Recommendation for PharmaLedger governance, operating model and Constitution

PharmaLedger – 853992 | Deliverable D4.2 v1.0 | PUBLIC 1/19
D4.2 Recommendation for PharmaLedger
governance, operating model and Constitution
Deliverable No D4.2
Work package No. and Title WP4 Governance and operating model
Version - Status Final
Date of Issue January 2021
Dissemination Level Public
Filename D4.2 Recommendation for PharmaLedger governance,
operating model and Constitution_v1.0_final
This project has received funding from the Innovative Medicines Initiative 2 Joint Undertaking under grant agreement No 853992. This Joint Undertaking receives
support from the European Union’s Horizon 2020 research and innovation programme and EFPIA.
Copyright © PharmaLedger Consortium 2020 – 2023 PharmaLedger: www.pharmaledger.eu IMI: www.imi.europa.eu
Ref. Ares(2021)3173426 - 12/05/2021

DOCUMENT INFO
Authors
Authors Organization
Robert Miller (editor) Pfizer
Ken Nessel Pfizer
Zeev Pritzker Arteevo
Contributors Organization
WP4 Team
Pfizer, Arteevo, Merck, Roche, Novartis, UCB,
Romsoft, Onorach, Bayer, GSK, J&J, EPF, INCM, ICSI,
OPGB, PDMFC, Boehringer Ingelheim, UPM, Novo
Nordisk, CERTH
Single Point of Contacts (SPOCS)
Pfizer, Arteevo, Romsoft, CERTH, Novartis, KU
Leuven, UCB, Ekon, Technovative Solutions, Novo
Nordisk, Boehringer Ingelheim, GSK, Bayer, Roche,
PDM, Merck, Abbvie, Onorach, European Patient
Forum, UPM
Disclaimer: Any information on this deliverable solely reflects the author’s view and neither IMI nor the European
Union or EFPIA are responsible for any use that may be made of the information contained herein.

TABLE OF CONTENT
Introduction and Document Purpose ....................................................................................................... 4
Governance Design Considerations.......................................................................................................... 5
Governance Design Principles................................................................................................................... 5
Stakeholder Analysis................................................................................................................................. 6
Governance Model ................................................................................................................................... 8
Governance Model Recommendation....................................................................................................13
Operating Model Recommendation.......................................................................................................13
Operating Model and Service Providers.................................................................................................16
Operating Model Case Study ..................................................................................................................17
Membership Model ................................................................................................................................17
Approach for finalization of recommendations......................................................................................19

Introduction and Document Purpose
PharmaLedger is a project under the auspices of the Innovative Medicines Initiative (“IMI”). Like all
projects, IMI PharmaLedger has a start and an end. The IMI PharmaLedger project will conclude in
December 2022. For the solutions developed in PharmaLedger to continue to operate and evolve into the
future, we must define a sustainable “post-PharmaLedger” governance and operating model. For the
purpose of this report, we are referring to the current project as “IMI PharmaLedger” and the future, post-
IMI business network as “NextGen PharmaLedger.”
This document builds on our previous work in researching governance and operation models (“D4.1
PharmaLedger Governance Options”). We provide a summary of the different governance options that
we considered and make a recommendation for NextGen PharmaLedger’s future governance and
operating model. In some cases there is not yet enough certainty about the scope, participants and scale
of NextGen PharmaLedger to make a final recommendation. In those cases, we have narrowed the
options to a smaller preferred set but have left a final recommendation until later in the project.
This report does not detail the implementation of its recommendations as those details will come later.
Furthermore, it is assumed that the reader has a general familiarity with the governance of blockchain
business networks and we do not provide exhaustive explanations of all details contained in this
document.

