Blog August 5, 2019

Blockchain and Pharmaceutical Supply Chain Security

chainBlockchain is a method to securely store digital information and create an accurate, verifiable, distributed record of individual transactions that is confidential, traceable and virtually uneditable. The first practical use of blockchain technology enabled bitcoin and other cryptocurrency transactions. Today, blockchain is being tested by a number of pharmaceutical companies, drug wholesalers, and at least one major retailer as a means of safely securing the pharmaceutical supply chain.


Blockchain technology enables a secure audit trail for drug components and finished products from manufacture to final sale, while also tracking who has shared the data and with whom, without revealing the data itself. The U.S. Food and Drug Administration (FDA), along with pharmaceutical companies, wholesalers and drug retailers, is hopeful that blockchain technology will enable the agency to fulfill the requirements of the 2015 Drug Supply Chain Security Act. As part of the Act, Congress has mandated that the FDA deliver an interoperable digitized system for tracking and verifying prescription drugs and vaccines by 2023. 


Merck learned some very costly lessons about the vulnerability of its supply chain in 2017, when it was hit with a cyberattack that affected several key systems within the company, including Merck’s API (active pharmaceutical ingredient) production, and its packaging and labeling systems. Fully restoring operations after that attack took the company nearly a year and $1 billion. Merck has now joined the FDA, along with Walmart, IBM and KPMG, in a pilot project to see how blockchain could help secure pharmaceutical supply chains. The project is slated for completion in Q4 2019 and the results will be published in an FDA report.


Walmart is already a leader in applying blockchain to securing product supply chains, having successfully applied the technology to tracking the origin and potential safety of several foods. As a major drug retailer, Walmart is particularly interested in the use of blockchain to track pharmaceuticals, as the company was among the most affected when the FDA recalled certain hypertension drugs that were found to contain suspected carcinogens produced during manufacturing of the API. The company is already a member of the MediLedger consortium — a growing group of pharmaceutical manufacturers, wholesalers, and retailers also including Pfizer, Genentech, Gilead, McKesson, AmerisourceBergen, and Cardinal Health — who are testing blockchain methods within the drug supply chain. Participation enables the consortium members to access and trace information on drug provenance, distribution and inventory, and to determine product integrity by including data measurements such as temperature controls during drug transport and storage.