Today, pharmaceutical supply chains fail to overcome the challenges of transparency, safety, and to fulfill the ethical requirements set up by the regulatory bodies. While proprietary IT systems are unable to overcome these challenges, Blockchain and IoT technologies are emerging as secure and efficient solutions.

The pharmaceutical research and development process is long and complicated. Regulations for pharmaceutical products are strict, and it takes years to deliver a standard medicine to the market.

Once the medicine is ready to be sold, it enters the pharmaceutical supply chain (PSC) to reach the intended customer. A pharmaceutical supply chain is composed of suppliers, manufacturers, distributors, wholesalers, retailers, doctors, and consumers.

Main objectives of the pharmaceutical supply chain management are:

  • Delivering original products to the customer
  • Reducing the impact of environmental conditions during transportation and storage of medicine
  • Providing visibility and control to the manufacturers and regulatory bodies
  • Ensuring trust between stakeholders
  • Safeguarding the valuable data regarding the product and supply chain operations.

Despite their vital importance, most of the modern PSC management systems are not fulfilling the intended objectives. IT systems often fail to provide the desired results due to their interoperability issues and security concerns. Therefore, governmental organizations responsible for administering the complex PSC, are calling for reliable technology solutions that deliver superior results to overcome the modern challenges.

Due to its inherent advantages, blockchain technology offers efficient means for the pharmaceutical supply chain management. When used in combination with IoT technology, blockchain can provide an interoperable, scalable, fast, and secure solution. Read on to find out the challenges faced by modern PSC management and how blockchain and IoT can help overcome them.

Challenges of Modern Pharmaceutical Supply Chain

A vector image illustrating pharmaceutical cargo shipment on different transport

Pharmaceutical supply chains are complex systems that involve many stakeholders. Major challenges of modern PSC are counterfeit medicine, trust & transparency, traceability, and information feedback.

The Problem of Counterfeit Medicine

A malfunctioning PSC management paves the way for the production, distribution, and consumption of counterfeit medicine.

World Health Organization (WHO) classifies medicine counterfeiting as a global problem. In their recent report, WHO estimates that 10% of medicine circulating in markets of developing countries are counterfeit. Contaminants and low-quality ingredients in fake medicine have serious health implications, including, but not limited to allergic reactions, adverse drug reactions, and possible death.

Counterfeit medicine presents an economic burden to governments and leads to a decrease in overall public confidence in original medicine.

Due to the inadequate management of PSC, it becomes very difficult to verify the origin of these counterfeit medicine and to determine how they enter the supply chain.

Lack of Trust and Transparency

Insufficient information about the journey of medicine from the manufacturer to the consumer leads to delays, unsuccessful deliveries, and deliveries of products of substandard quality.

A pharmaceutical supply chain consists of thousands of companies, carriers, and sales representatives and hundreds of thousands of distributors. Hence, the manufacturers and customers are unable to track medicine through such a vast and complex supply chain.

Manufacturers cannot guarantee the safe delivery of the medicine to the intended consumer, while consumers are unable to verify its origin. Global suppliers suffer the most for not being able to improve on the supply chain.

While there are several specialized solutions, current IT frameworks use proprietary features involving fax, email, and custom vendor relational databases that are prone to human errors and cyberattacks. A long history of technological and human errors has reduced the trust levels among stakeholders in the supply chain.

Lack of Traceability

Pharmaceutical companies are neither able to locate the individual medicine that enters the supply chain nor can they follow the movement history of the medicine.

Even though traceability is a mandatory requirement for compliance with governmental bodies in many countries,  its scope is limited in modern PSC. The main reason behind failing to meet the traceability requirements is the lack of interoperability in IT systems used in national supply chains. With international trade, this problem intensifies even further.

With the emergence of personalized medicine, supply chain management has to ensure the delivery of the right products to the right patients. Additionally, it is crucial to know the exact historical conditions of medicine and spot any inconsistencies in storage and during transportation.

Lack of Data Feedback

Modern PSC management systems fail to return the timely and critical information about the need, demand, and consumption patterns of medicine to the health system planners.

Inefficient management of PSC and lack of feedback information about the medicine demand can drive up costs of medication and cause medicine stock-outs. This scarcity, in return, opens space for the poor-quality products to fill.

The right information about movement and consumption of medicine is crucial for an accurate and precise forecast of dosage and market demand. Obtaining this information remains a challenge, partly due to patient privacy protection and partly due to the absence of adequate IT systems to collect and distribute data about PSC management.

Pharmaceutical Supply Chain Management Based on Blockchain and IoT

A person holds a tablet next to the distributed network of Blockchain and IoT icons

Blockchain, together with IoT technology, has the potential to overcome the challenges of supply chain management faced by pharmaceutics.

While blockchain provides an efficient, secure, and viable way to conduct business among the members of the supply chain, IoT technology can provide the data necessary for improvement and meeting objectives of supply chain management.

Blockchain is a distributed and decentralized record-keeping system that provides transparency, data security, and data integrity. Blockchain is a natural solution for pharmaceutical supply chain management because it enables multiple parties to record, validate, and protect the information without seeking central authority.

Blockchain handles information flow in a permanent, immutable, tamperproof, and transparent manner on a decentralized ledger. On a blockchain, the supply chain stakeholders can make smart decisions by accessing the desired transaction flows without compromising the security and privacy of the records.

