The pharmaceutical industry has long been troubled by the alarmingly high rate of counterfeit medicines entering the global supply chain. The World Health Organization defines counterfeit medicines as products fraudulently produced or mislabeled to give the appearance of being genuine . These fraudulent medicines can be detrimental, and even lethal, to patient health as they may contain inconsistent levels of the active pharmaceutical ingredient, or may be manufactured in unregulated and unsafe conditions . In addition to patient impact, counterfeit products directly influence pharmaceutical company revenues and reputations, as these products cannibalize genuine product markets and weaken brand image and credibility. With a 56% increase in international counterfeit pharmaceutical incidents between 2012 and 2016 (Figure 1), this is a growing problem that is amplified in complex global supply chains for large pharmaceutical companies. One such company that has recently felt the pain is Genentech, which was the victim of 3 counterfeit incidents of its blockbuster cancer drug Avastin beginning in 2012 within the United States (Figure 2) [3, 4].
How can pharmaceutical companies such as Genentech address counterfeiting?
One potential answer lies in leveraging the rise of digitalization to better trace all products and their constituent parts across the global supply chain. Genentech has taken this initial step by partnering with other large pharmaceutical companies to invest in the MediLedger Project . This project leverages blockchain technology to create a dependable record of all transactions within Genentech’s complex pharmaceutical supply chain. The project aims to integrate the recording of drug deliveries for all stakeholders in the supply chain in one computer system. As a result, each step in the distribution process will be recorded digitally, creating a permanent record of when the drug is exchanged between stakeholders. Thus, in addition to making it more difficult for criminals to introduce fraudulent materials or steal pharmaceuticals from the supply chain, this would allow for increased speed in tracing and investigating when disruptions occur. By successfully completing a pilot and investing heavily in leveraging blockchain technology, Genentech is riding the digitalization wave to get a firmer grip on its global supply chain over the next 3-10 years. However, this is not enough.
What are the risks? What else can Genentech do?
Genentech must remain cautious about overreliance on digitalization. The downside of new technologies, such as blockchain, is the ever-present threat to cyber security . As we have seen recently, cyber attacks can be detrimental to customers as well as company profits and credibility. In an industry where mistakes could directly lead to adverse patient outcomes, the stakes are even higher, and thus safeguards must be put in place when connecting an entire global supply chain using blockchain. As each stakeholder, whether it be the drug maker, distributor or hospital, owns a particular node in the blockchain, a cyber attack that impacts any one of these nodes, could lead to mismanagement of drugs along the supply chain.
Thus, Genentech must invest in non-digital mechanisms for dealing with counterfeiting. One such way is to innovate packaging and labeling techniques to make it impossible to replicate. This would include investing in R&D to further complicate barcodes and create additional unique identifiers for each drug. Further, Genentech should invest in authentication procedures that allow stakeholders within the supply chain, and especially hospitals, to more rapidly confirm the validity of drugs when they are received. Finally, Genentech should continue investing in mass serialization internationally to work toward improved traceability on the global scale.
While blockchain technology and the rise of digitalization provide exciting potential solutions, the challenges of securing a complex global supply chain in the pharmaceutical industry are plenty, and many questions remain. This new approach relies on participation by all parties in the supply chain, but will all stakeholders be open to adopting this new technology? Even if they are open to it, will they have the infrastructure and means to do so? Further, will switching to blockchain introduce more problems (in the form of cyber security) than it will help solve? In any case, the rise of digitalization has given corporations like Genentech new ways to address problems that have plagued the industry for decades.
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 “Substandard, Spurious, Falsely Labelled, Falsified and Counterfeit (SSFFC) Medical Products.” World Health Organization, 1 Jan. 2016, www.who.int/mediacentre/factsheets/fs275/en/.
 “Counterfeit Situation.” Pharmaceutical Security Institute, 2017, www.psi-inc.org/counterfeitSituation.cfm.
 Blackstone, Erwin A., et al. “The Health and Economic Effects of Counterfeit Drugs.” American Health & Drug Benefits, June 2014, ncbi.nlm.nih.gov/pmc/articles/PMC4105729/.
 “Genentech Warns of Fake Avastin.” 15 Feb. 2012, www.in-pharmatechnologist.com/Article/2012/02/15/Genentech-warns-of-fake-Avastin.
 Roberts, Jeff John. “Big Pharma Turns to Blockchain to Track Meds.” Fortune, 21 Sept. 2017, fortune.com/2017/09/21/pharma-blockchain/.
 Berke, Allison. “How Safe Are Blockchains? It Depends.” Harvard Business Review, 7 Mar. 2017, hbr.org/2017/03/how-safe-are-blockchains-it-depends.