Can blockchain solve pharma’s counterfeit drug problem?

Nobody doubts that fake medicines are an increasing threat to consumers and the pharma industry’s bottom line. Is blockchain the answer to secure the supply chain?

Counterfeit medicines are a multi-billion dollar problem on a global level. From the size, shape and colour of the pharmaceuticals, to the packaging made to look like the real thing, these bogus products usually contain small amounts of the active ingredients, or even none at all.

Regulatory authorities have made many attempts to prevent these fraudulent activities, but with large gaps in most global pharmaceutical supply chains, it is going to take much more than just training supply chain managers to securely transport medicines to the public.

Blockchain technology can combat these counterfeiting operations by significantly improving the security of supply chains around the world with verifiable medications.

The counterfeiting problem has serious consequences for all, from underdeveloped countries with no healthcare systems, to highly developed countries. Many of these fake drugs have incorrect doses, or even wrong ingredients in the formulations. Improper storage is another concern, because authorised medicines are starting to fail to meet the quality standards.

Blockchain technology, integrated into the industry as a whole, can address these concerns.

The World Health Organisation (WHO) has found that counterfeit drugs are a growing threat, particularly with increased internet sales of pharmaceuticals. WHO has received approximately 1,500 reports of fake and low-quality products, with antimalarials and antibiotics being the most-reported categories of risk. People are profiting from causing harm with these dangerous get-rich-quick schemes.

The problem extends much further, too, to everything from cancer drugs to contraceptive pills. Even purchases of the equipment used to manufacture fake drugs are spiking, including tablet presses, capsule machines, and syringe fillers. US Customs and Border Protection reports tablet presses are of major concern as they have been entering the US in record numbers in recent years.

The authorities have been seizing pill presses at a rate 19 times higher than reported in studies conducted in 2011. Coincidentally, in the same year the synthetic drug Fentanyl exploded on the US drug market, according to the American Association of Poison Control Centers. Varying in size from plastic, bench-top varieties that are easily bought online, to giant industrial machines generating upwards of 200,000 tablets per hour, these machines are an integral part of the drug counterfeiting process and play a direct role in why the Drug Enforcement Administration (DEA) is facing a national problem of synthetic Fentanyl overdoses.

A dangerous amount of counterfeit pills specifically marketed as Xanax or Oxycodone have actually been made with Fentanyl, causing deadly overdoses in many unknowing patients and victims. Fentanyl is approximately 25 to 50 times stronger than Heroin and up to 100 times more potent than Morphine.

In the past, many painkillers were only found in pharmacies, but now they are widely available online and through the American black market.

Blockchain: can it solve this problem?

Blockchain technology allows large amounts of associated data to be distributed but not copied. It was originally devised for the digital currency market, but has now expanded into other markets and potential uses. Although these types of digitally distributed ledgers have been around for years, blockchain uses new technology, like specialised algorithms, to validate and authenticate transactions within a decentralised architecture, while progressing in real-time through protected layers of digital encryption.

Third-party companies, such as shipping logistics and cold-chain management companies, who provide research on the movement of pharmaceuticals, could be replaced by a blockchain-based tracking system, reducing overheads for larger companies and small pharmacies.

With $200 billion lost in the war against counterfeit drugs annually, and patient safety issues on the rise, a chain-of-custody log, that blockchain could potentially implement, holds major promise. This type of blockchain system could ensure a standard log of tracking each step in the supply chain at the specific drug or product classification level.

Effective applications for blockchain have been developed to secure the drug supply chain, the foremost solution being a distributed digital ledger for managing the entire drug development lifecycle. Blockchain’s transparency and traceability also provide a great potential benefit to the pharmacy supply chain. It provides a rapid way for all parties to trace all of the data stored on the digital ledgers. In the event of a drug shipment issue, or if cargo goes missing to counterfeiting operations, the digital ledger can show who had handled it last. The complete visibility of this ledger would make it possible to trace every product back to the origin of the raw material manufacturers if needed.

If these principles are adopted, the important goal of blockchain for the pharmaceutical industry can be fully realised and implemented for hospitals, clinics and pharmacies worldwide. By developing this type of technology and supporting it with proper infrastructure to secure big data, building on a chain of transparency and accountability like blockchain will restore trust in the healthcare industry for generations to come.

About the author:
Gunjan Bhardwaj is the founder and CEO of Innoplexus, a leader in AI and analytics as a service for life science industries. With a background at Boston Consulting Group and Ernst & Young, he bridges the worlds of AI, consulting, and life science to drive innovation. 

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