SECURING THE PHARMACEUTICAL SUPPLY CHAIN: THE BLOCKCHAIN REVOLUTION
A Supply Chain in Disarray Tremendous effort goes into ensuring the effective operation of every pharmaceutical supply chain, yet the losses are staggering: Over $1B in drug thefts are reported annually1 $217-263B of counterfeit drugs entered the market in 20172 25% of vaccines are damaged in transit 3 20% of temperature-sensitive products are damaged due to a broken cold chain 4 30% of discarded pharmaceuticals can be attributed solely to logistics issues 5 Dollar signs and percentage symbols cannot capture the biggest losses, however. These issues affect people who receive drugs that are no longer effective, patients who rely on cutting-edge therapies that require a reliable cold chain or delivery within a narrow window of time, and the 1 million people every year who die from counterfeit drugs taken in good faith 6.
The pharmaceutical supply chain Confronting the Supply Chain’s “Black Box” is in a state of disruption. Drugs The root cause enabling such counterfeiting, theft, and loss is that the various links in intended to help, heal, and save are the pharmaceutical supply chain are all autonomous. Systems do not communicate with being compromised every day – and each other as a product moves from one logistics vendor to another, and from one mode the patients who depend on them of transportation to the next. The result is a “black box” in the supply chain where there are the ones who suffer. We need to is no visibility into the status of a shipment (Figure 1). Because of this black box, there is disrupt that disruption: to address opportunity for mishandling, spoilage, diversion, theft, and unauthorized replacement at the security and visibility risks that every stage along the way. prevent valuable pharmaceuticals from reaching their intended market. Shipment Disappears Here Shipment Reappears Here We need a blockchain revolution. Manufacturer Distributor
Figure 1 That is not to say that products cannot be tracked. They can be … but not in real-time. For example, in a simulated recall, Walmart required approximately 6.5 days to trace a shipment. The delay is due to the fact that each of the actors in the supply chain must review its data to isolate where, when, and how an issue may have occurred. There is no communal sharing of data that would permit swift analysis and remediation.
1 http://www.iosrjournals.org/iosr-jce/papers/Vol19-issue2/Version-4/P1902048388.pdf visited on 2 April 2018. 2 https://www.strategyand.pwc.com/reports/counterfeit-pharmaceuticals visited on 2 April 2018. 3 http://www.cargosense.com/cold-chain-shipping-loss-in-pharmaceuticals.html visited on 2 April 2018. 4 https://www.getconvey.com/blog/pharmaceutical-supply-chain-visibility/ visited on 2 April 2018. 5 https://www.getconvey.com/blog/pharmaceutical-supply-chain-visibility/ visited on 2 April 2018. 6 Interpol, 2013. 7 https://blogs.wsj.com/cio/2018/02/06/business-interest-in-blockchain-picks-up-while-cryptocurrency-causes-conniptions/ visited on 2 April 2018. Regulatory bodies around the world are seeking to implement safeguards for drug products. As a prime example, the Drug Quality and Security Act (DQSA) was enacted by the United States Congress in 2013. Title II of the DQSA is the Drug Supply Chain Security Act (DSCSA), which outlines steps to build “an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” One of the primary components of compliance with DSCSA is that pharmaceutical manufacturers need to put serialization into effect by applying a unique identification number to each and every item being shipped, down to the smallest sellable unit. The serial number will permit each item to be identified, tracked, and traced. But then what? Consider the torrent of data that serialization will generate as units are aggregated and de-aggregated in pallets and move from one stage of the supply chain to Blockchain is quickly becoming a another. For example, whereas previously you would have tracking data from one pallet, recognized gamechanger for the you now might have data from 10,000 individual units on that pallet. Multiply that by the supply chain at large, with the number of pallets and the data increase is truly of seismic proportions. potential for immense impact on A system must be put in place that can a) handle this much data, and b) make this data the pharmaceutical industry. actionable. That would be challenging enough, but even more is required. Remember that the ultimate goal of DSCSA is for an interoperable system: one that will eliminate the “black box” and allow for end-to-end supply chain visibility. There is no such system in existence at this time. It represents a radical shift for an industry that predominantly keeps data to itself and does not share information across the supply chain network. After all, with transparency of data, any breaks in the chain of custody that result in theft or diversion become open for all to see. If product is spoiled due to insufficient temperature controls, the time, location, and vehicle can all be identified. Supply chain stakeholders are leery of that much transparency. But the terms of the DSCSA are clear: such a system needs to be in place by 2023. The clock is ticking. Blockchain and the Supply Chain Blockchain is quickly becoming a recognized gamechanger for the supply chain