April 4, 2018 Yes Institute

A Blockchain Solution to the Counterfeit Drug Menace

Author: Priyanku Sharma, Fellow, YES Global Institute

It is estimated that around ten per cent of medicines available globally are likely to be counterfeit[1], leading to countless deaths every year and causing huge loss of profits as well as reputation to pharmaceutical companies. The rise of e-pharmacies, while enabling tremendous ease of access to medicines, has contributed significantly to the circulation of fake drugs. According to United States’ International Trade Administration, the size of the global counterfeit drug market ranges between $75 and $200 billion,[2] resulting in billions of dollars of lost profits rendered by pharmaceutical companies annually.

Technology is already playing a noteworthy role in the war against spurious drugs. As a matter of fact, the massive trade volumes of spurious medicines worldwide has turned anti-counterfeit packaging technologies into an industry in itself. Yet, most technologies only offer a temporary respite against counterfeiters, who are sophisticated enough to bypass these technologies in quick time. Pharmaceutical companies further end up spending millions of dollars annually on these technologies, which could otherwise be invested in drug research and is eventually borne by unsuspecting patients.

By ensuring the authenticity of a medicine from its point of origin till its purchase by customer, Blockchain promises to radically reshape the Pharma sector in the next few years. The virtually immutable ‘Distributed Ledger’ technology can prevent malicious individuals or groups from introducing duplicate or fake entries into the supply chain by recording the movement of goods at every stage and allowing the verification of transactions throughout the supply chain.

Blockchain offers a superior mode of ensuring the reliability of the Healthcare system. However, to achieve the necessary level of adoption readiness, the Pharmaceuticals industry has to overcome fundamental challenges in maintaining its supply chain integrity, including privacy issues and securing trust between all parties including raw material suppliers, drug manufacturers, third party logistics, wholesalers, retailers and patients. Also, needless to say, this would have to be in compliance with regulatory bodies. As a matter of fact, Blockchain can provide regulators with an accurate audit trail, making it easier for Pharma players to comply with global regulations effectively.

The scale and magnitude of the counterfeit drug problem – one of the most stubborn healthcare-related challenges of today’s time, also offers lucrative incentives for the Pharma players to make a move towards blockchain implementation. While patients would be the foremost beneficiaries, Pharma players can significant increase their profit margins as a result of the necessary Blockchain-enabled cleanup of the Pharma supply chain.



[1] https://www.interpol.int/Crime-areas/Pharmaceutical-crime/The-dangers

[2] ‘2016 Top Markets Report Pharmaceuticals’ by International Trade Administration, United States