A 2016 report from the U.S. Department of Health and Human Services revealed that $10,345 is spent per person on health care. The cost of medication contributes to these rising healthcare costs. Prescription drugs accounted for nearly 17 percent of all U.S. healthcare spending, while prices of prescription drugs also rose 10 percent in 2015.

One reason for this is the rising cost of bringing drugs to market. Pharmaceutical companies and drug manufacturers invest billions to develop new drugs. In addition, the process of getting medication to patients also entails costs at each step. Complex and unsecure supply chains further complicate matters. Manufacturers have to spend on solutions to address these issues, and the costs are passed on to consumers.

As such, technological solutions are being explored to remedy these issues. Blockchain, the same technology powering cryptocurrencies such as bitcoin, has emerged to bring innovation to a variety of industries. In healthcare, new ventures such as BlockRx seek to leverage blockchain’s decentralization and immutable recordkeeping to provide better connectedness in the supply chain for the benefit of patients.

Supply Chain Issues

The drug manufacturing ecosystem involves networks of suppliers and logisticians. The participation of these various entities poses a variety of challenges in ensuring safety across all activities. Manufacturers must adhere to strict practices and regulations in order to prevent instances of contamination or tainted drugs reaching the market.

Regulatory bodies around the globe have established rules that ensure that all medications that reach patients are safe. In the United States, drug manufacturers have to abide by the Food and Drug Administration’s (FDA) Current Good Manufacturing Practices (CGMP). These practices include strict quality control. Manufacturers must ensure that facilities are properly maintained and personnel properly are trained to manufacture drugs according to formulae.

Manufacturers must be also able to securely track what goes on through the supply chain. Any unchecked errors can have dire consequences. For example, in 2008, contaminated batches of the blood thinner heparin manufactured in China made their way to the U.S. and Europe. These led to several deaths due to severe allergic reactions from the drug’s tainted ingredients.

In addition, counterfeit drugs have become a global problem. A report by the U.S. Department of Commerce estimates the global counterfeit drug market to range from $75 billion to $200 billion. Counterfeiters exploit the gaps in the supply chain in order to penetrate the market.

Securing the Supply Chain

Regulatory bodies have also set rules that seek to modernize and secure supply chains. The lack of a comprehensive transparent system for tracking means the seamless transfer of information from one supply chain stakeholder to another isn’t guaranteed. A company can eventually lose track of which specific manufactured batch of a drug reaches a specific patient.

In 2013, the U.S. passed the Drug Supply Chain Security Act, which demands the creation of electronic systems that trace the movement of prescription medication in the country. Other countries are also striving for similar systems. Currently, most of this tracking is done through each stakeholder. Comprehensive sharing of information rarely happens.

Pharmaceutical companies also use a variety of means to thwart counterfeiting. Companies have invested in using radio frequency identification (RFID), holographic labels, infrared, and chromatography to aid tracking and guarantee the authenticity of their inventories. Unfortunately for patients, these methods cost money and, as businesses, companies have to factor these costs into drug prices.

New developments in pharmaceuticals is also putting pressure on supply chains to adapt. Breakthrough medical therapies and products along with increasing demand require a more efficient supply chain. Security measures must also be able to cope and reinvesting in technologies prompts manufacturers to up their prices.

Using Blockchain for Healthcare

Fortunately, new technologies are also providing viable alternatives. Blockchain has emerged to be a game-changing technology for a variety of industries. Its ability to provide decentralized, transparent, and immutable recordkeeping makes it a promising technology specifically for supply chain tracking. Blockchain can keep track of all transactions, which makes drugs traceable across the supply chain.

Projects also seek to provide their own innovative solutions. BlockRx, for example, is a series of initiatives by blockchain company iSolve LLC and aims to provide a framework to supply chain compliance as the laws and regulations take effect worldwide. Aside from the blockchain itself, BlockRx uses iSolve’s digital ledger technology to bridge legacy systems, which is critical to get all stakeholders up to speed. BlockRx’s system also encourages participation patients by incentivizing them with tokens when they share their information. These tokens can then be used to offset costs from participating healthcare providers and pharmacies.

Other pharma companies such as Pfizer and Genentech have also embarked on their own blockchain project and are focused mainly on tracking. Getting all supply chain stakeholders to participate in an integrated ecosystem won't be easy. These entities are often at odds with each other, and a reliable system must be able to record the pertinent and valuable information. Through blockchain, stakeholders would be at equal footing in terms of the transparency of information.

Cheaper and Safer Meds

These efforts not only position companies for better compliance to regulations but eventually benefit patients. Trackable medication and a secure supply chain mean less chances of counterfeiting, ensuring that the drugs that reach patients are safe. Addressing these supply chain issues also trims down the associated costs of bringing medication to market. Blockchain-driven systems encourage a more participative and rewarding ecosystem in which patients could benefit through cheaper and safer medication.