Consumers asking for visibility into supply chains is nothing new, but in the case of the pharmaceutical industry, it is the government that seems to be more privy to that information. This sentiment could be triggered due to the prevalence of counterfeit medicine, estimated to be worth $200 billion annually with an astounding 10-30% of all medicines sold in developing countries deemed fake. Since U.S. pharmaceutical investments are spread across the globe and as the industry contends with a very fragile supply chain, it is imperative for lawmakers to have greater visibility into the production and distribution of medicine.
The Drug Supply Chain Security Act (DSCSA) of 2013 mandated that pharmaceutical products sold in the U.S. need to have supply chain traceability, and had set the deadline for implementation in 2023 - a full 10-year period for companies to realize complete visibility into their processes. The legislation comes a full circle, while requiring compliance from every stakeholder in the industry, including distributors, logistics providers, and pharmacies.
The idea here is to make sure consumers who purchase drugs can clearly understand the life cycle of the drug from production to the counter - a simplistic way of looking at a seemingly open-ended problem. In the words of the FDA, in order to realize this, the pharma industry needs to build an “electronic, interoperable system” that can help the department identify and trace drugs right to the production floor.
When the mandate was formulated five years ago, the prospects to facilitate visibility across such an intricate supply chain would have been bleak, but now with blockchain in the limelight, it might help put things in perspective. The freight industry is one of the first segments to lap up the technology, as logistics giants are conducting pilot runs to see how viable its promise is, before adopting it into mainstream utility.
A SAP survey across the business community cutting different industries showed that an overwhelming 92% of the survey respondents view blockchain as an opportunity, while 84% of them are currently engaged in blockchain related activities. But what is concerning is that only about 3% of the businesses are actually using blockchain for production now.
Gil Perez, Senior VP of Product and Innovation at SAP was of the opinion that the blockchain rhetoric is still in its nascent stages. “The ones who are into production are not doing production at scale, but more like a very advanced pilot. I think in reality there is no real production of blockchain in the enterprise section. We might be seeing a gradual adoption and implementation over the next 12 to 18 months,” he said.
The pharma industry has been slow on the blockchain uptake, but a few initiatives have already spun out. The MediLedger project is an example, which is working on building an open network for the pharma supply chain while complying with the DSCSA regulations.
Chronicled, the company which built MediLedger has mentioned that their platform solves issues regarding data privacy, wherein business rules can be enforced without the need to divulge sensitive business intelligence on the blockchain. Sharing data on an open platform has probably been the biggest caveat for companies from pursuing blockchain standards, but this development could help in creating a conducive environment for global pharma supply chains.
The drugs that are produced can be serialized for identification, with an interoperable system recording information at a unit-level over every transaction made, thus holding every stakeholder in the supply chain accountable for the product. Innovation in microelectronics has made sure that traceable chips can be stuck to product casings without impeding distribution.
IBM’s crypto anchor program has created a chip that is the size of a grain of salt and can be stuck to products. The chip can monitor, store, and analyze data as products move across the supply chain - all this at a presumed price tag of ten cents a piece. Placing this chip on pharma products can effectively hinder rogue elements from injecting counterfeit drugs into the supply chain.
The DSCSA’s deadline is half-way past, and it is time the pharma companies get their system in place, since it is not just the technology but also about getting all the stakeholders on board, making the process cumbersome and time-consuming.
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