How blockchain creates trust in pharmaceutical supply chains


Drug fraud remains a major challenge for the healthcare industry and the coronavirus pandemic has led to a further rise in counterfeit medicines, posing a serious health threat to patients and significant challenges to law enforcement. From a supply chain perspective, this reduces the commercial trust that must exist between organizations to deliver critical products from manufacture to patient. According to Deloitte, more than $200 billion is lost every year in the US alone because counterfeit drugs infiltrate unsafe supply chains.

With this in mind, blockchain has been identified by the pharmaceutical industry as a technology that could be a game changer in the fight against counterfeit medicines. This is because blockchain has several properties that give it the potential to improve the trust, accuracy, and reliability of transactions and information exchanged in the supply chain about drug origin, location, and tracking status .

So what exactly is blockchain? In essence, blockchain is a digital ledger of transactions with a growing list of records, called blocks, securely linked together using cryptography. It is a distributed database that can efficiently, traceably and permanently record transactions between two or more parties. The blockchain records transactions and communications in these blocks across multiple computers, so everything is transparent. The record itself is tamper-proof and cannot be changed afterwards without breaking the cryptographic signature and alerting all other users.

Public versus private

While blockchain was originally associated with bitcoin and cryptocurrency management, the fundamental concept of the technology is to digitally manage each transaction. The early public blockchains are also based on the principle of giving each participant on the blockchain full visibility and access to the entire contents of the database. For many pharmaceutical companies and healthcare organizations, this does not sit well and raises privacy and governance concerns. So, a new generation of private blockchains is emerging, where ultimately a single authority or organization retains control and no one can enter this type of network without proper authentication.

Private blockchains offer the same benefits as public blockchains, but maintaining overall control helps improve privacy and eliminate many of the illegal activities often associated with public blockchains and cryptocurrencies. Private blockchains are “allowed” where the participants are known and trusted. Audits, checks and balances can all be done openly and provide real transparency. And since fewer participants or nodes are needed, decisions and transactions can be processed much faster and require much less energy – major criticisms attributed to public blockchains. For these reasons, private blockchains are attracting significant interest and for the pharmaceutical supply chain industry, benefits include:

efficiency. Unlike traditional record keeping processes, records are created and stored on a single distributed blockchain ledger accessible to all participants. There is no need to reconcile or consolidate disparate sets of records held by different third parties. The entire supply chain becomes traceable and products such as drugs or devices are easier to track, along with information such as place of manufacture, batch number and expiration date details, improving inventory control and rotation.

immutability. Records cannot be changed unless consensus is reached among all participants in the blockchain. This means, for example, that no entity involved between a pharmaceutical company and the retailer can alter the data to include counterfeit medicines, while the movement of medicines between the companies and medical institutions can be tracked in near real-time through the data stored on the blockchain.

safety. Records stored in the blockchain are more secure than traditional records because the data is not stored on a single server, but multiple times decentralized by a network of participants. The records themselves are tamper-proof and far less susceptible to being compromised or altered by malicious third parties than would be the case if stored via traditional forms of data storage. The private blockchain is there to support the business, not the individual, unlike their public counterparts.

transparency. Data stored by blockchain is visible to all participants. Unlike public or unauthorized ledgers, which can be accessed by anyone who joins the blockchain, private blockchains are only visible to legitimate and authorized participants.

traceability. Blockchains create a comprehensive, “start-to-finish” audit trail for every newly recorded transaction. When an issue is detected such as a counterfeit drug or even just a faulty or expired drug, the user can view all previous data entry, touchpoints, locations and timestamps to trace all the way back to find the origin of the product, specific manufacturer and even the particular batch it came from.

Early Adopters

Three of the largest pharmaceutical conglomerates – Pfizer, Amgen and Sanofi – are already working side by side to find the most effective ways to leverage blockchain technology, from securely storing data to accelerating clinical trials to reducing the cost of drug development. Another initiative exploring 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 to meet medication requirements by 2023.

The rush to develop and bring to market Covid-19 tests, vaccinations and therapeutics has further accelerated interest in blockchain. For example, in the UK National Health Service, two hospitals in Warwick and Stratford-upon-Avon began using distributed ledger technology to monitor the rollout of the COVID-19 vaccines.

In addition to managing the supply chain, blockchain technology can be used to provide more confidence in the confidentiality of information in clinical trials, resulting in shorter drug development and discovery cycles. ONE BioMed headquarters The report explores how reproducibility of clinical research studies has been an issue and how the use of blockchain technology can combine privacy with secure, decentralized tracking of all data.

Blockchain can provide undeniable value in tracking, monitoring and reducing problems in pharmaceutical supply chains. While it won’t eliminate all risks, blockchain can help address issues related to legacy and disparate systems. Because of its immutability, transparency, and traceability, it can provide efficient and accurate end-to-end supply chain tracking and monitoring, providing an auditable and verifiable representation of information. The pharmaceutical sector and the NHS in the UK are already looking to use this technology to improve recording and data sharing. So expect a lot more blockchain activity in the coming five years.


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