Reinventing healthcare with blockchain

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Blockchain & Healthcare - 2017 Strategy Guide
Method · June 2017
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2017 Strategy Guide
for the Pharmaceutical Industry, Insurers & Healthcare Providers
© Axel Schumacher, PhD

1
Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
The healthcare industry needs a revolution – and it is here now. Trusted and open R&D
processes, auditable & secure transactions between parties, authenticated by mass
collaboration and powered by collective self-interest, rather than by fewer and fewer
pharmaceutical giants motivated by profit alone. This healthcare ecosystem is immune to
exorbitant drug prices, tampering, fraud, or political control. The name of the technology that
makes all this happen is blockchain, a tool that will fundamentally change the healthcare
sector. Blockchain will prove to be indispensable in building a global precision-medicine
ecosystem that optimally connects patients, clinicians, researchers, insurers and clinical
laboratories to one another. Blockchain will improve data security, data sharing,
interoperability, patient engagement, big data analytics, health information exchange, fighting
counterfeit drugs, R&D processes, AI-based diagnostics and fostering vertical business
models. Compared to the financial markets, the healthcare industry’s participation with the
technology remains in its infancy – but this can change now. This strategy guide may direct
you in starting this process to transform ideas into profitable and ethical business models.
Keywords: Blockchain, Precision Medicine, Data Security, Interoperability, Supply Chain, Big Data, Artificial Intelligence.
Major achievements in genomics, stem cell science,
bionics, drug development, information technology,
and diagnostic technologies have enabled a new era of
healthcare delivery and treatment. This era of
precision medicine will deliver the most appropriate
therapy to a patient based on clinical and molecular
features of their disease. Yet, most healthcare systems
are in crisis, due to prohibitive costs, limited access to
care, unclear reimbursement models, patient safety,
and quality of care. It is evident that healthcare must
change, and insurers, healthcare providers,
pharmaceutical companies and patients must be
prepared to respond and lead. Building a new
precision health ecosystem can be achieved through
innovation, and by combining accurate diagnosis, rule-
based therapies with the latest technology such as
deep learning and blockchain technology.
Blockchain - What is it?
In a nutshell, a blockchain is a distributed tamperproof
database, shared and maintained by multiple parties
that secures all records that are added to it. Each
record contains a timestamp and secure links to the
previous record. Records can only be added to the
database, never removed, with each new record
cryptographically linked to all previous records in
time. New records can only be added based on
synchronous agreement or “distributed consensus” of
Public Key Cryptography. An
unpredictable random number is used
to begin generation of a pair of keys
suitable for use by an asymmetric key
algorithm. Anyone can encrypt data
(e.g. private health data) using the
public key, but only the holder of the
paired private key can decrypt.
Reinventing healthcare:
Towards a global, blockchain-based
precision medicine ecosystem.
A comprehensive Strategy Guide

2
the parties maintaining the database. By
cryptographically linking the records it is impossible
for one party to manipulate previous records without
breaking the overall consistency of the database. Such
a process eliminates the need for trust because
participants in the blockchain can have mathematical
certainty for every digital asset that constitutes the
system you want to protect.
When storing healthcare data in a blockchain,
cryptography is used for encrypting the contents of a
message or transaction, so that only intended users
can open and read its contents. The encryption
process works via ‘Public Key Cryptography’ or
asymmetric cryptography, an encryption system that
uses pairs of keys. First, a “public key” may be
disseminated widely to everyone and a “private key”
that is known only to its holder. Either key may be
used to encrypt a message, but the other key must
decrypt the message. Practically speaking, there are
two use cases involving public and private keys. A
patient can encode her health data with a public key
and be sure that only the holder of the private key can
decrypt it. Second, the data can be encrypted with a
private key. If the data, e.g. a hospital discharge letter,
makes sense when it is decrypted using the
corresponding public key, it is guaranteed that the
holder of the private key is the party that encrypted
the data. Such a process is equivalent to “signing” a
message because it is analogous to someone putting
her unique signature on a document.
Blockchain in healthcare
The potential uses of blockchain technology in
healthcare are multiple; blockchain technologies have
advanced and have matured to hold the promise to
unite the disparate processes in the pharmaceutical
industry and healthcare ecosystem, reduce costs,
improve regulatory compliance, increase data flow,
and improve patient experience and outcomes. Slowly
but steadily, life science organizations are getting
interested in this new technology. Even the FDA
started to think seriously about it by partnering with
IBM Watson to work on a secure, efficient and scalable

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exchange of health data using blockchain technology.
In particular, the two organizations intend to explore
the exchange of health information from several
sources, such as EHRs, clinical trials, genomic data, and
data from mobile devices and wearables. However,
starting blockchain projects for large enterprise
adoption from scratch is
difficult; many problems from
integration, scalability, and
identity- and contract
management to compliance
issues exist.
So, how to get started in real
life without running into
bottlenecks and burning
hundreds of millions of dollars?
To find out, I recently strolled
through the new Microsoft
offices in Munich, to find out
what is new in the local
Bavarian blockchain scene.
That day Microsoft hosted the
DX Blockchain Day, mostly to
advertise their Azure Project
Bletchley – Blockchain as a Service (BaaS) for
Enterprise Solutions. Project Bletchley is a middleware
toolset for developers that functions in the cloud,
supported by Azure that offers off-chain data
communication with audit applications, machine
learning, etc. Middleware is a general term for
software that usually sits between the operating
system and applications on different servers and
serves to "glue together" separate, often complex and
already existing, programs. Some software
components that are frequently connected with
middleware include enterprise applications and web
services. Middleware should be introduced into the
healthcare IT ecosystem to supply enterprise grade
services around identity, security, cryptography, scale,
tooling, management, monitoring and reporting for
both on and off the blockchain. Project Bletchley
addresses those services while providing an open
platform, ensuring crucial performance, scale, and
stability.
The new building blocks of Microsoft's blockchain
technology are so called cryptlets, which function
when additional information is needed to execute a
transaction or contract, such as date and time,
enabling all technology to work together in a secure,
scalable way. A cryptlet can act as a smart contract
surrogate, code that captures an agreement. Basically,
the cryptlet contains the smart contract and executes
it on behalf of the transaction contained within the
blockchain. Who is more interested in cryptlets can
look into a recent Microsoft white paper focused on
this topic that goes in depth about how cryptlets
operate and show how Microsoft intends how to
address many of the challenges associated with smart
contracts.
My intention was not to talk about Project Bletchley.
However, Microsoft’s Blockchain day and the buzzing
activity of the blockchain community and
entrepreneurs in Munich indicate that the blockchain
ecosystem matured to a point where the technology
finally becomes interesting for application outside of
bitcoin transactions. I’m sure, 2017 is the year
DX Blockchain Day in Munich attracted entrepreneurs and blockchain geeks.

