How blockchain could eliminate counterfeit medicine

Blockchain technology can be utilized to ensure transparency from start to finish in the pharmaceutical supply chain


Counterfeit medicines are on the rise, killing an estimated 1 million people a year. The World Health Organization (WHO) estimate that around 10% of medicines across the world are counterfeit and that this rate is as high as 30% in some areas of Asia, Latin America and Africa.

As a result, the OECD has deduced that the counterfeit pharmaceutical industry is worth somewhere in the region of $200bn annually – for comparison, the illegal drug trade is worth around $246bn.

Because of how lucrative the counterfeit medicine business now is, it has seen dramatic growth in recent times, causing Interpol to report a ninefold increase in the volume of fake drugs supplied between 2011–14.

Blockchain technology, notorious for its applications in securing vast swathes of data in a way that’s impossible to manipulate, has vast potential to tackle this growing illicit industry by tracking the movement of drugs.

This kind of tracking is vital because the imposter medications are nearly impossible to detect. "Counterfeiters can produce look-alike drugs and devices that contain little or no active ingredients, or the wrong ingredients, for less than the authentic medication would cost to make," the Partnership for Safe Medicines (PSM) states.

"Criminals duplicate packaging, product shape, taste and feel so that it is indistinguishable from authentic medicine. Patients and doctors can’t tell the difference," PSM added.

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These counterfeit medicines can have little to no effect, meaning that the patients won't see an improvement in their health, and they can even contain poisonous compounds causing further risk to the patient's lives.

In the US, the counterfeit drug market is rife. Nearly 40% of drugs are made overseas and approximately 80% of the active medicinal components of drugs are imported meaning that preventing them from entering the country is incredibly difficult.

The growth of the internet and, in particular, online retail is also responsible for this growth and US consumers are largely unaware of the dangers of purchasing counterfeit drugs from internet pharmacies. The rising cost of healthcare means some people turn to the cheapest option available, putting them at even more risk of purchasing counterfeit drugs.

Additionally, an estimated 36 million US citizens have bought drugs online without a valid prescription, according to the Partnership at, putting them at further risk of purchasing counterfeit medicines.

All of these factors contribute to a dangerous lack of transparency within the pharma supply chain that allows counterfeit drugs to slip through the cracks undetected and wreak havoc.

How can blockchain solve this problem?

The underlying ledger system of blockchain technology is already being applied as a solution to supply chain transparency in a plethora of industries. Because of blockchain technology's decentralization, encryption methods and immutable record-keeping, large amounts of associated data can be distributed, but not copied. This means it can be utilized to track and secure goods at each stage in the supply chain process.

This same methodology can be applied to pharma supply chains to prevent the distribution of counterfeit medicine. This will mean that blockchain can be harnessed to ensure there is verifiable proof of what has been delivered to who and by whom, with complete transparency and without a shred of doubt. As the drug moves through the supply chain, each transaction would therefore be noted and time-stamped using the ledger to ensure security and safety of the product.

While blockchain is generally associated with cryptocurrency, the acceptance of blockchain in pharma is a growing trend. Of the 120 pharmaceutical and life science officials Pistoia Alliance surveyed in a recent report, 83% expected to adopt blockchain within five years. Additionally, 68% anticipated that blockchain would have the greatest effect in securing the supply chain.

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What advancements are starting to be made?

Because of the technology's capacity to secure the pharma supply chain, there are already a number of organizations and government bodies working on blockchain-enabled counterfeit detection:

MediLedger: Introduced by LinkLab LLC and Chronicled, MediLedger aims to be an open network for addressing the entire pharma supply chain, from drug makers to wholesalers to hospitals.

MediLedger’s blockchain technology works by storing data on several separate nodes or servers, which makes it hard for a counterfeiter to manipulate the data. If they do manage to hack one server, blockchain tech means that they won’t be able to manipulate data across any of the others. This also allows it to enforce cross-industry business rules without ever revealing data, ensuring patient privacy and the safety of medicines.

The FDA: The UShave begun using e-pedigree software, an electronic document providing data on the history of a particular drug, to track drug shipments. One such application of this blockchain technology is through RFID tagging of all products, logged with an xml description of the life history of the drug which is then signed with certificates and entered into multiple systems.

Institute of Electrical and Electronics Engineers (IEEE): IEEE has an ongoing project, "The Pharma Blockchain Initiative" which aims to use emerging technologies to better track and optimize the pharma supply chain. It has recently begun investigating blockchain as a potential solution to issues within that supply chain.

"We were looking at it as a means to achieve compliance with the FDA’s Drug Supply Chain Security Act (DSCSA); and, also to better manage inventory, to facilitate true collaboration amongst trusted partners, and combat counterfeit medicines because it is becoming a rapidly rising global epidemic," states Maria Palombini, director, communities & initiatives development, global business strategy & intelligence, IEEE Standards Association.

Suppressing the threat

As the counterfeit medicine trade continues to increase, its growth will run in parallel to the development of blockchain technology, ultimately working to vastly limit the impact of counterfeit drugs, especially as attitudes towards the technology inevitably shift.

In the future, the reliability and security of the technology applied in pharma supply chains will almost entirely squash this global epidemic, saving countless lives.

To find out more on how you can leverage data analytics to deliver patient-centric outcomes, visit this year AI & Data for Pharma Summit, part of DATAx New York on December 12–13, 2018

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