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The Financial Express

Blockchain use in pharma supply chains

A way to reducing counterfeit, boosting consumer confidence



Blockchain use in pharma supply chains

Governments across the world are preparing to roll out Covid-19 vaccines to stop the spread of the virus and end the once-in-a-century pandemic. As a result, like never before a single drug has gained focus from countless individuals, regulatory bodies, government agencies, and private entities across the world. As such, it became crucial to ensure that we all are protected against advertising, selling, and administration of fake Covid-19 vaccines. A recent warning letter issued by the U.S. Food and Drug Administration and the Federal Trade Commission stressed the serious consequences that pharmaceutical firms may face for advertising unapproved and misbranded products related to Covid-19. Though Covid-19 vaccine administration has highlighted the challenges related to counterfeit vaccines, the issue is not new. According to an OECD report, the total value of counterfeit pharmaceuticals traded worldwide is as much as EUR 4.03 billion (as of 2016).Other reports have estimated that 10-15 per cent of the total pharmaceutical products distributed are substandard or falsified. Issue related to the circulation of fake medicines deepens in many developing nations.

Bangladesh is no exception to the counterfeit products circulating throughout the country. Over the past five years, the licenses of several pharmaceutical companies were cancelled because of the allegations of producing counterfeit medicines of substandard quality. Reports suggest that counterfeit drugs are sold across all the distribution channels from drug stores to top hospitals in Bangladesh. In the first six months of 2019, a total of 370 cases of fake medicines were filed. More recently,18 people accused of selling counterfeit drugs by claiming the same as imported ones from the US and Canada were arrested. The country's huge network of unlicensed pharmacies as many as 80,000 has led to the easy circulation of counterfeit drugs. The widespread counterfeit pharmaceutical products in Bangladesh has led to consumer mistrust and loss of confidence. This will impact Bangladesh's pharmaceutical industry sector's ambition to capture 10 per cent of the global generic market.

To deter the criminal gangs from advertising, manufacturing, and selling counterfeit pharmaceutical products in Bangladesh, the government of Bangladesh had been working on introducing 'Drug Act 2019' with tougher punishments including life-term imprisonment. However, this might not improve trustworthiness and consumer confidence. To achieve the same, consumers must have access to product information throughout the supply chain from production through to consumption. To authenticate the pharmaceutical drug, a start-up firm has taken an initiative where unique codes engraved on a file of pills are sent to the manufacturer via text. Though the initiative is intended to promote transparency, it did not go beyond the trial phase. Moreover, dependence on SMS text messages is prone to security issues. Recently, the blockchain-based platform gained much attention to promote transparency in supply chains. If implemented appropriately in Bangladesh pharmaceutical industry supply chains, blockchain has an immense potential to offer several benefits associated with transparency.

USE OF BLOCKCHAIN IN PHARMA SUPPLY CHAINS: Blockchain in conjunction with conventional technologies, such as RFID, barcode scanning, and mobile technology, has been applied for tracking and tracing of medicines from the moment it is manufactured to the moment the patient takes them home. The following steps are involved in drug visibility in a supply chain. Manufacturer: Pharmaceutical firms manufacture the drug and details such as drug name, location, timestamp, ingredients, usage of the drug, and side effects are captured on the product packaging. Further, manufacturers generate an encrypted QR (quick response) code with the details and record it on the blockchain system.

Transportation: Some of the drug details stored in the blockchain are shared with the logistics providers to prepare for transit. This is particularly crucial for the customs clearance in international shipments. Moreover, in certain cases, logistics providers install sensors to capture the location and temperature or humidity of the product. These sensors are integrated into the blockchain and data from the sensors are continually updated on the blockchain system.

Retailer: When the drug reaches the pharmacy, through the blockchain audit trail, it can be examined if the drug has been compromised in terms of its quality at any point of the journey from manufacturers to retailers. When the drug is dispensed, details of the dispenser and pharmacist checking the prescription are recorded on the blockchain.

At every stage of the process, barcodes would be scanned and recorded onto a blockchain ledger system which, in turn, records and creates an audit trail of the drug journey.

BLOCKCHAIN IMPLEMENTATION ADVANTAGES IN PHARMA SUPPLY CHAINS: While there are several advantages offered by blockchain technology across the pharma supply chain, the industry focuses mainly on the following issues:

Supply chain security: Encoded data recorded on a blockchain that can only be accessed with a private key provides data security. Traceability through blockchain technology helps to verify drugs resulting in the elimination of fake drugs and minimises patient harm.

Product recall management: Storing data on blockchain will assist in rapidly retrieving all the relevant information about a given pharmaceutical lot in the event of a manufacturer-generated recall. In addition, alerts are transmitted throughout the network about drugs that have been flagged as under evaluation, under investigation, or recalled status, to prevent the products from further shipment or dispense.

Cold chain management: Temperature controlled logistics is critical for pharmaceutical products as it has been forecasted that 26 out of the top 50 products will require to be transported using a cold chain. Current supply chains lack instantaneous, continuous, and transparent access to end-to-end cold chain data which results in the inability to take timely corrective actions if there is a breach in temperature. Blockchain could be the solution to trust the efficacy of the drugs, at the point of dosing.

Transforming developing markets: In developing nations, the market is fragmented and comprises several hundred manufacturers and tens of thousands of retailers. Tracking the drugs on a blockchain for transaction legitimacy at smaller firms authenticates the drugs and improves the trustworthiness among consumers.

Trade finance on Blockchain: Complexity in a pharmaceutical supply chain with several members causes delays in shipments and payments. For trading across borders, around 40% of the shipments get delayed due to customs clearances. The use of blockchain and smart contracts will automate the execution of business logic and bring a tremendous amount of efficiency to trade finance.

Ultimately, by eliminating the circulation of counterfeit drugs and streamlining the reverse supply chain with the use of blockchain technology, community health will be improved. This will also be a key driver to build trust among citizens in Bangladesh pharmaceutical industry. Furthermore, a fail-safe quality assurance system through blockchain technology will assist the pharmaceutical industry in gaining global competitiveness and facilitate export to several highly regulated markets including the USA, the UK, Australia, and Canada, and also strengthen the existing export markets in low and middle-income countries.

Professor Shams Rahman is a Professor of supply chain management, and Dr Aswini Yadlapalli is a Lecturer of supply chain management at the Department of Supply Chain and Logistics, College of Business and Law, RMIT University, Melbourne, Australia.

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