at large, with the potential for immense impact on the pharmaceutical industry in particular. The attraction is readily apparent. A blockchain, by its very nature, is: Encrypted, providing incredibly high levels of protection against hacking. To date, a blockchain has never been breached. Auditable, encapsulating an unchangeable record of every transaction, movement, and status along a product’s journey to satisfy the demands of regulatory compliance. Real-time, delivering instant tracking capabilities compared to the days required by current systems. How would a pharmaceutical blockchain work? First, whereas blockchains in the financial market tend to be public blockchains that anyone can join and access, blockchains in the pharmaceutical supply chain would be private and permission-based, where only sanctioned members would have access to the data. Second, the blockchain would rely on effective serialization coupled with Internet of Things (IoT) sensors to track product shipments throughout their journey. These IoT sensors can record any desired data: location, time, temperature, oxidation, etc. For example, suppose the temperature in a cold chain goes too high during one stage of transport. The product is ruined. Today, the problem is only discovered after the fact – or, worse, may not be discovered at all. But with a temperature sensor communicating data in real-time through a blockchain to the manufacturer and the vendor, the shipment could
2 potentially be saved by having an alert triggered that the temperature in the vehicle was climbing – before it reached critical temperatures. Even if saving the shipment was not possible, it would be flagged as spoiled and not passed along to customers and patients. Or consider theft. Today, a missing pallet may or may not be noticed during transportation. But with a blockchain in place, the next sensor reading would show that the pallet was missing because it would validate the current information against the historical data in the blockchain. The theft would be immediately spotted and an alert raised, increasing the ability to identify when, where, and how the incident occurred and paving the way for remediation to increase security. In both cases, the need for time-consuming research, emails, and faxes between the manufacturer and the vendors after an incident occurs is eliminated. On a blockchain, The usefulness of blockchain every piece of data is recorded in real-time. All that is necessary is to look up a serial technology in the pharmaceutical number and the entire chain of custody and all related product data is instantly available. supply chain is directly dependent Three Hurdles to Implementing Blockchain on the number of companies Blockchain initiatives are popping up in the pharmaceutical industry worldwide. For example, willing to participate in the blockchain collaborations have been announced between Maersk and IBM 8 , Viant and blockchain. To truly eliminate the GlaxoSmithKline (GSK) 9, and DHL and Accenture 10. The MediLedger Project is bringing “black box” in the supply chain, together leading pharmaceutical manufacturers and distributors (including Genentech, all vendors must participate in Pfizer, AmerisourceBergen, and McKesson) to explore the technology and how to implement it across the supply chain. Unisys currently offers ActiveInsights™ PharmaTrack, powered the blockchain. by blockchain technology, to provide manufacturers and transport providers with a way to ensure authenticity, safety, and availability across the entire pharmaceutical supply chain. But blockchain is very much a nascent technology, and three hurdles loom large before it can take its place in the pharmaceutical supply chain. The first hurdle has to do with blockchain technology itself, particularly its scalability. Scalability is a challenge because multiple nodes in the blockchain must process every transaction, requiring huge amounts of energy and computing power for a large blockchain network to function. This energy and computing power is, quite simply, cost-prohibitive. However, work surrounding blockchain technology issues continues apace. It is not too far-fetched to believe these issues will be solved before too much time has elapsed. What is of far greater concern are the other two hurdles, because they have to do with people – and “people problems” are inherently more difficult to solve than technology problems. That is why the second hurdle that must be examined is the blockchain network. The usefulness of blockchain technology in the pharmaceutical supply chain is directly dependent on the number of companies willing to participate in the blockchain. To truly eliminate the “black box” in the supply chain, all vendors must participate in the blockchain. However, we already noted that some supply chain vendors might not want the 100% transparency promised by the blockchain. They also might not be willing to share data with other vendors – particularly with competitors. Consider a scenario where one vendor out of five refuses to participate in a manufacturer’s blockchain. We’ll call this vendor “Invisible Cargo, Ltd.” The IoT sensors will stay on the pallet and continue to record temperature, location, and other critical data, but neither the manufacturer nor the other members of the supply chain will be able to see that data in real-time.
