Blockchain technology is centred on improving trust and can fix the grim realities of corrupted supply chains in the pharmaceutical industry.

Discovery of the fact that some cancer patients in US hospitals have been given fake chemotherapy was a profound moment for me during my battle with cancer. I know I am alive only because I received genuine chemo. It has already given me seven extra years of life (and hopefully many more).

Luckily at the time, I was in the fortunate position of understanding the power of blockchain technology and I knew that this offshoot of bitcoin’s technical design could provide a solution to this life-threatening fake-medicine industry.

Fake chemo is just one of many outrages. Interpol estimates about one million people — who buy drugs in good faith hoping for a cure — die each year from fake medicine.

Many more are injured by medications that have too little or too much of an active ingredient. Fake Viagra tablets have been found to be coloured by printing ink and there are even reports of tablets that contained rat poison, asphalt, and other contamination.

According to the World Health Organisation, the counterfeit pharmaceutical industry is worth more than $75 billion annually. Producing and trading fake medicine is, reportedly 10 to 25 times more profitable than trafficking narcotics. The problem is so severe that Christophe Zimmermann, the anti-counterfeiting and piracy co-ordinator of the World Customs Organisation, stated there may now be “more fakes than real drugs in the market”.

It may surprise many that blockchain technology has emerged as a remedy for the corrupted global trade ecosystem.

Restoring trust

Blockchain’s immutable, and transparent attributes can restore trust in our supply chains, businesses, and governments. The technology itself acts as an encrypted, unalterable permanent record that participants in a decentralised network can contribute to and access.

Every link in the supply chain from manufacturer, distributor, transporter, customs official to store owner can contribute data to a network that can then prove the authenticity of a product. Consumers can use a mobile app to check an entire item’s history before it reaches the store shelf. In the case of pharmaceuticals, consumers would be able to trace the origin of every pill.

It’s also important to note that blockchain technology is also about collaboration. Participants, both large and small, need to share data and see how the information from their individual link can benefit the entire chain.

Blockchain technology can destroy the counterfeiters’ business model. It combines the same encryption that protects bitcoin along with a sophisticated logistics-tracking platform backed by artificial intelligence. In the system we have built, this is all tied together with a third layer of protection — the immutability of blockchain architecture.

Every single medicine packet or bottle can be assigned a cryptographically unique identifier. This way an individual item can be identified, and its authenticity can be verified on a shared data ledger.

In addition, the concept of “no double spending” is one of the most compelling features of blockchain technology. It means that only one item with each unique ID can ever be sold.

Regulatory pressure

Pharmaceutical companies are under greater pressure to find solutions to protect their brand reputation and market position. Regulatory insistence on safe supply chains is increasing in many jurisdictions around the world.

In the US, the Drug Supply Chain Security Act, mandates that each pharmaceutical packet should be traced back to its point of origin. That tracking can easily be achieved with blockchain technology.

In the EU, the Falsified Medicines Directive also seeks to establish a secure supply chain for the distribution of prescribed medicines. It will require the serialisation of patient packs, as well as tamper-proof labelling for all medication before it is dispensed to patients. These regulatory requirements can now be fulfilled with cryptographic certainty.

It was revealed in 2014 that fake copies of products produced by Pfizer, the largest drug company in the world by revenue, were being sold in 107 countries. When leading pharma companies are so heavily attacked, it shows the alarming extent of the problem.

Treatments for common illnesses such as depression, schizophrenia, diabetes, blood pressure and cholesterol are among the most commonly detected fakes. With blockchain technology, pharmaceutical companies can stop packaged poison like this, being sold in their name.

Consumer power

Blockchain unleashes the power for an even greater chain reaction to take place — a “trickle up” effect between consumers and businesses. Each genuine item can be checked before it is purchased. This opportunity empowers and protects consumers at the end of the supply chain.

With greater transparency and awareness of a product’s origin, buyers will be more conscious of their purchasing power and its impact at a global level. This engagement will encourage local manufacturers to participate in ethical, Fairtrade business practices.

We can all become informed consumers who influence companies to operate responsibly. This will, hopefully, lead to less underground trade, and less exploitation of local workers and their communities. We can all learn to trust again — if not in the current system, then by allowing a new blockchain-based system to emerge. In the process, let’s hope this technology can save lives.

Images from CryptoCoinMastery


Mark Toohey is the co-founder and CEO of TBSx3 and lecturer on digital currency regulation for the University of Nicosia.

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