Governance Design Considerations
The purpose of a governance model is to answer two essential questions: how are decisions made and
who gets to make them? Before we consider the “fit” of different governance models, it is important to
keep in mind the scope of what we are governing. In blockchain business networks we need governance
for everything that is shared. Therefore, we need governance for infrastructure (e.g., software,
hardware), policies (e.g., node operator agreements) and services (e.g., identity provisioning and
management). In other words, it is not just about governance of the blockchain itself, it is the full stack
of shared technologies and services that enable the business network.
It is also worth remembering that we may need to launch the NextGen PharmaLedger governance model
sooner than December 2022. If some use cases being developed in IMI PharmaLedger mature to the level
of requiring a production grade business network, we will need to launch the NextGen PharmaLedger
model. IMI PharmaLedger is not designed to operate production platforms – it is simply missing the
agreements, investment, and resources to operate commercial solutions at scale. As we design NextGen
PharmaLedger, we need to consider a scenario where it potentially ‘co-exists’ with IMI PharmaLedger.
Governance Design Principles
We have created the following list of principles to guide our initial governance recommendation and any
future iterations:
• Stakeholder led: business networks should be led by the members of the ecosystems they enable
• Inclusive: broad adoption of the network will amplify the benefit to all participants
• Decentralized ownership: no one party should have outsized control over a network meant to
serve an ecosystem
• Vendor/technology neutral, open-source and standards based: be adaptive to evolving
technology by avoiding ‘lock-in’ to vendors and proprietary software, as well as adopting broadly
supported solutions and standards
• Simpler is better: overly complex governance designs stack the odds against success
• Plan for change: all governance designs will need to evolve so make the design change-friendly
As discussed later in this report, we used these principles to help in our evaluation of different governance
models.

Stakeholder Analysis
As we design the future state governance model, it is important to consider who are the likely participants
in governance for NextGen PharmaLedger. We collected the stakeholders identified by each of the use
case teams in WP1. The below table documents stakeholders by use case:
eLeaflet
Clinical
Supply
Finished
Goods
Traceabili
ty
Anti-
Counterfeitin
g
eConsent IoT
Clinical trial
recruitmen
t
Personaliz
ed
medicine
Manufacture
rs
X x x x x x x x
Patients X x x x x x x x
Sites x x x x x
Pt Advocacy x
Regulators X x x
Physicians X x x
Wholesalers x
Pharmacies x
Labs x
Carriers x
CMOs x
CROs X x X x x
Legend
x = stakeholder is a part of this use case
Grey rows = stakeholders that are unlikely to participate in governance
This assessment reveals that there are a variety of different stakeholders for PharmaLedger use cases. In
fact, no two use cases have the same set of stakeholders. We anticipate, at minimum, the following
stakeholders wanting to participate in governance: manufacturers, clinical sites, patient advocates,
wholesalers, pharmacies, labs, carriers, CROs and CMOs. Several of these stakeholder groups are not in
PharmaLedger at all today, and a governance model that can accommodate their participation will be
needed. In addition, IMI PharmaLedger is comprised of a diverse set of healthcare entities that extend
beyond the traditional stakeholders of these use cases. Organizations such as research institutions,

service providers, and technology subject matter experts are participating in IMI PharmaLedger and want
to contribute beyond the 3-year term of the project. Part of the design work ahead of us includes
determining whether governance roles are open to all, or if there are certain criteria or qualifications that
need to be met for governing members.

Governance Model
We identified four high level governance models for consideration:
1. Ecosystem led
2. Service provider led
3. Foundation led (Independently governed)
4. Foundation led (Ecosystem governed)
Each of these governance models is described below along with a list of pros and cons.
Ecosystem led:
Description:
In an ecosystem led network, members of the network collectively govern the network. Generally service
providers are not involved in governance, and there is no central party that takes an outsized role in
governing the network. Different members of the network may take on different network operations
roles on a rotating basis as needed. For example, one member may play the role of treasurer for a quarter
and then transition that role to another member for the next quarter.
Service providers may still be hired on behalf of the network to play certain roles in the network (e.g.
network manager, solution developer, etc.).
Examples: Synaptic Health Alliance
Pros Cons
• Avoids vendor “lock in”
• Low administrative and legal overhead
(i.e., relatively easy to get started)
• Governance by the ecosystem
• Leaves the door open to adopting a
different operating model in the future
• Potential for slow and suboptimal
“decisions by committee”
• Contracting with service providers can be
complicated without a central budget
owner
• Commitment of resources by members
may be uneven and fluctuate