4
distributed ledger technologies can provide the next
wave of innovation that streamlines the way
healthcare businesses work. Other tech giants such as
Hewlett-Packard, Samsung, Huawei, or Amazon will
likely deliver their own functionality that addresses
shortcomings in the current blockchain offerings on
the market. Already, IBM offers the Bluemix platform-
as-a-service offering, where developers can create
and test a blockchain on the cloud. Although Alphabet
has been surprisingly silent with regard to the
blockchain space, it is likely that the company is also
interested in providing Blockchain-as-a-service
products. Microsoft’s approach, to provide a
blockchain ecosystem to build real solutions
addressing real business problems while keeping the
platform open may be the tipping point – other tech
giants will follow. On the other side of early-movers
are startups such as Taiwanese DTCO, a company
which is involved in technological applications,
providing a blockchain ecosystem for many
applications. DTCO specializes in supply chain tracking
and tracing, and also in blockchain asset management.
The emergence of that kind of blockchain ecosystems
means that now, pharmaceutical companies can
implement distributed ledgers to revolutionize the
way transactions occur and the way information (e.g.
genomic data of millions of individuals) is stored and
processed. Blockchain technology will become a
game-changing force in any place where trading
occurs, where trust is at a premium, and where people
need their data protected from theft and misuse.
Pharma’s new strategic partner: Patients
For patients, the decision to participate in a clinical
trial is a complex decision and often requires weighing
the pros and cons of potential medical benefit vs. the
unidentified risks of side effects plus the time, effort
and commitment needed to comply with the study
protocol. The decision to participate in a trial increases
if there is a proper incentive. One solution could be
that patients become the owners of their data and of
the R&D efforts to find a cure. What more incentive to
make the whole process working and profitable do
you need? Having a process in place that is based on
such blockchain technology could help working
towards value for patients as the overarching goal for
health care delivery. Here, value is defined as patient-
reported outcomes (PROs) relative to costs, lifting the
implementation of eHealth and empowerment of
patients to be involved in their own care process to a
new level. Such a process may represent the next step
in cybersecurity evolution, focusing on the
management of “digital identities”. Patients will be
able to monetize their data, for example, by
anonymously selling controlled access to their health
data to pharmaceutical companies. There could also
be blockchain-based vehicles for issuing new shares of
stock.
There are also significant incentives for researchers,
who can participate in the blockchain network as
"miners". These researchers can obtain better insight
in their R&D efforts by earning ‘census level’,
anonymized patient or R&D metadata from the
blockchain in return for contributing the
computational resources that sustain the network.
This opens new opportunities to observe wide-
reaching patterns in drug development, while still
preserving the privacy of patients and lowering the
overhead associated with traditional clinical trials. In
this way blockchain technology enables the
emergence of new data economics between data
producer and data consumer, as the system supplies
information to empower researchers while engaging
patients and providers in the choice of how much and
which metadata to release. Because blockchains can
remain private, networks of health care providers or

5
pharmaceutical companies can decide on the proper
process and qualifications for onboarding new
research entities into the system. Such methods
prevent rogue, unregulated entities from joining the
mining network. With this incentive model,
researchers can access a dependable source of
census-level medical data, which opens an
opportunity to observe wide-reaching systemic
patterns in medical treatment while preserving the
privacy of individuals.
Blockchain technology is ideally suited to address
most trust issues, such as patient consent, unclear
data ownership, data integrity, or user authentication,
basically all areas where data is transmitted from one
entity to another. Overall, many opportunities exist to,
for example, increase revenue cycle efficiency, initiate
patient profiling for population health, improve audit
logging, enhance patient experience and satisfaction,
offer patient data as a service, and - decreased
opportunities for patient identity theft and insurance
fraud.
Data Security
Health data security must remain a top priority for
pharmaceutical companies, biobanks and CROs of all
sizes. Here, blockchain technology will be used to
solve identity issues, including the vulnerability of the
company to cyber-attacks,
securing valuable IP and
patient data. Health data are
an increasingly popular target
for hackers and sometimes sell
for more money than even
credit card numbers in an
increasingly sophisticated
black market such as the dark
web or darknet, where such private information is sold
and resold. The consequences of even a single cyber-
attack penetrating a network can be devastating,
resulting in enormous losses.
Obviously, there is a significant security risk associated
with centralized ownership of medical records.
Indeed, more and more high-profile cyber-attacks
have hit companies in recent years, such as Quest
Diagnostics which provides diagnostic services to
millions of Americans each year. Only recently the
company joined the list of health care companies
targeted by hackers when it announced a data breach
that exposed the health information of about 34,000
people. The intruders accessed a mobile app called
MyQuest on Nov. 26 last year. Data accessed included
name, date of birth, lab results, and, in some
instances, phone numbers. Other data breaches were
even bigger, for example, last year when health
insurance giant Anthem, (the second largest health
insurer in America) announced a massive breach that
compromised the data of 78.8 million people. The
attackers gained unauthorized access to Anthem’s IT
system and obtained personal information from
customers such as their names, birthdays, medical IDs,
social security numbers, street
addresses, email addresses
and employment information,
including income data. The
start of 2017 was not much
better as Protenus, a company
that monitors health data
breaches in the US. The
Protenus Breach Barometer is

