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Merck, IBM, Walmart and KPMG to pilot blockchain pharmaceutical supply chain system

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A new initiative from a drugmaker, a retailer, a technology company and one of the four largest auditing firms will explore the use of blockchain in securing the pharmaceutical supply chain.

Under the Food and Drug Administration’s program to evaluate blockchain technology for protecting drug product integrity, Kenilworth, New Jersey-based Merck & Co., along with Walmart, IBM and KPMG, said Thursday they had been selected for the program. The purpose is to develop an electronic, interoperable system to identify and trace certain prescription drugs in the U.S.

The four companies will create a shared, permissioned blockchain network that they said would allow real-time product monitoring and is meant to help reduce the time needed to track and trace inventory; allow retrieval of distribution information; increase the accuracy of data that are shared; and help determine product integrity, including factors like whether products are stored at the correct temperature. The collaboration is taking place under a program enacted in November 2013 through the Drug Supply Chain Security Act, which mandates the creation of an electronic, interoperable track-and-trace system for prescription drugs.

“Our supply chain strategy, planning and logistics are built around the customers and patients we serve,” Merck senior vice president for supply chain Craig Kennedy said in a statement. “Reliable and verifiable supply helps improve confidence among all the stakeholders – especially patients – while also strengthening the foundation of our businesses.”

There are multiple potential uses for blockchain being explored in the drug industry. For example, as a “shared source of truth” – as some described it in a December 2018 MedCity News report on the subject – the technology has been touted as a way to ensure compliance in clinical trials. Meanwhile, New York-based Embleema partnered with the government of Armenia in April to adopt blockchain for the country’s healthcare system, in the hope of attracting clinical research to the country. Safeguarding the pharmaceutical supply chain is another potential usage for the technology.

“A blockchain solution is well-suited for this use case because it can act as a secure, multi-party chronological audit log that sits across the supply chain,” wrote John Bass, CEO of Hashed Health, in an email. “The technology has advanced to the point where a technical solution is possible.”

Based in Nashville, Tennessee, Hashed Health develops blockchain products designed to reduce costs and administrative inefficiencies in healthcare.

That doesn’t mean the drug industry’s adoption of blockchain is without its skeptics. For example, one analyst quoted in the aforementioned December 2018 article pointed out that there are already tags placed on medicine bottles with an anti-cloning function.

Still, others see the technology as carrying significant potential for the industry.

“Most of the challenges to this use case are non-technical at this point,” Bass wrote. “Bringing together the FDA, Merck, Walmart and others is a big step forward in terms of solving the non-technical challenges to securing the pharma supply chain.”

Photo: Pixtum, Getty Images

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