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The COVID-19 pandemic has exposed issues in the pharmaceutical supply chain, including shortages, price gouging, and production and distribution disruptions. This has left the industry with some action items such as: streamlining regulatory procedures, improving supply chain visibility, and increasing security. Due November 2023, the Drug Supply Chain Security Act (DSCSA) in the US aims to increase transparency and traceability in the supply chain to combat falsified drugs and improve recall processes. Blockchain technology has the potential to not only help companies reach DSCSA compliance but also address the post-covid action items.
The COVID-19 pandemic has exposed numerous issues with the pharmaceutical supply chain, particularly the global distribution of essential medical supplies and equipment. The sudden and widespread demand strained the supply chain, leading to shortages, price gouging, and other challenges. In addition, the closure of borders and the disruption of international trade led to disruptions in the production and distribution of medications.
Overall, the pandemic highlighted the need for more streamlined regulatory procedures and better visibility and security in the pharmaceutical supply chain.
There is room for improvement when it comes to simplifying and streamlining regulatory procedures in the pharmaceutical industry. Doing so can reduce timelines and regulatory burdens. While such procedures are necessary to ensure the safety and quality of medications, they can also add significant administrative costs and delays to the supply chain. For example, pharmaceutical companies must comply with a list of complex regulations, including laws governing the production, testing, labeling, and distribution of medications. This can require a significant amount of paperwork, among other administrative tasks, which only increases costs and slows down the movement of products through the supply chain. Overall, the inefficiency and administrative burden of regulatory procedures can make it difficult for pharmaceutical companies to maintain a reliable and efficient supply chain. This bottleneck is only exacerbated during crisis times like the pandemic.
Another challenge that pharmaceutical companies face in meeting supply and demand schedules is a lack of visibility of the supply chain. This lack of visibility can make it difficult for pharmaceutical companies to accurately forecast demand, plan production, and manage their inventory levels. Consequently, they may be unable to produce medications in a timely and cost-effective manner. Overall, this leads to increased inefficiencies which can further disrupt the supply chain.
Poor visibility will naturally lead to poor security as you cannot protect what you cannot track. This is especially true along the drug supply chain as each step in the supply chain presents an opportunity for tampering.
“ The most counterfeited products related to COVID-19 have been antiviral medications, antimalarial chloroquine, vitamin C, painkillers, antibiotics, and herbal medicines and medical supplies like face masks, coronavirus testing kits, gloves, ventilators, disinfectants, gels, soaps and cleaning wipes. Moreover, fake coronavirus vaccines were reported to be sold in certain parts of the world. ” - Ziavrou et al. (2022)
Because of this, countries are working towards improving the security of the pharmaceutical supply chain through methods such as product serialization and end-to-end verification systems for drugs. The Drug Supply Chain Security Act (DSCSA) sets a great example in the US.
The DSCSA was signed into law in 2013. These regulations aim to increase transparency in the supply chain, which can help combat falsified drugs and medicines, as well as reduce the complexity of recalls. Full compliance with the DSCSA is expected by November 27, 2023.
In short, the DSCSA describes the requirements for enhancing drug distribution security. More specifically, it includes the steps to achieve interoperable, electronic tracing of products at the package level.
Through this act, the Food and Drug Authority (FDA) intends to facilitate the creation of a uniform methodology for product tracing while ensuring the protection of confidential commercial information.
Every entity in the pharmaceutical supply chain that engages in the transaction of pharmaceutical products is subject to this act. To meet these requirements by the 27th of November, 2023, these companies must have established electronic-based approaches to meet the requirements outlined by the DSCSA. For more information, please read the FDA’s guidance document.
Transparency. This word summarizes what key actors in the pharmaceutical supply chain need to achieve in order to address the post-covid action items described earlier, as well as reach compliance with the DSCSA. So what is the technology that can deliver this? Blockchain.
Blockchain is a distributed database technology that enables secure and transparent record-keeping. As you can see, transparency is native to this technology. It is a decentralized system that allows multiple parties to maintain and update a shared ledger of transactions without the need for a central authority.
This ledger is cryptographically secure and immutable, which means that it cannot be altered or tampered with once a transaction has been recorded. Moreover, blockchains utilize consensus. This is an agreement that helps a decentralized network to authenticate and validate a value or a transaction. It ensures that all network nodes share the same data and prevents malicious actors from manipulating the data. This would increase the security of the pharmaceutical supply chain.
The blockchain acts as a secure and transparent platform for tracking the movement of goods. Through the decentralized and immutable ledger, all parties in the supply chain have real-time visibility into the location and status of products, as at every stage of the supply chain, product barcodes could be scanned and recorded onto the blockchain. This automatically creates an audit trail that improves the traceability and end-to-end visibility of pharmaceutical products as they move in the supply chain. Due to its immutable nature, regulators will be able to audit the supply chain via the blockchain, allowing them to easily monitor the rate of counterfeit drug production.
Furthermore, all transactions in the blockchain are validated via a consensus mechanism, ensuring the integrity of the information on the audit trail. If a drug is found to be compromised at one point of the supply chain, the audit trail makes origin tracking easier which can increase the efficiency of recalling the drug.
Blockchain could potentially reduce paperwork and administrative burden as many of these tasks can be automated using smart contracts on the blockchain. Additionally, the use of blockchain can enable more efficient and secure communication and collaboration among supply chain partners, further reducing the need for paperwork while increasing trust between them.
Transaction authenticity in the blockchain can be further strengthened with the inclusion of verifiable credentials. This can take the form of Decentralized Identifiers (DIDs) or even biometric measures.
Overall, by investing in building blockchain-based systems for the tracking and tracing of pharmaceuticals, companies will not only meet regulatory requirements but also execute the post-covid action items. While blockchain has been primarily associated with cryptocurrencies, projects like Pharmaledger have been instrumental in the digital transformation of companies participating in pharmaceutical supply chains.
As stated on their website, PharmaLedger is sponsored by the Innovative Medicines Initiative (IMI) and the European Federation of Pharmaceutical Industries and Associations (EFPIA) under the Horizon 2020 programme. The project brings together 12 global pharmaceutical companies and 17 public and private entities; including technical, legal, regulatory, academia, research organizations and patient representative organizations.
The goal of the project is to provide a widely trusted platform that supports the design and adoption of blockchain-enabled healthcare solutions while accelerating the delivery of innovation that benefits the entire ecosystem, from manufacturers to patients.
With €22 million in funding from big pharmaceutical players, this is a testament to the feasibility and benefits of incorporating blockchain into the pharmaceutical supply chain.
This article aimed to describe how blockchain can help pharmaceutical companies and supply chain partners in addressing the post-covid action items for the pharmaceutical industry.
It is important to note that blockchain is not the only solution to these challenges. In fact, more value can be realized if blockchain can be incorporated with other technologies (like edge computing, IoT and RFID). If you would like to read more research about how blockchain is being used in the pharmaceutical industry, you should read this article.
The DSCSA is not the only regulation that aims to increase the transparency of pharmaceutical supply chains. This shows how transparency is foundational to what the pharmaceutical industry will be able to accomplish moving forward. As blockchains natively provide this transparency, they may serve as the foundation for better visibility of the supply chain, transparency and trust between stakeholders in the post-covid pharmaceutical industry.
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