8 http://www-03.ibm.com/press/us/en/pressrelease/53602.wss visited on 2 April 2018. 9 http://www.businessinsider.com/digital-health-briefing-viant-gsk-partner-for-blockchain-in-pharmaceuticals-cms-moves-to-increase-the- use-of-digital-health-solutions-hospitals-to-save-big-from-teleservices-2018-1 visited on 2 April 2018. 10 http://www.supplychaindigital.com/technology/dhl-and-accenture-working-blockchain-based-pharma-supply-chain-project visited on 2 April 2018.
3 If a loss occurs while the product is being transported by Invisible Cargo, it will be noted after the shipment is turned over to the next vendor who participates in the blockchain, when the previous and current data are compared and verified. But, instead of having instant access to Invisible Cargo’s data to figure out exactly where and when along the route the theft took place, the manufacturer will have to wait for Invisible Cargo to turn over the data – and trust that the data being provided is accurate. The third hurdle to address is blockchain security. At first glance, this might seem counterintuitive, since one of blockchain’s greatest assets is the security and immutability of the data in the blockchain. But, while blockchains have proven thus far to be resistant to hacking, the identification credentials or “private key” to access a blockchain are all too vulnerable. Identification credentials, by their nature, are stored outside the blockchain. In a Blockchain is poised to disrupt pharmaceutical supply chain, private keys would be contained within the systems that the pharmaceutical supply chain need to access the blockchain. If a system containing the private key was hacked and the private key stolen, the hacker could: as we know it. The hurdles can and will be overcome, though it Perform untraceable illegal transactions, such as diverting a shipment of drugs. will take the consolidated effort Sell confidential or proprietary information from the blockchain onthe black market. and cooperation of stakeholders Erase the private key from the original database so that the legal stakeholders could not across the supply chain – not access their own data. just of IT experts tackling the These action are not linked only to external hackers. Blockchains are also vulnerable to insider threats. A root user or administrator would have access to the blockchain’s private complex programming involved. key and therefore to sensitive information which he or she could choose to sell, modify, or delete to the detriment of the supply chain stakeholders. Currently, there is no recourse if a blockchain’s private keys are compromised. Therefore, the systems storing identification credentials must be secured at all costs. It is only when blockchain’s inherent security is coupled with robust infrastructure security that the technology is ready for the demands of the pharmaceutical industry. The Face of Success Blockchain is poised to disrupt the pharmaceutical supply chain as we know it. The hurdles can and will be overcome, though it will take the consolidated effort and cooperation of stakeholders across the supply chain – not just of IT experts tackling the complex programming involved. In the blockchain-driven pharmaceutical supply chain of the future, we can look forward to reductions in theft, counterfeiting, and loss. We will gain maximum return on investment from the drug products being manufactured, compliance with strict regulatory guidelines, and enhanced efficiencies across the supply chain. But the real face of success for a pharmaceutical supply chain blockchain is the face of people: the child who is healthy because she received a real vaccine and not a counterfeit one. The man who can continue to provide for his family by keeping his heart disease under control with valuable medicines. The woman whose cancer goes into remission through the use of innovative therapies. This is the face of success, and this is why we must work together to make blockchain a reality for the pharmaceutical supply chain.
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