Blockchain believers have delivered little more than hype, mostly failing to get it deployed outside the cryptocurrency space where the technology was developed. But a little-noticed U.S. law could change that, bringing the ledger system to the pharmaceutical business.

September 26, 2018

The Drug Supply Chain Security Act from 2013 requires drug companies and their supply-chain partners to more closely track where their finished products are shipped, making counterfeit medicines harder to sneak into the system and easing drug recalls.

By 2020, pharmacies and hospitals must be able to verify that the drugs they’re dispensing came from manufacturers or repackagers, which divvy up huge batches of pharmaceuticals into the actual bottles that get distributed in pharmacies or hospitals. While pharma giants are still evaluating how to comply, healthcare analysts says the impending deadline is leading firms to seriously consider the blockchain, since it’s designed to create detailed and immutable databases.

“The best bet going right now appears to be blockchain,” in part because of the shortcomings of conventional software, said Chet Stagnaro, a consultant with healthcare advisory firm Freed Associates. “The potential is definitely there.”

Blockchain, originally developed as the ledger technology that powers the Bitcoin digital currency, is promising for corporations, if they can figure out how to use it. Proponents predict billions of dollars in savings by handling records more efficiently and rapidly. Yet most corporate efforts are still in early development or testing.

Healthcare may buck that trend. The Center for Supply Chain Studies has been conducting studies and trials with drug manufacturers, distributors and pharmacies since 2017 to assess how blockchain can meet the law’s requirements, according to Robert Celeste, founder of the organization.