An Open Letter To Blockchain Vendors: Please Pay More Attention

Dear Blockchain Vendors,

It was good to see all of you at last week’s Drug Supply Chain Security Act (DSCSA) and Blockchain proof of concepts pilots review held by the Center For Supply Chain Studies (C4SCS) in Rockville, MD.  I hope your travel home was uneventful.  Let me say right at the top, I was in the audience representing Systech International.  My co-worker, Joe Lipari partnered with Dwight deVere of RxTransparent as the Green Team.  RxTrace is independent of Systech International.  That said, as the author of RxTrace, I have some helpful advice for you.

First, let me say I share your excitement over blockchain technology.  Used in the right applications, implemented the right way, I can see that it will be revolutionary, providing more secure access to shared information without relying on a central authority to provide trust.  Like everyone who might benefit from its use, I am trying to learn all I can about what constitutes the “right applications” and how to make use of blockchain in the “right way”.

Your presentations at the C4SCS event were very helpful in my education, but I must admit, I still have a long way to go.  I still hear people say things that I don’t fully understand, or which seem to conflict with something I read or heard from someone else.  But I’m starting to understand at least some of the concepts and how they relate to each other.  All of your presentations were helpful in my journey toward full understanding.

That brings me to the purpose of the letter.  While I am not a blockchain expert at this time, I do know quite a bit about the DSCSA and the pharma supply chain.  I have also been studying and writing publicly about the issues surrounding the use of technology to meet pharma serialization and tracing regulations for many years now.  Since the first day I started RxTrace in 2009 my mission has not changed.  The masthead says it all:  RxTrace is “A comprehensive exploration of healthcare supply chains, track and trace technology, standards and global regulatory compliance”.  I’ve seen and evaluated lots of ideas for meeting regulations like the DSCSA through the application of technology.  Based on that experience, I saw a problem with many of the presentations at the C4SCS event.

It was obvious that each team presenting had deep technical abilities, but at the same time, your understanding of the DSCSA and the needs of the US pharma supply chain was so elementary that it appeared that most of the presenters were making the simplest, most superficial assumptions about them.  These are almost always wrong.  If you expect to participate in the application of blockchain to meet the needs of this industry, you need to pay more attention.

The operation and preferences of the members of the US supply chain are significantly different than what outsiders would assume.  When you add in the DSCSA, these things become even more nuanced and sometime even seem counter-intuitive.  To be trusted enough to help design a supply-chain-wide solution using blockchain, you will need to have the understanding of an insider.  In a single letter I cannot give you the knowledge you need for that, but I can show you some of the worst mistakes you made in your presentations last week and I hope it causes you to investigate further.  I hope that leads to your success.