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a monthly snapshot of reported or disclosed breaches
impacting the healthcare industry. On average, every
day there are breaches in healthcare systems, with the
majority (59.2%) of breached patient records -
230,044 records (for Jan 2017) - were attributable to
insider incidents. Moreover, take note – such breaches
are very expensive. According to the 2016 Ponemon
Cost of Data Breach Study, about $7 million is the
average total cost of a data breach. In one costly
example, the Children’s Medical Center of Dallas after
multiple HIPAA breaches was fined early this year a
civil money penalty of $3.2 million.
It is evident that despite regulations like the Health
Insurance Portability and Accountability Act (HIPAA),
healthcare organizations still aren't doing enough to
protect themselves from such cyber-attacks, and
those companies quickly have to take steps to prevent
similar incidents from happening in the future. One
step in the right direction could be the
decentralization of the health – and R&D data. In this
scenario, patients will need to control their own data.
Dr. Eric Topol, Founder &
Director of the San Diego-
based Scripps
Translational Science
Institute, calls patient
data ownership a future
civil right.
Of
course, new rules and guidelines may be needed to
help healthcare professionals to understand how
HIPAA and EU regulations would potentially apply to
blockchain technology. In particular, client
information would need to remain secure through any
data transfer process, even across regulatory borders.
Although 100% crime prevention is impossible, using
blockchain, we gain now the possibility to have full
detection, accountability, and audibility across highly
complex systems. It is clear that a blockchain
ecosystem needs the necessary physical, technical,
and administrative safeguards to make all processes
possible. The best way to implement those
components is probably through learning by doing.
One organization that did the first step is the Beth
Israel Deaconess Medical Center in Boston, a teaching
hospital of Harvard Medical School. The center made
blockchain technology a working reality by
implementing a system called MedRec, a platform for
managing medical records that use the Ethereum
blockchain, a decentralized platform that supports
applications that run exactly as programmed without
any possibility of downtime, censorship, fraud or third
party interference.
The MedRec software was developed by MIT
researchers Ariel Ekblaw, Asaf Azaria, Thiago Vieira,
and Andrew Lippman. At the Beth Israel Deaconess
Medical Center, the software is helping users assign
specific permissions for access and sharing according
to their preferences. For example, healthcare
providers can add a new record associated with a
particular patient, who – in turn - can authorize
sharing of records between providers. The party
receiving new information gets an automated
notification and can verify the proposed record before
accepting or rejecting the data. This process keeps
participants informed and engaged in the
maintenance and accuracy of their records. The
software achieves this by linking access to the
patient’s medical records across the variety of their
provider’s databases. By functioning as an interface
between siloed health records, it also has the
potential to include personal sources of data, for
example from wearables or from genomic analysis
with external service providers. MedRec stores all the
contract data structures on the blockchain and
associate references to disparate medical data with
ownership and viewership permissions and record
retrieval location, providing an immutable data-
lifecycle log, even enabling later auditing, which is of
increasing importance in regulated environments.
The raw medical record content is never stored on the
blockchain, but rather kept securely in the providers'
existing data storage infrastructure. One advantage of
such a system is that different parties can leverage the
smart contract feature in blockchain technology that
allows to specify policies how to handle the data. A
policy can be designed to implement a set of rules

7
which govern a particular medical record, for example,
a policy may enforce that separate transactions
representing consent are sent from both patients and
healthcare provider, before granting access to the
medical record to a third party. For more details find a
MedRec whitepaper here.
One thing is clear; blockchain is potentially extremely
secure. A mathematical theorem, the Byzantine
Generals Theorem, proves that it takes a coordinated
attack between at least one-third of the nodes in the
chain to successfully break a blockchain network. It
does not guarantee 100% security, but to attack the
blockchain itself successfully requires orders of
magnitude more time and resources than most other
security measures.
Given the sensitivity of health data and the need for
each interaction with data to be appropriately
controlled and consistent with rules, it becomes clear
that any medical ecosystem needs a clear audit trail
for data that is nearly impossible to tamper with.
One company that uses blockchain technology to
make auditing task easier is the startup Factom. The
company provides solutions that help organizations to
secure and share their data, for example by converting
document management solution into a blockchain
based document platform. Such a process eliminates
lost documents, reduces audit time and prevents
costly disputes.
Recently, the company signed a deal with
HealthNautica, a US health data software provider to
secure documents which range from medical bills and
client-physician communications to claims and
disputes, thereby guaranteeing the authenticity of a
sequence of events. Factom also builds applications
on top of their Factom network, which can be used as
a public utility. These applications leverage the
MedRec Architecture. Data entry begins with a physician adding a new record through the MedRec Provider App. The
information is stored in the provider's existing database system with a hashed reference to the data. Appropriate viewing
permissions is then posted to the blockchain through an Ethereum client and library of backend APIs. The patient can anytime
retrieve and download this data from the provider's database, after the database gatekeeper checks the blockchain to confirm
their access and ownership rights. The miners for MedRec are researchers who are rewarded with access to census-level data
of the medical records.

