Feature Health Supply chain

Novartis explores blockchain’s potential for pharmaceuticals


In large companies business people are approaching IT and saying ‘Hey I have a blockchain idea’. It used to work the other way around, with IT persuading executives to adopt technologies. For Marco Cuomo and Daniel Fritz who support blockchain activities at Novartis, this presents a unique set of challenges and opportunities. So they’ve come up with some novel approaches.

The colleagues also shared with Ledger Insights what they’re working on and their views on the evolution of patient control over data.

Demos and an internal blockchain

Novartis has been experimenting with blockchain since 2016 and has run various proofs of concept (PoCs). But for many in the organization some of the ideas are abstract. So they brought a blockchain application to life using IoT and robotics.

Or rather they used a LEGO Mindstorm truck to demonstrate a medicine supply chain with great success. The purpose of the demo was to leverage blockchain to identify counterfeit medicines and track temperature with real-time visibility for all participants in the supply chain.

They’re planning to build on that success by implementing an internal private blockchain for education purposes. Using the platform, they plan to issue tokens to help colleagues get a sense of how they work. It will also help to de-mystify blockchain for the various digital groups around the business and clarify what blockchain is good for (and what it isn’t). In future, they intend to run PoCs on this internal network.

On the one hand, Cuomo and Fritz want people to bring them blockchain ideas. On the other hand, there needs to be a real business case and a good reason to use blockchain. So they’ve developed a set of criteria to evaluate new ideas.

Filtering use cases

When they ran their first PoCs, as Cuomo put it: “we found out very quickly that blockchain is a team sport. We have to build something as a consortium.”

So the filters include the requirement for more than one participating organization, and it needs to involve groups outside of the organization.

The use case has to address a current business pain point, whether that’s cost, efficiency or trust.

For Novartis, the technology is ideally open-source as they want to avoid lock-in. Cuomo, Novartis’ Applied Technology Innovation Manager, said: “If a third company owns it, then I’m depending on them and have to ask and request changes. Maybe I’m using blockchain technologies, but I’m still dependant on the middleman. I don’t want that.”

And they especially don’t want to create a financial barrier to others joining the network later on. They appreciate the need to create a healthy ecosystem which enables accelerated adoption for companies of all sizes and sets the stage for innovation and competition.

They’ve had a lot of offers for PoCs in areas where existing technologies work just fine. Some of the internally generated ideas are for process re-engineering, which doesn’t necessarily need blockchain. A related question is can the application use a centralized database instead? So blockchain has to have an advantage over other technologies.

When it comes to selecting technologies, it has to be proven. Cuomo commented: “In blockchain, you have a lot of startups who come with something. Sometimes you don’t even know if it’s only on powerpoint.” But they’re hands-on, so they don’t have a problem running tests to filter out the vaporware.

In general, Novartis sticks with the mainstream protocols. And they like to run PoCs using various technologies to learn the differences. But also because they expect some will disappear. So far they’ve used Hyperledger Fabric and Ethereum, and they’re planning a PoC using R3’s Corda. They also mentioned MultiChain.

Fritz who is Novartis’ Domain Architect Supply Chain, pointed out that when it comes to technology selection, they have an established architecture methodology that isn’t limited to blockchain. That includes evaluating security, performance, scalability, interoperability, and fitness for functional requirements.

Novartis projects

So what is Novartis doing with blockchain? Currently, their primary focus is on a public-private partnership between the European pharmaceutical industry and the EU. It’s called the IMI Blockchain Enabled Healthcare program. IMI stands for the Innovative Medicine Initiative.

The program aims to partner the pharma industry with a consortia made up of SME blockchain companies, universities, clinical labs, hospitals, patient representatives and others. They’re currently inviting the consortia to apply. It’s a wide-ranging project that includes counterfeit drug detection, supply chain, patient data, and clinical trials.

Novartis is also exploring various use cases based on ideas generated internally. For example, there’s one they may pursue relating to image copyrights. Pharma companies produce significant volumes of research. But when they publish papers, they end up assigning rights to the images which Novartis then has to pay to use. So a blockchain might help them to retain their rights. However, there is the problem of how to deal with companies which are currently the middlemen in the process. So far this is just at the concept stage.

Third party risk management and identity

Fritz and Cuomo are evaluating blockchain for third party risk management. Fritz explained why: “We are reliant on a number of suppliers of course. And we want to ensure that the labor practices, that the environmental practices, the quality standards and things like this for all our suppliers, and our suppliers’ suppliers in a multi-tier supplier network are meeting our standards. It’s hard to create this transparency when you have to rely on your own audits.”

Many pharma companies work with the same suppliers. Hence the audits are repeated many times. So a blockchain approach could avoid double work and save money for both the suppliers and pharma companies. The pharmaceutical industry is already collaborating in this area through the Pharma Supply Chain Initiative (PSCI) to share audits reports.

But the project has broader applications beyond pharma. Fritz elaborated: “Potentially if you’re going to hire us for a job, how do you prove what our education is, what our work history is, who our references are that have maybe certified our work performance and things like this.

Patient power, tokens and marketplaces

When talking to a pharma company, it’s useful to gauge views on patient data. Cuomo believes things will change and patients will gain control over their data. But won’t it just turn out like Google terms where most people just tick the box?

“I really believe it can turn to be exactly the opposite of the Google terms. Because we are the patient and when you think about GDPR we own the data, and suddenly the hospital has to do something to get the data. It will maybe turn the market. Maybe it takes a long time, but maybe GDPR is one step, then new technologies are helping that.”

There are numerous startup projects around sharing patient data from genomes to Fitbit devices. But Cuomo thinks it’s still unclear exactly how tokens and a marketplace will work.

“A lot of them have ‘hopes’, and we will see which ones survive. And they will change. They will go out with an idea. They will learn that’s not the right way. And they will then change to find the right mechanism between the big companies who want the data, a lot of patients who want to share the data, and there are others, hospitals, etc. We will see then how that works. But there will be something for sure.”

Fritz added: “I think that the concept of data as property is going to grow. So if somebody wants to it maybe they have to rent it in the future.”

If you’re interested in learning more about Blockchain and Pharma Supply Chain, Hanson Wade is running a conference in Boston in October. The link includes a 10% ticket discount. We’ve found Hanson Wade events have strong speakers, hardly any sponsor promotional content, and provide excellent networking opportunities.

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