Blockchain and IoT in the Pharma Supply Chain (Part 25)
Welcome to the 25th part of the 100 part series on Blockchain.
Trust is the foundation of the medical profession. When we fall ill, we trust the advice of our doctor and we consume the prescribed medicine with a trust that the medicine will help us recover from our illness. And by and large, they do. However, that ma e medicine you bought might actually be a counterfeit with just its visual appearance similar to the actual one. Some fraudsters out of their personal interests and monetary gains exploit the lacunas of the pharma supply chain to introduce these fake drugs in the system.
Here in this article, first, we will study the challenges that the pharma industry is facing today. And after that, we will see how Blockchain is going to disrupt this industry and bring about a paradigm shift in how it works.
Challenges of the Pharma Supply Chain
(i) Complex Supply Chain: Companies today no longer work in silos and are not limited by the physical boundaries. They trade internationally and are a part of the global network. Further, the pharma supply chain is highly fragmented, has various stages, and involves multiple hands changing from product manufacturers to product packagers to logistics partners and finally to a pharmacy from where we buy these drugs.
Furthermore, the current system in the pharma supply chain is not interoperable and unified. For example, when a drug changes hands, there is no system for the receiving stakeholder to verify that the drug he received is an original product from the manufacturer. Therefore, an increased number of stakeholders in the supply chain results in a complex system with very little control and nearly no transparency.
(ii) Temperature Sensitivity: Additionally, several drugs remain active below a particular temperature, and therefore during its journey, it is mandatory to maintain the desired temperature range for the drug to remain active and effective. Any fluctuation in the temperature above the desired range can hamper the effectiveness of the drug and make it unfit for medical use. And there is no way for the consumer or the company to know if the drug has been maintained at the proper temperature throughout its journey and is still active.
(iii) Drug Shortage: Drug shortage leads to delayed treatments of patients and thus poses a significant threat to public health. The issue of drug shortage demands attention and collaboration from everyone involved in providing life-saving medicines to patients. This includes pharmaceutical companies producing medications, wholesalers, distributors, pharmacies, and health care providers.
But because of the complex supply chain, there is a lack of coordination among the players to better communicate their demands. As a result, the manufacturers don’t get accurate information about the demand on time, which results in the delayed manufacturing and supplying of the drugs. Shortage of drugs can even force healthcare providers and patients to shift to alternate drugs that, in turn, can lead to a less effective treatment.
(iv) Drug Recall: Sometimes, certain drugs lead to severe side effects, and therefore, removal of such drugs from the market becomes very crucial to protect the customers. In such a scenario, manufacturers are required to withdraw the drug from the market at the earliest possible.
But the biggest challenge in such a scenario is that there is no direct contact between the company and consumers who have bought this drug. Drug recall announcements are generally made online or through advertisements. Therefore customers are subject to their awareness, and there are very high chances that they can miss out on the announcement of this drug recall.
(v) Regulatory Challenge: It is very challenging for a regulatory body like the FDA to monitor and regulate various players involved in the supply chain. Therefore it becomes challenging to weed out the illegal companies who claim to be legal entities through false paperwork.
(vi) Counterfeit Drugs: Counterfeit drugs are one of the biggest challenges that this industry faces today. The worldwide counterfeit drug market is valued at over 200 billion USD. Counterfeit drugs are responsible for killing more than 500,000 people every year. According to WHO estimates, 1 out of every 10th medical product sold — including pills, vaccines, and diagnostic kits — is fake or substandard.
According to the European Pharmaceutical Review, around 30% of drugs sold in developing countries are fake. Due to this growing challenge of counterfeiting, many countries have introduced strict regulations for tracking the drug in the pharma supply chain. For instance, the Drug Supply Chain Security Act passed by the US government mandates all the drug manufacturers to provide a unique ID on the drug for weeding out the counterfeit drugs.
How do counterfeit drugs affect our health?
(i) If a counterfeit drug contains no active ingredient, then
· the drug fails to treat the patients and therefore harms them indirectly
· In the case of counterfeit antibiotics, patients don’t respond to the first-line drug, which makes their physician prescribe them the more potent antibiotic. This unwanted use of a stronger antibiotic leads to antibiotic resistance in these patients.
