How Will PharmaTrace Smart Contracts Change the Pharma Business

In today’s world, when the global counterfeit market is estimated to be worth between US$200 and US$432 billion, and falsified drugs causing severe conditions in patients constitute 1% of the market in developed countries and up to 30% in certain Asian, African and Latin American countries, trust is not your best friend. And, while humans have proved to be powerless against the issue, new technologies are here to help. In this article, we will show how blockchain and smart contracts can drastically change the business in pharma.

What Are Smart Contracts?

In normal business contracts, you need not only plenty of manual work but also a lot of tools to make the deal legally binding to all parties and bring it into effect. Smart contracts can tremendously simplify administration and enforcement procedures. So let’s discover what they are and why they are useful.

In short, are self-executing computer programs (a code written into the blockchain) that automatically execute the terms of an agreement when certain conditions are met. In such a way they eliminate human errors and manual work as well as automate everything that would otherwise be completed by the parties in the agreement. 

Blockchain technology provides a secure platform for the execution of the contract as the code cannot be changed once it has been added. This means parties no longer have a need to trust each other as it’s simply impossible to deceive the system from a technical point of view.

Currently, there are more than 30 million smart contracts deployed worldwide. They cover different industries such as BFSI, energy, life sciences, the public sector, and real estate. We at PharmaTrace are doing our best to ease their implementation in pharma as well. 

Benefits of Smart Contracts for the Pharmaceutical Industry

There are plenty of advantages to integrating smart contracts into the pharma supply chain. Here are some of the most evident:

More transparency on data change. As every event and data are recorded on the blockchain and cannot be deleted, all the parties with view permissions can track the changes made throughout the journey.

Access management. With smart contracts, you can define which parties will have access to the data and what particularly they can do: view, edit, etc. 

Reducing manual paperwork. The burden of managing large amounts of paper documents causes lots of human errors. It also gives green light to drug falsifications as it is simpler to change or replace. Smart contracts are not the only solution that can cope with the issue, but taking into account their other advantages, it is a good alternative to all other existing tools.

Eliminating supply chain delays. This is especially critical when dealing with vital medicinal products that may cost people’s lives. Delays can be caused not only by paperwork, but also by a complicated hierarchy of payment approvals, or a long time for processing orders and payments. Smart contracts allow the execution of all actions automatically and in seconds.

Comprehensive audit trail and traceability. When all the actions are registered in a blockchain any unauthorized party can’t remove or modify stored information. At the same time, all parties to the agreement have access to and can inspect the history via the distributed ledger system.

Saving time and costs. With smart contracts, all the actions are automatically recorded in the blockchain which reduces time and money as there is no need to involve additional manpower or compensate for the faults and delays.

How PharmaTrace Smart Contracts Can Improve Your Pharma Business

In PharmaTrace we are working on blockchain-backed solutions that enable pharmaceutical companies to build tailored supply chain networks, share the data with their partners without any fear, and manage the product flows efficiently and safely. In this section, we will share some PharmaTrace smart contract use cases.

Compliance in Pharma Supply Chain

Governments start implementing regulations like the Drug Supply Chain Security Act (DSCSA) that require all the pharmaceutical supply chain participants to adopt technologies for reliable and secure transactions at each point of the medicines journey. This will help to eliminate counterfeits and to ensure that the right amount of products will be delivered to the right place, at the right time, and in the right quantity.

Blockchains provide a mechanism for unfalsifiable time-stamping of transactions in the supply chain. PharmaTrace solution allows storing and tracking the data in real-time securely, and in a publicly verifiable way. Original transaction data is encrypted with the public key of the user and can be decrypted only by an owner or other users who have adequate permission. 

As all the actions are registered to the blockchain, a smart contract can be bound to any change that occurs during the product transaction. The program can be configured to trigger corresponding notifications. The auditable trail helps to safeguard drug authenticity and prevent counterfeit in pharma. Counterfeiter copies of barcodes can be avoided since smart contract tracks every time a package changes hands. A map view within the mobile app also helps ensure that the drugs are in the expected geographical region.

