Conference Finds That Blockchain Is Still Years Away From Use in Pharma

Jul 13, 2017

Digital ledger technology (DLT), or “blockchain,” the digital ledger system behind the digital currency, bitcoin, is being applied in a number of industries, including finance and insurance, to ensure security and establish provenance.  Advocates believe that it could solve a number of pharma’s supply chain problems, as well as broader healthcare issues (e.g. secure transmission of sensitive patient data and clinical information).

Not only could the use of blockchain establish that a given pharmaceutical is authentic, it could provide assurance that the patient whose physician prescribed that medicine, actually took the prescribed dose. This would be important in assessing patient outcomes, which, in turn, would help determine physician reimbursement, and, in value-based contracts, pharmaceutical company payments.

As the technology becomes better known in pharma circles, a number of potential applications for it are being explored, as discussed here.  A June survey of 120 life sciences executives found that 83% expect the technology to be adopted within five years. 

On June 6, 2017 at Johns Hopkins University in Maryland, a conference focused exclusively on blockchain and its potential in pharma and healthcare.  Sponsored by the Institute of Electrical and Electronics Engineers (IEEE), the event featured speakers from one biopharmaceutical company, industry coalitions, academia, vendors and consultants.  This serves as a brief summary of the program.

Amgen’s senior manager of supply chain, Ashish Srivastava and David Mahlum, director of new innovation and technology at the company opened the program with the question:  Is blockchain a pipe dream or the right fit for pharm?  The consensus is that the technology is definitely promising, but likely a decade away from taking any real shape in pharma and life sciences.

They pointed out the technology’s ability to build trust, based on the fact that it has been designed to prevent hacking, and the fact that it allows transactions to be audited and traced.  They also noted its potential to improve collaboration with business partners and suppliers, and to increase inventory visibility. They see it as being a “foundational technology,” but, like other such technologies (notably, the Internet, which took 20 years to become the pervasive medium it is today), it will take time to be established and is still in the very early stages.  Using the Gartner Hype Cycle, they see blockchain in pharma getting closer to the peak of “inflated expectations,” and, thus, is probably five to ten years away from becoming a force to reckon with.  As they noted, comparing its evolution with that of the Internet, “the TCP/IP moment for blockchain has not arrived yet.”

Ken Cottrill, cofounder of Chain Business Insights, discussed “smart contracts,” invented in the 1990s, which feature software on a blockchain that defines agreement terms and execution clearly and could lower costs, help protect both parties against fraud, and offer enhanced connectivity to the Internet of Things.

IBM and a partner in China have already launched a blockchain-based platform involving hospitals and pharmaceutical retainers, to provide financial services for pharmaceutical procurement. This solution was designed to speed up payments. Companies in China can otherwise wait for payment after shipping their product, or buyers can be prevented from acquiring products due to credit issues.  

At the conference, Cottrill discussed a case study in which two banks and a shipper handled cotton shipments to China, in which blockchain and smart contracts were used. The setup involved blockchain, smart contracts, and an Internet of Things sensor, and validated the concept for other transactions, he said.

Other speakers discussed specific applications being discussed in healthcare, and in pharma supply chain management, as shown here.

Speakers suggested that industry professionals learn more about the technology, and connect with blockchain industry focus groups to learn more about whether, or how, it might benefit day to day operations.  The Center for Supply Chain Studies in Chicago is currently doing research in this area, focusing on how blockchain might fit in with pharmaceutical supply chain management and with traceability and compliance with the US Drug Supply Chain Security Act. 

 

 

 

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