When people hear about blockchain, their minds might typically jump first to use cases in banking or financial markets. Although these industries were the trailblazers in adopting blockchain, they are no longer alone: as someone who works closely with organizations in the healthcare and life sciences space, I am seeing major industry players move beyond investigating the technology and into the phase of building production-ready blockchain applications. This is the first of two posts where I will explore why blockchain is a necessary consideration for these industries, why certain use cases are better applications of blockchain, and the importance of being a first mover.
The blockchain paradox
For the healthcare and life sciences industries, blockchain is the perfect paradox. These industries operate with overwhelming amounts of data — data which must be shared yet secure, data that is digitized now more than ever, data that belongs to the increasingly empowered patient. By providing faster access to this trusted data, as well as facilitating better collaboration and increased transparency, blockchain can significantly improve and personalize the patient experience. The technology can also help reduce counterfeit medicines, promote more effective research and development, and drive new or optimized business models.
The characteristics of these healthcare and life sciences organizations that make them superb candidates for the adoption of blockchain technology, however, are the very same that may deter them from implementing. As the IBM Institute of Business Value (IBV), in collaboration with the Economist Intelligence Unit (EIU), found this year in their study of over 200 life sciences executives in 18 countries, life sciences organizations face different challenges than those in many other industries when implementing new processes and technologies. First off, the industry, awash with personal health information and classified research, is not only highly regulated, but also differs significantly across geographies in this degree of regulation. Second, antiquated and inefficient processes, combined with an inherent caution in applying new technologies, further slows this industry from exploring and adopting blockchain.
The IBV also found in its 2016 study of over 200 healthcare executives that healthcare organizations in North America are lagging behind other regions in adopting blockchain — only eight percent of North American respondents are blockchain Trailblazers, with 56 percent of North American organizations viewing immature technology as a barrier to implementing and many prioritizing readjustment to the 2010 Affordable Care Act over blockchain exploration.
From conversation to action
Despite the characteristics that delay these industries from diving into blockchain, we found in the first IBV study mentioned above, that these organizations are very eager to take the next step. In fact, nearly 70 percent of all life sciences executives surveyed expect to have a blockchain network in production by 2020. Although this may seem like an aggressive target, my team is passionate about partnering with these organizations to make this statistic a reality.
In order to move from conversation to action, we have had to narrow our focus and begin working on only the highest value use cases, which tend to have three characteristics: first, the blockchain technology itself provides significant value-added; second, implementing blockchain produces a sizeable near-term, demonstrable return on investment (ROI); third, there is some external, motivating force driving the need to redesign an existing process or service. Successful blockchain projects tend to address tangible problems that the industry faces and are coupled with either a regulatory or financial incentive.
The lifetime of a drug
A quintessential example of the ideal use case, which we discuss both in the Team Medicine study linked above and in our recent healthcare and life sciences industries blog post, is track-and-trace for pharmaceuticals. The need for a secure, immutable history of a drug is largely driven by the Drug Supply Chain Security Act (DSCSA), a U.S. Food and Drug Administration (FDA) policy enacted in 2013, which “outlines the steps to build an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.” This Act acts as the “external motivating force” propelling major life sciences companies towards blockchain.
Blockchain is an ideal solution for the business problem of tracking and tracing pharmaceuticals, as it provides increased trust through consensus, provenance and supply chain immutability. In addition to supporting compliance, there are many benefits to “doing DSCSA” on the blockchain: not only are there numerous operational benefits and millions of dollars of savings to be reaped through supply chain efficiency and rebate management, but there is also nothing stopping these organizations from “flipping the system on” early once the functionality is in place, years before the 2023 FDA-mandated deadline.
These first movers who recognize the massive potential of blockchain for DSCSA — and are working with my team to build and test it — will be poised to tackle the oncoming wave of regulation and disruption while deriving massive cost savings from the platform, positioning themselves competitively in the industry for years to come.
According to a 2016 IBV study, “Healthcare Rallies for Blockchain,” healthcare seemed to be “setting the pace on blockchain adoption,” even ahead of the financial services industry. The study surveyed over 200 healthcare executives and found that 16 percent expected to have commercial blockchain solutions in place by 2017. Now three years later, there’s no […]
Some of the key industry pain points facing supply chain management include the labor-intensive process of supplier onboarding and the trust deficit between the buyer and the suppliers. By implementing blockchain technology, these issues can be addressed and bring speed, efficiency and trust to the industry. Today’s businesses are operating in an increasingly complex world […]
The first part of our series on automotive blockchain tackled standardization. But with efforts such as the Mobility Open Blockchain Initiative — a consortium of worldwide technology leaders — breaking down barriers to shared ledger adoption, it’s worth looking at the practical potential of blockchain in automotive. What’s happening right now, what’s just over the […]