  1. Reduction of counterfeit drugs is not the goal (but it is a hoped for side-effect)
    In your presentations, most you said something about the percentage of counterfeit drugs.  I think I even heard someone claim percentages like 30% of drugs are counterfeit.  The implication was that companies are looking at blockchain to reduce that percentage.  In fact, a reduction in counterfeit drugs is not the goal of the group you were presenting to.  Yes, everyone in that room certainly hopes everything we do ends up resulting in a reduction in counterfeits and other crimes, but if it does, they recognize that it would just be a nice side-effect.  When Congress passed the DSCSA back in 2013, they determined at that time that this will result in more security against counterfeits and other crimes in the supply chain.  Whether it actually does or not is a moot point.  Companies are required to follow its many requirements, and so that’s what they are planning to do.  If blockchain is selected as part of the industry-wide solution it will be because it more efficiently and reliably meets the DSCSA requirements than alternative approaches, not because it results in lower percentages of counterfeits.  On a separate note, you should also understand the difference between the legitimate pharma supply chain and illegitimate sources of drugs, which is where the vast majority of those counterfeit drugs are.  The DSCSA doesn’t have anything to do with those sources.  (See “Illegitimate Drugs In The U.S. Supply Chain: Needle In A Haystack”.)
  2. The goal was in the title, but most missed it
    The focus of your presentations should have been “DSCSA and Blockchain”, which is the title of the larger C4SCS study.  Most presenters seemed to be presenting under the title “Why my solution fits my assumptions about your needs”.  They felt like sales pitches rather than actual pilot outcomes.  Maybe it’s just me, but it seemed like only two out of six teams conducted an actual pilot for this study.  There’s no excuse for this because C4SCS has done a great job of focusing on the DSCSA requirements in everything they have done leading up to this event.  How could anyone miss that, unless they weren’t really paying enough attention?  If you want to learn more about what the industry is facing with the DSCSA, I can recommend that you get ahold of my book “The Drug Supply Chain Security Act Explained”, and also subscribe to RxTrace.
  3. Full end-to-end visibility is a bug, not a feature
    Proof that you haven’t been paying enough attention is that the majority of the presenters touted how their blockchain solution would provide “full end-to-end visibility” (FE2EV), as if that’s exactly what everyone wants and needs.  In fact, that’s one of the problems C4SCS has been trying to solve in this study through the development and analysis of multiple ReferenceModels™.  FE2EV is not required by the DSCSA, and several revenue models in the supply chain today are based on the premise that data is owned by its creator.  The industry’s goal is to meet the DSCSA without changing that premise.  FE2EV would destroy that premise, so no, FE2EV is not a feature of your proposed solution, it’s a bug (see “Data Ownership In The Track And Trace Cloud, Reprised And Updated”).
  4. Point-to-Point data exchange will reign
    According to my notes, more than half of the presentations proudly stated that today’s point-to-point data exchanges would be eliminated with their blockchain approach.  That’s just tone-deaf.  If you had been paying attention to the recent responses from the Healthcare Distribution Alliance (HDA) to the FDA, and to comments made by the individual wholesale distributors on the C4SCS calls and elsewhere, you would know that they don’t want to get rid of those exchanges (for one example, see “HDA Questions FDA’s Authority To Mandate A Centralized System For the EDDS”).  I describe it a little differently than they do, but I believe the same reasoning is somewhere under the covers of their explanations.  The sale of product is point-to-point, the transfer of money is point-to-point, the DSCSA data exchange mandate can be met through point-to-point exchange, and the point-to-point data connections already exist and work well.  Only two parties (three, in the case of drop shipments) are involved in the transaction, so why would companies want to perform the data exchange through a technology that shared all that data—even encrypted—with everyone in the supply chain?  The answer:  They wouldn’t.  (See “Blockchain Will Not Be Used For DSCSA Data Exchange”, and “Data Ownership In The Track And Trace Cloud, Reprised And Updated”.)
  5. The real DSCSA problems blockchain might solve
    There are really only two real problems in meeting the DSCSA that might be solved using blockchain.  I’m sure you can find more than two, but these are the only problems that are essential.  To capture the hearts and minds of those in the industry, I advise you to focus on those two problems.  Everything else is a waste of your time and that of your audience, and just introduces smoke and mirrors which will turn everyone off.  I’m sure that’s not what you want.  I know you think blockchain will help in so many ways—and I’m sure it will—but if you don’t solve these two DSCSA problems first, you won’t be around to pitch the other things.  So here are the two problems:

    1. The HDA Verification Router Service (VRS)
      Whether it is just the Lookup Directory (LD), or the whole thing.  This is your entré into this industry this year.  Pay closer attention to it.  (See “What’s So Hard About Unique Identifier Verification?”.)
    2. Facilitating the collection of TIs
      In November of 2023 the DSCSA requires members of the supply chain to be able to facilitate the collection of transaction information going back to the original manufacturer or repackager.  This is the problem that blockchain can solve.  The only question is, which way is the best way?  The industry needs your help to figure that out so they are confident enough to invest, one way or another.  Pay attention to this need.  (See “Blockchain Will Not Be Used For DSCSA Data Exchange” and “HDA Urges FDA…Please Re-Read The DSCSA”.)

That’s about it.  If you’re serious, paying better attention will require you to listen more and talk less.  When you do speak, speak from the understanding of the five things I’ve listed above, and you will make a positive contribution.  If you don’t do that, then you won’t go very far in helping the industry meet the DSCSA.

It was nice meeting you all at the event.  I hope this advice helps you better construct your proposals to this industry going forward.  If you have any questions, I’m happy to answer them, or to provide a deeper explanation of any of my suggestions.  Just leave me a message here (don’t worry, unlike this open letter, messages submitted through that page go directly to me privately, and no one else, and it’s spam-free).

Sincerely yours,

2 thoughts on “An Open Letter To Blockchain Vendors: Please Pay More Attention”

  1. Well said Dirk. It’s not the greatest thing since sliced bread.

  2. I think your observations are very relevant. Blockchain has been a solution looking for a problem to solve for several years and while I think it has great potential, it may not be the silver bullet that it is being touted as. That being said, it is a technology that will continue to grow and improve, but some areas still have a way to go. It has very real limitations that will preclude it from being a perfect fit in many instances. But for certain niche use cases, it will have a profound impact.

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