In November the U.S. DSCSA legislation comes into force requiring returned pharmaceuticals to be verified. MediLedger offers one of the most popular DSCSA solutions. Today MediLedger announced a second solution with a new working group which focuses on the more commercially sensitive area of contracting. Instead of legal compliance, the motive is efficiency and value.

For the contracting solution, MediLedger signed up pharma company Pfizer, the two biggest U.S. drug wholesalers McKesson and AmerisourceBergen as well as group purchasing organization Premier which represents more than 4,000 hospitals. Other companies are involved but chose not to be part of the announcement.

The contracting and chargeback solution aims to address discounts. Pharmaceutical companies have pricing arrangements with both wholesalers and group purchasing organizations (GPO) which negotiate preferential deals on behalf of large numbers of hospitals.

That involves the pharma company charging one price to the wholesaler, but the wholesaler needing to sell to the GPO at a special low price agreed between the GPO and pharma company. As a result, the wholesaler has to know the discounted GPO price and also recoup the discount from the pharma company as a chargeback.

There’s also a lot of data that goes back and forth. In addition to the GPO discount prices, the wholesalers need to know which hospitals are currently members of the GPO and whether it is currently eligible for discounts. And the prices and hospitals are continually changing causing issues with synchronizing data and providing ample scope for error. Blockchain is being used to keep track of the latest changes and provides a real-time capability as opposed to batched data.

Sensitive pricing data is not stored on the blockchain. There is private peer-to-peer communication enabled by the user blockchain identities. Pricing and contract terms are only shared with parties involved in the contract. The blockchain stores zero-knowledge proofs as a privacy mechanism to enable only the appropriate wholesaler to check that the contract terms are the latest ones. In this way, every product, price and member data is perpetually updated as a proof.

“This innovative approach has the potential to transform how chargebacks work for the industry, allowing us to deliver better services to our members,” said Bill Marquardt, Vice President of Product Strategy and Planning for Premier Inc. “We are excited to collaborate with our partners to deliver these improvements.”

Verified drug returns

MediLedger’s first solution addresses the DSCSA requirement to verify drug returns. The legal deadline is November this year. Solution providers have integrated the MediLedger returns verification solution and they are currently in the final testing phase with a go-live expected next month. In testing, MediLedger reported having response times of less than 400 milliseconds.

After the go-live, MediLedger will continue to onboard customers into the network through to mid-summer. The industry is also coordinating a dry run period in the summer.

MediLedger is part of San Franscisco blockchain company Chronicled which four months ago announced a $16 million Series A funding.