Entrepreneurship Generalities

Blockchain, Mobile Apps: will technology solve the problem of counterfeit drugs?

« Fighting counterfeit drugs is only the start of what blockchain could achieve through creating [pharmaceutical] ‘digital trust’.»

Andreas Schindler, Blockchain Expert

20% of the medicines circulating in the world are counterfeit, most of them do not contain the right active substance or not in the right quantity. Representing 200 billion dollars per year, this traffic – 10 to 20 times more profitable for organized crime than heroin – causes the death of hundreds of thousands of people every year, the majority of whom are children, whose parents think they are treating them with real medicine. To fight this scourge, laboratories and international health authorities must form a united front, where technology could be the keystone.

The problem of counterfeit drugs

It is an almost invisible scourge, which contours are difficult to define, a low-key global epidemic, which does not provoke confinements or massive vaccination campaigns, but which nevertheless kills hundreds of thousands of patients every year. Counterfeit medicines, defined by the WHO as “medicines that are fraudulently manufactured, mislabeled, of poor quality, conceal the details or identity of the source, and do not meet defined standards”, generally concern serious diseases such as AIDS, tuberculosis or malaria, and lead to the death of approximately 300,000 children under the age of 5 from pneumonia and malaria. In fact, the general term “counterfeit drugs” covers very different products: some containing no active ingredient, some containing active ingredients different from what is indicated on the label, and others containing the indicated Active Pharmaceutical Ingredient (API) in different quantities. In addition to their responsibility for the countless human tragedies, counterfeit medicines also contribute to future issues by increasing antibiotic resistance in areas of the world where health systems are already failing and will probably not be able to cope with this new challenge.

Now, from a financial perspective. Apart from public health considerations, counterfeit medicines are also an economic and political problem for countries: this traffic, which represents 200 billion dollars per year, feeds organized crime networks and represents a very high cost for health systems. As far as the pharmaceutical industry is concerned, the problems caused by this traffic are numerous: it represents a 20% loss of revenue of their worldwide sales; a lack of confidence from their patients – not knowing, most of the time, that the counterfeit drugs are not the originals; and finally considerable expenses in order to fight the counterfeits.

Initiatives against counterfeit drugs

Counterfeit medicines are usually distributed through highly complex networks, which makes it particularly difficult to curb their spread. In its “Guide for the development of measures to eliminate counterfeit medicines”, the WHO identifies various legal-socio-political initiatives that can be put in place for States in order to limit the spread of these counterfeit medicines. While these recommendations are relevant, they are particularly difficult to implement in regions of the world where countries have few resources and whose structures are plagued by endemic corruption. In this article, we will therefore focus on solutions implemented by private companies: start-ups specialized in fighting against counterfeit drugs or large pharmaceutical companies.

One of the methods used by various start-ups – such as PharmaSecure based in India, or Sproxil based in Nigeria, and actively collaborating with the government of that country – is to use the widespread access of the populations to smartphones to allow them to identify counterfeit drug boxes according to the following model: drug manufacturers collaborate with these start-ups to set up codes (in the form of numerical codes or QR codes) concealed  inside the box  or on the packaging of the drug, under a surface that needs to be scratched or removed. Patients can download a free app and scan these codes to verify the medication is authentic. These applications also allow patients to receive advice on their treatments. They function as a trusted third party to certify the patient, the final consumer of the drug, that no one has fraudulently substituted the legitimate manufacturer.

Figure 1 – Model for drug authenticity verification using mobile apps

The system described above works almost the same way as serialization. The implementation began several years ago and is described in European Regulation 2016/61; with the exception that the verification is performed by the patient and not by the pharmacist.

Other mobile apps, such as CheckFake and DrugSafe, are developing a different verification system, taking advantage of the smartphone’s camera to check the shape, content, and color compliance of drug packaging. Finally, another category of mobile apps implements a system that analyses the shape and the color of the drugs themselves to identify which tablets they are, and certify they are authentic.

These different solutions have a number of qualities, in particular their ease of deployment and use by patients in all over the world. On the other hand, they have the disadvantage of being launched in a speed race with counterfeiters, pushed to produce more and more realistic and similar counterfeits. Nevertheless, these technologies can hardly be applied in other circuits: securing the entire supply chain or tracking the circuit of drugs in hospitals. This is why many large pharmaceutical groups, such as Merck or Novartis for example, bet on a different technology: the Blockchain. Explanations.

