Could blockchain technology have stopped El Chapo?

Tony Sagami

It is always a good thing when scumbags get their just desserts. I was pleased to see that Mexican drug kingpin Joaquín “El Chapo” Guzmán got convicted and will likely spend the rest of his life in prison.

But what really amazed me was the gargantuan amount of cash he amassed by selling illegal drugs. Nobody knows just how much, but most estimates are in excess of $10 billion.

Sure, $10 billion may seem like a mountain of money. But you may be surprised to learn the counterfeit pharmaceutical drug market is larger than the illegal drug market that made El Chapo so rich.

The U.S. National Institutes of Health estimates that a $1,000 investment in fake drugs can return $30,000 in profits. That’s 10 times the profit that can be made from heroin!

PricewaterhouseCoopers estimated that the street value of counterfeit drugs was $217 billion in 2018.

$217 billion!

Fake drugs not only make scumbags rich, but they also kill people. The World Health Organization estimates that over 1 million people around the world die from fake drugs.

Some 30% of those fake drugs contain no active ingredients, which renders them useless. However, a high percentage are contaminated with dangerous chemicals, and often make things worse instead of better.

Clearly, we’re talking about a serious, serious problem. However, battling the counterfeiters has so far proven to be impossible.

The good news is that some brilliant people are tirelessly working on solving this deadly, multibillion-dollar problem. And whoever figures out a way to take fake drugs off the market is going to make a FORTUNE.

Guess what? The solution is near and it is coming from blockchain, the underlying technology that drives cryptocurrencies, like Bitcoin.

Blockchain provides a public record of every step in the supply chain, one that cannot be changed.

Think about that for a second. This technology makes it possible to trace every drug all the way back to its raw materials.

Each step in the supply chain can be searched virtually — instantaneously. This is why blockchain will be such a powerful tool when it comes to combating counterfeit drugs.

Big pharma companies are climbing over themselves to incorporate blockchain technology into their supply chain. Many are already throwing billions of dollars in search of a solution.

Plus, drug-makers are running out of time to secure their supply chains.

In 2013, the U.S. introduced the Drug Supply Chain Security Act (DSCSA) with the aim of controlling the rampant counterfeit drug market.

The act requires drugmakers to be able to electronically track and trace their drugs through the entire supply chain. That means all the way from the raw materials to manufacturing to middlemen to the consumer.

And it requires complete implementation by 2023.

The Food & Drug Administration is even showing drugmakers how to secure their supply chain. It has launched several blockchain pilot programs to help in the tracking and tracing of pharmaceutical drugs.

In fact, the FDA is so convinced that blockchain is the solution that it recently hired Frank Yiannas as deputy commissioner for Food Policy & Response. Yiannas previously headed food safety at Walmart for a decade, and Walmart is one of the key partners in the IBM Food Trust blockchain initiative.

Related post: Walmart goes all-in on blockchain to manage its global supply chain

FDA Commissioner Scott Gottlieb made the following statement:

“As part of our ongoing efforts to protect our nation’s drug supply, today, we’re giving industry an opportunity to test new technologies that can help spur greater accountability for participants in the supply chain and improve our ability to trace prescription drugs at every point in the distribution chain.”

In other words, blockchain is the only solution. Blockchain provides a public and immutable record of every step in the supply chain, and is the most-powerful tool available to combat counterfeit drugs.

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Best wishes,
Tony Sagami

Comments 1

Bob Schubring February 26, 2019

Actually the monetary losses from counterfeit drugs sales in Third World.nations were a problem for US and European pharmaceutical companies for decades. What prompted the US Congress to take action was a domestic disaster that finally came to light in 2012: 20,000 Americans, many of them young women in childbirth, got epidural injections of a nerve block drug that had been incorrectly processed. A screwup at the New England Compounding company, a maker of cheaper generic drugs, resulted in unsterilized medicine being shipped. The 20,000 victims caught fungal meningitis which progressively spreads to cause Adhesive Arachnoiditis, a condition more painful than any known form of cancer. Arachnoiditis is named after a spiderweb appearance of adhesions where the fungus causes the spinal nerves to glue onto the meninge. The slightest muscle movement anywhere in the body shakes and pulls on these adhesions, causing extreme constant pain.

While New England Compounding liquidated itself in Chapter 7 bankruptcy because it’s profits could not provide care for these 20,000 victims, Congress held hearings and zeroed in on one aspect of the problem: It took an alert public health investigator in Nashville to realize that something had started an outbreak of Arachnoiditis and then it took her awhile to prove that defectively-packaged medicine had caused it. But for several months afterward, the outbreak continued spreading nationwide, because there was no mechanism for reaching out to every hospital and outpatient surgical clinic to warn them that they had been shipped this dangerously defective drug!

My good friend Terri A Lewis, PhD gave testimony before the House Energy and Commerce Committee in support of what became the DSCSA law. She gave a bit of history on this rare disease that’s caused by.defective medicines injected into the spine: President John F Kennedy caught it during World War II, from a diagnostic procedure done on him while recovering from his wounds in the sinking of the PT 109 under his command. Mr Kennedy was “titrated to effect” on a strong dose of the opioid drug Morphine and remained on it through law school, his service in the Senate, and his Presidency. He suffered complications of intractable pain such as chronic constipation, danger if he consumed any alcohol or certain other drugs that clash with an Opioid, and chronic fatigue. Learning to live with his disability had been a daunting challenge and sadly, he lived at a time when we confused disability with failure. It was the fact that he took the challenge of working with his disability, not because the challenge was easy but because the challenge was hard, that we have his achievements to look upon today.

A better, Blockchain based drug tracking system would have quickly shown that curious Nashville public health investigator that every single Arachnoiditis victim in the entire outbreak, had gotten a spinal injection from the same batch of medicine. And every hospital and clinic that had been shipped any of it, would have been notified in minutes to return the defective meds for replacement. Perhaps 19;900 fewer people would have developed this horrific complication!

One sad note: Dr Andrew Kolodny, a Board Director of the PRI malpractice insurance company, who were saddled with the damage claims for some of the 20,000 victims after New England Compounding’s funds were exhausted, launched a vicious campaign of libel and slander, pretending that the Arachnoiditis victims were actually addicts and that the Government should pay for their “addiction” so that malpractice insurers like PRI would not have to pay for it. Kolodny used his personal political activity on behalf of Senator Hilary Clinton and President Barack Obama, to gain influence in the Obama Administration aimed at making this vicious slander into public policy. The result has been that as the body count mounted from a cost-cutting campaign by Mexico’s organized crime cartels (switching imported heroin with homemade synthetic Fentanyl doubled their profit margin while minimizing their risks), the Cartels have avoided any blame for the problem. Instead, the Arachnoiditis victims are being blamed for what’s being called the National Opioid Crisis. Dr Lewis will gladly debate Dr Kolodny over this in any forum. So far, no discussion of the facts is coming from the Kolodny camp. In fact, the lobbying group who are promoting Kolodny’s version of the opioid story, a group he calls PROP, do not even mention in their online biography of their founder, that he sits on the Board of Directors of PRI Insurance.

The victims of the Arachnoiditis outbreak have been victimized twice.

Sensibly Congress ordered the Pharma industry to develop a better tracking system for defective drugs. It’s the one positive development to come from the tragedy. Drug makers are hopeful that they can pay for the tracking system by squeezing counterfeiters out of business…which will make healthcare safer in many poor nations. Recently Thailand sent a Pakistani national to prison on multiple counts of attempted murder, for selling pills made of rice flour, in counterfeit packages pretending that the starch was a heart medicine. How many people died from taking the fake medicines isn’t known.