The pharmaceutical industry has a paper problem. Every single box of medicine must include a paper insert with dosing instructions and technical information that can measure several feet long. Some patients read it over, some patients stash it in a drawer, while others just dump it in the trash. These pesky printouts can cause a massive headache for the entire drug supply chain if they are outdated or incorrect and result in a recall.
Novartis, one of the world’s largest pharmaceutical companies, thought it might have a solution: blockchain, the technology first popularized by bitcoin, which lets groups move value without the need for middlemen. Because blockchain requires networks moving value, the Basel, Switzerland-based company wasn’t prepared to go at it alone.
“Blockchain is a team sport,” says Daniel Fritz, a supply chain technology architect at Novartis. His team worked on a proposal for a public-private partnership with the European Union, known as the Innovative Medicines Initiative, to explore using blockchain in healthcare. The purpose of the program, says Fritz, is to fund projects that are “too risky” or “too expensive” for any one company to pursue on its own.
The first application for the PharmaLedger project is to provide patients with electronic medical leaflets, which are digitized versions of the paper inserts legally required by health authorities with important medical information. There is currently no way to get immediate changes to patients due to the complexity of the supply chain, but the hope is blockchain could eventually provide secure updates in near real-time.
A year after bringing together 29 partners and securing $22.1 million in funding, Novartis and Kenilworth, New Jersey-based Merck have started testing the technology. This project, along with 5 others in development, earned Novartis a spot on the 2021 Forbes Blockchain 50 list of billion-dollar companies taking blockchain seriously.
While blockchain is popularly associated with cryptocurrencies, like bitcoin and ethereum, pharmaceutical companies are banding together to explore its use as a more secure enterprise solution allowing different entities to communicate without revealing confidential information.
With PharmaLedger, a patient will be able to download an app and scan a 2D matrix on the outside of the drug package. Similar to a QR code, the data matrix is a collection of black and white dots that encodes information , including the serial number. The scan recognizes the manufacturer and then sends a request for the most up-to-date digital leaflet for that particular drug.
It’s imperative the manufacturer can prove through the blockchain ledger that the patient received the correct product information. “The leaflet has to be the right one, especially when you think about little details like one milligram or one gram,” says Marco Cuomo, an applied technology innovations manager at Novartis. But the patient also needs to feel secure that their personal health information is going to stay private. This is another key benefit to using blockchain, which uses random identifiers so patients don’t need to worry that the app is somehow recording what medicine they’re taking or what disease they have.
There is also a business benefit, though Novartis and Merck declined to estimate the savings that could be generated through blockchain. Not having to print paper leaflets could speed up packaging lines and could also reduce the number of recalls. Over the past five years, packaging or insert issues have accounted for 13% of all pharma recalls, according to Chris Harvey, who leads the recall team at Stericycle Expert Solutions. While around half of the 334 average annual drug recalls are due to issues in the manufacturing process or failure to meet certain standards, mislabeling recalls “can be larger in size,” since they can span across multiple batches, Harvey adds.
With two-years of funding left, the PharmaLedger group will continue to add new capabilities, such as anti-counterfeiting checks. The next step is to work on governance with regional and national health authorities in order to rollout the app in pilot markets. The technology will be available to any interested companies, no matter how big or how small. “It doesn’t cost any money—no software licenses, no maintenance costs,” says Fritz. “People don’t have to put up a big investment in order to adapt it and install it.”
We could provide a secure, distributed, decentralized architecture that nobody owned, but allowed for all relevant parties to participate in.
Securing The U.S. Supply Chain
While the European consortium is anticipating a future industry need, pharmaceutical companies operating in the United States are staring down a fast-approaching November 2023 deadline where blockchain could come into play. The Drug Supply Chain Security Act, passed in 2013, is a federal quest to stamp out the black market and counterfeit medicines trade.
It’s hard to quantify the size of the counterfeit drug market, since it operates outside normal channels, but a 2020 report from the Pacific Research Institute estimated global sales between $200 billion to $431 billion annually. The act included requirements for manufacturers, wholesalers, repackagers and dispensers to be able to track and identify drugs throughout the supply chain.
Merck teamed up with Walmart, IBM and accounting giant KPMG as part of a U.S. Food and Drug Administration pilot program to put blockchain to the test. “The reason we chose blockchain is because we could provide a secure, distributed, decentralized architecture that nobody owned, but allowed for all relevant parties to participate in,” says Craig Kennedy, senior vice president of global supply management at Merck. “It doesn’t have an intermediary who can get in the way of transparent flow of information up and down the supply chain.” The track and trace system in the U.S. needs to allow for a range of disparate corporate systems to be able to talk to each other without revealing any sensitive information.
