U.S pharmaceutical industry currently stands at $450 Billion, with six among the top 10 companies around the world, belonging to the country based on pure pharmaceutical revenue. Four of the leading pharmaceutical companies in the United States have delved into the blockchain space as they join a platform specifically designed to improve the complex process of chargebacks in the pharmaceutical industry.
According to report, leading life sciences and healthcare companies, Pfizer Inc., McKesson Corporation, Amerisource Bergen Corporation, and Premier Inc., have all joined the blockchain-powered MediLedger Project in order to tackle the inefficiencies of supply chain under the current system.
Chargebacks refer to the canceled or disputed transactions along the pharmaceutical supply chain and are unfortunately a common occurrence owing to the number of parties involved in the process.
Chargebacks occur when medicines are sold through wholesale distributors but contracts like pricing and eligibility are negotiated separately, making the supply chain extensive for companies. And because of the multiple parties involved, transactions are not always made clear for pharmaceutical companies, leading to a chargeback.
Research from the Global Pharmaceutical and Life Sciences Industry Group at PwC shows that chargebacks actually contribute to the largest deduction from gross sales for majority of the pharmaceutical companies.
The MediLedger Project aims to provide a solution for such inefficiencies via blockchain technology. It is an open and decentralized network for the pharmaceutical supply chain, providing companies the ability to:
- Keep an immutable record of transactions and data to demonstrate regulatory adherence and improve security.
- Enforce cross-industry business rules without ever having to reveal valuable, private data. This makes it easy to certify the authenticity of raw materials and drugs, stop counterfeit items from invading the supply chain, and easily manage payment contract terms.
- Protect business intelligence, so the data stays behind a firewall and under the company’s control.
- Use a permission-based private messaging in order to give companies the power to their data when it comes to what they want to share and whom they want to share it with.
- Connect with trading partners and trusted service providers at the vanguard of emerging solutions for the pharmaceutical industry today.
The new companies that have joined the platform hope that MediLedger will significantly help in reducing costly errors in addition to enabling healthcare participants in operating more efficiently, ultimately lowering the cost of patient care. Bill Marquardt, Vice President of Product Strategy and Planning for Premier Inc., said:
This innovative approach has the potential to transform how charge backs work for the industry, allowing us to deliver better services to our members.
Furthermore, according to the press release, the network has already succeeded in establishing a protocol for saleable return drug verification which is compliant with current 2019 Drug Supply Chain Security Act regulations.
Use Cases of Blockchain in the Pharma Industry
The blockchain technology has grown at a drastic pace in the past couple of years. While plenty of its applications have been utilized by big corporations for cost cutting and profit maximization, blockchain has been playing its part in areas that are more human centric.
The pharmaceutical industry is one part of the healthcare ecosystem that is actively exploring the use cases of blockchain technology and many of the theoretical ideas already have proof-of-concept implementations.
Verification of Returned Drugs
In the pharma industry, drugs are often returned to the manufacturing companies and the most common reason behind drug return is an excess inventory at the wholesaler, which arises from ordering excess stock in the first place. However, instead of throwing those drugs away, the manufacturers often resell them. That is where blockchain comes in handy as it has the potential to help verify the authenticity of those returned drugs. Pharmaceutical manufacturers can record the serial numbers of their packages on a blockchain which serves as a decentralized and distributed ledger. Wholesalers and customers can then verify the authenticity of a drug package by connecting to the blockchain.
Prevent Counterfeit Drugs
Since drug companies manufacture and deliver innumerable medicines, to keep a track of all those products is an arduous task. It is because of this difficulty that counterfeit drugs enter the system, which of course poses serious threat to both the company and the consumers.
Blockchain has a solution for this as well: as drugs move across the supply chain, the transactions can be recorded on a blockchain thereby providing a distributed ledger right from the time of its origin. This will enable all parties to track drugs through the entire supply chain life cycle.
Streamlining the Pharma Supply Chain
After being shipped by pharmaceutical manufacturers, the logistic companies attain the responsibility of keeping the drugs safe, all through handling, transportation and storage stages. Several things, including the right temperature for particular medicines, need to be tracked. Blockchain can streamline this whole process owing to its inherent transparency, immutability and distributed nature. It provides a mechanism that allows any participant in the supply chain to ensure that the supply chain logistics and transportation guidelines are being thoroughly followed.
Ultimately, this new blockchain initiative by leading pharma companies represents progress towards creating something better than before.