8
immutability of the blockchain and the scalability of
the Factom network.
Even some of the big tech giants think in this
directions. For example, Google subsidiary DeepMind
Technologies is undoubtedly convinced that
technologies closely related to blockchain are
essential for creating confidence in a healthcare
ecosystem. DeepMind’s healthcare division is working
on a product, DeepMind Health, which blends
blockchain technology with more traditional data
auditing techniques. Here, instead of a decentralized
ledger held by multiple parties that must all approve
the system's transactions, their team is planning to
use a single ledger and decision tree structure that
guarantees a tamper-proof, trusted audit trail. Like
blockchain, DeepMind’s ledger will be ‘append-only,'
meaning once a record of data use is added, it cannot
later be erased.
Also, similar to blockchain, the ledger will make it
possible for third parties to verify that nobody has
tampered with any of the entries. The difference to
classical blockchain is that no decentralized miners will
verify the blockchain, but rather ‘trusted’ institutions,
for example, hospitals or national bodies which can be
relied on to check the integrity of ledgers. In this way,
some of the wastefulness inherited in the blockchain
technology, and hence costs can be avoided. It is the
goal of the company that their system will allow
continuous verification of their platform, enabling
healthcare providers to easily query the ledger to
check for particular types of data use. Additionally,
tree-like ‘blockchain’ should allow partners in the
blockchain to run automated queries, effectively
setting alarms that would be triggered if anything
unusual took place, even checking the data processing
itself, such as individual patients or patient groups. For
technical details see the open this article explaining
how it could work.
Healthcare providers interested in blockchain
technology may want to be aware of National Institute
of Standards and Technology (NIST) standards,
guidelines, and supportive documents to be up to date
with the most current healthcare data encryption
standards.
NIST develops guidelines for healthcare providers to
help assess risk and then implement architectural
strategies that allow organizations to decrease
vulnerability and protect health data and information.
NIST recently released a draft of updating standards
(NISTIR 7977), which address the importance of
encrypting sensitive data by transforming it into an
unintelligible form until a recipient with a private key
can unlock the information. The primary stakeholder
of NIST is the US government. However their work is
also of interest to the public and private sectors.
Nevertheless, the industry should play a central role in
developing new and improved standards and
guidelines that can be used to secure blockchain
health information systems. Overall, any security
measures, such as healthcare data encryption or
blockchain technology, may help healthcare
organizations to confidently use novel technologies
while knowing that PHI is being secured.
Medical Devices & IoT
The relationship between people and machines will
change radically over the next years, in large part
because of the adoption of small medical devices and
Internet of Things (IoT) applications. So far, most

9
mobility approaches do not provide a solution that
simultaneously fulfills security needs while enabling
mobile access without causing privacy and usability
concerns with their end users. Blockchain could
support IoT applications by facilitating transaction
processing and coordination among interacting
devices and downstream analytical processes. For
example, blockchain can make it easier to synthesize
data from IoT devices for chronic disease
management, remote monitoring, or patient-provider
communication, enabling fee-for-value systems.
Portable biosensors and health apps provide useful
information for monitoring personal activities and
physiology and will play an important role in managing
health and enabling affordable health care. A
blockchain can collect information from those mobile
applications, as well as sensor technologies in fitness
trackers and other wearables and integrate it through
representational state transfer (REST) application
programming interfaces (API). RESTful API’s, who are
quickly gaining traction in healthcare Bio-IT, are
methods of allowing communication between a web-
based client and a server, making use of standards,
such as HTTP (most widely used), URI, JSON, and XML.
Interoperability is increasingly supported by FHIR
(pronounced "fire") standards.
FHIR stands for ‘Fast Healthcare Interoperability
Resources’, a draft standard describing data formats
and elements and an API for exchanging Electronic
health records. The standard was created by the
Health Level Seven International (HL7) health-care
standards organization and facilitates interoperation
between legacy healthcare systems, to make it easy to
provide healthcare information to
healthcare providers and individuals
on a wide variety of devices from
computers to tablets to cell phones.
Using blockchain-supported wearables
would be particularly useful to health
care providers, who can assign risk
scores to patients based on particular
disease phenotypes or a combination
of conditions, which in turn helps to
deliver the most precise, timely, and
cost-efficient combination of care
services. However, improper health
information exchange of biomedical
data can put sensitive personal health
information at risk. To protect the
integrity and quality of a network of
interconnected medical devices or wearables, all
components should participate in the blockchain. In
addition, for interconnected IoT devices to work on a
massive scale, a next generation of IoT architecture is
needed. One solution could be that the future IoT
ecosystem has to abolish the central role played by the
cloud, but rather will be decentralized and self-
managed, with minimum human intervention.
Medical devices will have the real-time health
information of people and the relevant context to
make accurate decisions by talking and collaborating
with each other. We will probably see that cloud
resources will assist in the decision-making process by