Being able to identify all of the steps a drug has taken on its journey from the manufacturer to a pharmacy or doctor’s office is also important for building patient trust, especially in markets with high rates of counterfeit activity. Merck has already deployed a pilot in Hong Kong around Gardasil, which is a vaccine given to adolescents to prevent the spread of human papillomavirus, a sexually transmitted disease that can lead to cervical cancer in women.
In Hong Kong, patients and pharmacists can use a phone app to scan the Gardasil package and get “the full history of its movement from the point of import into the distribution chain for the market,” says Kennedy. This reduces opportunities for counterfeiters, while simultaneously increasing patient confidence, he adds. Merck is hoping to roll out the solution in other markets.
Tracking Drugs Inside Hospitals
For some medicines, the journey doesn’t stop when it gets to the pharmacy, particularly inside large health systems. The last stretch from a hospital pharmacy to a patient can include many interim steps and handlers, especially when it comes to complex biologics, which have different storage and handling requirements than a standard single molecule pill.
Innovations in personalized medicine have led to high-cost, life-saving drugs to treat rare diseases. Cambridge, Massachusetts-based Biogen was the first company with an approved treatment for spinal muscular atrophy, a rare disease that causes weakening of the muscles. Children diagnosed with the most severe form often do not live past the age of 2. Biogen’s drug Spinraza, which targets motor neurons, must be injected into the fluid surrounding the spinal cord by a doctor. Each injection has a list price around $125,000 and a standard course of treatment requires three doses per year. UCLA Health in California decided it wanted to track this last stretch and teamed up with Biogen and Las Vegas, Nevada-based blockchain technology company LedgerDomain.
UCLA Health had previously worked with LedgerDomain, Biogen, Pfizer, and IQVIA on a supply chain solution for clinical trial drugs known as KitChain. Many clinical trials require blinding, which means the participating research institutions and patients can’t know whether they received an active drug or a placebo. KitChain offered a way to digitally track clinical trial shipments from manufacturers to couriers to research facilities, reducing reliance on paper logs while simultaneously ensuring the security of confidential trial information.
This next project, dubbed BRUINchain after UCLA’s mascot, was instead focused on tracking high-value commercially available medicines from the loading dock to the patient. Health systems receive huge shipments of medicines, and they first want to be able to verify that these pricey but life-saving drugs are genuine. At the same time, pharma companies don’t want to have to disclose all of the serial numbers for these medications.
BRUINchain is a secure way for hospitals and pharma companies to talk to each other without having to reveal confidential information, in what’s known as a machine-to-machine interaction. UCLA scans the drug when it arrives and sends a verification request to Biogen for the particular serial number. Both parties participate in the authentication of the user and the routing. After receiving confirmation from Biogen, the package is scanned by each individual who handles the vial from the loading dock to the pharmacy to a refrigerator, creating a reliable chain of ownership. Healthcare providers can use an app to check the medicine’s movement and current location. “The typical vial of Spinraza was examined by UCLA professionals 99 times during the course of its week,” says Ben Taylor, CEO of LedgerDomain. “They’re constantly checking these things.”
Similar to bitcoin, which provides a reliable chain of ownership for the cryptocurrency, each of these supply chain solutions, whether it be in transit or inside a hospital pharmacy, provides all of the organizations involved with a secure way to collect data about the movement and verification of precious cargo. But, in the end, Taylor sees an even bigger opportunity on the horizon: not just managing the drugs that are there, but the drugs that aren’t there. “I think that drug shortage is a big enough bogey for all of us, that we should want to have more supply assurance,” says Taylor.
More than half of hospitals surveyed delayed therapies or changed patient care due to a drug shortage, according to a 2019 report from the American Hospital Association. The world has acutely experienced the shortage of Covid-19 vaccines during the pandemic, as manufacturers rush to meet demand. While the need for vaccines couldn’t have been predicted, other shortages can. For example, 9 of the 11 drugs used to treat a blood cancer in children have gone in and out of shortage during the past decade, according to the FDA.
By giving real-time insight into the deepest layers of the supply chain, those shortages can be anticipated, and resolved. “The patient, the pharmacist, the manufacturer, everybody loses when there’s a shortage,” says Taylor. “And why are there shortages in an industry like this? It’s because there’s just not enough information.”