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On the blockchain, each new piece of data is digitally recorded into what is referred to as a ”block.” This block is then linked to the last block on the chain, via a hash function. It is this that ensures the immutability of the blockchain. A hash is a type of cryptography that is impossible to reverse engineer. This means that once a piece of data has been added to the chain, it cannot be deleted or changed. This is because altering one piece of information will change the contents of the block, which will require the alteration of every single other block. Such is the nature of distributed ledger technology, every node in the network will have a copy of this blockchain and therefore someone would need to simultaneously alter 51% of all nodes in order to falsify a record. This adds a layer of additional security over and above a manual system, where one central ledger is held by one trusted party.

There are several ways to design a blockchain network. One is a public ”permissionless” blockchain, where the blockchain is open for all participants to take part in every transaction. All of the data is replicated on all of the nodes and all nodes are treated the same. There are also private ”permissioned” blockchains, where only selected participants can take part in a given transaction on the blockchain. The data is then shared across pre-determined nodes based on the protocol.

Pharmaceutical supply chains

Blockchain could greatly improve supply chains. Whilst blockchain cannot account for all eventualities, it can substantially lower the chance of errors within the chain. In pharmaceutical supply chains, in particular, there are many stakeholders and stages are involved — from the API provider, the drug manufacturer, the packaging and distribution companies and the regulators, all the way through to hospitals, pharmacies and ultimately, the patient. Having so many intermediaries adds complexity and makes it difficult to track and ensure authenticity meaning counterfeit medicines are more likely to enter the distribution chain. The nature of blockchain means it would be able to show proof of origin of products and provide greater security.

The COVID-19 vaccine rollout

One supply chain which is receiving a lot of attention at the moment is the Covid-19 vaccine roll-out. The UK program is now well underway, with more than 35 million people having now received their first COVID-19 vaccination and over 18 million having received their second in the UK. According to a UK government press release on February 13, 2021, the vaccines are now being administered at 267 hospitals, 1,034 local vaccination sites, 90 vaccination centers and 194 community pharmacies.A rollout of this size and speed is completely unprecedented, and so there is an even greater need to ensure that the rollout is accurately monitored, and effectively and safely delivered.

The COVID-19 vaccines have added complications (over and above those associated with the supply of any drug or vaccine), due to the fact that there are several different vaccines with different storage requirements. Some require permanent storage at exact temperatures in order to be effective and this temperature must be maintained from manufacture, through distribution, during transit, and in the hospitals and vaccination centers. A further complication that requires stringent monitoring and coordination from suppliers and medical professionals is that the vaccines are not currently interchangeable, so a patient’s subsequent dose must be the same as their first.

A well-functioning supply chain is therefore essential to ensure that the COVID-19 vaccine rollout is safe, reliable, traceable and that errors are minimized.

How blockchain can help

Blockchain could offer reliable end-to-end tracking and monitoring of vaccines and drugs through the supply chain. One of the difficulties lies in assigning a digital identity to a physical product, such as drugs or vaccines. This could be done through applying identifiers e.g. barcodes to the product. In addition to adding an identifier, these need to be tamper-proof so fraudsters cannot insert counterfeit medicine into the tagged packaging. This could be done through scanning barcodes at each touch point, and making all of the information available to the manufacturer or the regulator (or whoever requires access to that data). The data could also be made accessible to parties with limited infrastructure e.g. pharmacies or hospitals, as they could simply use a barcode scanner to verify the authenticity of a drug. An example of a system already in use is the ‘bokode’1 — a visual data tag only 3mm wide but capable of holding thousands of times more information than a standard barcode. They can be read up to a few meters away, by any standard digital camera including mobile phone cameras.

Using blockchain, if an issue (such as a counterfeit drug or even just a faulty or expired drug) is detected, the user could look at all previous data entries, touch points, locations and timestamps to trace all the way back to find the origin of the product, the specific manufacturer and even the specific batch that it came from. Blockchain would therefore allow products in the supply chain to be readily traced and verified, and could enable easier detection and rectification of issues. This in turn would allow faster and more efficient detection and removal of counterfeit, faulty or expired products from distribution. There are further safety mechanisms built in to the blockchain: although counterfeiters could still copy barcodes, the blockchain would instantaneously and immutably flag any suspicious activity, and any attempts to amend the data in the chain would be immediately visible to all authorized users and could be rejected. This not only assures authenticity over and above a normal manual database which can be more easily tampered with and where individuals may be able to edit or remove important information, but also enables ways of verifying that an entity that has handled the product has complied with regulatory requirements.

