By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Some of the industry's largest pharmaceutical companies, including Pfizer Inc (N:PFE) and Eli Lilly and Co (N:LLY), have developed a blockchain-based system to track prescription drugs across the supply chain to better halt the flow of counterfeit medicines, company officials said on Friday.
Some two dozen companies in the industry including drugmakers, distributors, retailers and delivery firms created the blockchain-based MediLedger Network, which it has been testing in the verification of drug returns. They said they intend to further expand the system this year.
Blockchain, which first emerged as the technology underlying virtual currency bitcoin, is a shared database maintained by a network of computers.
The MediLedger group submitted a report to the U.S. Food and Drug Administration laying out the benefits of blockchain for this specific issue, Susanne Somerville, chief executive officer at technology company Chronicled, told Reuters.
Chronicled is MediLedger's custodian, providing administration of the network.
"Even though the drug supply in the United States is safe, there are small percentages ... of potential counterfeit drugs. Certainly, there's a lot of evidence of diverted drugs," Somerville told Reuters in an interview.
She said counterfeit drugs are a big problem in third world countries, where it is estimated that half of their drugs are counterfeit. "This is a plan intended that this never happens in this country."
Among the 24 participating companies are Amgen Inc (O:AMGN), FedEx Corp (N:FDX), GlaxoSmithKline Plc (L:GSK), Novartis (S:NOVN), AmerisourceBergen Corp (N:ABC), Sanofi (PA:SASY), Walgreens Boots Alliance Inc (O:WBA) and Walmart Inc (N:WMT).
Medicines identified as counterfeit may be contaminated, contain the wrong ingredient, or have no active ingredient at all. There have been instances in the past of counterfeit cancer drugs flooding the market, for example.
The World Health Organization estimates that counterfeit medicines worth 73 billion euros ($79.26 billion) are traded annually.
"The current point-to-point systems infrastructure lacks the ability to keep data in sync across the healthcare supply chain, which ultimately increases the risk of counterfeit, diverted or otherwise illegitimate products," David Vershure, head of channel and contract management for Roche's (S:ROG) Genentech unit, said in a statement.
The core function of the MediLedger Network is to validate the authenticity of drug identifiers throughout the supply chain, the MediLedger report said. This can all be done without any proprietary data being shared openly on the blockchain or ever leaving a company's control.
The MediLedger project was created in response to the FDA's call early last year for pilot projects testing an electronic inter-operable system as outlined in the Drug Supply Chain Security Act (DSCSA).