10
providing additional contextual information
supported by providing machine learning intelligence.
Machine learning algorithms will increasingly improve
the accuracy of decision-making as more devices
participate and more tamper-proof data is available in
the system. Already, detailed models were developed
to integrate machine learning with blockchains.
In one article, the authors designed a framework,
ModelChain, which utilizes the metadata in
transactions to disseminate the partial models and the
meta-information to integrate privacy-preserving
online machine learning with a private Blockchain
network. The devices themselves will be able,
autonomously and automatically to work with each
other and arrange themselves into self-learning
networks. For example, imagine a blood sugar monitor
that monitors itself, sends anonymized performance
data to the manufacturer for design improvements
and alerts the patient’s physician if necessary. Using
common languages and APIs, the IoT ecosystem will
be technology agnostic, meaning that devices from a
multitude of vendors, purposes, and protocols will be
able to interoperate in conjunction. Any piece of
hardware and software will be interchangeable and
interoperable within the device web, as they can
always access information from a suitable blockchain.
Such an IoT ecosystem will be fully distributed,
meaning that the overall system functionality will not
be channeled through centralized components such as
server farms or isolated supercomputers.
Use case: Medication adherence
Patient behavior as a key element in influencing
medication adherence. Often, procrastination,
forgetfulness, confusion about treatments or simple
disinterest in taking medications are the main causes.
Patient behavior, especially with signs of dementia, in
times of crisis or with mental health problems, is
difficult to predict. Blockchain technology can provide
solutions to this problem. First, the technology can be
used to provide incentives, e.g. a cryptocurrency like
bitcoin. For example, patients could use an app that
allows users to earn cryptocurrency by following their
prescription regimens, then using those rewards to
buy items at participating retailers. Second, to go one
Tokenization to support the claims process. The cryptographic one-way hash is deterministic, meaning that it produces
the same output (digest) given the exact same inputs every time. Anyone can check a token for validity by prompting for
inputs and validating the resulting hash against the one that was established originally. These hash algorithms are carefully
designed to be one way – making it impossible to determine the original inputs from the output alone. Tokenizing health
data would allow for patients to be uniquely identified by the health plan and provider, with the token changing as the health
plan information changes so one user is not tightly coupled to the same token. Loose coupling reduces the impact of a
security breach because a compromised token would be limited to a specific time range. Providers and health plans could
agree to the properties they each use for tokenizing during the contract negotiations but they would need to account for all
the information to identify the provider and health plan.

11
step further, smart medical devices could monitor
adherence by either remembering the user to take the
medication or by administering the drug itself.
Regulated could this via smart contracts associated
with the blockchain. Only if a particular condition is
met (e.g. the patient had to take another drug or eats
a meal), the smart contract is triggered and the
medication administered. The possibilities are almost
limitless.
Interoperability & Data sharing
The rise of the precision medicine era made it clear
that R&D is all about interconnectivity and data
sharing, which are already the norm of clinical
practice. Data sharing ensures that precision medicine
is brought to patients faster, cheaper, and with
significantly less severe adverse effects, leveraging
information from the interaction between labs,
biobanks, business management, CROs, investigators,
patients and a variety of other stakeholders.
Moving omics data and other information into routine
healthcare delivery will be critical for integrating
precision medicine into health systems. Sharing
private genomic, metabolic and other health data is
instrumental in enabling the next wave of scientific
and medical advancements. This sharing economy
ultimately translates to better drugs and overall well-
being for patients around the globe. However, current
healthcare systems are not good at interconnectivity
and interoperability. Even a simple process such as
transferring patient data from one institution to
another is complicated and expensive, and standards
are so loosely defined that they wind up becoming
interoperability barriers instead of enablers. The push
toward interoperability, information is going to be
exchanged across a legal landscape that has varying
degrees and various levels of privacy and security rules
and regulations. Here, blockchain technology can
improve data security and transparency for internal
and external business units and collaborators, with
fine-grained verification and authorization of
participants. Improved interconnectivity goes well
beyond the R&D process and includes manufacturing,
distribution, and retail areas. Blockchain technology
will change how pharmaceutical companies manage
and record data providing security and transparency
across all stakeholders.
Interoperability not only means having the capability
to exchange confidential information but also being
able to use the exchanged information. To give an
example: blockchain technology may have a special
benefit in the claims process. To determine the cost
shares, the health plan must first validate services
received from the provider against the agreement
they share, as well as any applicable regulatory
requirements for that interaction.
For most countries, the claims process can be
summarized as a dual interaction between healthcare
providers and medical insurance companies. Usually,
the healthcare provider records all the medical
services and their costs offered to the patient (the
policyholder). This record is sent to the policyholder’s
insurance company, who can accept all expenditures
and pay the bill in full, or reject the claim. During this
claims process, there are two procedures needed to
secure the data and ensure privacy when using
blockchain technology. According to a whitepaper by
Kyle Culver, the first process would be a cryptographic
one-way hash process to "tokenize" the patient,
provider and health plan identities. Once the
identifying information has been tokenized, the
remaining information needed to execute a smart
contract can be stored in plain text, which would be
the minimum amount of information needed to
successfully adjudicate the claim and a URL to fetch
additional details, reducing process time and friction,
including compliance with contract terms.
Translating agreements between healthcare
stakeholders into smart contracts removes ambiguity,
driving down administrative cost and processing time
across the healthcare industry. Other benefits were
described by Scott Gottlieb, MD, Resident Fellow at