Blockchain could also be used for monitoring the COVID-19 vaccine rollout, as it can be combined with the use of internet of things (‘IoT’) technology (e.g. temperature sensors). Monitoring of temperature and storage time is essential for the Covid-19 vaccine distribution chain in particular, as the different vaccines have different storage requirements. Blockchain technology could be used to monitor temperature and other important information during transport and storage of vaccine batches. The system would work by using smart IoT sensors on the transport containers which would collect, store, and transmit information and store it on the blockchain. Other authorized parties could then immediately view this information on the blockchain, allowing hospitals, distributors and regulators to check that the vaccines were transported and stored correctly and are therefore safe and effective.

There are many other potential benefits that blockchain could offer in the context of pharmaceutical supply chains, such as quickly and efficiently locating issues, hold-ups and bottlenecks and removing the risk of double counting through instantaneous transactions and the use of a consensus mechanism.2 As discussed above, blockchain could assist with quickly identifying problematic products (e.g. faulty, incorrectly stored or counterfeit products) and also with efficiently removing those from the supply chain.

Early adopters

We are already starting to see the use of blockchain and distributed ledger technology within the UK National Health Service (‘NHS’). Two hospitals in Warwick and Stratford-upon-Avon have started using distributed ledger technology to monitor the rollout of the COVID-19 vaccines. There are two companies involved: Everyware Ltd, which is a digital asset tracking and monitoring provider that already works with the NHS on monitoring other vaccines and treatments), and Hedera Hashgraph, a Texas-based distributed ledger provider.The way the system works is that information collected from Everyware’s temperature-sensitive monitoring sensors is logged on Hedera’s decentralized platform. The Hedera network “nodes” act as the unbiased neutral party to coordinate and timestamp the sensor data. The database exists across several locations and several parties, and is therefore not reliant on one single centralized authority (as is the case with ‘normal’ databases, which essentially have one single point of potential failure). The information is then immediately available to any parties who have been given permission to access it. This provides a reliable and tamper-proof record-keeping system where integrity and trustworthiness of the data is maintained and results are recorded, validated and shared across the supply chain in a cost-effective, secure and efficient manner.

There has also already been appetite for utilizing blockchain more generally in the pharma supply chain. One example is the MediLedger Network3 (originally the MediLedger Project) which was launched in 2017. MediLedger’s working group, which is made up of pharmaceutical manufacturers and wholesalers, are exploring the potential of blockchain to meet the Drug Supply Chain Security Act requirements for a track and trace system for US drugs by 2023. MediLedger counts some of the industry’s largest pharmaceutical companies as its members and it has developed a blockchain-based system to track prescription drugs across the supply chain to better tackle the movement of counterfeit medicines. The core function of the MediLedger Network is to validate the authenticity of drug identifiers throughout the supply chain, all of which can be done without any proprietary data being shared openly on the blockchain and without it ever leaving a company’s control.4

Blockchain could add undeniable value in tracking, monitoring and reducing issues in pharmaceutical supply chains. Although it will not completely eliminate all risks, blockchain (and distributed ledger technology more generally) can help to tackle issues associated with the manual systems. Due to its immutability, transparency and traceability, it can offer efficient and accurate end-to-end tracking and monitoring of the vaccine supply chain and can provide a verifiable and auditable account of information. There is already appetite among the pharmaceutical sector and in the NHS in the UK for using this technology in supply chains to improve record-keeping and data-sharing.

Hannah Schofield and Lavan Thasarathakumar, Hogan Lovells.



2. A consensus mechanism is a way to ensure all participants on the blockchain agree are synchronized with each other, agree on the status of the ledger and agree on which transactions are legitimate and should be added to the blockchain.