How blockchain could help secure the pharmaceutical supply chain

Supply chains in which sequential transactions move trackable physical assets through a system represent one way in which pharmaceutical manufacturers, packagers, distributors, wholesalers, dispensers and regulators could more seamlessly share information using a blockchain.

The current system

• The FDA is in the process of implementing the Drug Supply Chain Security Act of 2013 (DSCSA), which defined a system for identifying drugs and committed to defining a system to enable “track and trace” capabilities. The law requires each pharmaceutical package (also known as a salable unit) to be tagged with identifiable serial numbers, and manufacturers must share those numbers with distributors. They, in turn, share the same data with pharmacies.
• Sharing unique identification numbers for each package means the package can be tracked as it moves through the supply chain. It also can be traced back to its origin point in case of concerns about authenticity or quality. PwC estimates that $163 billion to $217 billion in counterfeit drugs were sold worldwide in 2015.
• These efforts still have weaknesses. Records could be altered. Barcodes could be copied and reused. Real-time tracking of products throughout a supply chain is infeasible. Blockchain could solve these problems.

With blockchain

Pilot programs are in the works between major pharmaceutical companies and wholesale distributors to enhance the supply chain with blockchain. Blockchain may offer manufacturers and distributors a potential solution that could address some past challenges, such as concerns about data transfer, privacy and ownership.

Each time a company entered into a transaction with another company in the supply chain, that transaction would be recorded and validated on the blockchain.

This would simplify the transfer of data and allow product recipients to validate their provenance with greater certainty. It would also significantly simplify transaction reconciliations and data transfers.

The process

How the process would work

1. Coded pallets—containing salable pharmaceutical units fitted with unique, serialized identifiers—are scanned as they are transferred to the 3^rd Party Logistics (3PL) for shipment, and transaction data is uploaded to the blockchain
2. The 3PL brings the pallets of pharmaceutical units to the wholesaler/distributor, who scans the pallet to review transaction data and validate the transaction in the blockchain
3. The wholesaler/distributor breaks down the pallets to fulfill an order by the dispenser and transmit transaction data to the blockchain
4. The dispenser scans the case and uses transaction history on the blockchain to authenticate products
5. The dispenser provides the medication to the patient

HRI impact analysis

Blockchain makes it easier to transfer, share and check data automatically, processes that now require numerous (and sometimes manual) handoffs as a product moves through the supply chain.

Regulators and suppliers could benefit as well, with company- or regulator-initiated recalls or warnings instantly recorded to a blockchain, allowing a pharmacy to make sure that a recalled or suspect product wasn’t inadvertently dispensed to a patient.

In this way, blockchain doesn’t have the potential just to transform product movement—it could transform entire business relationships as well.

To read more about blockchain's impact in the supply chain, as well as other case studies and information, please see HRI's latest report, A prescription for blockchain and healthcare: Reinvent or be reinvented.