(ii) The second scenario is if the counterfeit drugs have harmful ingredients like toxic paints, contaminated water, colored dyes, floor wax, boric acid, antifreeze, etc. This leads to an adverse effect on the health of the consumer and proves to be fatal in many cases.
For instance, more than 500 children around the world died after consuming counterfeit cough syrup containing an antifreeze agent, ethylene glycol. In another case, counterfeit inhalers for the treatment of pediatric lung disease were found to contain contaminated bacteria that hospitalized them.
(iii) Wrong concentration of the active ingredient in the drug can also have adverse effects on patients’ health.
Economic consequences of counterfeit drugs
(i) Counterfeit drugs hijack the brand and infringe the patent rights of legitimate pharmaceutical manufacturers.
(ii) Counterfeiters just copy the appearance of the products and take advantage of the money that has gone into the research and development of these original and authentic medicines.
(iii) For consumers, too, this is a big menace as counterfeit drugs lead to both health and financial loss for them when they pay their hard-earned money for these fake products, and that too with a substantial threat to their health.
How do counterfeit drugs enter the supply chain?
· As discussed earlier, the pharma supply chain is quite complex, and a drug changes multiple hands before reaching a pharmacy near you. It may happen that one or more parties in the supply chain are unethical and are involved in illegal practices. They may introduce counterfeit, contaminated products in the supply chain to increase their profit share.
· For any drug to be manufactured, the basic requirement is the raw material. It may happen that the raw material itself is coming from an unauthentic or uncertified source.
· Certain companies and trading partners claim to be certified legal entities by using false and forged papers, and using these certifications, they can easily introduce fake drugs into the supply chain.
· In many cases, fake drugs enter into the pharma supply chain through online distribution and internet sales. According to WHO, more than 50% of the drugs sold online are counterfeit.
· Drug shortages can also open doors for counterfeit drugs to enter the market.
· In addition to the above reasons, social stigma is another reason that makes it easier for counterfeit drugs to enter the market. For instance, Viagra is one of the most widely produced counterfeit drugs. Patients may be too ashamed to consult a physician for this drug; therefore, they may unknowingly buy the fake versions of this drug online.
Blockchain — The solution!
Today, pharma companies are exploring new routes to synthesize new drugs, and therefore their raw material requirements have become quite complex. Because of these requirements, these raw materials are sourced from various suppliers, who are geographically scattered across the globe. As the raw materials required run into tens of thousands, it becomes very crucial for the manufacturing companies to have a check on the ingredients and ensure that the suppliers are complying with the guidelines provided by them.
In the current system, there is no clear way to know if the raw material supplied is authentic or if it is some cheap counterfeit. Once the raw materials are sourced from the suppliers, the manufacturing process starts. Big pharma companies generally have multiple plants scattered in various locations. This further adds to the complexity of the supply chain. The manufactured drugs are shipped via third-party cold chain logistic companies to local distributors and various other countries. In many cases, these logistic partners don’t have the adequate capabilities to maintain these drugs under the required conditions. Thus leading to drugs losing their effectiveness.
But for a manufacturer, it is very difficult to ensure that the drugs were moved under the appropriate conditions as specified by them. If the drug is to be distributed within the same country, it is shipped to thousands of local distributors spread across the country. The distributors then supply these drugs to secondary wholesalers or pharmacies and hospitals, who sell these drugs to the patients.
And in case the drugs are to be exported, they change multiple hands in various countries before reaching their final destination. In such a scenario with a lack of transparency and control, the supply chain becomes vulnerable to counterfeiting.
Nodes in Blockchain: A Blockchain-based supply chain has information on all the stakeholders involved, like ingredient suppliers, manufacturers, logistic partners, wholesalers, distributors, pharmacists, hospitals, and patients. The stakeholders will act as nodes in the Blockchain. At each node in the supply chain, drop-off and pick-up activity is recorded in the shared ledger along with the time stamp.
