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Countering Counterfeit Drugs with Blockchain

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Blockchain’s public ledger could be the solution to the problem of counterfeit drugs by tracking all drugs throughout the complete supply chain from raw materials to patients.

The Effects of Counterfeit Drugs

In addition to posing a health risk to patients harmed by placebos or even harmful ingredients in the fake drugs, counterfeits add up to a major loss for the pharmaceutical industry to the tune of hundreds of billions a year. Aside from concerns about harm and loss, new legal requirements that demand traceability for drugs are kicking in.

Counterfeit drugs have been identified as a persistent global problem since 1985. The World Health Organization (WHO) estimates that around 10 percent of drugs found in low to middle income countries are counterfeit. That translates into the deaths of tens of thousands of people with diseases who took medication without the necessary active ingredient to treat their conditions. (To learn more about how tech is influencing the drug industry, see Big Data's Influence in Medicine and Pharmaceuticals.)

Current Conditions Favor Counterfeiting

According to Harvey Bale, Ph.D., of the Organization for Economic Co-operation and Development (OECD), counterfeits persist because of four conditions that persist:

  1. Fakes can be made relatively cheaply (at least as profitable as narcotics – lower risk).
  2. Many countries, especially in the developing world, lack adequate regulation and enforcement.
  3. Even in the industrialized countries, the risk of prosecution and penalties for counterfeiting are inadequate.
  4. The way in which medicines reach the consumer is also different from other goods: The end user has little knowledge of the product.

Limited Solutions Applied

As the problem is particularly rampant in West Africa, a Ghanaian entrepreneur named Bright Simons offered a verification solution through his company, mPedigree. A customer can be assured that the medication offered for sale is genuine if the code they find on the bottle checks out by calling a free number.

The mPedigree approach to spotting counterfeits works only on the final step of the drug supply chain, and it still puts authentication into one central source rather than offer the transparency of a public ledger, which is only possible with blockchain technology.

The Promise of Blockchain

IBM laid out some of the ways blockchain can improve the healthcare industry in Blockchain: The Chain of Trust and its Potential to Transform Healthcare – Our Point of View. The premise is that blockchain serves as “an Internet of Value” because what is in the blockchain record cannot be altered, and so can be relied upon as trustworthy.


Having that kind of authentication in place would assure consumers they are getting the benefits of the drugs they are prescribed and would benefit pharma companies in setting up a completely traceable supply chain.

Compliance Benefits

At the end of 2013, Obama passed the Drug Supply Chain Security Act (DSCSA), which calls for a a national track-and-trace system by which manufacturers must affix product identifiers to each package of product that is introduced into the supply chain. As companies were granted a period of ten years to get to the point of compliance with the new regulations, they have to gear up for a reliable solution to accurately track their supply chains by 2023. (AI is also having a big influence on medicine. For more, check out The 5 Most Amazing AI Advances in Health Care.)

Blockchain Features Secure Trust

Tapan Mehta, market development executive, healthcare and life sciences services practice, at DMI was quoted in Healthcare IT News, saying, “A blockchain-based system could ensure a chain-of-custody log, tracking each step of the supply chain at the individual drug or product level.”

“With blockchain, records are permanent and cannot be altered in any way, ensuring the most secure transfer of data possible,” Mehta explained, thanks to a ledger that is both decentralized and public. That’s what gives blockchain the dual distinction “transparency and traceability.”

Working off of that would not only make it possible to distinguish the real thing from the counterfeit but, “to trace every drug product all the way back to the origin of the raw material used to make it.”

Another advantage it offers is recovery. He explained, “In the event that a drug shipment is disrupted or goes missing, the data stored on the common ledger provides a rapid way for all parties to trace it,” to the last identified handler.

Building the Pharma Blockchain

The blockchain solution is not just a hypothetical idea. In 2017, Chronicled set up a joint venture to build and test a prototype system to function as an industry model under the name of the MediLedger Project. The project included representatives from major companies like Genentech, the Roche Group, Pfizer, AmerisourceBergen, and McKesson Corporation.

The MediLedger Project was built on a Parity Ethereum client, which worked to achieve the aims of tracking for DSCA, according the report on the project’s progress for the year. The prototype demonstrated the possibility of a secure blockchain network capable of processing over 2,000 transactions per second.

The project showed that a blockchain system can validate “the authenticity of product identifiers (verification) as well as the provenance of sellable units back to the originating manufacturer.” In addition to countering counterfeits, that record at every step can be useful in “allowing for expedited suspect investigations and recalls.”

The project report also asserts that there are many “additional business applications to the pharmaceutical industry, allowing for compounding benefit for this industry once such a platform is established.” However, that substantial return on the blockchain investment will only be possible if there is “strong participation from all industry stakeholders (manufacturers, wholesalers, dispensers, service providers, etc.).”

Given that what is at stake is not just billions of dollars for the pharma industry, but the lives and health of millions of people who have been prescribed medication, all the involved parties should come together to solve the problem of counterfeit drugs. If the difficulties in accountability and identification for drug production could be remedied by blockchain, it should be universally implemented.


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Ariella Brown
Ariella Brown

Ariella Brown has written about technology and marketing, covering everything from analytics to virtual reality since 2010. Before that she earned a PhD in English, taught college level writing and launched and published a magazine in both print and digital format.Now she is a full-time writer, editor, and marketing consultant.Links to her blogs, favorite quotes, and photos can be found here at Write Way Pro. Her portfolio is at