A blockchain-enabled platform could greatly simplify how products are paid for and reimbursed as part of the contract administration process used by group purchasing organizations (GPOs), manufacturers and distributors.
The contract administration process is considerably complex. A contract between a drug manufacturer and a GPO involves multiple steps, including adjudication, disputes, chargebacks and rebate payments. Each form, such as the electronic data interchange (EDI) 844 product transfer account adjustment form, requires dozens of data elements from each party.
A core challenge of the current system is ensuring that all parties simultaneously have up-to-date information about pricing and contracts. A wholesaler purchasing a drug is unaware if that product is going to an independent pharmacy, retail chain or health system. All such entities can have different pricing and contract terms, leading to chargebacks and contract disputes.
End-to-end, the contract administration process can involve a half dozen back-and-forth processes between a manufacturer and wholesaler and take more than 45 days, according to companies interviewed by PwC.
A blockchain-based system could dramatically shrink this process to one to two days with smart contract architecture, PwC estimates. Smart contracts code business processes on a blockchain and trigger automatic actions in response to certain other actions.
For example, validating the sale of a specific dose of a medical product to a specific vendor—such as a hospital—could trigger a specific sale price that previously was set by the contract. In addition to reducing how much time the process takes, this system could largely automate that process.
However, the biggest hurdle to implementing blockchain may be finding suitable partners. In most traditional business transformations involving technology, a company needs only itself to start building. In the case of blockchain, multiple partners are often necessary. Those partnerships don’t form overnight; they require trust, alignment of objectives and a willingness to work together.