Can blockchain make pharmaceuticals safer?

The technology makes traceability and serialization easy, and therefore, can help comply with new US and EU drug safety laws.
17 September 2018

Who’s keeping tabs on the drug supply chain? Source: AFP PHOTO / THOMAS BREGARDIS

The drug supply chain is getting increasingly complex, with counterfeiting, diversion, and cargo theft growing year after year.

It’s a cause for concern for governments, pharmaceutical companies, and patients alike. As a result, governments across the world are working on enacting regulations to make the drug supply chain more traceable and trustworthy.

The US Drug Supply Chain Security Act (DSCSA), whose deadline for implementation (Nov 26) is fast approaching, provides strict rules for drug tracing, verification, and serialization — hoping to make pharmaceuticals safer.

The European Union’s Falsified Medicines Directive (FMD) too, provides similar rules and comes into effect on Feb 9 next year.

And although regulations for drug tracing and serialization sound like a great idea, compliance is a tough challenge for most businesses.

However, those two features — tracing and serialization — are the two things that blockchain technology is known for. That very logic has caused big pharmaceutical companies such as Merck and Pfizer to explore how blockchain can help triumph over the challenges created by the new US and EU drug laws.

Does blockchain hold the solution?

Blockchain seems to have finally moved past the Bitcoin hype and is making headway in industries other than banking and financial services.

In fact, the technology is almost ready for deployment in supply chain functions in many industries — which is good news, and half the battle won, for the pharmaceuticals industry.

Blockchain allows for drug traceability

De Beers, the diamond company, for example, is using the technology to track stones from the mine to the retail store in order to clear the supply chain of imposters and conflict minerals.

Blockchain, being a decentralized ledger, allows the creation of a single database that holds permanent records. Entries, therefore, cannot be altered by pharmaeutical companies, distributors, and other supply chain partners. As a result, it makes it easy to trust where the drug was made and how it got to where it is being purchased or consumed.

The technology naturally lends itself to drug traceability, as evidenced by several user cases in the industry. However, when it comes to ensuring the authenticity of the drug, there’s something unique it offers: dynamic serialization.

Blockchain puts an end to counterfeiting

The right way to end counterfeiting is to make it impossible to pass off fake drugs as originals. The reason serialization (as per the new regulations) is difficult is because pharmaceutical companies can’t just slap a number on a vial or foil packing, in serial order.

That’s something anyone can duplicate once they have a single unit of the original.

However, blockchain allows something called dynamic serialization, which puts an end to this. The technology, which is essentially a distributed ledger consisting of several blocks, could use an algorithm to determine each serial number based on other numbers in the block.

As a result, each record number is original and unique, and therefore, the drugs become counterfeit-proof.