March 9, 2020 - Biotech, Blockchain, COVID-19, FDA, Pharma

Blockchain and The Drug Supply Chain Security Act (DSCSA)

As industry continues to grapple with and implement the Drug Supply Chain Security Act (DSCSA) enacted by Congress in 2013, some of the largest pharmaceutical companies believe they may have a solution to track prescription drugs across the supply chain to prevent the distribution of counterfeit medicines – blockchain.

The DSCSA outlines steps to build an electronic, interoperable system to identify and trace, to the packaging level, prescription drugs distributed in the United States as they move throughout the supply chain, and this system must be in place by 2023. The Act includes several different requirements with varying mandatory implementation dates that extend through 2023. Under the Act, FDA is required to establish pilot projects to explore and evaluate methods to enhance the safety and security of the pharmaceutical distribution supply chain.

On February 8, 2019, FDA announced the creation of the DSCSA Pilot Project Program to explore issues related to “utilizing the product identifier for product tracing, improving the technical capabilities of the supply chain, identifying the system attributes that are necessary to implement the requirements established under the DSCSA, and any other issues identified by FDA” (84 Fed. Reg. § 2879). Participants in the program were selected by FDA to reflect the diversity of the supply chain. One of the participants in the program is led by blockchain startup MediLedger, and includes a network of 24 companies in the industry, including several major pharmaceutical companies along with other manufacturers, distributors, retailers, and delivery entities. The MediLedger network tested blockchain in the verification of drug returns and recently published its Final Pilot Report in February 2020 detailing the benefits of using blockchain to implement the DSCSA. The MediLedger network believes that blockchain provides a feasible solution to the DSCSA’s track-and-trace requirements and can be used to validate the authenticity of drug identifiers throughout the supply chain in a central point of data sharing while protecting proprietary data.

It is still unclear what FDA’s opinion will be on the use of blockchain to implement the DSCSA, and FDA will not release its final program report until all of the projects included in the pilot program are completed. FDA notes that selection of a project into the DSCSA Pilot Project Program is not an endorsement of a particular technology, but other key markers may give us a clue as to FDA’s current thinking. For example, FDA has been supportive of the use of blockchain technology as part of its New Era of Smarter Food Safety initiative due to blockchain’s ability to work within decentralized and distributed food systems for full end-to-end traceability. However, based on MediLedger’s report, we know that there are several issues that FDA would need to work through before implementing a blockchain system throughout the industry.  For starters, a new set of standards governing the use of blockchain would need to be developed, including standards for data management among multiple blockchains and non-blockchain networks, recall and alert notification, ensuring authorized trading partner identification, the correction of system records, exception handling, and standards for testing and performance. A governance system would also be necessary, and while the MediLedger network believes that governance should come from the industry itself, FDA may disagree. Additionally, for the system to work, nearly all industry members (manufacturers, wholesalers, dispensers, service providers, etc.) would need to participate in one or more interoperable systems, as the lack of full participation can lead to breaks in the chain of custody, and with higher numbers of interconnected systems, the risk of misaligned and incorrect data increases. Other concerns include the discomfort with blockchain technology, costs for small industry players, international reach, and system security, including permitting only authorized trading partners to access the network. MediLedger’s report also notes that implementation of blockchain is a complex solution and will require a stabilization period, urging a distinction between the implementation date and FDA’s enforcement date of the DSCSA.