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BlockChain for the 503B Supply Chain: We are having this conversation on blockchain technology. Its something I have been interested in and following for several years now. I was talking with Syed Saleem about his October presentation on qualifying equipment and products within the supply chain, and it got me thinking about big pharma, and how they are trying to address counterfeit drugs and protecting their supply chain potentially through the implementation of block chain, so I was wondering if 503B manufacturers were thinking the same thing or doing anything in this space.
Vivian Juter Frankel 0:14
Welcome to PharmaSalon. This is your host Vivian Juter Frankel, we feature discussions on regulatory, policy, compliance and business issues specifically for the compounding pharmacy industry. The podcast covers topics related to 503A’s. 503B’s, hospital pharmacies and vetinary. I hope you’ll tune into all of our discussions as you never know when and where an idea will germinate that will take your business to the next level. We’re having this conversation today on blockchain technology. It’s something I’ve been interested in and following for several years now. I was talking with Syad Saleem about his October presentation on qualifying equipment and products within the supply chain. And it got me thinking about pharmaceutical companies and how they’re trying to address counterfeit drugs and protecting their supply chain potentially through the implementation of blockchain. So I was wondering if 503B manufacturers were thinking the same thing or even doing anything in this space.
Syed Saleem 1:17
Syed Saleem pharmacist for about 20 years now I have an MBA and I have few other licenses in multiple states. I’ve been in the pharmacy and compounding industry, life science, biotech, did some consulting I have experienced in multiple areas in regards to 503B’s compounding pharma, Life Sciences sectors.
Darshan Kulkarni 1:36
And my name is Darshan Kulkarni, I’m an attorney, I’m a pharmacist, I do FDA regulatory law. So any company that is FDA regulator probably have done some work around it; food, medical devices, drugs, compounding pharmacies. I have over 20 years of experience as a pharmacist in a variety of different pharmacy perspectives, everything from consulting to compounding to providing legal advice to pharmacies that are doing that buying and selling pharmacies, finding PBM audits and just a variety of different things. That’s my experience. And I can talk a little bit about I’ve presented with Vivian before for some of our events I know Syed has as well.
Vivian Juter Frankel 2:18
Syed, since this started with you, why don’t you kick this conversation off with your interest in blockchain? And where do you see the industry going? And then Darshan, you can jump in on what you’re seeing, and then maybe we can touch on some of the challenges the industry will be or is facing?
Syed Saleem 2:33
Sure. So the reason why I started the conversation about the blockchain is because this is one of the new technology we have hands on. And then there’s also aggregate requirements. Now the DQSA says by 2013, you need to have every product identifier up to the unit to do the serialization. And same thing with the EU. It also has a relation with say falsified medicines directive. That’s basically to identify a product from stores all the way to the shelf. So to do this with the current setup, what they have with multiple systems, multiple computing, multiple stops, change of hands, it is extremely difficult to have that tight knit traceability. So the blockchain offers primarily three avenues, security, transparency, and traceability. These three things again, these three are main focus of the new DQSA Act, which is going to be applied in 2023, and also EU directives. With that in mind, the pharmacy pharma firms entering the 503B’s, they could adopt this technology early on, and it is being adopted in many other segments as well. And especially a highly regulated industry like pharma, it’s much more important to have the technology early on. This technology is fortunately currently in development and also the some of the software development companies are providing right now, such as in process and there is a Pharma blockchain biopharm.com. I think they’re also providing this technology. And they were able to hash out all the nitty gritty of this trying to make this a smoother functioning platform. Again, given as like a SaaS software as a service. This is given as a past Platform as a Service. The need is, again, as I said, because of the track transparency to escalation security. According to the reports, an average yearly about $200 million of loss because of the counterfeiting drugs and any fraudulent fraudulent things happening in this industry. What this can bring about is transparency, traceability, accountability, and also there is a way they can do a smart contract between the organization right now we have something called pedigree. Pedigree is also where you trace from doors to the end. I personally have faced challenges in obtaining a pretty good from a supplier Sometimes you hear stories coming despite it’s coming from anywhere being faked, there are fake certificates. There are fake products. They don’t match up the documents, either the CofA, the chemical, all these things. So blockchain would help in solving all this issues, not only up to the product basis, but also for the documentation certification.
Vivian Juter Frankel 5:21
Sorry to interrupt, but I do have a couple of questions. One is it sounds like what you’re saying is that you guys have been talking about blockchain on a high level, is anybody actually pursuing it? And then I’m also wondering, how does, and has this happened before, 503B’s follow in the footsteps of pharmaceutical companies? I do know there are some big pharma companies that are pursuing blockchain. Is there a way to trickle down? And then of course, Darshan, I’d like to hear from you. What are you hearing because you also work with pharmaceutical clients? So you have that perspective? Maybe you can also answer that question in terms of trickle down. And also, if any 503 B’s are actually investigating the implementation of blockchain.
