In the pharmaceuticals industry, it’s vital that the supply chain is both transparent and secure. Ultimately, people’s health is at risk if anything goes wrong—and any disruption in the supply chain can potentially result in a shortage of lifesaving drugs and medicines. Blockchain technology is a potential solution, as it offers the heightened level of security that the industry needs.
Blockchain is based across a secure and trusted network based in the cloud, making it almost impossible to break into. It delivers a level of security that surpasses the platforms many companies currently use, but as the technology advances, it’s expected that more businesses will move away from their vulnerable internal systems to a safer option.
In pharma, one major concern is counterfeiting; if imitation medicines enter the supply chain, this can result in serious consequences, from civil lawsuits to health complications and even deaths. The United States Food and Drug Administration (USFDA) has reported that about 10% of all pharmaceuticals sold globally are fake—this is mostly in developing nations, such as Africa, where it’s estimated that 30% of all medicines sold are counterfeit.
To combat this risk, pharmaceutical companies use serialisation and methods allowing them to trace items at every point in the supply chain through unique identification codes. Each of these codes detail the drug’s journey to date, its remaining shelf life and how it should be disposed of after it has expired. Identification includes information such as a product code, batch number, expiry date and national reimbursement and identification number.
The serialisation process is costly and requires a uniform application of serial numbers, which in turn means that parties at every point of the supply chain must have the correct IT systems in place.
Unfortunately, counterfeiters are becoming more sophisticated, making it increasingly difficult to identify fake drugs from the real thing. This means that in instances where expired drugs might be repackaged for sale using the same processes and even machinery as legitimate manufacturers, it takes more than inspecting packaging to determine whether a product is authentic.
It’s no wonder that the pharma industry is looking towards blockchain as a solution. There are some initial concerns, such as the unfettered access to information about every product of parties at every point in the supply chain, but this risk must be weighed against the benefits of implementing more secure processes to guarantee the integrity of drugs.
Even though there have been mandatory directives brought into force in an attempt to reduce the impact of counterfeit drugs, from the Drug Supply Chain Security Act (DSCSA) in 2013 to the EU Falsified Medicines Directive (FMD) in 2011, companies in the pharmaceuticals industry are still struggling to comply; the British Medical Association reported that only 15% of manufacturers were compliant at the time of the February 2019 deadline. And according to GS1 US, only 20% of packaging in the US was complaint in advance of the November 2018 DSCSA deadline.
Consequently, many companies developed internal systems in an attempt to adhere to the directives, but these systems are potentially vulnerable to hacking.
It appears that blockchain won’t be the panacea to eliminate counterfeits entering the supply chain, but it will be part of the process. Working in tandem with other technologies, however, it can play a vital role to guarantee security by ensuring that data will be transferred across the supply chain without the risk that it will be interfered with or altered.