First used to track cryptocurrencies such as Bitcoin, blockchain is finding its way into tracking and quality control systems in healthcare, including clinical laboratories and big pharma

Four companies were selected by the US Food and Drug Administration (FDA) to participate in a pilot program that will utilize blockchain technology to create a real-time monitoring network for pharmaceutical products. The companies selected by the FDA include: IBM (NYSE:IBM), Merck (NYSE:MRK), Walmart (NYSE:WMT), and KPMG, an international accounting firm. Each company will bring its own distinct expertise to the venture. 

This important project to utilize blockchain technologies in the pharmaceutical distribution chain is another example of prominent healthcare organizations looking to benefit from blockchain technology.

Clinical laboratories and health insurers also are collaborating on blockchain projects. A recent intelligence briefing from The Dark Report, the sister publication of Dark Daily, describes collaborations between multiple health insurers and Quest Diagnostics to improve their provider directories using blockchain. (See, “Four Insurers, Quest Developing Blockchain,” July 1, 2019.)

Improving Traceability and Security in Healthcare

Blockchain continues to intrigue federal officials, health network administrators, and health information technology (HIT) developers looking for ways to accurately and efficiently track inventory, improve information access and retrieval, and increase the accuracy of collected and stored patient data.

In the FDA’s February press release announcing the pilot program, Scott Gottlieb, MD, who resigned as the FDA’s Commissioner in April, stated, “We’re invested in exploring new ways to improve traceability, in some cases using the same technologies that can enhance drug supply chain security, like the use of blockchain.”

Congress created this latest program, which is part of the federal US Drug Supply Chain Security Act (DSCSA) enacted in 2013, to identify and track certain prescription medications as they are disseminated nationwide. However, once fully tested, similar blockchain systems could be employed in all aspects of healthcare, including clinical laboratories, where critical supplies, fragile specimens, timing, and quality control are all present.

The FDA hopes the electronic framework being tested during the pilot will help protect consumers from counterfeit, stolen, contaminated, or harmful drugs, as well as:

  • reduce the time needed to track and trace product inventory;
  • enable timely retrieval of accurate distribution information;
  • increase the accuracy of data shared among the network members; and
  • help maintain the integrity of products in the distribution chain, including ensuring products are stored at the correct temperature. 
In the FDA’s February announcement, Scott Gottlieb, MD (above), the FDA Commissioner at that time, said, “For the drug track-and-trace system, our goals are to fully secure electronic product tracing, which provides a step-by-step account of where a drug product has been located and who has handled it, [and] establish a more robust product verification to ensure that a drug product is legitimate and unaltered.” It’s not hard to imagine how such a tracking system would be equally beneficial in clinical laboratories and hospital pathology departments. (Photo copyright: FDA.)

Companies in the FDA’s Blockchain Pilot

IBM, a leading blockchain provider, will serve as the technology partner on the project. The tech giant has implemented and provided blockchain applications to clients for years. Its cloud-based platform provides customers with end-to-end capabilities that enable them to develop, maintain, and secure their networks. 

“Blockchain could provide an important new approach to further improving trust in the biopharmaceutical supply chain,” said Mark Treshock, Global Blockchain Solutions Leader for Healthcare and Life Sciences at IBM, in a news release. “We believe this is an ideal use for the technology because it can not only provide an audit trail that tracks drugs within the supply chain; it can track who has shared data and with whom, without revealing the data itself. Blockchain has the potential to transform how pharmaceutical data is controlled, managed, shared and acted upon throughout the lifetime history of a drug.”

Merck, known as MSD outside of the US and Canada, is a global pharmaceutical company that researches and develops medications and vaccines for both human and animal diseases. Merck delivers health solutions to customers in more than 140 countries across the globe. 

“Our supply chain strategy, planning and logistics are built around the customers and patients we serve,” said Craig Kennedy, Senior Vice President, Global Supply Chain Management at Merck, in the IBM news release. “Reliable and verifiable supply helps improve confidence among all the stakeholders—especially patients—while also strengthening the foundation of our business.”

Kennedy added that transparency is one of Merck’s primary goals in participating in this blockchain project. “If you evaluate today’s pharmaceutical supply chain system in the US, it’s really a series of handoffs that are opaque to each other and owned by an individual party,” he said, adding, “There is no transparency that provides end-to-end capabilities. This hampers the ability for tracking and tracing within the supply chain.”

Walmart, the world’s largest company by revenue, will be distributing drugs through their pharmacies and care clinics for the project. Walmart has successfully experimented using blockchain technology with other products. It hopes this new collaboration will benefit their customers, as well.

“With successful blockchain pilots in pork, mangoes, and leafy greens that provide enhanced traceability, we are looking forward to the same success and transparency in the biopharmaceutical supply chain,” said Karim Bennis, Vice President of Strategic Planning of Health and Wellness at Walmart, in the IBM news release. “We believe we have to go further than offering great products that help our customers live better at everyday low prices. Our customers also need to know they can trust us to help ensure products are safe. This pilot, and US Drug Supply Chain Security Act requirements, will help us do just that.”

KPMG, a multi-national professional services network based in the Netherlands, will be providing knowledge regarding compliance issues to the venture. 

“Blockchain’s innate ability within a private, permissioned network to provide an ‘immutable record’ makes it a logical tool to deploy to help address DSCSA compliance requirements,” said Arun Ghosh, US Blockchain Leader at KPMG, in the IBM news release. “The ability to leverage existing cloud infrastructure is making enterprise blockchain increasingly affordable and adaptable, helping drug manufacturers, distributors, and dispensers meet their patient safety and supply chain integrity goals.”

The FDA’s blockchain project is scheduled to be completed in the fourth quarter of 2019, with the end results being published in a DSCSA report. The participating organizations will evaluate the need for and plan any future steps at that time.

Blockchain is a new and relatively untested technology within the healthcare industry. However, projects like those supported by the FDA may bring this technology to the forefront for healthcare organizations, including clinical laboratories and pathology groups. Once proven, blockchain technology could have significant benefits for patient data accuracy and security. 

—JP Schlingman

Related Information:

IBM, Walmart, Merck in Blockchain Collaboration with FDA

Pilot Project Program Under the Drug Supply Chain Security Act; Program Announcement

IBM, KPMG, Merck and Walmart to Collaborate as Part of FDA’s Program to Evaluate the Use of Blockchain to Protect Pharmaceutical Product Integrity

IBM, KPMG, Merck, Walmart Team Up for Drug Supply Chain Blockchain Pilot

Merck and Walmart Will Track Prescription Drugs on IBM Blockchain in FDA Pilot

The Dark Report: Four Insurers, Quest Developing Blockchain