Combating counterfeit drugs with Blockchain

Combating counterfeit drugs with Blockchain

A counterfeit medication or a counterfeit drug is a medication or pharmaceutical product which is produced and sold with the intent to deceptively represent its origin, authenticity or effectiveness. A drug is called a counterfeit when:

  • the drug may not contain appropriate quantities of active ingredients
  • the drug may not contain any active ingredients
  • the drug contains ingredients that are not marked on the label and may or may not be harmful
  • the drug may have false or fake label

All this relates to pharma fraud.

While many manufacturers and distributors are investing in technologies to increase traceability and authenticity of these drugs, the problem persists. This is a very profitable business for criminals. Corruption and high handed political influence also adds to the problem. These criminals are only interested in producing a perfect copy. They do not care about the content. Some drug manufacturers take up this practice as well, to save costs. The subject of counterfeiting is an organized crime in the Pharma industry, and a menace to the society.

Counterfeit medicine smugglers have sold treatments for arthritis, birth control, macular degeneration, cancer, migraines, asthma, infertility, anesthesia, osteoporosis, cosmetic procedures, Hepatitis, HIV etc. There are a lot of shady items like road paint, floor wax, boric acid, aluminium, etc.. that can be used to create these drugs. Since 2012, the FDA has warned 2,234 medical practices across 49 states in the USA that they have done business with unlicensed distributors. In a technologically advanced country like USA, if such an act can happen, imagine the state of affairs in Africa where counterfeit drug producers from Asia import drugs into Africa extensively.

Counterfeits are a global problem. It is important to uncover counterfeits and effectively prosecute. Based on industry estimates, pharmaceutical companies incur an estimated annual loss of $200 billion due to counterfeit drugs globally. About 30% of drugs sold in developing countries are considered to be counterfeits.

So, how do we solve the issue. Let us look at the various participants in the supply chain of a drug. To keep things simple, I have listed only the high level roles.
drug manufacturers

  • wholesalers
  • pharmacists
  • medical representatives
  • the patient

The key issues to solve are as follows:

  • who created the drug
  • how the drug is being transported
  • who consumed the drug

This inherently means that there needs to be transparency, access to information and disparities in treatments while solving the problem. Can this be solved by implementing a Blockchain technology in the supply chain network to discover and/or trace a drug from consumption (end user) to production?

What are blockchains and how does the blockchain technology work?
Blockchain is a permanent record of online transactions. This record of transactions can be shared among a network of computers. Users on this network can add to the record of transactions. Transactions are kept secure via cryptography, and transactions have to be approved and verified by the network in a process called mining. Blockchain is similar to a database which stores information, however the main difference is that the data is located in a network of personal computers called nodes where there is no central entity such as a government or bank controlling the data. Instead, all data is shared publicly although the contents of each data is only accessible to those with permission. Each transaction can be thought of as a block, and the ledger that links them together is the chain. Blocks are linked together in the chain through mining. Each participant