Indian policy thinktank Niti Aayog is working to put the entire inventory of drugs made and consumed in the country on blockchain with an intent to crack down on counterfeit and spurious drugs, according to two government sources.

The government wants to complete a “proof of concept” (PoC) solution by the year-end and begin implementation in 2019.

The move, a Niti Aayog official said will help the government and pharmaceutical companies to curb the rising problem of fake drugs in the country. “We are all taking those medicines and I am sure people are dying. One way to reduce that is put the entire supply chain on the blockchain,” the official said, asking not to be identified since he’s not authorised to speak with the media.

Though it is seen as a problem, estimates of counterfeit and spurious medicines vary widely. Industry body Assocham estimates one in five drugs are fake (both illegal copycats of brands or plain spurious with no clinical efficacy) and the industry is growing at 20-25% every year. Counterfeiting of drugs as an industry worth Rs 15,000 crore. Drugs quality regulator, the Central Drugs Standard Control Organisation says 0.05% to 0.3% of drugs are spurious. According to the World Health Organisation, 10.5% drugs in low and middle-income countries, including India, are substandard.

“We are looking at the technology and see how can it benefit India and its people,” the second source, another senior Niti Aayog official, said. He gives a little peek into the plans, without disclosing much: “Whenever drugs are transferred, there is a hierarchy of barcodes. We have identified a company that will do the technology for us. Now we have to identify a partner and do the PoC on the blockchain.”

Also see: Tamper-proof degree certificates to be India government’s first blockchain project

It’s too early to divulge everything as the proof of concept is not yet over. However, a good way to understand how it will work is to look at the graphic below that shows how DHL plans to use the Blockchain. Counterfeiting is not only an Indian problem: globally more than a million people die every year after consuming fake medicines.

The first source explained the plan: “Every time the medicine changes hands, the unique number (generated at the manufacturing stage) is tracked. When the consumer gets the drug there is a QR code or a barcode on it… you can open up an app, and you can check the entire details of where it was manufactured and all the places where it exchanged hands to travel to the shop.”

That’s not all. “Once you have sold it, the code gets irrevocably audited on the blockchain that this ID has been sold, and no longer exist,” this source added.

This is not the first time India has tried to use technology to combat the spread of fake drugs, including using SMS messages on mobile phones.

Who’ll pick up the tab?

The pharma industry said it was open to the blockchain idea. “Fake drugs are a concern and if blockchain can help the industry get rid of the problem we are up for it,” said D G Shah, secretary general of industry lobby Indian Pharmaceutical Alliance.

But there are apprehensions around cost. Shah said that even simple two-dimensional barcoding, which is not common in India for drugs, comes at a significant cost. “If the government is willing to consider it that it is an additional cost and compensate it, the industry will have no objection,” he said.

There is one problem with putting the entire inventory on blockchain. “Additional barcoding will result in a production loss of 25% in the short term at least,” Shah said. This is because of inadequate packaging capacity.

Niti Aayog officials are relying on private players to do the PoC and take forward the implementation of the solution. “If the government did it, there are a couple of problems – the cost of the exercise and who will bear it,” said the first source.

The thinktank is also looking at the use of internet-connected devices to monitor shipment and link the devices with blockchain. The first source gives an example of how it will work: “In the case of diabetes, insulin can’t be at a temperature more than seven degrees.” An IoT (short for Internet of Things) device accompanying the shipment will monitor temperature. “The device will trip at a certain temperature condition and it will invalidate the entire batch on the blockchain so that it can’t be fudged and sold in the market,” the source added.

“These devices are not expensive now compared to the value of the shipment. But we have got the PoC made and now we will implement it,” added the source.

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