Pros Cons
• Could potentially engage a third party to
provide governance facilitation services
on behalf of PharmaLedger
• Would not be profit-seeking, and
therefore lower cost of membership
Service Provider led:
Description:
In a service provider led network a single service provider governs the network and charges members for
use of the service. The service provider is responsible for creating the technology and roadmap, in
addition to provisioning any needed services (e.g., monitoring nodes, operational support, etc.). Members
may play a role in influencing the governance decisions of the service provider, but do not have decision
making authority.
Examples: MediLedger, ProCredEx
Pros Cons
• Low legal overhead and little
administrative burden for members
• A single party being in charge simplifies
decision making and operations
management
• Stakeholders have no decision-making
authority and an uncertain level of
influence
• Centralizes product development and
locks ecosystem members into a single
vendor

Pros Cons
• Venture capital investment could fund
product development
• As the service provider would be profit
seeking, costs to members of this model
are likely to be higher
• Service provider led networks tend to
attract competition from other service
providers, leading to multiple, competing
networks which fragment the ecosystem
and diminish the network benefits
Foundation led (independently governed):
Description:
In a foundation led network, an independent non-profit legal entity governs the network. The foundation
creates technology, roadmaps, provisions services, and so forth. In this model, the foundation is
independent of the network members and has decision making authority for the network. Again, the
members may be able to influence governance decisions, but it is the foundation that has the decision-
making authority.
Examples: Sovrin Foundation

Pros Cons
• Avoids vendor lock in
• As the governance entity is non-profit,
there is no need for members to fund the
profit margins of a 3rd
party
• A dedicated organization leading the
network simplifies decision making and
operations management
• Stakeholders have no decision-making
authority and an uncertain level of
influence
• More costly than ecosystem led, since a
separate legal entity will need to fund its
operations through membership fees
• Setting up a new legal entity as a
foundation would require time, expertise
and money that may be difficult to justify
at start-up
Foundation led (ecosystem governed):
Description:
Similar to the previous model, a non-profit foundation leads the governance of the network. However, in
this scenario, the foundation is directly governed by a board made up of ecosystem stakeholders. While
the foundation directs the operation of the network, it is accountable to the network’s stakeholders.
Examples: Libra, Transcelerate (not blockchain)
Pros Cons
• Avoids vendor lock in
• Governance by the ecosystem
• As the governance entity is non-profit,
there is no need for members to fund the
profit margins of a 3rd
party
• Some member organizations will need to
participate in both governing the
foundation (e.g., participating in board
meetings) and governing the network
(e.g., participating in committees), which

Pros Cons
• Ecosystem members are supported by
foundation staff, providing continuity in
implementation of decisions and
operations
increases the time commitment required
from members
• Setting up a new legal entity as a
foundation would require time, expertise
and money that may be difficult to justify
at start-up

Governance model options and governance design principles
Below is a mapping of the 4 governance models to the design principles highlighted earlier.
Ecosystem Led Service Provider
Led
Foundation Led
(independent)
Foundation Led
(Ecosystem Governed)
Stakeholder led ✓ X X ✓
Inclusive ✓ ✓ ✓ ✓
Decentralized
Ownership
✓ X X ✓
Vendor/tech
neutral, open
source, standards
based
✓ X ✓ ✓
Simpler is better ✓ ✓ X X
Plan for change ✓ X X X
Recommended: Yes No No Yes
Governance Model Recommendation
Both the ecosystem led, and foundation led (ecosystem governed) models are largely aligned with our
design principles. We are recommending these two governance models as viable options for NextGen
PharmaLedger, although we will need to spend additional time seeking the input and perspectives of
PharmaLedger members before declaring one of these as our target model.
Argument in favor of Ecosystem Led governance model:
An ecosystem led model could be simpler to establish at the initiation of NextGen PharmaLedger. There
would be no need to create a new legal entity, only the need for a consortium agreement. The limited
legal overhead and cost will be critical for getting the network established. Over time, the ecosystem led
model leaves the door open to evolving toward any of the other models, should that become desirable.
Argument in favor of Foundation Led (ecosystem governed) governance model:
A foundation led model offers the advantage of having dedicated resources committed to the governing
of the network. Ecosystem members who sat on the board of the foundation could ensure the foundation
operated in accordance with the larger ecosystems wishes (Board members would have the authority to
hire or fire foundation staff).
Operating Model Recommendation
The operating model describes the different operating components of governance and how those
components work together to make, implement and monitor decisions. We considered a range of
potential operating model designs. Some designs were more integrated (see design A below) -- where
the capabilities to “develop, scale, operate & evolve” the network all reported to a single Governing Board.
Other designs were less integrated (see design B below) – where the “develop” capability would be

