Pharma & Biopharma Use Cases for Blockchain Technology

Our previous blockchain posts covered the impacts that blockchain technology can have across various industry-wide areas. We attempted to describe some of the changes that could arise with the implementation of such a technology. In this post, we aim to deep dive into some of the issues that the pharmaceutical-, biotechnology-, and medical devices companies (which we will refer to as pharma or pharmaceutical companies going onwards) face by explaining the business problem. Furthermore, we will describe the challenges around the current ways of addressing these problems and, finally, a proposal on how this could be overcome with the use of blockchain technology to aid in the resolution of these business issues.

Large pharmaceutical companies create and sell their products worldwide as the demand for their products is also on a global range. When a particular medication is identified to have generated an out-of-the-ordinary secondary effect, or there is a risk of having any consumer safety concerns, a specific manufacturing batch of the product must be recalled. Many other reasons can lead to a product recall, such as contamination identified in the production process, mislabeled product or package, a product defect, or an incorrect medication potency. 

A product recall is a vast administrative task that starts with a clear understanding of the national and international regulations, determining what the communication strategy is, until when the recall needs to occur, and what reporting requirements need to be provided to local government agencies to name just a few. These activities imply retrieving information on batch genealogy and physical distribution along the supply chain. The data is spread across various sources by several organizations across different time zones. However, it is critical and not always 100% reliable and accurate. The recall process requires pulling back the products to their sources like a reverse logistics operation. Knowing the variety of locations the products of that batch were distributed to, can be extremely difficult to obtain. This information is spread across numerous organizations that work in the supply chain, from the manufacturer to the distributor to the pharmacies or physicians or stores or hospitals those products went to.

Let's go through a simple example to showcase how complex this can get.

Let's say a fictitious pharmaceutical company called QWERTY produces a batch ABC101 of a product in manufacturing site 1 in country A and ships this product to a distribution center in country B. The distribution center then performs the receipt of the goods of this batch but does not record the 01 suffix of the batch code given by the distributor's systems, which are not the same as those of the manufacturer.

Part of the distributor's activities is to repackage the goods into locally labeled packages and sizes that match country B's consumers' product demands. This new repackaged batch is renamed ABC1A. It is no longer the same as ABC1 and is then distributed to pharmacies or pharmacy chains, retail stores, and other local distribution centers within country B. There is nothing too complex or out of the ordinary in this example, so let's look at what happens when a product needs to be recalled.

In the event of a product recall in country B, the pharmaceutical company, which, let's assume also owns the license to operate in country B, needs to be familiar with this country's recall process and procedure, which can be different across different geographies: Differences in the product recall time window, type of communication required to government agencies, consumers, and distributors. After understanding what the product recall requirements are, they now need to collect all the necessary information. 

Here we see that information is scattered across different entities.

There is very limited harmonization of data along the supply chain, as with the naming of the batch, which goes from being called ABC101 to ABC1 to ABC1A – all recorded in different systems.

The main issues with the current working methods result from the lack of an automated or centralized repository of consolidated information or reports that provide the bottom-up and top-down batch tracing genealogy. There is no cross-system overview in complex systems architecture and no way to permanently monitor batch tracing, mainly across different time zones and continents. In the event of a recall, there are many communications between these entities to get this mapping between different nomenclatures correct.

How blockchain can address this issue

The blockchain can support this process by collecting the information trail of a batch into a ledger that can be shared with a group of users in a network in real-time, accessible 24/7/365, so long as there are validators in the network to validate the different transactions being submitted to the network. Therefore, the blockchain can serve as an automated repository of information constantly monitored through a dedicated explorer application to retrieve the information we wish to see.

A network of validators would be established to submit and validate transactions to the blockchain. These validators can be any organization with a role to play within the actual supply chain processes and are interested in documenting the information through this tool. Whenever there is any record generated related to the batch of products, this record or transaction will be submitted to the blockchain for the different validators to ensure that it is a valid transaction for this network. Upon validation of the transaction, this would then be appended to the blockchain and available for all entities with access to the blockchain to see or verify.

A blockchain solution is not the answer to all aspects of this business problem since processes would need to be in place to work with a different repository of information. Nevertheless, the speed with which consolidated information about a batch of products can be retrieved can significantly reduce product recalls' damage to people and organizations. Also, the accuracy of the provided information can be determined with a much higher degree of precision than is the case nowadays.

Another example relates to product samples sold and shipped to medical representatives internal or external to the pharmaceutical company. When performing their consultations with physicians, these medical representatives distribute these samples to share them with their patients to try and experiment. The cascading of these product samples without any record of the doctors receiving the product and to whom those samples were supplied breaks the concept of batch genealogy which is fundamental to ensure full traceability and monitoring of the product.

There is a significant business opportunity in implementing a blockchain-based solution to improve the track and trace key to product recalls. There is an overall improvement in batch monitoring and traceability: Not only in the direct cost savings coming from all the administrative work required when a product recall happens but also in the increased speed of response. This allows for improved mitigation of any reputational damage that could occur with a slower recall process.