Type of Blockchain: Blockchain used in the supply chain will be permissioned Blockchain. The stakeholders involved will be assigned specific functions on the smart contracts based on their role in the supply chain. And on the permissioned Blockchain, it is also feasible to decide what information can be seen and added by the respective stakeholders. For instance, the information about the agreed prices of raw materials between the manufacturer and suppliers should not be revealed to the other involved entities, like pharmacies, wholesalers, customers, etc. They simply need access to limited information, like the authenticity of drugs and performing the necessary functions like placing orders. This is possible with permissioned Blockchains that will allow limited permission to the various participants in the network.
IPFS: Storing the entire data on Blockchain is very costly; thus, distributed file storage IPFS can provide low-cost off-chain storage to store supply chain transactions data ensuring reliability, accessibility, and integrity. A unique hash is generated for every uploaded file on the IPFS server, which is then stored on the Blockchain and accessed through the smart contract. Any change in the uploaded file would change its hash.
The physical transfer of ownership of the goods gets recorded virtually in the Blockchain only after each receiving party verifies that the shipment has been received from the correct source. In a Blockchain ledger, no one can tamper the records in the chain, including their own.
1. Suppliers will initiate the blockchain by submitting on dApp, the serial number on the packs of the raw materials which are to be sent to the manufacturer. The data will be stored on IPFS, and the hash will be stored on the smart contract so that the data can be accessed later by authorized stakeholders. Additionally, the location of the supplier will also be recorded.
2. The suppliers also need to upload the certificates of the authenticity of these supplied materials. This can be done by getting their facility inspected by a regulatory body and getting a legal certificate proving the same. This information is stored in the genesis block of the Blockchain.
3. When the ingredients reach the manufacturer, the event will be recorded on the Blockchain along with the date of receiving and the respective location.
4. Once drugs are manufactured, they will be placed in bottles, vials, or strips labeled with unique identifiers and will then be grouped and packaged. These packages will have labels that will be scanned and recorded at every point throughout their journey from the factory until it reaches the pharmacy. Information about the drugs, and their unique identifiers present in the labeled package, will be uploaded on the IPFS, and the hash will be stored on the smart contract.
5. Whenever these packets exchange hands, the concerned party will scan the label on the packets, and the transaction will be recorded permanently on the Blockchain. If anyone tries to temper the product or the information, its hash will change; thus, it can be detected easily.
6. Similarly, the whole journey of drugs from the ingredient supplier to the pharmacy will be recorded digitally on the Blockchain. In case the drug shipment goes missing due to counterfeiting operations, it is much easier to locate it as the complete transaction is recorded on the ledger, and it can easily be known who was possessing the consignment when the issue happened.
7. The last step in the journey is selling the drugs to the patients. The event of the sale of the drug, including drug information and patient information, will be recorded on the Blockchain. This process will ensure that all the transactions are stored on the Blockchain and can be accessed later by all the supply chain participants to check the authenticity of the products or, in the case of drug recalls.
8. The consumer can also scan the unique number on the drug and know the origin of the drug, the route that drug has taken, and even the ingredients used to manufacture the drug, provided the customer has been granted access to this information by the manufacturer.
Because of the decentralized and immutable nature of Blockchain technology, it prevents any single entity from manipulating or modifying the data. It ensures data security as once the information is added to the ledger, it cannot be removed or modified. Transparency of transactions is another important aspect of any supply chain that Blockchain provides.
Applications of Blockchain in the Pharma sector
Application 1: Monitoring Temperature Sensitivity of drugs
Many medical aids like vaccines are sensitive to environmental conditions, and any fluctuations in these conditions can make them ineffective. Therefore, IoT sensors are installed on the packages. IoT sensors include a Global Positioning System (GPS) receiver to locate where the package is, temperature sensors to record the temperature of the package throughout its journey, and pressure sensor to measure the pressure differences that detect any opening or closing of the package.
Each IoT sensor and gateway needs to be registered on the Blockchain network and is given a fixed unique ID. Any change in the temperature data will be timestamped and then recorded on the IPFS, and its hash will be recorded on the smart contract. If the values for temperature or humidity exceed pre-defined levels, the state of the transport of the package changes to “out of compliance” and is recorded as a transaction inside the Blockchain digital ledger. The smart contract will be executed, and an alert will be sent to the relevant parties in the supply chain. Thus through this technology, it can be ensured that the drugs remain in the suggested storage conditions throughout their journey.