outside of the Governing Board and owned by use case-focused teams that are independent of the
governing board.
We are recommending a more integrated operating model in alignment with our “simpler is better”
principle. For example, in model A (see above) there is one overall consortium agreement to negotiate
and sign, as opposed to the multiple separate agreements and entities that model B would create.
Furthermore, model A is more akin to IMI PharmaLedger and is an approach we already have familiarity
in working under.
Below is the operating model structure that we are recommending:
Here is a description of the different components of this structure.
PharmaLedger Governing Board: This is the ultimate governing authority of NextGen PharmaLedger. The
Governing Board’s purpose is to ensure that NextGen PharmaLedger fulfills its mission to the benefit of
ecosystem stakeholders, and it is ultimately accountable for the strategies, policies, and financial oversight
of PharmaLedger. Some of the Board’s key activities are:
• Allocating funds to support key operational activities
• Final approval of service providers hired by PharmaLedger
• Approval of new members, changes in membership structure, or membership fees
The Board is composed of representatives of NextGen PharmaLedger’s member organizations. and seats
at the Board could be determined, for example, by the tier of membership (see section on Membership

Model). The Board can create committees as necessary to provide management and operational
oversight.
Business Committee: The Business Committee is chartered by the Governing Board to carry out the day
to day business management of NextGen PharmaLedger. Some of its key activities are:
• Creating and disseminating marketing materials
• Interfacing with potential new members and forwarding membership applications to the
Governing Board
• Creating and enforcing policies for 3rd
party applications that may run on its network
• Creating working groups as needed
• Oversight of external legal council used to draft participant agreements and other contracts
Representatives to the Business Committee could be appointed by gold or platinum members (see section
on Membership Model).
Policy and Legal Committee: A committee that is subordinate to the Business Committee that is likely not
standing but is instead convened for limited durations of time as needed. The Policy and Legal Committee
designs and executes legal agreements for the network and could be represented by external counsel.
Technical Committee: The Technical Committee makes technical decisions and policies for NextGen
PharmaLedger. It carries out the technical strategy approved by the Governing Board, creates technology
to enable use cases, and is informed by the business requirements of the Use Case Teams. The Technical
Committee also manages any technical service providers that are hired, such as the network manager.
Some of its key activities are:
• Interfacing with and overseeing the Network Manager
• Setting overall architecture
• Setting policies related to node hosting
• Proposing and executing technical strategy with approval of the Governing Board
Representatives to the Technical Committee could be appointed by gold or platinum members or by the
Governing Board based on recommendations of existing members of the Technical Committee. (see
section on Membership Model)
Network Manager: The Network Manager is a service provider or group internal to NextGen
PharmaLedger that is responsible for the technical operation of the network. A few of its key activities
include:
• Monitoring the network (e.g. ensuring that all the nodes are properly running)
• Code base oversight
• Providing identity verification services
• Fielding service requests
Use Cases committee: The Use Cases Committee manages the design and development of new use cases
and the evolution of existing use cases. Some of its key activities include:
• Evaluating new use cases proposals and making recommendations to the Governing Board.

