Pharma’s Black Box and the Potential of Blockchain

Industry Transformations5 minutes readOct 31st, 2018

The pharmaceutical supply chain is in a state of disruption. Drugs intended to help, heal, and save are being compromised every day – and the patients who depend on them are the ones who suffer. Technology offers a way to address the security and visibility risks that prevent valuable pharmaceuticals from reaching their intended market. Blockchain, in particular, holds the keys to the supply chain revolution.

Consider that despite the effort that already goes into ensuring the effective operation of every pharmaceutical supply chain, the industry still deals with staggering losses. Consider:

The biggest threat, however, is to people who receive drugs that are no longer effective, the patients who rely on cutting-edge therapies that depend on a reliable and timely delivery.

Confronting the “Black Box” of the Supply Chain
The root cause enabling such counterfeiting, theft and loss is that the various links in the pharmaceutical supply chain are all autonomous. Systems do not communicate with each other as a product moves from one logistics vendor to another, and from one mode of transportation to the next. The result is a “black box” in the supply chain where there is no visibility into the status of a shipment. Because of this black box, there is opportunity for mishandling, spoilage, diversion, theft, and unauthorized replacement at every stage along the way. And though products can be tracked, they are not tracked in real-time.

Regulatory bodies around the world are seeking to implement safeguards for drug products. As a prime example, the Drug Quality and Security Act (DQSA) was enacted by the United States Congress in 2013. Title II of the DQSA is the Drug Supply Chain Security Act (DSCSA), which outlines steps to build “an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” One of the primary components of compliance with DSCSA is that pharmaceutical manufacturers need to put serialization into effect by applying a unique identification number to each and every item being shipped, down to the smallest sellable unit. The serial number will permit each item to be identified, tracked, and traced.

However, this creates another problem in itself. Consider the massive quantity of data that will result from this serialization – which then has to be tracked across various stages of the supply chain. For example, whereas previously you would have tracking data from one pallet, you now might have data from 10,000 individual units on that pallet. Multiply that by the number of pallets and the data increase is truly of seismic proportions.

The Potential of Blockchain
A system must be put in place that can not only handle this much data, but also make this data actionable. Taking it a step further, remember that the ultimate goal of DSCSA is for an interoperable system: one that will eliminate the “black box” and allow for end-to-end supply chain visibility.

Blockchain is quickly becoming a recognized gamechanger for the supply chain at large, with the potential for immense impact on the pharmaceutical industry in particular. The attraction is readily apparent. A Blockchain, by its very nature, is:

  • Encrypted, providing incredibly high levels of protection against hacking. To date, a Blockchain has never been breached.
  • Auditable, encapsulating an unchangeable record of every transaction, movement, and status along a product’s journey to satisfy the demands of regulatory compliance.
  • Real-time, delivering instant tracking capabilities compared to the days required by current systems.

Of course, questions remain about how exactly a pharmaceutical Blockchain would work, but there are two core considerations that are required for it to succeed. First, whereas Blockchains in the financial market tend to be public Blockchains that anyone can join and access, Blockchains in the pharmaceutical supply chain would be private and permission-based, where only sanctioned members would have access to the data. Second, the Blockchain would rely on effective serialization coupled with Internet of Things (IoT) sensors to track product shipments throughout their journey. These IoT sensors can record any desired data: location, time, temperature, oxidation and more.

For example, suppose the temperature in a cold chain goes too high during one stage of transport. The product is ruined. Today, the problem is only discovered after the fact – or, worse, may not be discovered at all. But with a temperature sensor communicating data in real-time through a Blockchain to the manufacturer and the vendor, the shipment could potentially be saved by having an alert triggered that the temperature in the vehicle was climbing – before it reached critical temperatures. Even if saving the shipment was not possible, it would be flagged as spoiled and not passed along to customers and patients.

Or consider theft. Today, a missing pallet may or may not be noticed during transportation. But with a Blockchain in place, the next sensor reading would show that the pallet was missing because it would validate the current information against the historical data in the Blockchain. The theft would be immediately spotted and an alert raised, increasing the ability to identify when, where, and how the incident occurred and paving the way for remediation to increase security.

This is the face of success, and this is why we must work together to make Blockchain a reality for the pharmaceutical supply chain.

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Tags-   Blockchain Pharma Pharmaceutical Supply Chain