Implementation

There are many different ways to implement blockchain for pharmaceutical supply chain management. Here we propose a simplified model that includes the best of blockchain and IoT technology and interconnects the technology with stakeholders at all levels of the supply chain. The aim is to show how this technology combination can help solve the PSC challenges and open a way for the creation of value-added services.

Blockchain records the data transactions into packages called blocks that are connected to create a chain of blocks, hence the name blockchain. Each blockchain unit contains the Block Header and the Block Data.

The Block Header contains the following metadata:

  • Version – software version
  • Timestamp – block creation time
  • Merkle root – the hash of all the transactions
  • Nonce – random number used for proof-of-work
  • Hash of the previous block
  • Hash of the current block.

Each block in the chain references the previous block in chronological order, making it almost impossible to change any data without updating all subsequent blocks in the chain. This inherent security feature of blockchain improves data integrity in next-generation PSC management.

Block Data represents all the data about transactions in the supply chain. In the proposed implementation, IoT edge devices collect, record, and aggregate data from sensors (temperature, humidity, motion, light), RFIDs, barcode readers, and GPS trackers. IoT devices are present at multiple locations in the supply chain, at supplier sites, manufacturing locations, and distributor networks, ensuring reliable and timely data collection about all transit activities of the medicine.

Data is the key element of the overall system implementation. All of the PSC stakeholders (suppliers, manufacturers, distributors, and retailers) must record data about the medicine journey towards the customer. Supply chain stakeholders participate in the blockchain through single or multiple blocks. Blockchain records details about every physical transaction as well.

The four types of blocks in PSC blockchain are supplier, manufacturer, distributor, and retailer blocks:

  • Supplier block contains the data on raw materials used in the medicine formulation. Each ingredient is uniquely identified and tagged. Blockchain records details about each transaction occurring on the supplier level.
  • Manufacturer block contains the data on medicine transformation from raw ingredients into a commercial product. Blockchain records data about manufacturing batch, active ingredients, dosage, shelf life, and transportation and storage conditions.
  • Distributor blocks contain data about the distribution paths of commercial medicine units.  Physical location, transportation, storage conditions, and distributor details are recorded in the blockchain.
  • Retailer blocks contain data about the transactions and storage conditions of the medicine at the point-of-sale level. These blocks also include consumer data.

Advantages of the Blockchain and IoT in Pharmaceutical Supply Chain

A scheme illustrates the distributed network and its advantages: transparency, traceability, privacy, security, data feedback

  • Trust and Transparency – All stakeholders, including the consumer, can track medicine throughout the supply chain. Parties can trust each other, as all the data about products and transactions is readily available on the blockchain. Manufacturers can ensure that the product is safely delivered to the intended consumer while the consumer can verify the legitimacy of the purchased product.
  • Traceability – Information about the medicine enters the blockchain at the supplier level. The product is tracked, traced, and authenticated at each stage of its journey. As the information about physical ownership changes in the real world, it simultaneously reflects in the blockchain as well. Manufacturers, health administrators, and various regulatory bodies can trace the medicine from manufacturer to wholesaler, from retailer to the consumer.
  • Visibility and Privacy – Visibility and privacy are mutually exclusive terms in most of the modern IT systems. However, blockchain can ensure the originality of the public data while keeping private information secret. In PSC, the participants can verify data about the medicine without compromising the secret information about ingredient composition and production methods. On the other hand, consumer’s public health data is accessible to participants of the network without compromising the patient’s privacy.
  • Security – Blockchain is one of the most secure ledger systems and is an immutable database in which stored information cannot be deleted or modified. Blockchain for PSC is a permission-based private blockchain that is even more secure than the public blockchain since only legitimate participants are permitted to store data to the blockchain.
  • Data Feedback and Statistics – As blockchain contains the transaction data, regulatory bodies can obtain statistics on the movement of medicine through the supply chain. These statistics can improve production scheduling, inventory optimization, early warning, and stock-out prevention. Blockchain can extend further to record data about the effect of the medicine on patients. Doctors can then use this data to adjust medicine dosing proactively.

Conclusion

Blockchain and IoT technologies have the power to transform the pharmaceutical supply chain. The inherent advantages of these technologies are overcoming pressing challenges in this industry. For instance, the immutability of the ownership data helps prevent counterfeit medicine from entering the legal supply chain.

Data transfer from supplier to manufacturer, manufacturer to distributor, distributor to retailer, and finally, from retailer to the consumer via blockchain is highly secured. The information inside the blocks cannot be altered post-factum, which eliminates the possibility of theft and fraud.

Traceability of the physical movement of medicine is significant for all products on the supply chain, particularly for personalized medicine. Traceability increases the trust as the IoT technology allows for tracking of medicine’s physical location and environmental conditions. Blockchain stores this data, and each supply chain stakeholder can verify the quality of the product at any given time.

Despite its many advantages, the implementation of blockchain for PSC management is not straightforward. We at PixelPlex specialize in developing public and private blockchains for supply chain management. With our proven track record of implementing similar solutions, we establish ourselves as a trusted partner for companies looking to streamline their processes.

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PixelPlex Custom Blockchain Development Company. 50+ blockchain projects delivered. 100+ experienced blockchain developers. Offices in New York & Europe.