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  • Writer's pictureDale Montrone

Revolutionizing Pharma Supply Chains with Blockchain & Smart Contracts (Part 2)

In our previous Blog titled “Revolutionizing Pharma Supply Chains with Blockchain and Smart Contracts Part 1”, we discussed the FDA’s Drug Supply Chain Security Act of 2013 that addressed requirements in pharmaceutical supply chains.[1] Here we continue with Part 2 which focuses on the implementation of a supply chain that conforms to the FDA mandate for the pharmaceutical industry and takes advantage of a Blockchain implementation using Smart Contracts.

Blockchain technology ensures the integrity and trust in the pharmaceutical and health commodity supply chain. Blockchain powered tracking and traceability systems will work across disparate stake holders such as Pharmaceutical Companies, Various Distributors/Wholesalers, Pharmacy Chains, Hospital Chains and Regulators.

Figure 1

Traditional supply chains that utilize a central server-based implementation are not adequate to satisfy all the requirements of the FDA regulations.

Blockchain Technology has the Following Properties

· Distributed ledger - It replicates the same data at multiple servers and all data records are synchronized and validated.

· Consensus Algorithm - Transaction records are validated across multiple servers.

· Smart Contracts - Enforces rules to transaction execution.

· Provides ability to trace and validate the origin of the transaction.

· Uses Hash function and consensus algorithm to enable the validation.

Smart Contracts are software programs that 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. As an example, transaction rules will be checking FDA licenses of the drug manufacturer, wholesalers, distributors, pharmacies etc. A Smart Contract can inspect the quality parameter data like temperature, humidity and exposure to light of the drugs while at various stops of the pharma supply chain and enforce the rejection of the drug from the supply chain if it is outside of the acceptable range.

A Blockchain based pharma supply chain is superior to the traditional central server-based supply chain systems due to the following reasons:

· Ensure trust and security in the supply chain system

· More Cost effective

· Efficient compliance with FDA regulation.

· Robustness and completeness of the solution.

A flow diagram of the end to end pharma supply chain using the Blockchain technology is shown in Figure 1 above.[2] A drug manufacturer assigns a unique National Drug Code (NDC) to each drug before shipping to the customer which could be either a wholesaler, distributor, pharmacy or some other agent. The transaction record is written in a Blockchain with all the details of the transaction. When the shipment reaches the next stop of the supply chain, which could be a distributor or pharmacy, the node verifies the origin of the product which is implemented by a Smart Contract operating on the Blockchain network such as Ethereum, Hyperledger or a private Blockchain network. The transactions between the players of the supply chain like the drug manufacturer, wholesaler, pharmacy and end customer is recorded on the Blockchain based pharma supply chain.

The Blockchain based network system records the complete transaction details at every node of the entire supply chain and thus will have multiple records of the complete transaction data on the Blockchain. These multiple records are immutable and validated against each other, thus making it very secure and immune to hacking. A complete trace of each transaction is available at each node which is a primary requirement of the FDA regulation for the Drug Supply Chain Security Act of 2013.

Domani Systems has developed a prototype product of the Blockchain based pharma supply chain running on an Ethereum network which complies with the requirements of the Drug Supply Chain Security Act of 2013.

Currently, we are in discussion with pharma companies for field trial of this prototype system.

* * * * * *

Dr. Tapan Chakraborty is Vice President of Intellectual Property Products at DomaniSystems and has over 30 years of experience in the semiconductor, telecommunications & IT industry. Dr. Chakraborty has a PhD degree from Rutgers University and a M.S. degree from Columbia University in Electrical Engineering.

For our earlier Blogs and more details about DomaniSystems, visit our Website at

We encourage open discussion on Smart Contracts, Blockchain, Security and IoT for mutual benefit and enhancement of knowledge and understanding. You can start your discussion or questions here. You can also contact us directly; all the information is on our Website.


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