According to Coindesk's June 3 report, Walmart, a large retail giant, joined MediLedger, a blockchain alliance that aims to track drug sources.
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A spokesperson for the Bentonville, Arkansas-based company confirmed the news to Coindesk, but did not comment further.
This move represents Wal-Mart's deep involvement in blockchain technology. In addition, the retailer is a key player in the IBM Food Trust. Food Trust is a system built on the Hyperledger Fabric platform that tracks fresh produce through the supply chain.
Wal-Mart insists that its green leaf vegetable suppliers integrate the IBM blockchain and should bring similar supply chain influence to Mediledger. MediLedger's members include pharmaceutical manufacturers such as Pfizer and three major pharmaceutical wholesalers: McKesson, Amerisource Bergen and Cardinal Health.
According to Wal-Mart's annual report, in the fiscal year ending January 31, sales of “health and health-care drugs”, including drugs and over-the-counter drugs, were US$35 billion in the US, accounting for 10% of Wal-Mart's total sales.
Unlike Food Trust, Mediledger uses the enterprise version of the Ethereum blockchain, which is built from a modified version of the Parity client and a consensus mechanism called a proof of authority. The alliance, led by San Francisco-based blockchain company Chronicled, completed a round of $16 million in financing earlier this year.
At the time of Wal-Mart's entry, MediLedger is preparing to launch a pilot project with the US Food and Drug Administration (FDA) in early June. The agency is testing various methods to create an interoperable digital system to track and validate prescription drugs, which Congress has requested to deliver by 2023. Eric Garvin, co-head of MediLedger, told CoinDesk:
“The pilot project really makes sense only if it works with a group of partners.”
MediLedger's initial focus was on verification of the drugs that were returned for resale, which is only a small part of the pharmaceutical market, but still worth more than $6 billion. Legislation to prevent the resale of counterfeit and shoddy products will take effect in November this year.
Now, the expanded team will begin a broader tracking of all pharmaceutical products, including interoperability data and packaging serialization.
Why use blockchain technology?
One might say that in places like the UK, the health care system is primarily run by the government, and the digital system that the FDA was mandated to create may be easier to implement using a centralized system.
But the United States is the world's largest privatized health care system (the highest price), which leads to the disorderly fragmentation of isolated databases and supports decentralized solutions.
The 10-year roadmap for all drug packaging standards required by Congress begins with some of the largest companies that perform electronic tracking of bulk shipments, such as a 100-pack of a drug. The next goal is to perform a more elaborate series at the pill box or bottle level.
The third point of the legislation is that the data collected must be technically interoperable.
Maria Palombini, director of emerging technology communities and project development at the IEEE Standards Association, said the last requirement made some industry insiders think "blockchain is the perfect solution."
Palombini stressed that the FDA does not advocate a technology that overrides another technology. Its only prescription is to use recognized standards in each pilot's technology stack. However, making data (and metadata) interoperable poses a challenge to the industry, she said:
“I think some companies will try and accept this, while others will try to stay away from the blockchain. Because there is a word that scares them – transparency.”
According to Garvin, nodes are distributed and operated by industry participants and technology providers, but data privacy is being addressed by zero-knowledge proofs, an encryption method that allows someone to not expose the data itself. In the case of a piece of data, some things are true.
This data transparency issue is particularly relevant to the end of the supply chain of large pharmaceutical companies such as Wal-Mart, which are not accustomed to sharing potential sales data with competitors. Palombini said:
“They have to try to share the data to give people a clearer picture of the inventory, but now retailers must also return the data they never really need. It will be a very difficult part.”