Pharma supply chain is a complex system facing a bunch of problems from drug traceability and counterfeiting to product shortages and temperature nonconformity. This is mainly due to the lack of innovation and the inability of all stakeholders to come to a consensus with respect to procedures and common rules. In this article, we will show how blockchain technology can help overcome some of the key issues within the industry.
Complex, usually outdated technical solutions, involvement of a big number of stakeholders, and lack of common data standards are some of the obstacles that the pharmaceutical industry faces today. As a result, the drug supply chain has its weaknesses that may poorly impact people’s health and well-being or even cost lives. So let’s review the most burning issues in detail.
Counterfeits are one of the biggest challenges in the pharmaceutical industry today. The worldwide market of falsified drugs is estimated to be over 200 Billion USD. According to WHO, 1 out of every 10th pills, vaccines, diagnostic kits, etc. do not satisfy regulations and/or other requirements. These include medicines with little or no active ingredient, with the wrong ingredient, with fake packaging, and tampered or stolen items. More than 500,000 people die every year because of fake or substandard medical products. On the other hand, counterfeits facilitate the illegal consumption of medicines and drug abuse, including for such reasons as psychotropic or performance-enhancing effects.
Poor product visibility is one of the main reasons for this. Before reaching a pharmacy, a hospital, or any other dispenser, the drug comes a long way and changes multiple hands. Enhanced traceability could be a solution. But as of today, most companies rely on old and insecure methods for batch management and/or item authenticity verification. Many of them still use Excel files for data sharing and certificates accompanying the lots as a confirmation of the product source or origin. However, for the unethical parties, it’s not a big deal to provide false or forged papers. This means there is still space for illegal practices along the whole supply chain.
The other way for fake drugs to enter the market is through online sales. According to WHO, more than 50% of the medical products sold via the Internet are counterfeit.
What is more, not only drugs themselves but also raw materials used to manufacture them can be from uncertified sources.
Fraud is another serious issue faced by pharma. Good Manufacturing Practice violations, off-label marketing, insurance cost falsifications, unlawful kickbacks, and manufacturing of compound drugs not only add to counterfeits but also lead to big money losses. Some of the known cases include GlaxoSmithKline's $3 billion settlement, Pfizer's $2.3 billion settlement, and Merck's $650 million settlement.
No doubt, drug shortages have a negative effect on the economy and healthcare sector, as they disrupt supply chains and lead to increased costs or revenue losses for the stakeholders, however, at the end of the day, it is patients who suffer from this issue most of all. The absence of necessary medications may cause increased patient monitoring, suboptimal treatment through the use of alternative drugs, delayed care, increased length of hospitalization or the need to change the institution, adverse events, treatment failures, and relapse, as well as associated care cancellations including vital surgeries, or even deaths.
Not so long ago, the world faced the coronavirus pandemic, which showed how vulnerable the pharmaceutical industry is to disasters of this magnitude. Not only has Covid-19 disrupted the traditional supply chains but also caused an anticipatory purchasing of medications around the world, driving demand to an unprecedented high. And both governments and pharma companies are still coping with its consequences. The war in Ukraine was the next big factor questioning the preparedness of pharma to satisfy unpredicted demands.
However, the outbreaks of diseases, wars, or any other force majeure circumstances are not the main reasons for medical product shortages. All types of drugs, such as essential life-saving drugs, oncology medicines, antimicrobial drugs, analgesics, opioids, cardiovascular drugs, radiopharmaceuticals, and parenteral products, are in great demand and are lacking accessibility in some parts of the world. The reasons for drug shortages are multifactorial. In particular, they include unavailability of raw materials, raising operational costs, lack of definite governmental policies, as well as seasonal and unpredicted demands. But most often the issue is the result of the manufacturing and logistics problems caused by untimely informing of the parties involved about the lacking products. Companies using outdated technologies for inventory management simply have no capabilities to predict and detect the problem in time and thus take necessary preventive actions.
To ensure the conformity of medical products to the requirements a lot of conditions should be taken into account. First of all, to remain active and effective, the drugs should be kept at a defined temperature range during all their journey from the manufacturing site to the patient. Especially, if any fluctuations can hamper the effectiveness of the product and make it unfit for further use.
Other important environmental controls include humidity and exposure to the sun among many others specific to particular items.
