Pharmaceutical Supply Chain with Blockchain: Drug Tracking, Tracing and Verification at the Last Mile

Under the Drug Supply Chain Security Act (DSCSA), the U.S. pharmaceutical supply chain will be brought together by an electronic, interoperable system to identify and trace prescription drugs as they're distributed throughout the country. This has radical implications for the entire industry, as regulators and stakeholders all race the clock to transform how drugs reach the patients who need them.

In today’s drug supply chain, DSCSA-compliant verification is rare; but once it becomes required, without a real-time system that allows for single scans and near-instant verification, pharmacies will bear a massive regulatory burden.

To address these needs, a peer-reviewed study was commissioned in partnership with UCLA Health to deploy and test a last-mile blockchain-driven solution for caregivers to use in the delivery of lifesaving medications. This study is among the first to reveal exactly how blockchain could save pharmacies billions of dollars in labor and safety stock costs, as well as massively enhance data security and help ensure that medications reach the patients who need them.

Taylor shares how blockchain and the U.S. Food and Drug Administration’s DSCSA-required 2D barcodes provide a solution for pharmaceutical supply that ensures data integrity, security and privacy, but also allows global visibility, interpretability and counterfeit interception.

Current State of Pharmaceutical Supply Chain

In today’s pharmaceutical supply chain, each transacting party typically manages its own database systems. These private databases allow each party to minimize external security threats while maximizing internal data consistency, since a global relational database would require each party to trust all other parties in the supply chain with the integrity and security of their data.

However, this also means that there is no shared global system of record representing the single source of truth describing the flow of items through the pharmaceutical supply chain. This leaves the supply chain as a whole more vulnerable to common attack vectors such as man-in-the-middle or spoofing. Each participant must be trusted to securely manage user privileges, authentication and auditing. Critically, each participant must also be trusted to not carry out malicious edits of data in their system of record to their own benefit.

Why Blockchain for Pharmaceutical Supply Chain?

One of the core requirements of the DSCSA is that prescription medications must have a unique product identifier, which takes the form of a 2D barcode. These federally mandated barcodes could be the foundational information building block for a common data model. Combined with blockchain, this could enable a system of record that would lessen the need to trade data integrity and privacy for global visibility and interpretability.

Blockchain is a tamper-proof, timestamped, near-real-time, auditable record of transactions, which makes it possible to enhance privacy and security across a range of collaborative applications. Unlike a centralized relational database, no single user or organization can access the full record of transactions. Unlike in a relational data model, blockchain communities converge on a single version of the truth through the application of validated transactions. Once transaction finality is achieved, that single best version is committed to the chain.

This consensus is particularly important in the pharmaceutical supply chain, as this single version of the truth cancels out double counting and reveals possible instances of counterfeiting, diversion, spoofing, or man-in-the-middle attacks. In this way, blockchain can be a potential “honest broker” that would allow hundreds of competing pharmaceutical and biotech enterprises and their vendors to work collaboratively and communicate with hundreds of wholesalers and tens of thousands of dispensers.

A Pilot Application for the Last Mile of the Supply Chain

The keystone of our medication delivery study was a blockchain-based mobile solution and notification system designed to track and trace changes in custody of the drug within a dispenser organization using barcodes mandated by the U.S. Food and Drug Administration (FDA). By combining this emerging technology with commercial off-the-shelf technology, it was possible to track and verify drugs in a busy hospital pharmacy.

From the receiving bay to patient administration, caregivers scanned unique 2D drug barcodes using a mobile app. During their journey, drugs passed a series of checks until they were administered to the patient. New barcodes were routed to a trading partner for verification, and the drug was held back from being administered. At any time, the prescriber could view the progress of the drug through the pharmacy into the clinic.

Once the trading partner verified the drug, the drug could be administered with confidence. In the event of a problem, such as a potential counterfeit, the drug would be stickered and physically quarantined. If human review were to reveal a high risk of illegitimacy, the blockchain application provides all the data needed to notify the FDA and trading partners.

Learnings and Outcomes

This pilot provided important insights into what a larger implementation of a DSCSA verification system would look like in the pharmaceutical supply chain. It also validated the use of commercial off-the-shelf technology in a pharmacy that relies heavily on legacy systems:

• Barcode scanning nearly 100% effective with commercial off-the-shelf technology
• Drugs can be tracked to the “refrigerator” level within a dispensing pharmacy
• Tracked expiration dates, verified barcodes, inspected for problems
• Stakeholders desire inventory notifications and view of supply chain

During the course of the study, we found that the rollout costs for DSCSA compliance could be massively reduced by a real-time blockchain system. In the relational world, we expect labor costs for dispensers to be approximately $365 million, as two scans would be required—one to start verification and one to confirm.

But what if only one scan is required? With a highly performant, fully automated end-to-end system involving real-time access to a persistent blockchain with up-to-date statuses, dispensers could verify drugs without the need to wait and rescan. Per the study, this would represent a $183 million annual savings to dispensers in the United States, as well as a major bulwark against bad or fraudulent transactions. Real-time verification would also minimize the amount of safety stock that dispensers need to retain in the event of potential quarantine events, freeing up $20 billion in inventory.

Where Do We Go From Here?

The big question for the future is whether policymakers and stakeholders will rally around a blockchain solution that includes manufacturers and wholesalers and federates their data into a single actual or virtual persistent data store.

Based on our findings, this would allow dispensers to fulfill their obligations under DSCSA with a single scan, without trading off the security or integrity of trading partner data. Ultimately, this system would better ensure that American patients receive the full suite of benefits a globally accessible, DSCSA-compliant supply chain could afford them.

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