Serialization or the process of sequencing of vials or blisters of products is another area where pharmaceutical companies have invested significant amounts in minimizing product counterfeiting.

Data on a record is dependent on the information of the previous vial serial number. This dependency on the last record determines the following serial number of a product batch; it is similar to the blockchain where transactions are tagged together. Yet, a degree of randomness is introduced, so the sequence cannot be forecast through a rule. This helps minimize the possibility of presenting a different vial of product into the product labeling line or during product distribution, e.g., a counterfeit. The verification process of determining the integrity of the information provided by the product can be easily obtained and help identify the fake, for example, through scanning a QR code on the vial. An application that scans the vial's code is connected to the blockchain data. Using the person who submitted the transaction, and their digital signature, can help ensure product authenticity and identify root causes much easier.

The previous examples are particular cases of supply chain management challenges that pharmaceutical companies need to address regularly. We will discuss a couple of ways to see what a blockchain-based approach could look like to cover this topic and how it could be set up.

We see two possible ways to enable an information system of this nature through a blockchain.

Let's start with the case in which a consortium of companies collaborates and develops a platform that they all use to document transaction events on a blockchain. In this situation, we assume that a group of companies such as suppliers, manufacturers, distributors, and retail organizations of a specific pharmaceutical product have agreed to collaborate on a private blockchain platform and act as transaction validators of transactions posted by other entities of the consortium. So, a blockchain is defined with the consensus rules established, and each party posts transactions to the ledger.

These transactions get validated by the other nodes in the network once the consensus rules have been fulfilled. The succession of transactions and the timestamped data logging create the data stored on the blockchain for future retrieval. Access to this blockchain can be restricted to the consortium members or open depending on the situation; there are multiple ways to keep the data in each record privately accessible through cryptography.
The retrieval of the data in the blockchain requires an explorer application where a member of the consortium can easily search for records on the blockchain that meet a specific search criterion. This application is a search engine dedicated to the blockchain that enables the quick retrieval of all the data related to a particular parameter. This parameter could be a product number, batch reference, manufacturing location, or any metadata that gets stored on the blockchain transaction and can be easily redeemed through a simple search query in the explorer. The output of this explorer for a batch number query could look like the complete list of blockchain addresses that the original batch of product got distributed to, and where each of these blockchain addresses could refer to any location reference as broad as either a manufacturing location or a warehouse to as minute as a storage bin or inventory shelf location; all of which are timestamped and digitally signed.
Going back to our product recall problem, we can see that the information contained in such blockchain systems can yield complete, accurate, and timely records where there is permanent monitoring and tracing of batch data since the blockchain is accessible 24/7/365. By having a dedicated search application, there is a high degree of automation in the consolidation of information, drastically reducing the need for email communication and, consequently, any miscommunications between parties.

Another way this blockchain platform can be set up is through the use of a public blockchain platform. The difference between the private and public blockchain is that the private blockchain is restricted to the group of companies that form the consortium. This consortium building may be difficult to obtain as it is uncommon for companies to group around a specific product, as we described above. Suppliers may supply products to pharma companies or chemical companies and may not want to become validators of 'n' different private blockchains. Public blockchains are developed for general use where some of these platforms can store metadata within the transaction.
A public blockchain has a group of validators distributed within the general public whose only mission is to post and validate transactions to the network. The advantage of using a public network relates to the larger user/developer of the platform, which can provide features to the network users much quicker and faster, taking full advantage of the open-source nature of this industry. Users can immediately take advantage of these new features instead of developing them themselves or within a consortium. The dichotomy between private and public blockchains appears similar to the past discussions around local intranets and the internet. Intranets are private domains organizations created to share and store information across an organization. There are benefits of both, yet the network effects of the public internet were very significant and, for the same reason, may balance the pendulum towards these publicly oriented solutions in the blockchain space.

Lastly, we see payment networks being a cross-industry development and building on top of that layer. Trade finance can highly benefit from introducing blockchains as a foundational layer, particularly for the pharmaceutical organization with a consumer healthcare division. There, smart contracts can be taken advantage of and used to substitute the matrix of contractual arrangements that define the trade finance relations of these companies.

Imagine a scenario where, instead of developing a variety of separate physical contracts to establish the trading terms between different organizations, arrangements could be created through software and assured execution from a smart contracts platform consolidated onto a blockchain network.
In a trusted automated environment with full assurance of contract execution, the automation of payments and expense claims has considerable benefits in the trade finance space, where administration costs can be huge only to manage the information surrounding these events.

This post is essentially an exploration adventure into the future of blockchain technology and its subsequent layers in a particular industry of reference to us here at Fusion Consulting. We see substantial potential for the pharmaceutical, biopharma, and medical devices industry to take advantage of an upcoming technology that will have an unimagined impact on our daily lives in the years to come. Not only will this industry impact our day-to-day lives as individuals, but we see there could also be impacts on the way corporations are set up.

For more on this topic, don't miss our following episode in this blockchain series, "Will blockchain trigger the end of the corporation?" where we assess how blockchain technology and its surrounding industry will change the corporation.

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