Counterfeit goods are a massive global industry, worth almost half a trillion dollars worldwide. These items worm their way into just about every industry you can think of, including some you may have considered safe from the threat of fake products.
In the early days of co-founding a startup that focuses on supply chain solutions, I spoke with people from a variety of different industries who were worried about counterfeits and diversion in their supply chains. But one industry that stuck out to me, in particular, was medical devices.
It’s difficult to imagine someone out there is counterfeiting life-saving devices or implants, but it does happen. In fact, more than $51 million in counterfeit medicine and medical devices were seized in an Interpol operation back in September 2017.
It’s extremely disconcerting to hear the devices many rely on to keep them healthy may not have been manufactured under rigorous scrutiny, but rather, created in an attempt to make a quick buck.
Fortunately, the industry is well aware of the issue, and new technologies are making it easier than ever for companies to thwart counterfeiters.
After optimizing enterprise supply chains for several years, I’ve found several ways blockchain can help.
Having a blockchain-run chain of custody (COC) will ease patients and providers peace of mind because it provides proof of origin.
The implications of counterfeit medical devices are frightening. Patients who go in for hip replacements are expecting those implants to last 20 years or more. But they probably aren’t expecting to be fitted with artificial hips that are counterfeited and made of low-quality materials.
If a fake implant is used, what was supposed to last a patient for decades suddenly has a much shorter life span. And for devices like pacemakers, the stakes are even higher.
With lives on the line, it’s necessary to have a chain of custody system that can help clean up supply chains. Without one, some of the products we trust to keep us healthy may actually have the opposite effect.
For example, Boston Scientific’s use of polypropylene for gynecologic mesh implants recently came under scrutiny after more than 100,000 women filed lawsuits over the products. The plastic, originating from brokers in China, was deemed unsafe by experts. Yet after the supply of plastic was cut off, the company found another source—one that was FDA-approved but seemed to come with little visibility into the various steps in the supply chain. While it hasn’t been proven that these implants contained counterfeit materials, they still raised health concerns among patients.
It’s simply unacceptable for patients and providers to be worried that the medical devices they’re using may have an unexpected effect on overall health.
Digitizing chain of custody records and placing transactions on blockchain will eliminate many questions about origin.
Tracking a medical device is simply a way of ensuring two things: it’s coming from the correct place, and, if something goes wrong, there’s no question of where it originated.
The blockchain is the best way of eliminating any unknowns or questions. Say you’re following the path an artificial hip takes as it travels from the manufacturer to the hospital, where it awaits a hip replacement patient. The hip is tagged with a unique cryptographic identifier that links it to an identity on the blockchain. Each time that hip trades hands, from the supplier onward, it’s possible to register the timestamp and geolocation on the blockchain—creating an immutable record about the implant’s chain of custody.
If everyone in the supply chain is registering those transfers of custody, it becomes difficult for counterfeits to enter the supply chain. They would have no identifier, and even if they did, the record on blockchain would show they had not originated from the supplier or manufacturer. Working backward through the registered COC, it would be relatively easy to find out where the counterfeits had entered the supply chain.
A large part of the value of blockchain is that the data on these supply chains will persist.
Right now, if a company that’s tracking chain of custody goes out of business, that data may not be there 10 years later when a class action lawsuit begins. With a blockchain, you know that the information will always be there. It’s not possible for the guilty party to have the classic “shred everything” Enron moment when auditors come knocking.
Still, the goal isn’t to persecute companies within the industry, it’s to make sure they have better records that don’t allow anything to slip through the cracks in the first place.
If you have an existing physical chain of custody, consider adding a blockchain backend.
Chain of custody isn’t a new concept, and there are already different methods that companies can use to track products. Some are digital, while others rely on physical documents. If your company is already using a COC solution, it’s a good idea to add a blockchain backend solution to help with asset management.
Over time, the goal for the medical devices industry is to come together in a consortium and set standards for what they expect the chain of custody to look like for devices and implants. And once those standards have been set, and the industry has formed a network around them, new collaborative possibilities can happen.
Counterfeits may be a pervasive problem, but not one that patients and doctors should have to worry about. With a tighter supply chain, backed by blockchain COC solutions, that goal can be turned into a reality.