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Countering counterfeit drugs with blockchain


The United Nations Office on Drugs and Crime states that counterfeit drugs pose a serious risk to public health and safety. They kill hundreds of thousands of people globally each year. In monetary terms, the OECD has deduced that the counterfeit pharmaceutical industry is worth $200 billion annually. For comparison, the illegal drug trade is worth around $246 billion.

Drug counterfeiting both endangers patients and negatively impacts pharmaceutical companies by increasing costs and compromising brand integrity. Recognizing this, in November 2013, the US Congress introduced the Drug Supply Chain Security Act (DSCSA) as part of its Drug Quality and Security Act (DQSA). The act places requirements on pharmaceutical companies to address vulnerabilities in the drug supply chain and simplify tracing throughout the distribution supply chain. The DSCSA is being gradually phased-in and, by 2023, the full traceability of drugs will be required by the law.

Drug manufacturers need to adapt to these requirements and address the vulnerabilities in the drug supply chain without diminishing the efficiency of the current processes.

Blockchain: Key to addressing the issue of counterfeit drugs

To truly eliminate counterfeiting, all participants in the supply chain need to be able to verify the origin of the product via a highly secure platform. However, many manufacturers today rely on expensive and impractical technologies like radio-frequency identification (RFID) and electronic product code (EPC) technologies that provide traceability for pharmaceutical companies but don’t deliver the degree of transparency required for all stakeholders to have insight into exactly what’s happening with a product, at any time, to reduce the possibility of fraud.

The rise of blockchain, however, means pharmaceutical companies can ensure the tracking and tracing of all transactions. Leveraging IDs and IoT monitoring enables all supply-chain participants to interact with one another to ensure the integrity of transactions. A decentralized ledger is accessible to all participants and transaction records become immutable once entered. This means there is a record each time the drug changes hands, which helps organizations detect tainted products before they reach consumers and gives consumers a way to verify the authenticity of any product.

How to take advantage of blockchain

Because of the transparency blockchain enables, many pharmaceutical companies have begun to leverage it to ensure they’re meeting the new DSCSA requirements. However, blockchain isn’t a typical technology investment and, when adopting it, there are a few things organizations need to keep in mind. With blockchain, pharmaceutical companies can no longer operate in a silo; rather, they need to collaborate with a number of participants in the supply chain, such as distributors and consumers, and will likely need to make a number of organizational and cultural changes as a result. Additionally, blockchain can be considerably more expensive than other methods. Because of this, pharmaceutical companies should first leverage it for the highest-value products.

How to make the most of blockchain

Blockchain is going to be the key differentiator in the pharmaceutical industry in the months and years to come. Those who take advantage will have first-mover benefits which were not possible with inefficient traditional approaches.

For maximum impact, pharmaceutical companies should partner with organizations that have considerable experience with blockchain, serialization IDs, and IoT technology and which can support real-time tracking and monitoring. Capgemini has this experience and would be happy to partner with you to enable far greater transparency and ensure you’re meeting regulatory requirements.

Author details

Kiran Negi

Kiran is an associate consultant at Capgemini.