How Might Blockchain Impact the Pharmaceutical Supply Chain?

In particular, cryptoassets which are built on these technologies - such as the cryptocurrency Bitcoin - have courted a lot of media attention since the start of the year due to the huge fluctuations in value that they've seen.

Leaving aside the hype around cryptoassets, it should not be overlooked that distributed ledger technologies are hoped to hold the key to unlocking some enormous benefits in a wide variety of industries. In the pharmaceutical industry, one form of the technologies that is being examined closely is blockchain, which the industry hopes could be exploited to improve the global supply chain and help in the fight against counterfeit medicines.

The Growing Issue of Counterfeit Medicines

As we highlighted here back in March of last year, the coronavirus (COVID-19) pandemic has led to a rise in seizures of counterfeit medicines. The increased proliferation of counterfeit medicines creates a serious health threat to patients, significant challenges for enforcement authorities and diminishes the trust that exists between organisations involved in the supply chain.

Following the UK's withdrawal from the EU, the threat posed by counterfeit medicines has been recognised as an important matter to be addressed as part of the changes that are being made to the regulatory framework which governs the UK pharmaceutical sector. The Medicine and Medical Devices Bill, which is currently working its way through Parliament, will introduce a scheme that is designed to protect the UK supply chain against counterfeit medicines and to prevent them from falling into the hands of patients.

The Role Blockchain Could Play

Against this backdrop, blockchain has been identified by the pharmaceutical industry as a technology that could be a gamechanger in the fight against counterfeit medicines. This is because blockchain has a number of properties which give it the potential to radically improve the accuracy and reliability of the information that is shared in the supply chain about the origins and tracking status of drugs. These properties include:

• Security - Records stored through blockchain are more secure than traditional records because, rather than residing on a single server, the data is stored in a decentralised way by a network of participants. This makes the records less vulnerable to being compromised by a malicious third party than they would be if they were stored through traditional forms of data storage.
• Immutability - Records cannot be changed unless a consensus is reached between the participants in the relevant network.
• Transparency - Data stored through blockchain is visible to all participants in the relevant network. For certain "unpermissioned" ledgers (such as Bitcoin), this means that they can be accessed by everyone on the internet.
• Traceability - Blockchain creates a comprehensive "beginning to end" audit trail for each new transaction that is recorded.
• Efficiency - Unlike traditional record-keeping processes, record-keeping takes place in a single distributed ledger that is accessible to all participants. There is no need to rectify different sets of records held by various third parties.

It is hoped that realising these benefits would lead to increased trust in the supply chain and make it harder for the supply chain to be infiltrated by counterfeiters.

A major project investigating the potential for using blockchain in the pharmaceutical supply chain is Pharmaledger which is being carried out by a consortium of 29 partners that includes 12 global pharmaceutical companies. The project's website explains that the consortium is investigating the use of blockchain in the supply chain because it is "one of the most promising and potentially efficient tracking, verification and authentication technologies".

Pharmaledger is sponsored by the Innovative Medicines Initiative and the European Federation of Pharmaceutical Industries and Associations. Together, these organisations have made financial and in-kind contributions to the project of more than €22.1m.

The application of blockchain to improve the industry supply chain is just one aspect of exploiting the technology which Pharmaledger is looking into. It is also investigating the benefits that blockchain could have for health data and clinical trials.

Conclusion

As the cryptocurrency phenomenon demonstrates, distributed ledger technologies have great potential to disrupt established markets and industries.

The pharmaceutical industry is taking a very significant interest in these technologies, particularly blockchain. There are very promising signs that blockchain could be harnessed to improve the global pharmaceutical supply chain and protect it from counterfeit medicines. It is to be welcomed that projects such as Pharmaledger show that the industry is approaching the technology with optimism and in a spirit of collaboration. It will be very interesting to see how things develop through 2021.

If you have any queries about the current regulatory environment, or if you would like to share with us any thoughts you have on how blockchain could impact the pharmaceutical industry, we would be pleased to hear from you. Please contact a member of our Pharmaceuticals & Life Sciences team, or complete the form below.