Where does my prescription come from? Has it been altered or diluted? Can I trust the label? With millions of prescriptions filled each year, quality control and security across the pharmaceutical supply chain seems like a herculean task. In an attempt to slay this proverbial hydra, the Food and Drug Administration (FDA) developed a new pilot program – the DSCSA Blockchain Interoperability Pilot (the “Blockchain Pilot”) – which aims to use blockchain to create a secure electronic, interoperable system that tracks and traces certain prescription drugs as they are distributed in the United States.
To address quality control issues within the pharmaceutical supply chain, Congress enacted the Drug Supply Chain Security Act (DSCSA) on November 27, 2013. Among other things, the DSCSA requires FDA to create an electronic, interoperable system to identify and track prescription drugs distributed within the United States by 2023. In February 2019, FDA announced the implementation of pilot projects to help achieve the aims of the DSCSA. This February announcement asked pharmaceutical stakeholders to propose pilot projects for review by FDA that would help enhance the safety and security of the distribution supply chain. The results and advancements of these pilot programs are meant to be shared with all stakeholders.
In a synchronized statement, four companies – IBM, KPMG, Merck, and Walmart – announced that they were selected by FDA to collaborate on the Blockchain Pilot. Each of the four collaborators in the Blockchain Pilot bring to the table technical knowledge and experience with blockchain technology:
IBM has worked on a myriad of blockchain projects since 2016, and can provide use of its cloud-based Blockchain Platform that delivers end-to-end capabilities.
Walmart – recently ranked as the third largest retail pharmacy – brings a deep knowledge of the current machinations of the pharmaceutical supply chain.
KPMG is one of the “Big Four” accounting firms and has previously worked with IBM on joint endeavors involving other IBM technologies including IBM’s Watson AI platform.
Merck is a leading biopharmaceutical company that has previously worked on a blockchain solution to secure its own pharmaceutical supply chain and detect counterfeit drugs.
Blockchain as a Solution
The Blockchain Pilot’s backers announced that they are hopeful that they can use blockchain to create a reliable and verifiable supply chain that helps improve confidence among all stakeholders, especially patients. Applied to the pharmaceutical supply chain, this could potentially allow users to access a platform that tracks a drug from its creation all the way through to its delivery to a patient. Such a ledger “has the potential to transform how pharmaceutical data is controlled, managed, shared and acted upon throughout the lifetime history of a drug.”
However, blockchain is by no means a panacea. The Blockchain Pilot will need to contend with technical limitations of the technology and will not solve all the issues facing the pharmaceutical supply chain at once. For example, as a blockchain grows larger, it operates more slowly and requires more energy to run. Storage size can likewise become an issue. More data equals a larger ledger, and, since the ledger is copied to and stored on multiple nodes across a network, more storage space will be required on each node.
The Blockchain Pilot is scheduled to be completed in the final quarter of 2019. Ideally, the Blockchain Pilot will allow both FDA and industry leaders to weigh the strengths and weaknesses of blockchain as a potential solution, and decide whether and how to best implement the technology moving forward. We will continue to monitor the status of this project and provide updates concerning the next steps taken by FDA and these industry stakeholders.
 21 U.S.C. § 360eee-1
 84 Fed. Reg. 2879 (Feb. 8, 2019)
 See IBM’s Blockchain Webpage
Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.