Blockchain, the distributed ledger technology, continues to expand in the financial industry, but we haven’t yet examined its full potential to transform the healthcare industry. Healthcare, and the pharmacy industry specifically, could employ blockchain to streamline efficiencies, improve privacy and confidentiality, enhance patient safety, and provide a higher level of clinical care to consumers.
What is blockchain?
The white paper “Blockchain for Dummies” by Manav Gupta defines the term thusly: “Blockchain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. Virtually anything of value can be tracked and traded on a blockchain network, thus reducing the risk and cutting costs involved. The blockchain network is economical and efficient, because it eliminates duplication of effort and reduces the need for intermediaries. It is also less vulnerable, because it uses consensus models to validate information. Transactions are secure, authenticated, and verifiable.”
In its most simple explanation, think of blockchain as a huge decentralized database over a network of users and computers, with no single ownership. It is also totally transparent to the users:
- Users see any changes made to the chain
- Users can’t change anything once it has been entered
- All changes are recorded with a detailed chain of timestamps
- Updates connect each block back to the original block
Current investments
The amount invested in blockchain technology is comparatively small but aggressively growing. Examples include IBM and Microsoft incorporating blockchain platforms in their customer support systems. Additionally, major companies are actively exploring the value of integrating blockchain technology into their operations. Examples include:
- Walmart – vendor payment and digital shopping
- Starbucks – tracing beans from various countries
- American Express – partnering with Boxed to customize rewards for cardholders
- JD.com – use of blockchain technology to accelerate AI development
In healthcare, blockchain technology has already begun making an impact. Healthcare Rallies for Blockchain, a study from IBM, noted that 56% of surveyed healthcare executives had solid plans to implement a commercial blockchain solution by 2020.
Business benefits
Businesses view the core benefits of blockchain as promoting greater:
- Trust across stakeholders, since the ownership and any changes are transparent to all
- Time and cost savings, considering there is less oversight, participants can interact directly, and it removes duplication of efforts, since all stakeholders have shared access to the network
- Security and privacy, thus reducing tampering, fraud, and cybercrime
- Auditability and timely follow-up to help avoid potential longer-term problems
- Overall efficiency, since it streamlines transfer of responsibility and ownership
Applications for healthcare and pharmacy
The power of blockchain and realizing its full potential to simplify, speed, and lower the cost of transactions depends on stakeholders to participate, cooperate, agree, coordinate, implement, and adopt across the healthcare industry. There are several promising use cases of how blockchain could benefit the healthcare and pharmacy industry being explored:
- Multiple Electronic Healthcare Records (EHR) are currently created for the same patient across multiple providers and platforms, creating challenges around the completeness of the record, the timeliness and accuracy of the personal and healthcare history, and the security costs associated with protecting the information.
- Blockchain would potentially be able to hold the complete history for each patient, and any updates or changes made by any provider or the patient would be captured and recorded securely in one place – that includes data from the many patient engagement apps and devices that may be used to monitor his or her daily health.
- Healthcare payment preauthorization requires that any supporting detail must be included, and this may or may not be included with the initial request. The follow-up to request missing information for preauthorization is costly, requiring time and support staff. Additionally, the payment processes slowly.
- Blockchain could simplify the process, since the collection and sharing of information is automated and timely.
- Pharmaceutical supply chain infrastructure is fragmented. Cumbersome handoffs to maintain chain of custody, integrity, product verification, and notification of respective stakeholders are being “patched” with current track-and-trace and other operational technologies, but these are costly and can increase the overall healthcare spend.
- Blockchain has the potential to improve overall operational efficiency and lower costs from greater integration, transparency, and traceability.
- With the introduction of new specialty and traditional drugs requiring cold chain, there is an opportunity for blockchain to effectively and efficiently monitor the integrity of the product across the supply chain from manufacturer to the patient.
- Blockchain can monitor the active ingredients from source of raw materials, as it is introduced through the manufacturing process of a product.
- Prescription abandonment and medication non-adherence is still a $300 billion-a-year issue, resulting in 125,000 deaths annually.
- By placing greater responsibility of ownership of the healthcare data on the patient, blockchain can benefit the patient and provider by promoting greater bi-directional insight, tracking/trending, and timely follow-up on patient behavior relating to medication compliance and adherence.
- The complexity and evolution of gaining consensus will be a primary challenge toward achieving the cost/benefit resulting from the application of blockchain technology.
Will you be ready?
While healthcare is early in the lifecycle of blockchain integration, it’s never too early to prepare.
Blockchain’s power to simplify, increase speed, and lower costs of transactions makes it imperative that there is collaboration, cooperation, interoperability standardization, consensus, and adoption of blockchain-enabled networks among key industry stakeholders in the healthcare supply chain. Those key stakeholders include:
- Pharma: Supply chain operational and financial efficiencies; product quality
- Healthcare technology companies: Platforms and systems to empower patients to capture and own their health data; HIPAA privacy and security standards; connecting of data from patient engagement connected devices
- Providers and payers: Opportunities to improve service levels, continuity and care outcomes, and operational efficiencies
- Patients: Empowering patients/consumers to take more ownership and sharing of their data
Digital technology has been one of the most significant drivers impacting our businesses and our lives. Blockchain has the potential to be very disruptive to our healthcare supply chain. It’s important for healthcare stakeholders, including pharmacy, to really understand the potential implications and be strategically positioned to evaluate and potentially adopt the “fast-moving” commercial applications as blockchain integrates with mainstream healthcare supply chain.
David J. Fong, PharmD, is president of Dave Fong Rx Consulting, Inc. A former senior retail pharmacy executive for Fortune 100 and Fortune 500 companies, he is recognized as one of the U.S. and Canada’s business and professional healthcare leaders, leveraging his knowledge and experience working with pharmaceutical manufacturers, distributors, retailers, payers, and healthcare technology companies to bring value to the industry and the consumer.
