With full transparency and traceability of all data, blockchain is now one of the most important digitalization technologies in the healthcare sector. However, technical limitations or regulatory hurdles, such as the requirements of the EU GDPR, can quickly undermine its practical application in companies.

There is, however, one area where this does not apply: combating counterfeit medicines could serve as a prime example of a value-adding blockchain application. The counterfeit protection provided by blockchain enhances the fight against criminal activity, thereby reducing revenue losses for manufacturers. Additional cost savings can arise as intermediaries, such as auditors, become less necessary.

€10.2 billion is lost annually by the EU pharmaceutical sector due to counterfeit medicines on the EU market.*

13 million illegal medicines worth €165 million were seized in a single operation by European investigators in 2018.**

How can companies concretely use blockchain for this application? Two key points are particularly relevant:

• Risk Factor Database: In the fight against counterfeit medicines, databases in current IT infrastructures or solutions are considered classic weak points: there is a constant risk that entries may be altered and data manipulated, e.g., through cyberattacks. This challenge is already being addressed with the EU-wide database securPharm. Using this IT-based protection system, prescription medicines can be verified for authenticity immediately before being dispensed to patients. Since February 2019, packaging for prescription medicines must also include security features required by securPharm. This reduces the risk of manipulated data, as information on the registration of importers, manufacturers, and distributors of active ingredients is shared.

• Blockchain as a Protective Barrier:: These and other database solutions can now be complemented with blockchain at the company level. Blockchain secures the log files, which record any changes to the data. Existing structures remain intact. However, companies should conduct workshops with various IT experts to thoroughly assess these structures, identify weaknesses, and explore further possible applications for blockchain.

The added value of blockchain in combating counterfeit medicines arises from its core feature of decentralization—data is not stored on a single server but is distributed across multiple computers. This decentralization guarantees counterfeit protection. No intermediary is required to validate transactions; instead, transactions are verified by participating network nodes (see Yli-Huumo et al.). Decentralization also enables transparency, as all transactions are fully visible to participants in the distributed ledger.

This benefits all stakeholders: Consumers can accurately trace the supply chain of their medicine, which strengthens customer trust in the products and services. Additionally, the GDPR does not pose a barrier as long as no personal data is processed. Thus, the use of blockchain at this interface is not only realistic but can deliver tangible returns for manufacturers in the short term, addressing the key points mentioned earlier.

References:

Yli-Huumo et al., 2016. Where Is Current Research on Blockchain Technology? - A Systematic Review. https://doi.org/10.1371/journal.pone.0163477  

* Bericht EUIPO u. Europol, 2016

** dpa/aerzteblatt.de, 2019