blockchain pharma

Supply Chain

How B2B blockchain can make a difference to the pharmaceutical supply chain

April 6, 2022

With an ever-increasing counterfeit medicine market and growing financial fraud, as well as cases of medication simply being labelled incorrectly or untraceable, the pharmaceutical supply chain has become an issue for everyone from the boardroom to the home. According to Deloitte, in the US alone, more than $200bn is lost each year because of counterfeit drugs infiltrating insecure supply chains.

A blockchain solution can make a substantive difference to the pharmaceutical supply chain. At every stage of the process, barcodes can be scanned, and data and transactions recorded onto a blockchain, which creates a tamper-resistant and immutable audit trail of the end-to-end drug journey. Blockchain delivers trust, accuracy, governance, and reliability of information shared around the origins, location and tracking status of drugs.

So, how does blockchain do this? Essentially, a blockchain is a digital transaction ledger with a growing list of records called blocks, securely linked together using cryptography. It is a distributed database that can record transactions between two or more parties efficiently and in a verifiable and permanent way. The blockchain records transactions and communications in these blocks across multiple computers so that everything is transparent. Everyone on the blockchain has visibility, meaning that an entry cannot be altered retrospectively without breaking the cryptographic signature and alerting all other users.

Different flavours of blockchain

Blockchain was originally associated with Bitcoin and the management of cryptocurrencies, built around the principle of allowing every participant in the blockchain to have full visibility and access to the entire contents of the database. For many pharmaceutical companies and healthcare organisations, this does not sit well and causes concerns around data protection and management. So, a new generation of B2B blockchain is emerging where a single authority or organisation ultimately retains control, and no one can enter this type of network without proper authentication.

B2B blockchains offer the same benefits as public blockchains but the retention of overall control helps to improve privacy and management while eliminating many of the illicit activities often associated with public blockchains and cryptocurrencies. B2B blockchains are ‘permissioned’, where participants are known and trusted or invited and audits, checks and balances can all be openly performed, providing real transparency. And as fewer participants or nodes are needed, decisions and transactions can be processed at a much higher rate and require far less energy – major criticisms attributed to public blockchains. For all these reasons, B2B blockchains are attracting a lot of interest from the pharmaceutical supply chain industry

Blockchain in pharma supply chain

Using a blockchain solution has many advantages:

  • Reduced complexity and costs 
  • Traceability – drugs are easier to track and Information systems can hold expiry date details which improves stock control and rotation
  • Reduced errors – drugs can be verified and authenticity ensured to reduce mistakes and patient harm
  • Security and resilience – data is protected, and counterfeit drugs are minimised
  • Trusted transactions – all parties can access the drug information when needed to ensure the quality of the drug being dispensed
  • Auditing – the blockchain creates an audit trail so that drugs are easily traced making recalls simpler and all parties can see if the process has become compromised at any point
  • Transparency – all parties can see every stage of the drug journey
  • Regulation – businesses and regulators, such as pharmacy inspectors, can monitor the product lifecycle through the supply chain

Early adopters

Three of the biggest pharmaceutical companies – Pfizer, Amgen, and Sanofi – are already working side-by-side to find the most effective ways to utilise blockchain technology, from storing data safely to speeding up clinical trials and ultimately lowering drug development costs. Another initiative to explore the use of blockchain in the pharma supply chain is The MediLedger Network, which is made up of pharmaceutical manufacturers and wholesalers, to explore the potential of blockchain to meet the Drug Supply Chain Security Act requirements for a track and trace system for US drugs by 2023.

The rush to develop and take to market Covid-19 tests, vaccinations and therapeutics further accelerated interest in blockchain. For example, in the UK National Health Service, two hospitals in Warwick and Stratford-upon-Avon started using distributed ledger technology to monitor the rollout of the COVID-19 vaccines. The NHS is also exploring the use of blockchain technology to improve record-keeping and data-sharing.

As well as managing the supply chain, blockchain technology can be used to give more confidence in the privacy of information in clinical trials, leading to shorter cycles for drug development and discovery. A BioMed Central report touches on how the reproducibility of clinical research studies has been an issue and how using blockchain technology can combine privacy with secure, decentralised tracking of all data.

Blockchain provides a solution to the challenge of interoperability across suppliers and systems, as well as providing a verifiable log, held in a secure electronic environment. Blockchain can add undeniable value in tracking, monitoring, and reducing risk in pharmaceutical supply chains, while also tackling issues associated with legacy and disparate systems. Due to its immutability, transparency, and traceability, blockchain can offer efficient and accurate end-to-end tracking and monitoring and can provide a verifiable and auditable account of information. There is already growing interest and appetite in the pharmaceutical sector, and we can expect to see a lot more blockchain activity in the coming five years.

Speak with our industry-leading experts about blockchain for the pharmaceutical supply chain, today.

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