Blockchain Joint Venture Aims To Stop Counterfeit Drugs

ICO News, Innovation, Investing, News, Regulation | September 21, 2017 By:

A joint venture that will explore and develop blockchain solutions for the pharmaceutical industry has been formed. The MediLedger project unites Chronicled Inc., a technology company specializing in Internet of Things, and The LinkLab LLC, a supply chain consulting group. The venture is aimed at demonstrating compliance with the Drug Supply Chain Security Act (DSCSA), which seeks to limits counterfeit medicines in the supply chain and manage patient records on prescription drugs.

The MediLedger Project aims to leverage blockchain’s capability to create an interoperable system in which
multiple parties, including manufacturers, wholesale distributors, hospitals, and pharmacies can
register, verify, and transfer pharmaceutical products with absolute trust in their authenticity and
provenance.

The MediLedger Project has aspirations beyond helping to enable pharmaceutical companies to
achieve DSCSA compliance. The participants hope to use their system to help fundamentally
move the industry forward in improving drug security and preventing the production and
trafficking of counterfeit and illicit drugs globally.

The project participants include Genentech, a member of the Roche Group, Pfizer, AmerisourceBergen, and McKesson
Corporation. The group has built a prototype system and will now focus on business models and operating requirements.

Chronicled co-founder Samantha Radocchia talked with Block Tribune about the project.

BLOCK TRIBUNE:  How big a problem is supply chain in the pharmaceutical industry?

SAMANTHA RADOCCHIA:  I can’t specifically quantify it, but in terms of being a big enough problem to justify the passing of legislation recently, it’s quite large. The DSCSA Act was passed to track pharmaceutical drugs in the supply chain, ’cause there is a huge incidence of counterfeit pharmaceuticals making it to the hospital, pharmacy, and patient. The Regulation requires that by 2018, all pharmaceutical drugs are marked with a unique identifier and by 2023, the pharmaceutical industry and FDA is required to agree upon an interoperable system by which all of the parties can pass that information from one party to another.

BLOCK TRIBUNE:   How are these counterfeit drugs getting into the system currently?

SAMANTHA RADOCCHIA:  Yeah, so it could be anything from gray market situation where something would be switched out or swapped at any phase in the supply chain. So say it goes from the manufacturer and it’s sitting in a warehouse at the distributor and it’s swapped with something else and there may be bad actors at play. It could be coming straight from the source, so even beyond just the once the pill, or whatever it is … the vaccine is made, the chemicals going into it could potentially be counterfeit. Yeah, there are incidences again anywhere along the chain if the custody is broken and the drugs are swapped out.

BLOCK TRIBUNE:   Are the drugs that are getting into the system placebos?  Or are they just using generic materials?

SAMANTHA RADOCCHIA:  It could be anything like that. It could be generic materials or even different kinds of chemicals that are used as fillers that are not the chemicals that should be the primary chemical composition, like lower cost things. Yeah, those are usually the two instances.

BLOCK TRIBUNE:  Tell me how your company was formed and how it aims to solve this issue.

SAMANTHA RADOCCHIA:  Chronicled, our company, was formed in 2014 with the mission to give unique and unforgeable identities to real-world objects, devices, and sensors on the blockchain. Our company is a software company, primarily in the blockchain and internet of things space. We have handled [inaudible 00:03:11] cases anywhere from asset tracking and luxury goods and conflict minerals, like gold, right through to temperature logging of the pharmaceutical drugs.

About a year ago or a year and a half ago, we were approached by a group of ex-Genentech executives that had formed a group called the LinkLab that was focusing specifically on this DSCSA Regulation and track and tracer pharmaceuticals because it’s a massive problem and there are a lot of companies proposing potential solutions to it, but none of them offer the security and interoperability that a blockchain would. So they identified that a blockchain-based solution to this problem would be the strongest and scalable over time.

We started working together, which is what we are now formally launching, which is called the Mediledger Project. So that project is a joint venture formed between our two organizations to bring together large players in the manufacturing, distribution, and write down some possible pharmacy-level working groups to create the solution.

BLOCK TRIBUNE:  Will each of these companies have its own secure silo? They won’t be able to share information between each other?  Or will they?

SAMANTHA RADOCCHIA:  No. That is the point for all of the parties to be able to share the information. If they are on the same level of the supply chain, so say it’s two manufacturers, they won’t be able to see into their inventory data or that information and one of the features of the system that we’ve built that is particularly of interest is that we’re using zero-knowledge proof in order to anonymously transfer this information so you can prove that it’s authentic and that it came from an authenticated party, but you can’t necessarily see what that information is which protects the competitive business intelligence and data that would be associated with these companies.

BLOCK TRIBUNE:  Walk us through how this would be used. In other words, from the inception of the drug by the manufacturer, take us along the supply chain.

SAMANTHA RADOCCHIA:  I haven’t been personally involved in the development of this system recently, so I don’t know if I can specifically speak to that point with accuracy. From what I recall, the systems that generate the GTIN, so the global standard for serial numbers, would be captains of the system so when they are generated, they would be registered alongside the registrant, the manufacturer, distributor … it would enter the system and then each event that would trigger a change of status in the proprietary systems would also trigger an event on block chain.

BLOCK TRIBUNE: Now this won’t completely eliminate counterfeits . Or will it?

SAMANTHA RADOCCHIA:  The goal of the legislation is to completely eliminate counterfeits or at least increase supply chain visibility and auditability. If counterfeits do enter the chain at some point, the provenance can be tracked back to the beginning so it might not right away fully eliminate bad actors and counterfeit goods entering the supply chain, but it will certainly help to prosecute and track them to the source.

BLOCK TRIBUNE:  Do you have an initial coin offering coming up?

SAMANTHA RADOCCHIA:  No.

BLOCK TRIBUNE:  Why are you not going that route?

SAMANTHA RADOCCHIA:  Chronicled has not ruled that out as a potential fundraising vehicle down the road, although we have taken a traditional path route, venture capital, and are waiting to see how things transpire in the market and would like to set a good example in terms of doing it in a compliant way.