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Blockchain Can Save Pharmaceutical Industry $180 Million, Study Says

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A new FDA study shows that blockchain technology can save the pharmaceutical industry $180 million in labor costs by tracking and tracing prescription drugs.

UCLA Health and LedgerDomain, a blockchain development platform, announced a new study revealing that blockchain technology would save the United States pharmaceutical industry over $180 million each year.

The study was launched as part of the U.S. Food and Drug Administration’s Drug Supply Chain Security Act Pilot Project Program. The program is part of a broader effort to develop an electronic, interoperable system to track prescription drugs throughout the U.S. 

According to the Drug Supply Chain Security Act enacted in 2013, by 2023, pharmacists in the U.S. will be required to verify prescription drugs before they are dispensed. This is problematic, however, because verifying drugs has never been a requirement for U.S. pharmacies. 

LedgerDomain CEO and Founder Ben Taylor told Cointelegraph during an interview at the Hyperledger Global Forum that 17% of prescription drugs in the U.S. are counterfeit. He explained that drug verification must be achieved in real-time to comply with DSCSA’s new standards, adding:

“In today's drug supply chain, DSCSA-compliant verification is rare; in three years, it will be required. Without a real-time system that allows for single scans and near-instant verification, pharmacies will bear a massive regulatory burden.”

Blockchain as a solution for tracking prescription drugs

In order to solve this problem, LedgerDomain has partnered with UCLA Health — a leading U.S. dispensary that consists of five distinct pharmacies and over 200 clinics — to apply DSCSA requirements within one pharmacy located at one of the nation’s busiest hospitals. 

One of the Pilot Project Program’s objectives was to focus on enhanced requirements for package tracking. In turn, UCLA Health leveraged LedgerDomain’s blockchain-based mobile application, “BRUINchain,” to track a prescription drug called Spinraza. Created by biotechnology company Biogen, Spinraza acts as a treatment for children and adults with spinal muscular atrophy and is a critical, life-saving medication.

According to Taylor, BRUINchain is built on Hyperledger Fabric, an enterprise-grade, open-source distributed ledger. He explained how the platform operates:

“By leveraging blockchain technology, BRUINchain is able to track and trace drugs as they move through a pharmacy while verifying the legitimacy of the drug with the manufacturer before being administered.”

Taylor further noted that the application is designed as a shared, permissioned blockchain-based system where membership and participation in the network are controlled, rather than open to the public. This makes it possible for multiple parties to track and verify drugs using BRUINchain while preserving data integrity and security.

During the trial, UCLA Health officials used cell phones to scan FDA-stipulated two-dimensional barcodes placed on the bottom of Spinraza boxes. This allowed them to check for possible duplicates and to update the drug's custody, allowing real-time reporting of inventory counts and locations within the UCLA pharmacy system. According to a report submitted to a peer-reviewed journal:

“The BRUINchain system requirements include scanning the drug package for a correctly formatted 2D barcode, flagging expired product, verifying the product with the manufacturer, and quarantining suspect and illegitimate products at the last mile: pharmacist to patient, the most complex area of the drug supply chain.”

Taylor also noted that BRUINchain can turn over data in real-time, in about 50 milliseconds. This is important, as drugs should be verified instantly, otherwise, dispensers would need to scan the packaging twice. 

Leveraging blockchain technology means that only a single scan is required, saving the U.S. pharmaceutical industry $180 million each year in labor costs alone. Blockchain technology would also reduce the need for pharmacies to hoard safety stock, resulting in $3.5 billion per year in savings.

While this may be the case, Taylor mentioned that the cost to implement a solution such as BRUINchain would result in a multi-billion dollar challenge for the pharmaceutical industry. “We learned that this current work process would cost UCLA about $5 million a year to comply with this system,” he explained. 

Blockchain for supply chain management

Although a blockchain-based solution such as BRUINchain could be costly to implement, it was nevertheless impressive during the trial, as Biogen, Spinraza’s manufacturer, never once had to scan a single product for verification. LedgerDomain made it easy to access Biogen’s relational database by loading it directly onto the BRUINchain blockchain.

The senior manager of clinical supply capabilities of Biogen, Imran Shakur, told Cointelegraph that blockchain technology has great potential to bring clarity to pharmaceutical supply chains, adding:

“Managing a global network of rare and specialty treatment requires a tremendous level of collaboration across different systems, people and processes. Each component is focused on ensuring that treatment is brought to a patient with care and assuredness. But, we have to ask ourselves: How do we manage the responsibility that our patients receive the right medication across all these various networks?” 

Shakur explained that while existing systems can help ensure patients receive correct, authentic medications, operational teams often work in silos. He noted that blockchain technology can seamlessly bring teams together to help deliver proper care to patients.

Moreover, the results of the study suggest how the BRUINchain can be effective. During the trial, a 100% success rate was observed across scanning, expiration detection and counterfeit detection. The paperwork was also reduced from approximately 1 hour to less than a minute.

Can this be applied to coronavirus test kits?

Given that the BRUINchain leverages blockchain technology to detect counterfeit prescription drugs, it may be possible to apply the same technology to ensure that coronavirus testing kits are authentic. A recent article from ABC News reported that fake home-testing kits for the coronavirus were seized at the Los Angeles International Airport. When asked if BRUINchain could be used to determine authentic coronavirus test kits in the future, Taylor responded:

“If you believe that the coronavirus pandemic is the new normal, supply chain assurance is more important than ever. Blockchain can provide an overlay that helps all stakeholders. Our goal is to apply blockchain in real-time to provide a single version of truth for everyone.”

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