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Can Blockchain Technology put an end to Counterfeit Drugs?

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Roughly 50% of drugs consumed in developing nations are counterfeit

The global pharmaceutical industry is faced with a growing counterfeit drugs market, a serious concern that is a strong deterrent to generic and innovative industries. Most importantly, it puts millions of lives at stake. According to the World Health Organization, roughly 50% of drugs consumed in developing nations are counterfeit. Among these, most are antibiotics and antimalarials. These drugs can harm  patients and fail to treat the diseases they are treated for. Furthermore, they can hurt the reputation of the original product.

How Grave is The Problem

A report from the US International Trade Administration on The Pharmaceutical Market states that the size of the global counterfeit drug market ranges between $75 to $200 billion and comprises of 50% of all drugs sold in low-income nations. Such illegal operations have caused over 100,000 deaths across the globe, with the expenses in lost profits rendered by pharmaceutical companies touching $18 billion annually. The report suggests various ways to counteract the increase in fake drugs in the market, which includes the use of Radio Frequency Identification Devices (RFID) and implementation of powerful state licensure supervision of suppliers to precisely segregate real drugs.

The counterfeiting trade has become more profitable than the narcotics business.  And experts state that finding a permanent solution to it or stemming the tide entails active participation of both the industry and government.

Some of the top counterfeit drug types are as follows:

  • Cytostatic
  • Central nervous system
  • Cardiovascular
  • Anti-infectives
  • Alimentary

One prominent stakeholder that’s fighting fake drugs is the Pharmaceutical Security Institute. Thomas Kubic, PSI chief executive, states that there were 2,003 incidents involving 808 various drug products that were counterfeited, stolen or illegally diverted in 2016.

Counterfeits are also on the rise in developed nations mainly because of the prevalence of online pharmacies. The FDA routinely purchases drugs on the internet and finds that more than 50% are fake. According to the National Crime Prevention Council, the traffic in counterfeit drugs poses a massive threat to all Americans and people in other countries.

INTERPOL conducts yearly operations to crackdown on unauthorized sale of medicines, medical equipment and devices. During its operation in 2016, it seized over $53 million of potentially fatal medicines and blocked 4,932 websites selling illegal drugs. INTERPOL had also seized harmful drugs worldwide worth $6.3 million in 2011. While these facts highlight the success of authorities, it also shows the huge growth of counterfeit pharmaceuticals over the years.

Can Blockchain Be The Solution?

Blockchain technology is popularly known as email for money; however, it has the potential to be so much more. To date, blockchain applications mainly focus on the financial world but this is just the tip of the iceberg. There are many other industries that are putting blockchain technology to good use. And among them is the pharmaceutical industry.

Blockchain technology stops the entry of fake drugs into the supply chain, mainly the part between the manufacturer and consumer. The technology uses a highly scalable transparent protocol in order to assign every manufactured product an asset. These assets are then added to the blockchain and assigned a unique identification number, commonly referred to as hash.

The technology then verifies the hashes to find out whether or not the product in question is counterfeit or legitimate. Whether it’s a tablet, a handbag or a medicine, every product in the world can be verified using this technology. An interesting part of this technology is that anyone can get access to the blockchain and conduct his own product verifications. On top of that, it avoids malicious groups or individuals from creating duplicate items.

Blockchain creates a visible supply chain where all entities like suppliers, vendors, distributors and partners are brought together in a close-knit and comprehensive manner. It keeps record of all transactions and makes every necessary detail like location, quality, price and other data visible to all concerned parties while lessening the tampering of records. The supply chain is made transparent, secure, decentralized and verifiable besides plugging loopholes in the supply of authentic medicines and trimming costs involved in detecting faulty areas.

Blockchain is a wonderful platform to increase transparency and trust, with customers being able to keep a track on pharmaceutical products throughout the supply chain. Only trusted parties are allowed to write on the blockchain. Manufacturers and consumers can scan the bar code and view the history. The platform also notifies whenever a counterfeit drug is found.

One of the major issues to be taken into consideration is the change of ownership of a particular drug. Fear not as the technology provides absolute verification on the ownership

In short, blockchain tracks pharmaceuticals throughout the supply chain and ensure that consumers receive authentic products.

Startups Engaging in Blockchain Technology in The Pharmaceutical Supply Chain

Companies like LinkLab, iSolve, LifeCrypter and BlockVerify and a few more are actively working to find blockchain solutions that bring transparency, traceability and integrity to the global drug supply chain.

In November 2016, Chronicled launched CryptoSeal, representing a major step forward in making the supply chain more genuine. Each CryptoSeal contain a Near Field Communication (NFC) chip installed with a unique identity number, which is registered and verified on a blockchain. Besides a product’s identity, the CryptoSeal also records the identity of its registrant and packaging, also known as asset metadata on to the blockchain.

London-based anti-counterfeit solution provider, BlockVerify, has started focusing their efforts on the pharmaceutical industry. They plan to give every drug its own permanent record on the blockchain, which will make manipulation of private keys an impossible task. The system will also be able to identify stolen drugs, diverted goods, and fraudulent transactions.

Final Thoughts

By implementing blockchain technology, pharmaceutical supply chain stakeholders can significantly improve their efficiency while distributing verifiable medications all across the globe. Patients also stand to gain by independently verifying the products.

At the end of the day, a transparent and secure supply chain is important for companies spending billions of dollars on R&D to come up with innovative formulas and also for millions of patients who rely on life-saving drugs.

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