple stakeholders is relatively complex. Paper-based contracting and lack of interoperability between suppliers often leads to disputes.

Blockchain opportunities: A blockchain platform could be used to securely facilitate payments, reimbursements, and other transactions. This could be achieved through interoperability with existing payment systems or utilizing token-based models. Tokens could be used to represent a store of value, which is exchangeable between all intermediaries at an agreed upon conversion. There is the option to eventually transfer this back to fiat currency, if required. This would be especially useful for cross-border payments for quicker transactions and at a cheaper rate compared to existing systems.

An open blockchain solution could also assist smaller players entering the manufacturing and distribution chain. Barriers to entry would be significantly lower with additional security, potentially lower costs across supply chain management and payment mechanisms, as well as transparency between network participants. This could provide a new form of trusted relationships between large, historic pharmaceutical businesses and new entrants, possibly enabling access to funding through token-based models. Ultimately, this could positively impact patients in underserved areas of the market in gaining access to pharmaceutical products.

#5 | Regulatory compliance, governance, and risk

Use cases: Regulatory compliance, credentialing, risk assessments

Current challenges: Certain pharmaceutical products have to adhere to strict storage and handling requirements when being transported along the supply chain. These requirements may include temperature levels, storage materials, handling, humidity, and air quality. These requirements are put in place to ensure that the quality and effectiveness of the drugs are not degraded.

There is, however, an issue in ensuring that the same regulations are abided to throughout the supply chain. Each intermediary from the research, manufacturing and distribution groups maintain their own record of these safety metrics during transit. Often in the case where smart devices are not used and linked to a central database, records are manually tracked which leads to further concerns making past audits near impossible.

Blockchain opportunities: A blockchain solution could be used to provide a more secure and transparent way to report on changes to operating conditions. All intermediaries and external authorities in the supply chain would be able to use this to ensure better compliance.

Smart contracts could also be used to trigger certain events where these conditions have not been met. One such example could be penalties to the relevant logistics companies responsible for ensuring products are transported under the right conditions. This would create a more trusted relationship between supply chain partners, and end consumers with increased transparency on the quality of pharmaceutical products. Establishing such a platform could improve supply chain operations, leading to greater efficiencies and an improvement in the quality of products.

Consumers/Patients

Blockchain technology will completely revolutionize the patient and consumer experience in the near future. At its core, blockchain will enable a new way for patients to take back control of the way their identity is managed, enable new data models and marketplaces, and allow cross-collaboration that will fast-track the improvement of healthcare even further.

#6 | Improvement of care through data sharing

Use cases: Value-based care, medical records, data collection and interoperability, aggregation and monetization, prescription sharing

Current challenges: Patient data is usually completely separated between healthcare providers. Manual intervention is required in certain circumstances when direct sharing of patient information is required.

Blockchain opportunities: Sharing of prescriptions can be better managed, with an immutable timestamp attached to records. This increases data quality and provides for better healthcare. The days of carrying a signed physical script from a hospital visit to a pharmacy would be over, and this would reduce the number of fraudulent scripts.

The long-term future vision could then be extended to digital copies that can be verified in sick notes. Combined with big data and AI, a blockchain solution would be able to predict and manage epidemics, lead to more informed research and fast-track our efforts toward better healthcare.

Data provided by a patient or consumer could also be monetized. This could include medical records, routine health tests at hospitals, dental check-ups, fitness tests, and even data collected from wearables. This could be achieved through a marketplace platform through the selling and buying of data without exposing personal identity information.

This would enable users to choose when their data is used by others and by whom, incentivizing them to do so, while still having the net benefit of having data that can inform decision making. More reliable data would be exchanged as a result of an incentivization to provide quality information. An interesting blockchain project that could be further explored in connecting data providers to data consumers is the Ocean Protocol — “A Decentralized Data Exchange Protocol to Unlock Data for AI”. Other than a monetary benefit, patients could ultimately receive better customized and value-based care.

#7 | Self-sovereign identity and consent management

Use Cases: Identity management, consent management

Current challenges: In an era where virtually everything has a digital representation, identity and consent management has lagged way behind. Manual processes of filling in forms, signing physical documents, and tracking patient data has led to many inefficiencies and lost opportunities in improving patient healthcare. Furthermore, a lack of security around patient health data creates vulnerabilities that could result in data breaches.

As the world’s population increases, the number of patients and, hence, their data also significantly increases. This, in turn, puts pressure on existing manual processes and may further hinder coordination efforts between healthcare providers distributing patient data, which can often lead to a loss of vital information.

Blockchain opportunities: Blockchain solutions for identity and consent management, coupled with biometric technology, could be used to prove a patient’s identity while providing access to past healthcare information.

Conclusion

The use cases explored can already be implemented using existing blockchain platforms and tools. It’s merely a process of identifying the right area of the supply chain, with the highest potential return at the lowest effort. Start with a pilot and iteratively go through the motions of build, measure and learn in a phased approach to eventually scale the solution.

It should be reiterated that the benefits of implementing blockchain solutions into the pharmaceutical industry are exponential. Looking past the potential financial and efficiency returns, these systems could lead to a synchronized society, and most importantly ultimately help in saving lives.

In a further article, we will explore many of the pilots and blockchain solutions being built around these use cases. There are already a number of promising solutions being trialed and even fully implemented.

At Linum Labs, we aim to create a healthier society through blockchain solutions that solve many of today’s problems in the pharmaceutical industry. To achieve these goals, we are exploring partnerships through an alliance, enabling collaboration through conferences, and building knowledge and awareness through education and skills development. If you’re interested in enterprise or government implementations across any of these areas or other blockchain use cases, we’d love to talk to you.

If you would like to learn more, have specific questions on any of the use cases, or possibly looking into blockchain in pharma for your organization, please do not hesitate to reach out to us.

Contact: Linum Labs, or Oz Razak (info@linumlabs, oz@linumlabs.com)