12
the American Enterprise Institute who argued in a
hearing before the House Committee on Energy and
Commerce that blockchain could also help payers
create risk adjustment strategies that accurately
match a patient’s health status. Such a risk adjustment
system could be based on examining the severity of
common chronic diseases among an insurer’s patient
pool in which the blockchain might help create a more
personalized approach to distributing such incentives.
Already, some startups are working on blockchain
platforms that connect providers, supporting their
transition to value-based care regardless of their
clinical affiliation. One of them is Simply Vital Health,
which provides an online tool that monitors and
records providers as they administer every step along
the value chain.
The platform allows to follow clinically validated, and
federally approved care plans to reduce denials, helps
to monitor and manage costs for payment programs
or contributes to track patients through their entire
post-acute care journey. The healthcare provider can
always monitor if all steps were followed or if a
process has been overlooked. The crucial security of
the blockchain, and its ability to completely deidentify
users, may be able to make payers and patients more
comfortable with the idea of assigning insurance
beneficiaries a risk score based on their health status.
Those scores would only be accessible to blockchain-
approved parties. Decreased opportunities for patient
identity theft and insurance fraud and makes it easier
for payers and healthcare providers to engage in
tailored risk stratification, health programs, and
chronic disease management activities without the
fear that the assigned risk score might negatively
impact the patient’s employment status or insurance
prices.
Another enterprise solution is provided by PokitDok.
Their API platform makes easier to integrate
healthcare business data at scale. The company offers
5 types of solutions: clearinghouse (X12), private label
marketplace, scheduling, identity management and
payment optimization. Their main product supports
the X12 protocol which is one of the most popular
Electronic data interchange (EDI) protocols, used in
virtually every industry that exchanges EDI data,
including healthcare. The X12 protocol is fundamental
to the EDI communication process, allowing
businesses to send business documents, communicate
messages, and synchronize data quickly and securely
with other business partners and vendors.
Traditionally, for a business to transmit essential X12
transactions such as eligibility and benefits, claims,
and authorizations, they would have to manually
integrate with health plans or buy expensive and
complicated practice management software. PokitDok
has removed that layer, providing the ability to
integrate with a realm of business solutions. Data,
regardless of where it originates, is maintained and
verified across an encrypted, distributed network that
utilizes the Linux Foundation’s Hyperledger Sawtooth
blockchain platform and Intel Software Guard
Extensions (Intel SGX).
PokitDok provides the ability to submit encrypted
transactions, monitor API activity, track the status of trading
partners.
One use case is to integrate information about a
person's existing coverage into a health benefits
exchange for an automated enrollment process.
Health systems can check eligibility, benefit plan, and
deductible status to instantly determine out-of-pocket
costs and coverage.

13
Improving R&D
Having access to functioning blockchain platforms can
improve data sharing and IP issues in R&D. Just think
about genomic data. Sharing data on an international
level is difficult because all countries have different
rules how to protect and transfer genomic
information. Consequently, genomics research is filled
with of several centralized data siloes that prevent
researchers from seeing significant enough sample
sizes for more efficacious analysis. Not surprisingly,
genomic researchers turned their view on blockchain.
In June 2016, the Global Alliance for Genomics and
Health (GA4GH) announced a plan to use a federated
data ecosystem for sharing genomic and clinical data
based on blockchain technology. At first, the
technology will be utilized for internationally sharing
genomics data on somatic cancer variants, placing
trust in the algorithms of the blockchain instead of
trusting a foreign data provider. However, because
blockchain is something that exists on the internet, it
is very blind to national borders and as such could not
always be compatible with national rules for sharing
genomic data across borders. Particularly in the
European Union, the General
Data Protection Regulation has
raised concerns among
researchers because of its
potential to undermine patient-
oriented collaborative research
and international data-sharing
efforts. Here it is certainly helpful to foster lobbying by
the biomedical research community to allow more
research-friendly regulations. One of those efforts
developed the Framework for Responsible Sharing of
Genomic and Health-Related Data to reflect the rights
of all people to benefit from scientific advances. An
additional workaround could be the implementation
of private blockchains, which exist in more regulated,
centralized environments, controlled by a central, yet
independent authority. Recording a genome and
associated clinical information in such a blockchain
can make information widely available while
guaranteeing its authenticity and integrity. On the
other hand, having whole genomes available can
provide problems for individuals. The potential to
identify specific individual genomes has not only
disadvantages but also brings benefits, e.g. regarding
intellectual property (IP).
For the agrochemical and pharmaceutical companies,
it can be very valuable to have the option to make
genomes identifiable. For example, if a there is a
dispute which company introduced new strains of
crops or microorganisms, both claiming patents on
them. In such cases, the blockchain will
unambiguously show who entered the genomic data
and when. One company that thinks already in this
direction is Boston-based Medicinal Genomics (MGC),
which was born from Courtagen Life Sciences.
Through MGC’s proprietary StrainSEEK™ service, DNA
sequencing is employed to record the unique
fingerprint for various internal- and client- cannabis
and hemp strains into the Bitcoin Blockchain database.
This type of genetic registration ensures the
consistency, safety, and branding integrity of strains
used in the treatment of patients in states where
medical cannabis is legal. Also, in case somebody later
lays claim on one of those genomes, the blockchain
record will show an earlier description of it. Ethically
dubious companies, known as patent trolls that file
even more dubious patents for the sole purpose of
collecting licensing fees have no chance. Without
convincing evidence of prior art, it is difficult for any
company and inventor to challenge a claim by one of
those patent trolls or competitors.
Health information exchange
The decentralized nature of the blockchain allows any
approved participants to join an information exchange
pool, without the need to build data exchange routes
between affiliated organizations. In this way,
blockchain technology may help patients keep
sensitive information, so-called patient-generated
health data (PGHD), such as mental health or
substance abuse data from certain parties (e.g.
insurances), while ensuring that medications are up-
to-date across disparate organizations, and engage in
more shared decision-making with their caregivers of
their choosing. At the same time, patients (and
providers) gain the trust that sensitive patient data is
accurate, and that the health records moving between
doctors, hospitals and other organizations is correct.
Nowadays, patients often interact with a staggering
number of health care providers through the course of
their lives, leaving at each connection health data
scattered, often across a particular jurisdiction's
system.

