Blockchain use case: Healthcare supply chain

Tamper-proof distributed ledger tech helps with efficiency, security, integrity and visibility of pharmacy and other supply chain data. And because it doesn't necessarily involve PHI, it may be a logical place for hospitals to start exploring.
By Mike Miliard
09:42 AM
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blockchain supply chain

Of all the being explored for blockchain in healthcare, one of the most promising – and one of the most likely to gain more real-world momentum in the short term – is for supply chain management.

In other industries, mammoth players are already making big deals about how the immutable distributed ledger network can fundamentally improve the efficiency, security and integrity of the supply chain.

Just this week, it was reported that IBM is working with Abu Dhabi National Oil Company to help , and that Chinese e-commerce behemoth Alibaba – which bills itself as the "" – is betting big on what DLT can do for supply chain transparency.

Many of these projects, of course, are focused on the big-picture version of supply chain – international shipping, containerized freight, food supply, etc.

But in the complicated and often fragmented hospital setting, where efficient tracking of pharmacy orders, medical devices, surgical tools and critical resources is essential, blockchain is already showing itself to be a new approach worth exploring.

Even better, for health system IT leaders looking to take some first steps with a proof-of-concept or two, supply chain lends itself much better to exploratory projects than some other more clinically-focused use cases.

We showed this week how . But the attorneys we spoke to said those concerns are not as prevalent when dealing with supply chain initiatives.

"It's a lot safer space for organizations to dip their toes," said Foley Gardere attorney Eddie Block. "Because it doesn't necessarily involve personal health information."

Moreover, it might make a good first stepping stone to learning about larger and perhaps more data-sensitive pilots. If hospitals "get comfortable with how things work, doing more logistical, device-specific things," he said, "people will better understand how to protect the PHI as well."

"Supply chain management is another very effective technological use of blockchain," said Block's colleague, attorney Peter Vogel. "In healthcare, you don't want to get the wrong medicine to the patient, and you don't want to get some corrupted device that isn't going to work and put it in somebody's body. It can help validate that you are using the right medication, or if something went wrong with it, you could track down to find out why that happened."

Not for everyone, but could hold big promise for pharmacy

A recent McKinsey report outlined blockchain's potential for supply chain, generally speaking, and found some big advantages, but also some limitations.

"For supply chains where participants are not known or trusted, blockchain technology can add trust, transparency, and traceability," . "Almost by definition, these supply chains are complex, multi-tiered, involve many parties, and they operate in a regulated environment that demands a higher level of traceability."

But for those logistics networks comprising "known and trusted players, a centralized database approach is generally more than adequate," they said. "Many of these supply chains do not need blockchain technology to solve such issues, as they can leverage existing technologies that are better suited to their high-volume transactions, either on their own or with partners."

That said, healthcare is looking in earnest for new and innovative applications of blockchain to its help address its supply chain challenges. Earlier this year, we reported on research from The Center for Supply Chain Studies, .

This was no limited pilot project. The research gathered a wide-array of pharma stakeholders –manufacturers, wholesalers, retail dispensers, hospital dispensers, regulators, pharmacy systems associations, track and trace system vendors, blockchain companies and other experts – to learn how about "scalability, platform response times, latency, and interoperability between different solutions" for the emerging DLT tech, said Center for Supply Chain Studies founder Bob Celeste.

"Blockchain technology may hold a key to establishing a trusted network of information that both industry partners and regulators can rely on to aid in maintaining the security of the legitimate supply chain and thwarting the behavior of nefarious players," he explained.

And who are those "nefarious players"? Drug counterfeiters, to name some – with their wares risking patient safety and costing health systems billions of dollars each year.

"With an estimated global annual loss of $200 billion due to counterfeit drugs, pharmaceutical supply chain integrity may be one of the most relevant and demanding use-cases for blockchain," said Tapan Mehta, a life sciences exec at mobility company DMI, . "A blockchain-based system could ensure a chain-of-custody log, tracking each step of the supply chain at the individual drug or product level."

"Logistically, blockchain aligns well with federal efforts like the National Strategy for Global Chain Security," added Kevin Clauson, associate professor in the College of Pharmacy and Health Sciences at Lipscomb University, .

"One of the most promising benefits of blockchain from a patient safety perspective," he said, "is to help stem the tide of the so-called SSFFC medicines – substandard, spurious, falsely labeled, falsified and counterfeit – that continue to plague the pharmaceutical supply chain."

 

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