Digital Transformation in Pharma: Let’s Chain Things Together

Louise Matias IV Velayo

November 10, 2022

Earlier this year, during spring, the aviate labs team went to Paris Blockchain Week. If you want to see how much fun we had, check out our Highlights From PBWS 2022 article. 

The event was great and truly a memorable experience, but if I had one critique, I would say that the event did not do justice to other applications of blockchain technology aside from Defi and crypto. However, I guess it was fitting for the atmosphere seeing as the venue was situated in the historical Paris stock exchange. 

While it has mainly been banks and fintech companies that have made the most noise around blockchain, the technology is accelerating the digital transformation in other industries as well. 

Blockchain offers decentralization, immutability and transparency.

Aviate labs is tracking sectors that are facing challenges, where blockchain and other web3 technologies might be part of the solution. This article will explore how blockchain is being used to address problems, deficiencies and limitations that are commonly faced in the pharmaceutical industry.

💊 The Pharma Problem

An average of 39% of patients place complete trust in pharmaceutical supply chain entities - compared to 44% of pharmaceutical industry decision-makers. - John Wirthlin, industry principal, Zebra Technologies.

A study by Zebra Technologies, released earlier this year, revealed the lack of trust patients have towards the medications they are receiving and the various entities in the supply chain who manufacture, distribute and prescribe the drugs. 

In fact, 43% of patients fear more illness and/or death could result from contaminated or tainted medications without supply chain improvements.

The results of this study highlight how crucial it is to deliver transparency about information patients want so that trust can be established in the industry. Consequently, decision-makers in the study indicate that enhancing track and trace solutions will be the key to supply chain integrity and meeting patient expectations around medication authenticity, availability and quality assurance. How can blockchain technology be used to address these issues? 

🔍 Improving Supply Chain Security and Transparency

In the paper “Governance on the Drug Supply Chain via Gcoin Blockchain”, Tseng et al. propose the Gcoin blockchain as the base of the data flow of drugs to create transparent drug transaction data.

Tseng et al. deconstruct the Gcoin blockchain to its different roles and apply it to the different stakeholders in the drug supply chain. For instance, government authorities assume the role of alliance members, drug manufacturers assume the role of coin issuers. The remaining large wholesalers, hospitals or other third parties take on the role of a full node and the pharmacies and consumers are the wallets. The explanation of the Gcoin blockchain is beyond the scope of this article, but more information can be found here.

System structure and roles of participants | Figure from Tseng et al., 2018

The transaction data between the different parties will typically include the digital signature of the drug seller and buyer as well as information about the drug, like its timestamp, location etc. and the number of drugs involved in the transaction. All of this data will then be hashed and recorded in the Gcoin blockchain. Essentially, the Gcoin blockchain is able to track all drugs in circulation in a similar fashion to how cryptocurrencies are tracked in other blockchains, like Bitcoin.

How this solution truly addresses the transparency limitation is that Tseng et al. suggest making all the drug supply chain data, which is protected by the Gcoin blockchain, open to all participants such that they can view relative drug transaction data. People, including government inspectors, would have access to track and trace drugs in the supply chain without having to be physically present in factories, warehouses or pharmacies.

Through the use of blockchain as a platform, the drug supply chain transaction data becomes immutable, transparent and consensus-driven.

🤝Improving Trust

What causes such a lack of trust in the pharmaceutical industry? One of the main causes is the fact that multiple parties are able to manipulate data within the system, which adds complexity to the data and can bring it to insecure states. In their paper, Ying et al. propose a blockchain-based prescription drug supply chain system to provide visibility to transactions while protecting patients’ privacy.

Overview of system architecture | Figure by Ying et al., 2019

In the figure above, you can see the proposed architecture of the solution. The four actors include the Health Department Center (HDC), Pharmacy Industry (PI), Pharmacy Agent (PA) and the end-users; patients, doctors and nurses. 

The HDC is responsible for registering, authenticating and verifying PAs. The PI is responsible for supplying and inspecting drugs in the system. They must also record the journey of the drugs from creation to delivery to the pharmacy. 

The PA is where end users interact with the system, but most importantly, it is the part of the system which builds trust between the parties. How is this done? The PA includes three modules that work together to achieve this.  1.) The access control module, which tailors data manipulation privileges to certain parties. 2.) The data management module, which is responsible for how to encrypt, store or manipulate data in the system. 3.) The security management module, which provides secure communication channels between users to the PA. This is achieved through the distribution and management of public and private keys.

Transaction flow | Figure by Ying et al., 2019

In the figure above, the different transaction flows are illustrated. The user can send a request message which is encrypted by their common session key to their PA. This request can be to view/upload prescriptions in the case of a doctor or nurse, to track the drug’s journey in the case of a patient, or to check the inventory of drugs in the pharmacy in the case of a PI. The PA will decrypt and verify the request. If this is successful, the transaction is broadcasted in the blockchain and validated by other PAs in the network.

The proposed solution by Ying et al. shows how blockchain can be used to manage a prescription drug supply chain such that all transactions are visible, each participating entity has specific access privileges, and patient data is kept private. 

📈 Improving Supply Chain Efficiency

So far, we have established how blockchains can improve transparency and build trust. As a result of these two qualities, supply chain efficiency can be improved as well. 

COVID-19 exposed the lackluster supply chain behind medical supplies and devices. Typically, production is centralized and thus, requires the transfer of products from manufacturing centers to geographically remote locations. Moreover, it becomes increasingly difficult to verify the authenticity of supplies produced in new emerging facilities and trace them as well.

In their paper, Alkhader et al. propose a blockchain-based solution for the decentralized digital manufacturing of medical devices and their supply, which addresses the issues mentioned above.

Traditional vs. decentralized digital manufacturing and supply systems | Figure by Alkhader et al., 2021

Two interesting components of this proposed solution that I would like to highlight are the virtual inventory and the distributed network of digital manufacturing workshops. The virtual inventory is a database which stores all the approved designs from the FDA. With a virtual inventory, hospitals and clinics can skip the design phase by reusing existing and approved designs and move directly to the manufacturing phase at a nearby workshop.

Enter the geographically distributed network of digital manufacturing workshops. These workshops would be equipped with digitally enabled machines like 3D printers, CNC machines, robots and of course, its own raw material stock. Manufacturing is now closer to the end-user, which significantly reduces lead times.

The proposed model is enabled through the use of two Ethereum smart contracts. The first smart contract governs both the design (in case the design is not present in the virtual inventory) and manufacturing processes. The second smart contract is responsible for correctly registering the different components of the system together with their approval certificates and confirming the upload of newly approved designs to the virtual inventory.

Through these two smart contracts, the proposed solution is able to decentralize manufacturing, as well as reliable and traceable supply chain management. This makes it more flexible, efficient and reliable than traditional manufacturing systems.

📕 Conclusion

Blockchain is an emerging technology that is expected to open new possibilities, enable new models and advance the digital transformation in multiple industries. This article highlighted three research articles that propose blockchain-based solutions that address the pharma problem; transparency. 

The research mentioned above is only the tip of the iceberg. And, research into how blockchains can be used in various industries is growing rapidly. If you would like to learn more about the research at aviate labs, have a look at the following articles:

I hope this article has excited you about the other applications of blockchain. Now here is a question for you: how can blockchain be used in your industry? 

Feel free to contact us to share your ideas and start a conversation 😉.