AmerisourceBergen, Merck to Expand Blockchain Test Project for Tracking Drugs

Drug wholesaler AmerisourceBergen and drug developer Merck will expand a 2017 blockchain trial for tracking drugs as new regulations put pressure on companies operating in the healthcare industry.

US healthcare sector giants AmerisourceBergen and Merck & Co intend to expand a blockchain pilot that was concluded in 2017, the Wall Street Journal reports. During the test, the companies tracked the ownership of medicines along the supply chain route. The upcoming trial is expected to include more drugs and healthcare devices and carry out more elaborate transactions, according to AmerisourceBergen CIO Dale Danilewitz.

A blockchain implementation is preferred in light of current federal laws, which require of healthcare companies to ensure the drugs reach the intended recipient.

Danilewitz said the test would focus on the verification process for drugs that a hospital or retailer returns to the company. If the history of the drugs is clean, they could be resold.

“We’re making sure of the provenance of the product, guaranteeing it hasn’t been tampered with all the way through the chain to the patient. Blockchain is such a natural fit for that kind of capability,” he added.

Danilewitz revealed that Amerisource resells about 16 million product units each year, which is the equivalent of $3 billion in revenue. But if blockchain were to be implemented, that figure would go much higher. It is currently insignificant when measured against the company’s total revenue, which was $153.1 billion last year.

Blockchain seems to be highly relevant given that the healthcare industry is facing new regulations. They will come into force in 2019 and aim to detect and remove fake, stolen, or contaminated drugs. Under the current Drug Supply Chain Security Act of 2013, companies have to adopt an electronic system to trace specific prescription medications from manufacturers to healthcare providers, distributors, retailers, and patients.

AmerisourceBergen’s pilots are part of a broader initiative called MediLedger, on which we reported last year. Due to regulatory pressures, the company teamed up with Pfizer and McKesson, among others, to explore the use of blockchain for tracking drugs.

The drug wholesale giant has applied blockchain solutions provided by SAP. On Thursday, we reported that SAP had made its blockchain-as-a-service solution available to all customers. AmerisourceBergen is also interested in the Hyperledger blockchain.