Bringing blockchain to pharmaceuticals

By Arun Ghosh

KPMG is teaming up with IBM, Merck and Walmart to kick off a new FDA pilot project that explores the use of blockchain to help track pharmaceuticals in the supply chain – an issue that has far reaching health consequences such as keeping counterfeit drugs off the market and preventing medication shortages.

The U.S. Drug Supply Chain Security Act (DSCSA) mandates the creation of an electronic, interoperable system to identify and trace certain prescription drugs as they move through the U.S. supply chain – and pharma companies have to figure out the most efficient way to make this a reality before this part of the law goes into effect. 

Every supply chain is rich in intricacies, and the pharmaceutical sector is particularly complex. Drug makers have a massive challenge given the involvement of protected health information (PHI) like electronic health records, patient claims, doctors’ notes, and even personal data from wearables. Enabling interoperability – or the sharing of this data across different organizations – as proposed by DSCSA is no simple feat.

To help address this challenge, we see significant potential in blockchain’s decentralized nature, with data that can be stored and accessed globally within a private, permissioned network. In other words, multiple parties can access the same data in a secure environment and in this case, track pharmaceuticals from the moment they are manufactured to the point of sale.

Why is this so important? It comes down to one thing: patient care.

Creating more transparency offers an opportunity to help prevent and more quickly remove counterfeit drugs from the supply chain, improve the efficiency of recalls, more accurately share information, and create greater accountability. A recent study estimates that 48 separate incidents of counterfeit drugs led to 7,200 casualties, including 3,604 deaths.

Greater transparency also allows stakeholders to gain greater insights into the supply chain, including tracking ingredients and uncovering, or better preventing, potential issues, such as drug shortages. For example, if a bad ingredient or improper handling leads to a recall, there will be a precise record on the blockchain, enabling network members to quickly identify the source of the problem, trace which drugs need to be recalled, and track if they have been removed from the market.  

The ability to identify this level of detail is why I’m excited to kick off this pilot today.  While IBM will be configuring and deploying their Food-Trust based blockchain, KPMG will be developing the integration, analytics and user experience at the time of manufacture and when the product is received by the patient.

In addition to tracking pharma products through the supply chain, we will also seek in the future to test blockchain use cases to improve the patient experience. For example, using blockchain, can we:

  • Enable patients themselves to scan a barcode to confirm a prescription is not counterfeit?
  • Demonstrate those drugs have been stored at the required temperatures throughout the entire supply chain journey?

In the future, state and local agencies may also be provided permissioned blockchain use so that they also have visibility into the pharmaceutical supply chain. Hospitals and trial sites that have contact with drugs in early stages of the supply chain  might also be able to access supply chain data, which can help advance medicines through clinical trials and into the market.

We expect to complete the pilot in Q4 2019 and the FDA will release the results as part of a program report on the DSCSA Pilot Project Program. Read more about it here.

For further reading, KPMG recently highlighted the role blockchain can aid in pharmaceutical compliance in our Demystifying Blockchain for Life Sciences report. It's available to download below..

For more information or to arrange an interview, please contact Bill Borden..


Download the report

Demystifying blockchain for life sciences
Blockchain could be a key to interoperability and privacy

Arun Ghosh

Arun Ghosh

One Americas Blockchain & Cryptoassets Leader, KPMG US

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Media contact

Bill Borden

Bill Borden

Director, Corporate Communications, KPMG US

+1 201-505-6351