A report from strategy& last year stated that prescription drugs is the biggest global counterfeiting market by sector and that one million patients die every year from toxic counterfeit pharmaceuticals. Not only that, the World Health Organisation (WHO) estimated earlier this year that 1 in 10 medical products in low and middle income countries is substandard or falsified .

It is not a new problem but it is one that the industry has continually failed to solve. However, the EU’s latest approach to tackling the issue comes in the form of its directive related to medicinal products for human use and specifically section 16, which states that:

“The verification of the authenticity of the unique identifier is a critical step to ensure the authenticity of the medicinal product bearing it and should only be based on the comparison with trusted information on the legitimate unique identifiers uploaded in a secure repositories system by verified users.”

This directive is an important weapon in the fight against counterfeit drugs but it is not a simple change for organisations to implement. This is partly because of the complex and globalised supply chains that exist for the design, manufacture and distribution of drugs. It is also because the requirements for ‘comparison with trusted information’ and the need for ‘a secure repositories system’ are difficult to envisage with the current technology available.

However, a radical new technology could solve this issue if the industry is willing to embrace it.

Blockchain as a solution

It’s fair to say that the hype that surrounds blockchain at present means that it is being proffered as the solution to almost every issue within the pharmaceuticals and healthcare industries, as well as a lot of others.

However, in the battle against counterfeit drugs, these claims have strong evidence to back them up. A public blockchain is a distributed and decentralised record of information that is transparent, highly secure and immutable. Within tokenised economies, such as Bitcoin, it serves as the authoritative record of truth as to where and when digital assets have been created, transferred and currently exist.

Looking again at the EU’s directive, a couple of significant points stand out. Firstly, there is a need for “trusted information...in a secure repository system”. When you peel away the complementary or parallel technologies that often get mixed in, this is exactly what a blockchain is design to be. Public blockchains are decentralised, open-source infrastructure that incorporate cryptography and consensus mechanisms, resulting in them being highly trustworthy, secure and immutable data repositories.

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These characteristics are key to explaining why blockchain technology is the only viable solution to the EU’s directive. That’s because, while database tools already exist for storing information in a way that can easily be compared, they are not fit for purpose. The result is that they are mutable and they are hackable.

Immutable and unhackable

Mutability can be a very useful characteristic in software development, as it’s often the case that changes need to be made to databases. However, when using unique identifiers for medicinal products to fight counterfeiting, immutability is key.

Not only that, once these records are stored, they need to be held securely. Blockchain technology, through its decentralised consensus and cryptographic processes, makes hacking a near impossibility. When you compare this with the number of well documented breaches from centralised databases that have occurred in recent years, the same can’t be said for the technology used today.

While blockchains are clearly well suited to the EU’s directive, it is worth noting the importance of storing the right information in the first place. The whole system that the EU has envisioned relies on unique identifiers being used as the verifier of authenticity. In the globally distributed supply chains of medicinal products, there could be opportunities for dishonest parties to attempt to record counterfeit drugs as legitimate ones.

This is why the “verified users” that the directive mentions are so important. These individuals would need to have access to services that allow them to securely encrypt data and store it on a blockchain, so it can be used as proof of evidence. Not only would this make it easy for trusted parties to work with the blockchain but also make it possible for them to generate value from their data when interacting with other parties that want to access it.

Provenance proved

Undoubtedly, the eradication of counterfeit products from as complex a supply chain as exists for drugs is no small task. From the areas where raw materials are sourced, to the plants where the drugs are manufactured, the warehouses where they are stored and all the transportation points in between, there are many opportunities for malevolent forces to operate.

However, by using cutting edge verification services to ensure the right information is stored, blockchain technology can be used to establish an immutable, unhackable and secure repository system that everyone can trust.