14
Blockchain technology may help patients to transmit patient-
reported outcome measures, e.g. via fitness trackers,
wearables, and other generators of quantifiable lifestyle
information. At the same time, the patient can keep sensitive
information, such as substance abuse data, hidden from
certain stakeholders, while ensuring that health data are up-
to-date across disparate organizations. As a result, outcomes
research and precision medicine initiatives can be better
supported. In addition, this framework would allow
stakeholders, e.g. employers or insurers to incentivize their
client’s lifestyle change. Such a rewards program could
measure blood biomarkers and issue "health certificates" that
the stakeholder can verify via the blockchain and reward
accordingly.
Imagine a diabetes patient is sent from her physician
to another specialist to check for cardiovascular
comorbidities such as hypertension or dyslipidemia
and is then send further to another specialist to
prevent a looming arthritis. Within the blockchain,
such patients have better chances of fighting their
disease and comorbidities because they would not
need to take the time to gather all their health records
from multiple doctors to send to their new specialist.
Instead, the next specialist in line would simply be
added to the existing blockchain from where she can
access the same information as everyone else already
participating in the chain. All the participants in the
blockchain have the additional bonus that they know
that the information transmitted between different
providers has undergone validation and that there is a
reduction in lost data, for example from
indecipherable handwriting. Depending on the ease-
of-use of a healthcare solution other benefits are
possible, such as enhanced patient-doctor
communication; real-time emergency alerts and an
increase in preventative care due to empowered and
informed patients.
While there are obvious benefits for patients, health
practitioners also gain from using a blockchain
platform, for example when healthcare providers have
the opportunity to earn credits for their work. One
platform that uses this system is called PointNurse.
The platform is open to all licensed US healthcare and
behavioral health professionals including nurses,
doctors, physician assistants, psychologists, social
workers, home health aides, and patient advocates.
All of the members of the platform can perform online
patient focused care outside of the hospital and clinic
setting, utilizing team-based virtual clinic technology
for private practices and a flex marketplace model to
provision continuous longitudinal care for populations
under contract. Members can connect with
consumers and patients seeking navigation, referral,
live consultations, disease management, remote
monitoring, triage, and diagnosis. The most proactive
nurses, doctors in the PointNurse community will not
only earn income from their “virtual consults” with
patients but can also participate in profit-sharing,
meaning they get rewarded for contributing to the
success of the platform. For example, a member who
records a minimum number of on-call hours, who
actively take calls, and who achieves certain
performance levels, will earn credit towards future
ownership of the community including earning a share
of any profits.
The PointNurse app
provides a “virtual visit”
with a medical
professional “from home,
work or on the road.” The
platform employs
blockchain technology to
give care credits to the
healthcare professional.
Patients can use the
PointNurse site to find
nurse practitioners &
medical doctors.

15
In an ideal case scenario, patients are incentivized to
take better care of their health. HealthCombix, aims to
do exactly that, encouraging patient support groups
by providing patients’ friends and family with
“rewards for helping patients reach health goals.” In
addition, the patients receive rewards for achieving
their goals as well. Purpose-built kiosks and/or mobile
apps are used by patients and caregivers to sign up,
record care coordination, behavior, and vital data
onto a block-chain network monitored by nurses and
smart contracts. When goals are met, payouts in
digital currency are made that can be redeemed by
patients and caregivers at participating food, housing,
and community outlets. Incentives are designed to
encourage long-term engagement by both patient and
caregivers.
Another company that uses such a combination of
incentives and blockchain technology to influence the
choice people make is the Portland-based startup
Healthcoin. The company developed a global,
blockchain-enabled rewards platform designed to
change people’s behaviors and prevent diabetes. The
idea is simply that the platform tracks all of a person’s
lifestyle choices that could influence the diabetes
status. Users own their health information and choose
whom to share it with, and a dashboard helps them
track and understand their health. The same platform
aligns employers, insurers, and the government
behind user prevention efforts. Healthcoin provides
the patient health data and aligns them along one
reward. If value of the reward tokens depends on the
user’s prevention network. For example, their
employer can agree to reward the user for each
healthcoin; a government can offer a tax break; a non-
profit can create community recognition; or a fitness
brand can offer a discount.
Healthcoin platform: Any user can submit their biomarkers
(e.g. HbA1c levels, heart rate, weight, etc.) into the database.
The blockchain network then automatically calculates their
improvement and awards the user digital tokens, the
“healthcoin.” Healthcoins can be used to decrease insurance
costs, recognize achievement and demonstrate improvement
with health care providers.
Key to success is the network that does the work of
prevention as a user needs the support of their
network to fight diabetes. Blockchain activates that
network because it builds trust and coordinates
activity across silos. That is why it is a suitable
technology for driving behavior change. The patient
can share the information with friends, an employer,
the government and public health organization, e.g.
for using the information for diabetes research.
Sharing their health data with friends creates a strong
impetus for the patient to make the right choices to
improve their health.

16
Some companies started already developing more
generic patient-centric systems, and one of them is
startup YouBase. The company offers a privacy-
enabled, peer-to-peer data layer for health
information storage and exchange built on blockchain
technology.
Using encryption, digital signatures, digital wallets,
and distributed data stores, it provides the framework
for management of personal and medical data that’s
focused on the individual. The core technology allows
each personal data element to be assigned a
blockchain-compatible personal wallet address that
cannot be linked back to an individual without the
proper private key. Their product consists of
enterprise nodes for the exchange of health data.
YouBase stores information safely and securely, all
independently of any one company or data storage
service. Even YouBase employees cannot access the
data that is stored in the blockchain. It is up to the user
to keep and use the data as she wishes. Much like
digital currencies, the data is encrypted in a network,
and only the user has the keys to access it. With a
YouBase digital wallet, a patient can use the keys to
share information with those she chooses.
Validated data would also address communication
break-downs between hospital discharge and
outpatient follow-up, the event where most serious
medical errors involving miscommunication during
patient transfers occur. If a patient is part of a clinical
trial, blockchain can also provide additional
accountability and transparency to trial reporting
processes. For example, pharmaceutical companies or
hospitals participating in the trial can store all the data
on local servers or in the cloud, while the blockchain
stores the links to pertinent clinical trials. All trials
associated with a published study can then be curated
and used in within individual blocks, timestamped and
published on the blockchain to support larger
precision medicine initiatives and R&D groups. Having
access to the blockchain would offer the researchers
the opportunity to easily upload links to additional
YouBase is a consumer-level technology and allows individuals to maintain their data and identity across various networks
they use daily and share as they like. The platform combines blockchain compatible technologies which together deliver a
secure and flexible container for data that is independent of any one single entity.

