How blockchain can add value to the pharmaceutical industry

Arun Samuga, chief technology officer at Elemica explains how blockchain can add value to the pharmaceutical industry.

The current health crisis affects all of us: It’s a global struggle that gives companies and producers in the pharmaceutical sector a special responsibility. Product availability, safety and credibility are the critical requirements for doctors, patients and producers of drugs and medical equipment these days. 

Technology is proving to be an accelerant in the manufacturing and distribution of these products. It has a significant presence in both upstream and downstream manufacturing activities: data analysis and testing, innovation, quality, production, logistics, and administration. As we applaud these activities that will save lives, it is worthwhile to visit how emerging technologies, like blockchain, could add further value.

Global processes need to be transparent

Pharmaceutical supply chains are highly complex with a large number of different suppliers, regulatory agencies, pharmacies, hospitals, insurance agencies, and producers collaborating to manufacture and distribute globally.

As new diseases like Covid-19 occur, this complex chain must be agile and responsive to bring new drugs to market. This means that producers need to be innovative and adapt quickly to the new market need. Suppliers also must comply with additional or new transport regulations. 

To do so, a manufacturer needs to secure the quality of each ingredient, ensure that the shipping of goods happens on time and that storage and transport conditions are optimal. In a crisis such as the current one, these challenges are even more important than before: after all, it's about timely distribution of life saving agents to protect human life. Technology will help multi-enterprise business process work more smoothly in many areas. 

It starts with trust 

One promising solution to address the formidable challenges within the pharmaceutical supply chain will be blockchain. Blockchain technology is particularly predestined when it no longer involves a partnership of two or three companies, but many partners such as suppliers, producers and so on as part of a network.

Blockchain provides traceability in product lifecycles by relating data, propagating it and sending it through an organisation. This is especially important for highly regulated industries such as pharmaceuticals. This industry requires bringing transparency to activities like clinical trials, control over lot from scale-up, validation, quality assurance till commercialisation of the final approved product.

Many pharmaceutical organisations utilise contract manufacturing processes for the co-ordination of sourcing and production processes. Documentation is created and accompanies the products as they travel from raw material through stages until finished goods and delivery. This documentation can include regulatory requirements, ingredient specifications, or contractual information. Blockchain helps to correlate and audit the information, such as packaging components, development evidence, regulatory integrity of all associated commercial content certifications that are created through collaboration with other parties. 

This results in a need to establish trust among various parties to orchestrate the flow of material, information and finance. There is tremendous amount of time and effort spent on creating and enforcing contracts, auditing payments, reconciliation and legal proceedings. Blockchain technology fundamentally enables a trustless environment with distributed ownership of data.

Innovation and privacy

It is important for institutions to be able to exchange and expand their knowledge and data globally. Especially when human lives are at stake like in the case of Covid-19. Blockchain provides the ability to share protected and unalterable data, which allows companies to more easily join forces in the spirit of innovation. By differentiating which persons can access the data from the blockchain, patient data can be sustainably protected. This is important because nobody wants to give up their rights to personal privacy when it comes to healthcare data, not even in the rush to fight this pandemic. However, the general use of patient data is indispensable for the progress of clinical research. This comes into play, for example, in clinical studies: patients must be informed and give their consent at every step of a clinical study. This consent must be appropriately recorded and securely stored, including under current data protection regulations.

It is also crucial how such systems handle historical patient data. In this case, the patient should decide what information can be “unlocked”. In addition, only data that are relevant to the disease under investigation should be made available. This differentiation in access authorisations can be implemented using distributed ledger technology. An unlimited number of basically equal copies of the ledger (or transaction and process step) are maintained by different parties.

Appropriate measures ensure that new transactions are adopted in all copies of the ledger and that a consensus is reached on the current status of the ledger. Distributed ledgers can be divided into "authorised" or “open” ledgers depending on the access options of the participants in a network. While the latter are openly accessible to everyone, access to the account ledger is regulated in the former.

Traceability of product quality

The traceability of process steps plays an important role in pharmaceutical manufacturing and distribution. Goods flows need to be checked from the outset and identified beyond doubt to reduce counterfeit product and quickly execute any recall where the cause of the defective product must be traced. 

An important added value offered by blockchain are Smart Contracts. These can be automatically attached to deliveries and ensure that the products themselves report a breach of the rules – or re-order replacements if the storage conditions were not appropriate.

Trust in the visibility and traceability gained in the supply chain is the basis for the implementation of Smart Contracts. These automatically trigger certain actions at predefined events. Processes that require the agreement of several supply chain actors can be automated. For example, a logistics company's confirmed proof of delivery can immediately trigger automatic digital invoicing and payments via the banking system.

Conclusion

Currently, many blockchain developments are still pilot projects and implementation across the entire network of suppliers might take a long time. An example of this is the MediLedger Project which formed in 2017 to test a closed blockchain system to track who touched what drug at what time. 

Experts agree that blockchain could have a revolutionary impact on industries such as pharmaceuticals. And the current crisis shows impressively that technology can bring high added value in many areas. The bottom line: new blockchain technology is only as relevant as it is adopted by larger volumes of participants and how quickly companies can see a return on investment.