Existing for only a decade, Blockchain has already made its way into the life of the general public. This buzzing technology regularly hit headlines because of the dramatic rise and fall of Bitcoin prices, on mainstream media platforms. The increasing relevance and buzz around Blockchain have made it impossible for businesses to avoid incorporating it.
Smart Contracts are an essential application of Blockchain which has revolutionized how transactions and deals are made. According to the latest report by Gartner, it has been estimated that more than 25% of global organizations would be leveraging Blockchain and its applications by 2022. Incorporation of smart contracts in Pharmacy Supply chain will bring more transparency and independence (elimination of trusted third-party) into the system. The endless applications of Blockchain can be an all-encompassing solution to the flawed Pharmacy Supply chain which will bring tangible benefits to the sector.
What does a Smart Contract really mean?
Smart contracts are the protocols intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract under which the parties of that smart contract agree to interact with each other. These software programs are used by all members of the supply chain to initiate and execute transactions and various rules of the transactions are enforced by the Smart Contract. These transactions are completely trackable and irreversible.
A look at the Pharmacy Supply chain and its problems
Comprising of excipient manufacturers, drug manufacturers, re-packagers, wholesalers, logistics partners, and the dispenser, the Pharma supply chain is highly complicated. The whole scenario of Pharmaceutical supply chain has been wretched by increasing complexity of the supply chain, the prevalence of counterfeit medicines, often contamination of medicines during manufacturing, storage, or distribution along with other issues.
The theft of medicines and then their divergence i.e. the reintroduction of the stolen drug into the Pharmacy Supply chain has been a grave concern due to hard verification of provenance and authenticity of the diverted drug.
The production and distribution of counterfeit drugs is a global issue costing billions of dollars and this problem has serious economic and health ramifications for Governments, businesses, and consumers. A report issued by the World Health Organisation estimates that 10% of medicines in low- and middle-income countries are counterfeit. The report also states that the sale of fraudulent medicines from Asia to South-East Asia and Africa alone amounts to some $1.6 billion per year.
Extending across boundaries, the Pharmacy Supply chain is quite an enormous and complex one, given the diversified information flow, document exchange, and payment processes used by all mediatory partners. Lack of integration across Pharmacy Supply chain has plunged the supply chain with many loopholes making trackability of drugs difficult and information inaccessible.
Use cases of smart contracts in Pharmacy Supply chain
As the complexity of global Pharmacy Supply chain is increasing, it is putting more stress on manufacturers and the entire healthcare ecosystem. Yet, the dilemma of full implementation of global traceability standards as a cohesive solution is still a work in progress. Building on the advantages of smart contracts would enable Pharmaceutical Manufacturing and Supply Chain to combat counterfeit drug production and assure a high level of confidentiality, integrity, and availability. The technology would prove to be an all-encompassing, worldwide solution that will seamlessly save lives and dollars in the future.
Ensuring Security and automation of Pharmacy Supply Chain – The prominence of counterfeit medicines in the supply chain has been a headache for governments across the globe. The issue is grave, both in terms of the economic cost and the risk to human lives that comes from taking counterfeit drugs that may not have the same active pharmaceutical ingredients or dosage levels as the real medicine.
The incorporation of smart contracts in the Pharmacy Supply would lead to full automation of orders of pharmaceuticals. Smart contracts would execute transactions without intervention from any trusted third parties and this would be made possible through the combination of verifiable information (IoT and Blockchain) and self-executing code (smart contracts).
Increasing efficiency and making the pharma supply chain cost-effective – The incorporation of smart contracts in the Pharmacy Supply chain would consolidate tasks and automate them. This would help to streamline business operations and boost the efficiency of the organization. By the incorporation of smart contracts in the Pharmacy Supply chain along with cryptocurrency, smart contracts will take over the functionalities performed by intermediaries like banks, escrow services, and even legal services.
Maintaining Integrity across Pharmaceutical Supply Chain – Nick Ayton, CEO and founder of Chainstarter, says, “All secured digital records can be accessed by the parties taking on the risk, automating contractual obligations (e.g. share of risk, premium and pay-out) using Smart Contracts.” The incorporation of smart contracts in the Pharmacy supply chain facilitated by a closed ledger system in a Blockchain enabled ecosystem enables trusted exchanges between parties along with the added advantage of an audit trail that satisfies regulatory requirements.
Embedding Trust in the Pharmacy Supply Chain – The incorporation of smart contracts in the Pharmacy Supply chain brings trust to the cumbersome and complex scenario. The assets of immutability and transparency of smart contracts ensure that transactions and agreements are verifiable by both customers and service providers. This encourages compliance and accountability among both parties.
Future of smart contract in Pharmacy Supply chain
No doubt the incorporation of smart contracts in Pharmacy Supply chain would create a transparent, tamper-proof and efficient ecosystem. This would directly benefit the pharmaceutical industry, however, the incorporation of smart contracts in Pharmacy Supply chain would significantly change an organization’s ways of functioning.
Currently, the global Blockchain scenario witnesses budding start-ups like Jincor, which promises to allow any business to accept smart contracts and cryptocurrencies easily “with no legal, technical or operational complications in a cost-efficient manner.” Such initiatives would bring innovation to technical, non-technical businesses including the Pharmacy Supply chain. But to carve its niche, such companies would have to navigate the technical and compliance challenges that come with the adoption of Smart Contracts. Complete strategic planning would be required to encourage the incorporation of smart contracts in Pharmacy Supply chain.