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Could There Be a Blockchain Solution to High Prescription Drug Prices?

Prescription drugs are one of the biggest contributors to soaring healthcare costs in the U.S.  And for both individuals and families, particularly where multiple prescriptions are needed, drug expenses can quickly escalate to thousands of dollars.

According to a report from the Kaiser Family Foundation, 8 in 10 Americans would like the government to negotiate prices for those on Medicare. Additionally, Americans want limits set on the amount drug companies can charge for high-cost drugs, such as those to treat cancer.

Prescription costs for seniors seem to be garnering the most attention. Many on Medicare Part D experience what is known as the “doughnut hole,” a term that’s used to describe a medication coverage gap. All Part D patients begin each year with a deductible amount, which, once hit, triggers coverage for medications. However, when that coverage amount is exhausted, patients begin paying for their medications at the much higher retail rate — often 5 to 10 times the covered costs.

The continued escalation of costs across all stratas of the U.S. population has been a key discussion point in efforts to revamp the Affordable Care Act, also known as Obamacare. The prevailing message: drugs don’t work if patients can’t afford them. Even President Trump has chimed in, saying that drug companies are “getting away with murder.” And in a speech to Congress that garnered bipartisan support, he said that his administration and Congress should “should work to bring down the artificially high price of drugs and bring them down immediately.”

Bringing Blockchain Technology Into the Conversation

Brennan Bennett, a pharmacy point-of-care expert and editor of Blockchain Healthcare Review, says one of the biggest issues related to drug costs is the research and development expenses associated with every failed drug formulary. He notes that it can take nearly a decade and several billion dollars to bring a new drug to market, and that’s if the clinical trials and paperwork fall within average timetables. Moreover, formulary patents for those that make it through last 20 years, meaning there are no cost-effective off-brands to counterbalance the premium brand.

Another major roadblock according to Bennett is the influence of pharma lobbyists on lawmakers, particularly with prescription issues that might involve some sort of legal stigmas. He cites for example a 2016 congressional action blocking the Veterans Administration from being able to prescribe medical cannabis for vets with injuries and PTSD, versus Oxycontin and Xanax, both of which are both highly addictive and expensive.

But in his view the biggest issue in the whole prescription price debate is fraud. Says Bennett: “I heard at the recent Healthcare Blockchain Summit just this month that 1:100 drugs in America are counterfeit. I can’t say as to if that included over-the-counters, but, really, that would be irrelevant given the size and scope of this number.”

He believes blockchain technology could play a valuable role in addressing this issue by integrating with Internet of Things (IoT) devices to ensure a tamper-proof model throughout the supply chain. Says Bennett: “To achieve this entire chain of custody with a blockchain security–enabled system, a big pharma company would need to deploy a permissioned blockchain to handle their own internal chain of custody. At that point, they could share data with other permissioned blockchains run by the organizations that transport and distribute the drugs.”

Bennett believes that the biggest barriers to blockchain adoption in this space are IP security concerns. “Nobody wants to adopt just yet because the data governance capability that would allow collaboration among blockchain-enabled pharma systems to share the data needed to drive down costs is still relatively immature. IP security is directly correlated with network security. So an entanglement of permissioned blockchains would need serious security.”

A Lack of Existing Major Players?

In terms of promising blockchain use cases, Bennett remarked that is he not aware of any that are “end-to-end,” meaning molecular modeling to retail shelf. “I will be participating in a panel discussion at the Johns Hopkins campus in June that will specifically be addressing what a major player would need to bring to the table in order to address the enterprise pharmacy space. If any do exist, I hope they’ll consider sharing their knowledge.”

He went on to note that there are plenty of applications being developed for specific pharmacy business operations in terms of interaction with other points of patient care, but that pharmacy supply chain management is going to have to integrate with a variety of blockchain applications to secure the whole process, the IoT being the biggest.

Amid talk about blockchain advancements in the pharmaceutical industry, Bennett had this to say:

“More and more of the patients in my pharmacy practice area are obtaining medications from Mexico and Canada. Patients are finding international pharmacies online. There are even organized bus trips across the border for drug purchases. I’ve even gotten reports from my patients of incredible savings on a brand-name product in the same packaging and same manufacturing plant. Why the costs to the American consumer are consistently at such an outrageously inflated rate compared with other countries is not well explained from any source I have found.”

Bennett is hopeful that pharmacy physical supply chain management use cases will evolve rapidly, learning from and mimicking other current supply chain management blockchain examples involving tangible items, such as food. He states that a number of blockchain use cases are popping up that address specific choke points in pharmacy costs like clinical trials.

“Overall, the conversion of precision science, blockchain platforms, smart contracts on permissioned networks and A.I is where I think we are going to see the next macro evolution in modern science. And frankly I believe there is no better place for pharma to lead the way.”

Michael Scott

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