The pharmaceutical supply chain is a complex web of interactions that take place across multiple groups and institutions. Patients, doctors, healthcare professionals, insurance companies, and medicine manufacturers have to work with each other to keep the ecosystem alive.
The industry faces challenges from all sides. Every day it has to deal with the complexity of production, quality assurance, distribution and tracking of products. The pharmaceutical ecosystem is vast and complex. So these processes can become bottlenecks to collaboration. The drug companies also have to innovate for challenges like aging population and new diseases. They have to work in a highly competitive market where the landscape is changing fast and challenging their prominence. The old centralized models are just not enough to address today’s issues.
For the immediate future, the pharmaceutical companies have three important challenges they need to address:
For a long time, the pharmaceutical industry has been trying to deal with the counterfeit issue. Just like pirated materials plague the entertainment industry, fake drugs plague the pharmaceutical industry. However, fake drugs have more dire consequences. The adverse effects extend to societies and economies all around the world.
Over the years, counterfeiters have become sophisticated. They have multiple ways of manufacturing fake drugs and medical products. Some inject themselves into the pharmaceutical supply chain and supply inauthentic raw materials. Others try to manufacture the drugs themselves. They can end up supplying the market with unregulated products. Some criminal organizations and groups work exclusively with real medicine but they concentrate on counterfeiting labels to sell generic drugs under brand names.
The pharmaceutical industry has to adhere to strict rules and regulations. Following these rules adds to the cost of manufacturing quality products that are safe to use. However, counterfeiters are able to circumvent the rules and produce the drugs without any safety measures in place. They make the drugs for a fraction of the cost using resources from developing countries, relabel the drugs as branded products and sell them at premium prices.
The fake drug epidemic has consequences. It is a threat to public health. Unregulated medicine can be ineffective in treating diseases and cause harm. It can even lead to death. Also, it hurts the revenues of real drug manufacturers and impedes future innovation. Drug manufacturers invest and lose large amounts of money in research and development because they know they can make up the losses with their successful products. But if they are unable to recuperate their costs due to lost revenue, it can put them out of business.
According to PricewaterhouseCoopers (PwC) Strategy&, counterfeit drugs is a $163 billion to $217 billion business. The worldwide pharmaceutical market is about to become $1.3 trillion by 2020. So the counterfeit drug problem is quite significant in terms of market share.
Distribution of drugs is a challenge for the pharmaceutical industry. They generally rely on logistics companies to help them gain efficiency. But storage and transportation of drugs are not trivial. Anyone involved in the process has to adhere to guidelines to maintain correct temperature, humidity, air pressure and other requirements. Temperature sensitive products like vaccines need to be properly monitored throughout the supply chain. Temperature excursion or deviation from the required range can make the vaccines ineffective in the field.
Monitoring pharmaceutical products have improved with technological advances. Today drugs are monitored throughout the supply chain using smart IoT devices. But Temperature excursions are still affecting up to 5% of all medical transportation.
One of the problems with temperature excursion is that there are black boxes in the supply chain that cannot be properly monitored. The unpredictable nature of transportation can lead to delays and increase the probability of product deterioration. However, if there is a problem, it can easily go unreported. The pharmaceutical supply chain requires better ways to add accountability to the transportation process. It needs better ways to monitor the products.
Traceability and Recalls
The pharmaceutical supply chain is a complex web of interconnected nodes flowing like rivers all across the landscape. Every product moves through multiple transactions to reach the final customer. If there is a problem with a particular product or batch, it is extremely difficult to recall it.
From 2017, all US prescription drug packages are required to have a unique product identifier that identifies the drug’s national drug code (NDC), serial number, lot number, and expiration date. The system will take time to become effective. In the meantime, the drug companies have to still deal with the complexity of the number of transactions, technology incompatibility, and security concerns.
In order to increase traceability and improve recall success, drug companies need a more comprehensive and cohesive solution.
How Blockchain Can Help Resolve the Issues
The blockchain is a distributed digital ledger technology. Pharmaceutical companies can use blockchains to record outputs from IoT and smart devices. It will help them keep track of temperature, humidity, and pressure through every transaction. They can couple the compliance monitoring information with product and shipping details to create an end-to-end database.
A key property of blockchain is that any recorded information is immutable. So drug companies will be able to fight counterfeits more effectively. In traditional record keeping, there is no centralized database. The manufacturer, the logistics company, the stores and the pharmacies each maintain their own information. There is no way to validate the authenticity of a drug across the whole supply chain. Because blockchain is distributed and can serve as an open ledger, it can help everyone keep track of a product through the whole life-cycle. If there is any tampering in the supply chain, consumers can easily verify using the blockchain records.
The same principles apply to compliance. Temperature, humidity and other factors can be recorded using smart devices throughout the life-cycle. Suppose, there is a temperature excursion during a transportation. With blockchain, the consumer can easily see at what point the event occurred. Similarly, traceability and recall become trivial issues. Every move of the product is recorded. So identifying a batch that needs to be recalled becomes a lot easier.
Blockchain can help the pharmaceutical industry better manage its transactions. Using the distributed digital ledger, the industry can improve their record keeping capabilities across the whole supply chain. Better records will enable them to address the issues of counterfeit drugs, compliance, and traceability more effectively.