Darshan Kulkarni 6:02
I’m gonna take a shot at it. And five can obviously add to it as well. short version there are a bunch of different Pharma companies and distributors are actually looking at using what you’re referring to as blockchain technologies. The key piece to remember obviously, is it’s not necessarily blockchain. So blockchain is a type of technology as part of a larger group of technologies known as DLTs, or distributed ledger technology. So I see that term thrown around a lot. The problems people are facing is people don’t want to, I mean, DQSA is great and it sort of gives some credence to tracking the unit level. However, the truth is that there’s more to it. And what I mean by that is companies are trying but overall, the general perspective is that it’s taking longer than they thought it would they thought to be really simple thing. People are also adding on to using something like a DLT or blockchain, they’re adding on things like RFIDs and trying to track them in real time, which adds additional complications as well. today’s news or this week’s news was there are people using blockchain in the context of Bitcoin to for ransomware. And this sounds like is completely unrelated. But I say that the key piece that I’m referring to is in the context of ransomware people are using Bitcoin to say, pay me in bitcoins, because you can never track me or you can never really know where the money came from. Turns out people can and people and the ransomware process was people got the ransom back. And the reason that’s relevant is that bitcoins, obviously built on the blockchain technology. And the moment you say that someone can actually go and find out and trace the process, that level of confidentiality and that trust in that confidentiality is compromised. And the question then becomes if the trust can be compromised like that, does it have downstream effects on other applications of blockchain, such as in the context of tracking and tracing products across the entire value chain?
Vivian Juter Frankel 8:03
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So wait, let me pause you for a second and ask a question. But first, I just want to tell our listeners that we are referencing the ransomware attack and the recovery of Bitcoin by the government in early June. Even though I’ve been following blockchain for several years now, I’m still wrapping my head around it, unlike what we’re talking about, the application is almost the exact opposite of Bitcoin, because you do want everything trackable. But what you’re saying is that since the blockchain was supposed to be secure in, for example, the ransomware attack, and the security was actually broken in that we were able to track it and get the Bitcoin back. So that goes the other way. And the accountability that we’re looking for, you’re saying now is proven that it’s hackable, and that you could make changes to the digital ledger?
Darshan Kulkarni 9:08
Well, I mean, to be perfectly fair, I haven’t looked into exactly how it got compromised. So if it was compromised, based on
Vivian Juter Frankel 9:14
Yeah, no, I’m just saying, in general, if you can optimize it that way, then you can compromise it the other way, hack it and mess with the records that are supposed to be secure.
Darshan Kulkarni 9:22
That could be true, assuming that’s what that’s what happened. So I would I don’t know whether they just got one person to compromise and that helped solve these other problems or it was an actual hacked system, I would have to guess it wasn’t a completely hacked system. However, it speaks to vulnerabilities, which is where the problem lies. And my recollection based on very brief review was someone sort of got compromised, but your point and my point is still on point, which is the moment you are seeing vulnerabilities are people going to invest in the same way because you have company secrets that are traveling and sort of being tracked across the entire value chain? Are people gonna say maybe this isn’t everything I wanted it to be. And right now we’re talking purely in the context of the DQSA but blockchain was being perceived and considered in a much larger set of questions, things like, Can I track patients, and the impact of this is maybe this is not the right process. Maybe we aren’t there yet. And then that raises GDPR issues and HIPAA issues and stuff like that as well. For example, in the case of the US, you do have to worry about with CCP and the right to be forgotten. Does that come into play as well? My point is, I think blockchain and DLT will very much likely be a part of the future. But I have a feeling that we aren’t seeing anywhere close to the final iteration, we seem to be in the very, very early stages of what that’s going to look like Sayed has that been your experience, I see something different.