Additionally, Blockchain technology makes the hacking of IoT sensors difficult; thus, tampering with IoT sensors or manipulating IoT data will not be possible.
Even the consumer, with the help of this shared digital ledger, can easily know if the drug is active by scanning the label on the drug.
Application 2: Easy Drug recalls
Sometimes severe side-effects of a certain drug are known only when it reaches the market. In such a situation, manufacturers are required to withdraw the drug from the market at the earliest possible.
It is still feasible for a company to recall the drug from the distributors and pharmacies. But the biggest challenge is to contact the consumers who have bought this drug and intimate them to avoid using the drug. Drug recall announcements are generally made online or through advertisements. And there are very high chances that the customer may miss out on the announcement and consume the drug. In such a scenario, Blockchain technology will help manufacturers and pharmacies to keep a record of the people who have bought that particular drug. This will make it easier for them to contact these consumers and inform them about the drug recall.
Application 3: To validate the authenticity of the returned drugs
The unsold stock of medicines by wholesalers or pharmacies is commonly returned to the pharma companies. These companies, instead of destroying them, might opt to resell them.
But before reselling, they need to validate the authenticity of the returned drugs, i.e., they need to confirm if the drug is effective and has been kept at the desired storage conditions throughout its journey. Because any fluctuation in the temperature, humidity, or any other described environmental conditions can make the drug ineffective.
The companies can scan the returned drugs by their unique ID and track all their journey information. If they find the drug to be effective, then only this drug can be sent for reselling.
Application 4: To stop the entry of counterfeit drugs
It has become an urgent need to curb counterfeit drugs for the well-being of people. As we have discussed, these fake drugs have serious side effects on human health. Blockchain technology has the ability to minimize these frauds.
A central authority, say a company, will decide who will participate in the Blockchain or, in other words, who will act as nodes like suppliers, logistic partners, distributors, retailers, consumers, etc., and the smart contracts may be issued that will help in establishing the proof of drug ownership.
When the drugs exchange hands, the unique ID will be traced and verified every time. Fake drugs entered into the system will not be verified as they don’t have the original unique ID and, therefore, will fail to become part of the network. This will even help to locate the node that allowed counterfeit drugs to enter the supply chain.
When a consumer gets the drug, he can trace all the required information by simply scanning the unique ID on the medicine with his smartphone or by entering the ID on the company’s website. In addition, the drugs can be time-stamped, and the technology also ensures that the drug is in its expected geographical region.
Online pharmacies are the main culprits for selling fake drugs to consumers. According to WHO, 50% of drugs bought online are fake. With Blockchain technology, one can identify whether the drug he has received from an online pharmacy is authentic or fake. This technology can save many lives by making them aware of these fake drugs.
Application 5: Avoiding drug shortages
Drug shortage can lead to delayed treatment of the patients and thus pose a significant threat to public health.
To avoid drug shortages, it is essential that the drug manufacturers should get information about the demand on time so as to minimize drug manufacturing and supply delays. But because of the complex supply chain, there is a lack of coordination among the players to better communicate their demands.
The shortage of drugs forces healthcare providers and patients to shift to alternate drugs that can lead to less effective treatment and can even lead to the introduction of counterfeit medicines in the market.
As we know, Blockchain technology will record all the information about the drug from its raw materials until it reaches the consumers. Therefore the digital ledger will also record the sales of medicines from a particular wholesaler or a pharmacy. This, in turn, will update the inventory of drugs available with them on the shared digital ledger. This insight will help the manufacturer to keep his inventory updated and supply these drugs on time to avoid drug shortages in the market.
This will be a win-win situation for all the stakeholders involved. Patients will have timely access to the required drugs. At the same time, the company also won’t suffer financial losses due to lost sales because of a drug shortage.
So this is how blockchain is going to disrupt the pharma industry and bring about a shift in how it works.
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