How Blockchain Contributes to Drug Supply-Chain Management?

Mar 15, 2018 · 6 min read

The pharmaceutical industry has been wrestling with the challenges related to counterfeit drugs and ineffective supply chain management. Naturally, it is the most important task for all the pharmaceutical companies to prevent fake drugs and gain confidence among the consumers. This blog intends to orbit the blockchain healthcare supply chain and how it is effective in fixing information asymmetry and combating counterfeit drugs.

A lot of pharmaceutical companies have developed drug tracking solutions using bar-codes or radio-frequency identification tags. However, but to sync the data across different suppliers and individuals in the network doesn’t suffice the need. Here, the data remains unavailable in real-time and the entire supply chain ecosystem is susceptible to manipulation. Regulatory issues along with data privacy are perceived as the two top hurdles in the pharma supply chain.

At present, there is no real-time management between legitimate drug inventories and the trading partners in the pharma supply chain. As per a survey conducted by Premier Healthcare Alliance in 2014, the estimated drug shortages cost U.S. hospitals about $230 million annually. Hence, it is easy to say that there are loopholes in the existing pharma supply chain model which must be redressed.

How can Blockchain revolutionize pharma supply chain management?
The blockchain is capable to bind together a complex team-based healthcare, finance management and payment structure with the care provided along with it. It helps in creating a new level of integrity for pharma supply chain management by making use of the inherent wealth of cryptographic public and private keys.

“Our vision is a system where everyone would register a serial number, and you could develop technology so that every time a drug changes hands, the technology automatically verifies the authenticity of the drug,”

— Susanne Somerville, co-founder of the Link Lab, a life sciences consulting firm

Blockchain in Medicine being a game-changer has the potential to impact several industries. It has disrupted the pharma supply chain management and redesigned the complete business with its unique offerings. Blockchain technology also makes it effortless to track a particular drug as it makes it journey from manufacturer to the patient. This upgrades the traceability of a drug and helps to intercept drug counterfeiting.

The principal concept of effortlessly managing the data and maintaining the data security are the reasons why it is being adopted by a majority of pharmaceutical companies. The improvedinformation sharing among healthcare providers and patients means accurate diagnosis along with a cost-effective care. In the healthcare value-chain, the data security is maintained at all stages and it is possible to track data provenance.

Today, the counterfeit drugs add to a loss of more than $200 bn to the pharma industry. To add to the misery, this has also resulted in losing credibility and trust among the patients worldwide. Providing medication is very complex, and in most of the cases, supply chains are mixed up, thereby inviting counterfeiting. These inappropriate levels of supply chain management result in putting users at risk.

However, a Blockchain healthcare supply chain is capable to track drug route at every step. Here, the private keys and smart contracts help in building the proof of drug ownership. With blockchain integration, Pharma companies can reinvent the way of auditing and consult services by streamlining the entire process.

The entire Blockchain architecture supports in-built fault tolerance and data encryption. These features add to the benefits and the entire supply chain will become easy to work with. Moreover, this will likewise eradicate the need for complex point-to-point data integration systems.

A simplified, trust-based pharma supply chain:

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Since the Blockchain technology has gained a cockpit position in the health IT systems, as a pharmaceutical supplier one should start re-basing their interoperability strategy in order to gain market leadership.

Recent efforts from pharmaceutical giants like Pfizer and Genentech have sought to introduce blockchain supply chain systems that are capable to track the drug supply chain of medications right from pre-manufacture stage to the patients. Such a concrete ecosystem provides a significant way to establish rapid immutability & transparency and compliance with drug-related laws and regulations.

The Need for Drug Supply Chain Facelift
The pharmaceutical value chain kick-starts from the drug development phase which is a lengthy process. Hence, there is no room for simplicity of auditing and gaining regulatory approvals. Here are different stages:

  1. Discovery Phase
  2. Test Phase
  • Safety
  • Effectiveness
  • Efficacy
  1. Patent Protection
  2. Approval from authorities
  3. Final Stage

During these phases when a particular drug is up-scaled to enter the markets, the biggest battle is to fight the quality issues and consumers’ safety. Therefore, ensuring supply chain security is something that every pharmaceutical company must consider something of supreme importance. In many cases, Pharmaceutical manufacturers fail to maintain transparency and lose on disincentivizing future innovation.

The blockchain healthcare supply chain can enable pharmaceutical manufacturers to identify defective drugs before they enter supply chains, all credits to cryptographic timestamps. The entire system promises to keep counterfeit drugs out of medical supply chains and smooth the entire process.

How blockchain takes care of counterfeit drug problem pharmaceutical supply chain?
Two specific use cases in blockchain healthcare supply chain mentioned below make sense. First is securing the supply chain and the other is to optimize the supply chain, which brings visibility and accuracy in the event of a drug recall.

Use Case 1: Combating Counterfeit Drugs
Over 1,00,000 lives are lost annually due to the odd-effects of counterfeit drugs. Surprisingly, they account for 10% of the pharmaceutical market share, further resulting in an annual loss of over $200 billion. The 2010 findings of World Health Organization estimate in more than 50% of cases, medicines that were being purchased over the Internet were counterfeit drugs. However, the overall death toll caused by counterfeit medicines is uncertain, but the costs to public health are enormous.

The blockchain solution
The blockchain is viewed as an opportunity platform which is developing the much-needed trust and transparency. The customers will be able to track pharmaceutical supplies throughout the supply chain. The blockchain grant access only the trusted parties who can scan and verify the drug source using barcode. Optimally, the blockchain powered platform ensures drug identification, detection, verification and altering in case dishonest practices are observed.

This is how the blockchain system works:

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With the support of the blockchain technology, pharmaceutical supply chain stakeholders gain the power to maximize their efficiency while distributing the drugs to a bigger consumer-base. Patients, on the other hand, stand to profit by being enabled to independently verify the drugs at every stage.

Use Case 2: Fixing Data Asymmetry and Irregular Returns in Pharmaceutical R&D
The blockchain technology intends to add value to the pharmaceutical value chain. Since R&D is the primary source of data asymmetry between organizations and financers. This data asymmetry makes it difficult for investors to derive correct information. In a pharma supply chain network, the absence of reliable information is most likely to create uncertainty.

The blockchain solution
Blockchain can inherit trust and credibility among the stakeholders by increasing effectiveness and transparency in the early research phase. The blockchain safeguard information exchange and flow across different processes of the drug production stage.
The real-time information in a blockchain network is visible to the investors, which helps in reducing data asymmetry and therefore address the irregular returns in pharmaceutical R&D. Hence, the funding party gains belief as they see a value-added asset, which is most likely to be added to their valuation.

The blockchain is perhaps a potential solution that can effectively keep a vigil on every activity performed in the supply chain. It provides the much-needed visibility.
Healthcare blockchain companies get you a robust cyber defense strategy to monitor the ongoing activities in the supply chain, which is possible only with underlying capabilities of this revolutionary technology.

This content is originally posted on Techracers blog


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