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FDA choses Walmart, Merck, IBM, and KPMG for blockchain pharma project

With fake medicines a huge and potentially fatal problem, the U.S. Food and Drug Administration thinks blockchain might be the solution

Walmart, Merck, IBM, and KPMG are teaming up with the U.S. Food and Drug Administration on a blockchain pilot program aimed at protecting the American pharmaceutical supply chain.

The project, announced by IBM Blockchain on June 13 and scheduled for completion by year’s end, seeks to help build an interoperable, electronic system to identify, track, and trace prescription medications and vaccines distributed in the United States. It is part of the Food and Drug Administration’s (FDA) program to support the U.S. Drug Supply Chain Security Act (DSCSA).

That law requires step-by-step tracking of where a drug has been and who has handled it, from manufacturing by pharmaceutical firms like Merck all the way through to the retail pharmacies. Walmart was the sixth-largest pharmacy by revenue in 2018, accounting for 4.9% of all prescriptions, according to the Drug Channels Institute.

Counterfeit, substandard, and expired pharmaceuticals are a huge problem, with the World Health Organization estimating that fully 10% of the medicines in developing countries are either fake or expired. But it’s not just a third world problem.

In 2015, the Partnership for Safe Medicines reported that California resident Tosh Ackerman died after taking a fake Xanax pill containing a fatal dose of fentanyl, a synthetic opioid that is 80 to 100 times more powerful than morphine. In February, the World Health Organization issued a warning about fake $450-a-pill leukemia medication in circulation.

“Blockchain could provide an important new approach to further improving trust in the biopharmaceutical supply chain,” said Mark Treshock, IBM global solutions leader for blockchain in healthcare & life sciences. “We believe this is an ideal use for the technology because it can not only provide an audit trail that tracks drugs within the supply chain; it can track who has shared data and with whom, without revealing the data itself.”

With existing cloud infrastructure making it easier and more affordable to create an immutable record of transactions, permissioned enterprise blockchain is “a logical tool to deploy to help address DSCSA compliance requirements … [and help] drug manufacturers, distributors and dispensers meet their patient safety and supply chain integrity goals,” KPMG Blockchain Leader Arun Ghosh said.

Pointing to successful Blockchain pilot programs tracing pork, mangoes and leafy greens from the farm to its shelves, Karim Bennis, Walmart’s vice president of strategic planning and implementation, health and wellness added, “we are looking forward to the same success and transparency in the biopharmaceutical supply chain,” in a statement.

Walmart was the sixth-largest pharmacy by revenue in 2018, accounting for 4.9% of all prescriptions, according to the Drug Channels Institute. Looking at that number, it’s worth remembering that Walmart has a strong focus on inexpensive medications, charging just $4 for generics, which would tend to skew its market share by revenue.

“We believe we have to go further than … everyday low prices,” Bennis said. “Our customers also need to know they can trust us to help ensure products are safe.”

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.