• Generating and prioritizing technical requirements and desired changes for execution by the
Technical Committee
• Collecting feedback on policies and routing this feedback to the appropriate committee
Each use case can appoint a member to the Use Cases committee.
Working groups are sub-teams established by committees for specific purposes on an “as needed” basis.
They may be standing or established for a limited duration, and their membership is defined by the body
that establishes them.
Use cases: are teams organized around an opportunity area like eLeaflet or clinical trial recruitment.
These teams may interface with other parts of the organization, but ultimately report to the Use Cases
committee.
Operating Model and Service Providers
While the above operating model accounts for both governance and management, there is also a need
for execution and “doing.” We anticipate a need to contract with service providers to provide specialized
expertise in three areas: legal council, network management, and solution development.
Legal council: Authors legal agreements to be signed by members such as the network participant
agreement, charter agreement, consortium agreement, etc.
Network management: Manage shared infrastructure and related services: code base oversight, change
control management, testing, identity verification services, etc.
Solution development: Develops new capabilities or solutions and ultimately transitions them to Network
Management
The fees raised from membership dues will be leveraged to pay for these services, and the committees
will oversee them. The governing board has the ultimate authority to hire and fire service providers.

Operating Model Case Study
To help make the operating model concrete, we thought that it was instructive to examine how the
committees would work together in a common network operations scenario. The below diagram
illustrates how adding a new feature to a shared solution under network governance would work, with
step by step descriptions:
Notes:
1. Use Cases committee surfaces need for new feature and communicates change request to the
technical committee.
2. Technical Committee prioritizes change request and sends to the solution developer.
3. The solution developer performs an impact assessment including resource requirements and
sends assessment back to technical committee.
4. Technical Committee votes on whether to endorse change request. If approved, sends the change
request to the solution developer.
5. Solution developer designs new feature.
6. Solution developer develops new feature.
7. Solution developer releases new feature into platform code base.
Membership Model
The network’s membership model should align with our principles of openness, inclusiveness,
decentralized ownership, and “simpler is better.” To raise the money necessary to operate the network,
membership fees will need to be charged. It is typical in existing networks that tiered membership
structures are employed.
In some networks, in return for higher fees, members are given more representation in governance
bodies. This approach allows the membership model to be inclusive (i.e., a variety of organizations can

join), while still reserving the governance roles for those most committed to the network’s success (i.e.,
only those committed would spend the money).
In other networks (such as Sovrin) members are not given more representation in governance bodies in
return for higher fees. Instead, the members are given extensive marketing, affiliation and branding
benefits. Furthermore, members could commit to operational contributions such as running blockchain
nodes, rather than pay membership fees.
Here is one possible approach using four membership tiers where higher fees confer more representation
in governance bodies:
Here is another possible approach using four membership tiers where higher fees do not confer more
representation in governance bodies:
Platinum members:
• Can elect one representative to the governing board
• Platinum members' representatives can appoint a member to the business and technical
committees
• Can participate in working groups
• Membership fees: tier 1 (highest fees)
Gold members:
• Gold members as a class can appoint one governing board representative for every three gold
members
• Each gold member can appoint a representative to the business and technical committees
• Membership fees: tier 2
Silver members:
• Silver members as a class can appoint one governing board representative
Design partner members:
• Participating in the design of a new use case
• Can participate in use case committees only
• Membership fees: tier 4 (lowest fees)
Platinum members:
• Affiliation and branding rights
• Prominent logo placement on PharmaLedger website
• Access to PharmaLedger experts and training
• Participation in working groups without decision making rights
• Membership fees: tier 1 (highest)
Gold members:
• Less extensive marketing rights
• Access to PharmaLedger experts and training
• Participation in working groups without decision making rights

We believe that these membership criteria will create the foundation for a sustainable governance body
in the future that aligns with our principles.
Approach for finalization of recommendations
In the next two years PharmaLedger will evolve in ways that are hard to predict today. Several key details,
such as how mature the network is and how many resources are needed to manage it, will be important
factors in selecting the future governance model of PharmaLedger. Given this reality, a few decisions
should be made at a later stage in the project when there is more certainty about the needs of NextGen
PharmaLedger, such as:
• Whether to adopt an ecosystem led or foundation led model
• What membership model to use
• The appropriate amount of fees to charge for membership
We anticipate gathering data at the end of year 2 and making final design decisions at the beginning of
year 3. This approach will allow us all of year 3 to implement the governance model before the end of IMI
PharmaLedger in December 2022.

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