Presentation of the Blockchain technology

Blockchain is a technology conceived in 2008, on which cryptocurrencies have been built since then. It is a cryptographically secured technology for storing and transmitting information without a centralized control body. The main objective is to allow a computer protocol to be a vector of trust between different actors without an intermediary third party. The Blockchain mechanism allows the different actors participating to obtain a unanimous agreement on the content of the data, and to avoid their subsequent falsification. Thus, the historical method of consensus between actors is the so-called “proof of work”: a number of actors provides computing power to validate the arrival of new information. In the context of cryptocurrencies, these actors are called miners: very powerful computing machines with high energy expenditure are all given a complex mathematical problem to solve at the same time. The first one to succeed will be able to validate the transaction and be paid for it. Each of the participants, called “nodes”, has therefore an updated history of the ledger that is the Blockchain. The way to corrupt a proof-of-work blockchain is to gather enough computational power to carry out a so-called “51%” attack, i.e., to carry the consensus towards a falsification of the chain: the double spending in particular. In fact, this attack is hardly conceivable on blockchains such as Bitcoin, as the computing power to be developed would be phenomenal (perhaps one day the quantum computer will make what we currently consider to be cryptography obsolete, but that is another debate…) Other validation techniques now exist; such as proof of participation or proof of storage. They were essentially designed to address the issues of scalability and energy sustainability of blockchains.

Figure 2 – Diagram of how to add a block to a blockchain.

Conceived in the aftermath of the 2008 financial crisis, this technology has a strong political connotation, and Bitcoin’s philosophy, for example, is to allow individuals to free themselves from banking and political control systems. Thus, the original blockchains, such as Bitcoin, are said to be “open”: anyone can read and write the chain’s registers. Over time, and for greater convenience by private companies, semi-closed blockchains (everyone can read but only a centralizing organization can write) or closed blockchains (reading and writing are reserved for a centralizing organization) have been developed. These new forms of blockchains move away considerably from the original philosophy, and one can legitimately question their relevance: they present some disadvantages of the blockchain in terms of difficulty of use while also retaining the problems associated with a centralized database: a single entity can voluntarily decide to corrupt it or suffer from a hacking.

This closed configuration often allows for greater scalability but raises a question that is as much technological as it is philosophical: is a blockchain, when fully centralized, still a blockchain?

Prospects for the use of technology in the fight against counterfeit drugs

At a time when trust is more than ever a central issue for the pharmaceutical industry, which sees its legitimacy and honesty questioned relentlessly, it is logical that the players in this sector are interested in this technology of trust par excellence. Among the various use cases, which we will no doubt come back to in future articles, the fight against counterfeit drugs is one of the most promising and most important in terms of human lives potentially saved. For example, Merck recently began collaborating with Walmart, IBM, and KPMG on an FDA-led pilot project to use blockchain to allow patients to track the entire pathway of the medication they take. This concept is already being functionally tested in Hong Kong on Gardasil, and using mobile applications downloaded by pharmacists and patients. Thus, the entire drug supply chain is built around the blockchain, making it possible to retrieve and assemble a large amount of data concerning, for example, shipping dates or storage conditions and temperatures. The aforementioned consortium is also exploring the use of Non-Fungible Tokens (NFT): unique and non-interchangeable digital tokens. Each box of medication produced would have an associated NFT, which would follow the box through its circuit, from the manufacturer to the wholesaler, from the wholesaler to the pharmacist and from the pharmacist to the patient. Thus, in the future, each patient would receive an NFT at the same time as the medication in order to certify the inviolability of its origin. None of the actors in the supply chain could take the liberty of fraudulently adding counterfeit drugs since they would not have their associated NFT. Future is probably pleasing and in favor of increased drug safety, but it will only be achievable after significant work, on the one hand to educate stakeholders and on the other hand to set up digital interfaces accessible to all patients.


With the emergence of e-commerce and its ever-increasing ease of access, the problem of counterfeit drugs has exploded in recent years, and it will be necessary for the pharmaceutical ecosystem to mobilize and innovate in order to curb it, as well as to restore the deteriorated trust. Several fascinating  initiatives using blockchain technology are currently being carried out by various stakeholders in the health sector, we can see in these projects the outline of a potential solution to drug counterfeiting, but we must however consider them with a certain critical mind. The temptation to market the buzz-word “blockchain” since the explosion of crypto-currencies in 2017 can be strong – and even, unfortunately, when the issues could be perfectly satisfied with a centralized database. Can we go so far as to think, as some specialists in this technology do, that blockchain is only viable and useful when it is used for financial transfers? The debate is open and there is no doubt that the future will quickly bring an answer!

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By Alexandre Demailly

Pharmacist graduated from Lille University, France, Alexandre pursued his studies in Medical Economics at the Paris-Dauphine University and developed his knowledge of Artificial Intelligence in Health at the University of Paris.
Passionate about health innovation and entrepreneurship, Alexandre is currently involved in two early stage biotechs in the neurodegenerative diseases field.