Syed Saleem 10:44
That is correct. Again, the reason because I think when you have a highly regulated industry, everything moves slowly, because you need to make sure that anything, what you’re doing is not going to be having any drastic impact, or laboratories are much here, for example, as apartment industry or airline industry, for example, they don’t want to move as fast as delta on technology or any other technology, because the industry itself is very regulated very much. But but the technology is there. And again, we are going through a technological evolution here, it is adoptable, there will be redundancies. And again, when we took the first flight to the commercial airline, we had some failures, but we knew where we wanted to go. The reason why I think this technology is very helpful is because of the transparency and traceability, which has been a very toughest thing, the hardest thing in the supply chain of pharma historically, adding to Darshans point in terms of the hacking of the blockchain, the ransomware and those things, I think there are some patches still needs to be built. In any case, even if that is to be considered. Once you have the track and traceability, it’s easy for you to pull the bad lot from the system, because you have a better track and traceability compared to what we existing now. So, it will not be a totally foolproof system. Imagine somebody introduces a barcode or a QR code fake QR code and that is properly introduced into the system. But later on, they found out but in any case, once they found out that particular log can easily be recognized and relayed to the distributors or supply chain or everybody who is under the contract. So that is one advantage. Currently, I think Humana is a Quest Diagnostics, Optum, United Health Systems, they are all investing into this. And there are a few other which are considering. So this technology is there. And they do want they definitely want to make use of this further data disparity data analysis and supply chain services as such, but I think that she said it’s a little bit it was it’s gonna take some time, maybe we’re not there yet. But again, I think you know, when they launch something, they cannot launch without bugs, they launched something and then you discover no matter how much QA you do testing and everything you do, there will be some bugs which should be fixing. So I think it’s a good technology to adapt and rollout and fix the bugs.
Vivian Juter Frankel 13:07
Right. So what do they say, you know, how the good is the enemy a perfect movie?
Darshan Kulkarni 13:11
Let me challenge you on that, though. I 100% agree with you on the good is the enemy of perfect. I think what we have to be careful of however, is the idea that noncompliant is the enemy is the thing that throws you in jail or even worse. Oh, so we should draw that line. But I’m with you your points well made. But I want to show that there’s a floor to that. As Well,
Vivian Juter Frankel 13:32
and compliance is always the exception to the rule. I guess what I was thinking is that every system is hackable. So saying that blockchain will have some vulnerability, obviously, the systems that we have also have vulnerabilities, every system is going to have some. So you’re just looking for the ones with the smallest holes. Do you think that the 503B’s are going to be looking to pharmaceutical companies to model after? Or will it be happening simultaneously? You mentioned healthcare, Optum and United, do you suppose that these blockchain companies or these blockchain technology companies will be approaching and saying, Oh, I’m in healthcare, and I’m working with United. Let me work with you. How do you see this moving forward?
Darshan Kulkarni 14:11
I personally see it so that there will be parallel solutions, pharma will probably get the super optimized super souped up version, pharmacies, quite honestly simply won’t have the budget for it. So they’re going to do some version of that. However, I think overall, there will be some level of crossover, the small players trying to become bigger, and then the bigger players trying to eat the lunch of the smaller players. So there will be some level of crossover, generally speaking, I think people are, the conversations I’ve seen, suggest that there’ll be per transaction costs as opposed to a monthly subscription, if you will. And that may keep things cheaper for a pharmacy compared to a pharma company, because there’s simply fewer transactions that are happening. And even if we keep it at the one cent per transaction level, that adds up very, very, very quickly. My short version would be I think that there will be people trying to meet different audiences, but there will be some behemoths that emerge out of that, Syed.
Syed Saleem 15:04
I agree. Definitely. I think it’s like I said, if the 503B’s want to have some sort of contract with pharma, who has the first place, blockchain technology verification system, they could outsource those services as well. And they could charge them, they could have some stuff. Again, there’s a contract between them saying that if you could verify this, because in blockchain, you have multiple distributed Ledger’s in different places. As long as you can have one verifiable ledger, that should be sufficient enough, because all the Ledger’s are carrying the same account.
Vivian Juter Frankel 15:33
Okay, excellent. That about wraps up our time. I appreciate it. Is there anything else you think we should mention? Yeah,
Darshan Kulkarni 15:39
if you want to talk to me, feel free to reach out to me at Darshan Talks on Twitter, or find me at DarshanTalks.com. I have my own podcast as well, so you can listen in as well. Thank you.
Vivian Juter Frankel 15:49
Thank you for listening. At Pharmasalon we produce content and conferences for the compounding pharmacy industry that focuses on learning through conversation. It is our mantra that everyone’s experience is worth hearing and can benefit someone else in the industry and we’re the ones to facilitate those discussions. Our next event is the compounding pharmacies grand salon, four days for tracks, regulations, inspection, preparation and response, quality validation and design, environmental monitoring, and leadership. pre recorded presentations will be released on September 20. And live sessions will be October 5 through eighth CE credits will be offered to both pharmacists and technicians. For more information go to www dot pharma salon slash compounding that’s www dot P is in Paul h a r as in Robert M is in Mary A S is in SAM a l o N as in nancy.com slash compounding
