DSCSA: blockchain mass adoption test
The (DSCSA) is a law act of 2013 that outlines critical steps to build an electronic interoperable system in 10 years. By 2023 all suppliers in the pharmaceutical supply chain are required to be compliant as they are distributed within the United States. The DSCSA legislation aims to help protect patients from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. It intended to improve the detection and isolation of substandard ingredients, prevent entry from gray markets, and remove potentially dangerous drugs from the pharmaceutical supply chain.
Problem:
Like in any other supply chain, in the pharma supply chain there’s no shared global database so human errors are impossible to catch. Specifically, in the pharma supply chain, nobody knows how many fake drugs are there, and how to recognize the real one from a counterfeit, so criminals are able to spoof and do man-in-the-middle.
In this patchwork of many black boxes, nobody knows for sure where drugs came from and how much inventory is available, causing drug shortages. This situation is becoming more critical especially with the rise of personalized medicine and with the increasing number of aging Americans, projected to nearly double, from 52 million in 2018 to 95 million by 2060.
The food and drugs US administration FDA have to oversee to make sure that the US residents are receiving safe, secure, and highly reliable drugs and that the product from the manufacturer through the distributor down to the retail pharmacy and all the way to the patient, is secure.
On February 8, 2019, the FDA launched the DSCSA Pilot Project Program to explore and evaluate methods to enhance the safety and security of the pharmaceutical distribution supply chain. Participants have tested new technologies, processes, and methods that can help improve security along with the ability to trace prescription drugs at every point in the supply chain.
There are several blockchain pilots in the DSCSA Pilot Project Program based on different blockchains technologies and solutions. Here below are four of them:
1- IBM/KPMG/Merck/Walmart- DSCSA Blockchain interoperability
2- MediLedger — MediLedger DSCSA Pilot
3- TraceLink — DSCSA Traceability with Distributed Ledgers and Digital Recalls Project Proposal. Executive summary
4- UCLA Health — UCLA-LedgerDomain: DSCSA Solution Through Blockchain Technology and video presentation
With 4.2 billion prescriptions being dispensed each year in the United States, DLT would not only reduce the projected per-unit DSCSA compliance cost from 17 cents per unit to 13 cents per unit (saving $183 million in annual labor costs), but also enhance timeliness and reduction in paperwork burden, reduce the need for safety stock, and enhance the detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S.
Why DSCSA’s Pilot Project Program can be the springboard for blockchain critical mass adoption?
1- since all suppliers in the pharmaceutical supply chain are affected by the DSCSA, the number of entities that, by law, will potentially join the blockchain networks is massive. From the manufacturers to the wholesalers, the repackagers and dispensers (as the law calls them) the retail pharmacies, the hospital pharmacies, the groups of large common ownership pharmacies, and any authorized person by law that can dispense, minister, or prescribe a drug.
2- blockchain capabilities (a transaction system that provides a common data structure, a shareable ledger with immutable data, and inherent ability to track drug provenance) fit gracefully with DSCSA’s requirements to track and trace prescription drugs and reporting. The full end-to-end supply chain verification capability of blockchain allows monitoring a suspect product, or potentially a recall, or a number of other events that authority may want to inquire about, and the industry to exchange information.
3- all entities in the supply chain are forced to adopt new software because all dispensers must not accept ownership of a product unless they have what’s commonly referred to as its t3 data: transaction history — transaction information and transaction statement. Additionally, dispensers transferring ownership, have to supply those same t3 data to a subsequent owner, and finally, all transaction-level details have to be incorporated for it is not less than six years from that transaction date.
4- the blockchain networks will implement b2b relationships that are already existing. The peers are incentivized to be part of it in order to be DSCSA’s compliance. Commercial incentivization comes by design making the network sustainable over time which avoids the DLT’s common challenge of chasing commercial incentives to on-boarding the participants.
5- relatively short go-to-market (DSCSA’s compliance by 2023) consider the complexity of the implementation, deployment, and numbers of stakeholders involved (although implementation and stakeholders will be added incrementally through the years) those projects will be launched to the US pharma market in about two years.
6- the experience gathered by the US pharma industry will be exported outside the US and across other industries.
There is a significant need to enhance transparency and trust in an increasingly fragmented pharmaceutical supply chain given the number of entities, logistics providers, and distributors. Clearly, it’s a daunting task when you think about the complexity of the system to be implemented. With no doubt, the complexity of the orchestration, governance, deployment, and interoperability of DLT pharma’s networks is considerably high, but compared with other use cases where blockchain has been piloted, the trigger seems bigger. There is a concrete problem to solve, with a deadline and regulations to follow at industry level, that will foster a broad adoption if they will make it work all together. Not to underestimate that, in some cases, projects running different types of blockchain technologies have also a different implementation logic that is incompatible with each other. Like in other blockchain initiatives collaboration within the industry is crucial, but the involvement; since the beginning of the regulators, the FDA, leaves hope for the awaited network effect to take place.
It is a humongous opportunity to test DLT technology integration with other systems and technologies, along with the interconnection between different networks under the eyes of the institutions that are reviewing the results got from the pilots.
In contrast to other industries where regulations are still strong barriers for blockchain adoption, FDA pilot program could boost the awaited DLT network effect as the foundational technology for the pharma supply chain by 2023.
