Disrupting Pharmaceutical Supply Chain

A case of Blockchain powered Track&Trace

We ignore at our own peril!

Pharmaceutical drugs remain one of the most thriving counterfeit markets in the world today. This has far reaching implications on the pharma industry as well as the wider society. There are no exact numbers on the scale of counterfeiting or its impact, but a recent PwC Strategy study provides a disturbing perspective on both the scale and far reaching implications of pharma counterfeiting (Source: Fighting Counterfeit Pharmaceuticals, 2017):

  1.  1% – 30% of all drugs sold in the market are counterfeit – lower % in developed world and higher in eveloping world.
  2.  At $ 150 – 200 B, counterfeit drugs are the largest sector within fraudulent goods.
  3.  Nearly 1 m people (WHO estimate) die every year from toxic counterfeit pharmaceuticals. Millions more live with life changing disabilities.

With the advent of e-commerce, the menace of counterfeit drugs is growing even further. WHO reports that nearly 50% of all drugs sold online are counterfeit.

Apart of adversely affecting millions of people around the globe, counterfeit drugs constitute a major financial and reputation risk for pharmaceutical industry and its players. Apart from the billions of dollars lost in sales to counterfeit drugs, resultant regulatory fines and reputation impact are potentially fatal risks for manufacturers and distributors alike. For example, as per a conservative estimate, 59 million units of returned drug products worth $13 billion annually at risk (Source: LSPedia, 2019). Further, in 2017, McKesson agreed to pay a $150 million settlement for alleged shipment violations (Source: justice, 2017).

Pharma Industry needs its own Greta Thunberg!

In August 2018, a 15-year old school girl in Sweden started missing her school to protest against world leaders for not doing enough to protect the environment. What started as a single child missing school to protest in front of Swedish parliament, has today evolved into a mass movement involving millions of young people from United States to Australia. The deafening silence following Greta’s “How Dare You!” refrain at the United Nations perhaps sums up the dilemma that the world faces – the harmful effects of a deteriorating environment are well known, and yet the economic benefits of not doing enough far outweigh an all-out war on human pollution!

If one extends the above analogy to the pharma industry, the similarities are glaringly stark. The impact of pharmaceutical counterfeiting on humanity at large is quite well known. If all stakeholders acted as one, this menace can be arrested. Individual countries and regulatory bodies are doing their bit and tightening controls. The cost of not doing enough is far less than the cost of doing something! Consider this – the measures in place to prevent the counterfeiting of an American dollar note, a piece of paper with no inherent value of its own, far exceed the measures in place to prevent a counterfeit drug that carries the burden of saving a life!

Solution lies in the Problem!

Gathering thousands of protesters to try and force pharmaceutical industry to act on counterfeiting is one possible approach to a solution. Another, perhaps a more viable approach, to solving the problem is to apply advances in technology in pharmaceutical context to help various stakeholders solve the problem. Such an approach could have benefits for all stakeholders involved – modern technology has a unique ability to solve multiple problems with a single stroke application – help pharma eco-system players adhere to regulatory compliance frameworks, reduce costs of recall, get visibility into their supply chain, plan production and supply based on reliable data from the field and mitigate reputational risks. Harnessing today’s data technology to solve pharma supply chain problems with its regulatory conformance and economic benefits is possibly a win-win solution that the industry is craving for.

Blockchain powered Track&Trace to the rescue!

Pharmaceutical supply chain remains the weakest link in fighting the menace of counterfeiting. While some efforts have been made by the industry and regulators including mass serialization and track and trace requirements, these have failed to arrest the growth in counterfeiting.

Now, with new evolutions to Blockchain technology (Enterprise Blockchain), the answer to many of the supply chain tracking problems seems to be within sight. 

In its simplest form Blockchain is a distributed ledger technology that enables validation, clearance settlement, tracking and recording of ownership of assets as they are traded without the need of centralized authority (Source: Finance, 2016). First developed by group of unknown developers as a technology to promote digital currency (Bitcoin), Blockchain has today generated interests in a minefield of applications. Some of the distinguishing features of Blockchain technology are that the transactions happening using Blockchain are incorruptible, immutable, durable and robust. This makes transactions transparent, secure and automated. Enterprise Blockchain takes the technology further enabling organizations/ consortiums develop their own closed, private network while preserving the core elements of immutability and consensus driven data management.

In pharmaceutical supply chain context, Enterprise Blockchain can be applied to Track and Trace solutions, driving following outcomes:

Regulation adherence (e.g. DSCSA 2023, 2019) – any manufacturer/ distributor working in the US will need to provide fast, prompt and complete track and trace history of any consignment/ product sold in the US if asked by the regulator.

Cost Savings – Enterprise Blockchain enabled visibility reduces product recalls and manufacturing process stoppage time.

Journey to the New – Enterprise Blockchain is a next generation digital disrupter. This fits Digital Transformation plans of any pharmaceutical manufacturer to get full visibility into their supply chain. This has enormous revenue and cost benefits ranging from managing supply, reducing waste and accurate forecasting-based production.

References

  • Fighting Counterfeit Pharmaceuticals. [2017]. Fighting counterfeit pharmaceuticals: New defenses for an underestimated and growing menace. [online] Available at: https://www.strategyand.pwc.com/gx/en/insights/counterfeit-pharmaceuticals.html[Accessed 7th Oct. 2019]
  • [2019]. McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical Drugs. [online] Available at: https://www.just [7th Oct. 2019]
  • [2019]. FDA’s Already Enforcing DSCSA Rules – And It’s Going To Be Costly. [online] Available at: https://lspedia.com/20 [7th Oct. 2019]

Finance, i. (2016). Blockchain Basics: A Primer. [online] Quotidien Corporate & Crypto Finance, Blockchain Daily News. Available at: https://www.finyear.com/Blockchain-Basics-A-Primer_a36196.html [Accessed 26 Dec. 2018].

About the Author: Anubha Dixit is the founder and CEO of Tongadive. Prior to Tongadive, Anubha has 21 years of experience in data driven software development, working in global multinationals and niche data software firms. Anubha has an Engineering degree in Computer Science, a Masters in Communication Technology and a Leadership Diploma in Strategy and Innovation from University of Oxford. She is a founding trustee of Pumpkin Seeds, a charity working to provide opportunities to the girl child through high quality education.

 

 

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