Verifying the Authenticity of the Drugs

In many countries, there are regulations, requiring all drugs to be serialized or barcoded, like DSCSA in the US or the Falsified Medicine Directive (FMD) in the European Union.

Our solution allows for building tailor-made networks of partnering companies, i. e. manufacturers, wholesalers, packages, dispensers, etc., generating serial numbers as per the requirements, and creating a centralized database of the serial numbers with the distributed ledger technology.

All the parties can then verify the authenticity of a drug package by connecting to the blockchain. Smart contracts can be used to notify of any issues.

This will be especially crucial for the drugs that are being returned to the pharmaceutical manufacturers. Quite often wholesalers order excess inventory and need to return unsold stock. In this case, manufacturers can opt to destroy those medications or resell them after ensuring their authenticity. 

It is estimated that returns constitute about 2–3% of sales and cost companies $7-10 billion a year.

Drug Recall

Organizations, consumers/end users, and regulators are lacking a common method to recall products at various points of the supply chain. PharmaTrace offers a standard set of business processes and supporting data, enabling traceability partners in a supply chain to quickly and efficiently initiate a Product Recall and track its progress through to its conclusion.

For one product recall cycle, to handle the safe and transparent product transit, smart contracts can trigger corresponding business messages notifying the involved parties of the start/end of the product recall, as well as product removal status.

Drug Shortages Management

Medicine shortages pose a significant threat to public health and safety as they can lead to delays in patient care, increased costs, and other negative impacts. Smart contracts can be used to help manage the issue by providing a secure and transparent platform for tracking and managing inventory.

The PharmaTrace application allows its users to create a product shortage and notify the involved participants.

Here's an example of how smart contracts can be used to manage drug shortages:

·  A pharmaceutical company creates a smart contract that defines the terms and conditions of its inventory management system, including the drugs they produce, the quantity of each drug they have in stock, and the expiration dates of each drug.

·  The smart contract is deployed on a blockchain platform, which provides a secure and decentralized platform for the management of the inventory.

·  Hospitals and other healthcare providers can access the smart contract and view the inventory of drugs available from the pharmaceutical company.

·  When a healthcare provider needs to order a drug that is in short supply, they can place an order through the smart contract.

·  The smart contract automatically checks the available inventory and the expiration dates of the drugs and determines whether the order can be fulfilled.

·  If the order can be fulfilled, the smart contract initiates the shipment of the drug to the healthcare provider.

·  If the order cannot be fulfilled, the smart contract notifies the healthcare provider and provides alternative options, such as suggesting a different drug or a different supplier.

By using smart contracts to manage drug shortages, the healthcare industry can improve the efficiency and transparency of the inventory management process, which can lead to better patient outcomes and lower costs. Additionally, the use of blockchain technology ensures that the inventory data is secure and tamper-proof, which helps prevent fraud and other malicious activities.

Monitoring Temperature And Other Environmental Conditions

Internet-connected sensors can be placed inside containers with medications and configured to measure temperature, humidity, or other required metrics on a regular basis (for example, every 15 minutes for example). The readings can be recorded on the blockchain.

Smart contracts can be programmed that automatically execute when manual attention is needed, i. e. an IoT device detects an out-of-range condition. This will trigger an instant alerting the relevant parties in the supply chain.

Final words

Smart contracts are a new efficient method of doing business and have already changed some industries. In PharmaTrace we are implementing smart contracts to dramatically change the pharmaceutical industry supply chain: from reducing the number of people needed to handle the administrative side and automating the logistics procedures to safeguarding products from counterfeit and meeting the compliance requirements. Please feel free to contact us and to know how our tailor-made solutions can help you to level up, safeguard and streamline your supply chain operations and improve your pharma company productivity in general.

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