It is the responsibility of the fabricators, packagers/labelers, testers, distributors, importers, wholesalers, and dispensers to ensure that the required storage and transportation conditions are met. However, how one party can be 100% sure that all the other parties followed the requirements and that the equipment and gauges they use are of appropriate design and capability? This is still an issue to be solved within the industry.
Blockchain is a technology that enables sharing data in a way that makes it difficult or impossible to change, hack, or cheat the system and modify any piece of information. Basically, it is a digital ledger of transactions that is copied and distributed across all the participants of the computer network on the blockchain.
Each block in the chain contains a number of transactions, and every time a new transaction takes place, a record of that transaction is added to every participant’s ledger. New information can only be added, and it’s impossible to erase any already existing details.
In fact, blockchain is a type of DLT, a decentralized database managed by multiple participants. What is particular about this technology is that all the transactions are recorded with an immutable cryptographic signature called a hash.
The ability of blockchain systems to pinpoint the origin of data makes them particularly suitable for the pharmaceutical industry which lacks multi-party visibility of events across the supply chain. For example, the drug identification data, as well as records of product movements from one party to another can be stored in the blockchain-distributed register which may help to accurately determine the authenticity of each item.
As already mentioned blockchain technology can provide transparency and increase trust in pharma. So let’s review its possible applications in more detail.
Blockchain systems are a goldmine for the pharma supply chain. As it is possible to decide who will participate in the blockchain, proof of drug ownership is easier to establish. Manufacturers, suppliers, logistic partners, distributors, and retailers may sign smart contracts to be able to have access to the information.
At PharmaTrace we are working on technologies and apps that allow our customers to track and trace drugs throughout their journeys from the plant to the patient.
With our serialization solution, manufacturers can generate serial numbers in accordance with legal requirements applicable in the countries the products are intended to be marketed. Then the packages are labeled with this unique identification information in a legally required form. All the partners in the supply chain will be able to scan these labels and verify the authenticity of the medications with our application lot/batch transaction module. This module tracks the location and status of each lot or batch at every point until the products reach their final destination, including whether they have been sold, returned, or recalled.
It also checks the validity of each lot or batch and ensures that it meets all necessary quality standards.
In case of counterfeit or fraud, it will be easier to identify tempered items as well as to figure out where and when the issue has happened as the complete transaction history is stored on the ledger.
As we already know, blockchain technology can be used to record all the drug information in the supply chain, including information about the sales from a particular wholesaler or pharmacy. This will make it possible to manage the inventory easily despite the many parties taking part in the logistics.
From time to time it happens, that the medications appear to be defective or unsafe. In some cases, manufacturers may discover a problem with their drug themselves, in other cases, issues such as counterfeit or unmet storage conditions may happen.
To help the customers handle the drug recalls we have added a special module to our application. This solution makes it possible to initiate a recall of a specific product or batch, to track the progress of the recall, including which products have been returned and which are still in circulation, as well as to send notifications to customers, retailers, and other stakeholders about the recall with the instructions for returning the affected products.
Drug shortages may also be prevented or handled with the help of blockchain technology. As the information about the drugs is stored on the shared digital ledger, the manufacturers can easily keep their inventory updated and supply necessary products on time to avoid their lacking in the market.
As an example, the PharmaTrace Product Shortage Transaction module allows the user to identify products that are in short supply and to prioritize orders for those products. It also sends notifications to customers, retailers, and other stakeholders about product shortages and provides updates on the availability of the affected products. Finally, this module helps the user to allocate limited supplies of products to customers and retailers in a fair and equitable manner.
Similarly to serial numbers, IoT devices like sensors can be attached to the packages. They can record the temperature, humidity, and other required environmental conditions of the package throughout the supply chain. Any changes will be tracked with the blockchain. Whenever the compliance conditions are not met all the parties may be notified. This will help to avoid unnecessary losses and negative effects on the patient’s health and well-being.
While blockchain technology is mostly associated with cryptocurrencies and NFTs, it is also suitable to secure any transaction and verify the authenticity of physical items. This makes it applicable in the pharmaceutical industry as well. Blockchain ensures traceability of the drugs throughout the entire supply chain, allows faster and more efficient detection and removal of counterfeit, faulty, or expired products, and facilitates drug recall and shortage management, or compliance with the required storage and transportation conditions.