17
data, for example negative data, which is often
omitted from reports, for addition to the blockchain,
increasing transparency and providing reliable
historical information to future trial subjects.
Blockchain-based trials could also help preventing
selective or biased reporting of data. Often individual
researchers are keen to report only positive results,
which can produce unpleasant side-effects. The
blockchain would help to prevent “hidden outcome
switching,” the statistically flawed practice of secretly
changing the focus of a clinical trial to fit the results
with profound impact on clinical and public policy.
Such problems are not rare at all; the COMPare
project, which monitors clinical trials, found only nine
out of 67 studies it has so far looked at had reported
their results accurately, while 60 reported on
outcomes they were not looking for, according to their
original protocol. Using public keys for trial protocols
uploaded to trial registries and added to journal
submissions would allow other researchers to quickly
check whether the correct results were being
reported. That does not mean that pharmaceutical
companies have to be entirely open, risking their
competitive advantage. Using smart contracts,
reporting details of SOPs could be hidden until a trial
is completed.
A central, immutable ledger of transactions would
allow auditors and regulators such as the FDA or EMEA
to rapidly monitor the flow of clinical data, avoiding
after-the-fact verification. Hence, blockchain will
speed up the R&D cycle and time to market of new
drugs. Accurate reporting would also improve outside
of clinical trials, such in preclinical studies and even
academic lab, decreasing the chance of violation of the
standard codes of scholarly conduct and ethical
behavior in professional scientific research. In turn,
many scientific journals would have the chance to
make sure that data submitted to them were not
tampered with, helping the journals dealing with
suspected misconduct. Similarly, blockchain
technology can provide the technical framework for
patients to easily donate their data for clinical trial and
other research initiatives. In this context, for patients,
it is crucial that health data provided by individuals be
secure, tamper proof, and monetizable.
Basically, data produced by individuals (e.g. blood
sugar levels, heart rate, physical activities, galvanic
skin response, blood pressure, etc..) should be work
for the patient. For this to work, a data exchange
platform is needed. The first such platform is the
Healthbank cooperative, the ’world’s first citizen-
owned medical data storage platform.'
The Healthbank allows people to store their data in a
secure zone that only they can access. Using intelligent
consent management, the system enables users to
choose to make money from their data by connecting
via the platform with medical research projects, online
prescription services, and other commercial ventures.
It is the goal that users can pick the research topic they
want to support. Although Healthbank currently still
runs on a centralized platform, the Cooperative is
actively exploring options to tap into blockchain such
as smart contracts.
Collecting patient data that is stored on the blockchain
also offers opportunities for population health
management. One of the early movers in the field is
Atlanta-based start-up Patientory. The company’s
mission is to drive population health management by
securely assisting healthcare organizations store and
transmit data via blockchain cyber-security and smart
contracts, while enabling physician coordinated care,
enhanced by social media inspired peer to peer
patient engagement. Their whitepaper can be
downloaded here.
The company developed a mobile app that enables
users to store, view and track their healthcare data
using HIPPA-complaint blockchain technology, giving
users instant access to their medical history, doctor
visit, medications, immunizations, and health
insurance information. The patients can not only
connect with care providers but also with other
patients who have similar health issues or concerns.
This allows patients greater control over their overall
health across multiple care teams, both inside and
outside the hospital. Doctors (and their healthcare
organizations) use Patientory to get the patient’s

18
complete and up-to-date medical history. They use
PTOY tokens to secure private health information, rent
computing power, servers, and data centers through a
unique private infrastructure on the Ethereum
blockchain. Also, smart contracts can be executed in
relation to the patient care payment cycle.
Patientory claims that this way of digitization of
healthcare data will not only increase healthcare
quality and efficiency but also will reduce healthcare
costs by billions each year. Of course, one has to keep
in mind that the platform is specifically tailored to the
US healthcare system. In April 2017, the company
introduced the first crypto-token to the healthcare
sector. The purpose of the tokens (PTOY) is to reward
providers that work together and provide the best
care to their patients. Tokens can be purchased in
exchange for another cryptocurrency, in this case
Ethereum (ETH).
Ethereum Blockchain
What is noteworthy when looking at
all the new blockchain solution in the
healthcare space (and other
verticals) is that almost all platforms
sit on top of the Ethereum
blockchain. This is not surprising,
because of its capacity for smart contracts and other
complicated computing capacities. In this context,
Ethereum is viewed as more agile and adaptable than
Bitcoin. Like Bitcoin, Ethereum represents an own
cryptocurrency, the ‘Ether.' While Bitcoin has more
than doubled in price in 2017 alone, it has been
outperformed by Ether, which was up over 3,000
percent by the end of May 2017. One reason is
certainly that companies are more focused on how the
Ethereum blockchain could be used in real-world
applications. One advantage is that in Ethereum the
block time is set to ~14 seconds compared to Bitcoins
10 minutes. Such speedup allows for faster
transaction times which will prove to be useful for
many blockchain platforms. Another benefit of
Ethereum is that it offers a highly generalized platform
that allows users to make applications for a very wide
variety of use cases with much less effort than it would
take to create their own blockchain solution. The
platform’s vision is that of “the world computer,” a
system which looks and feels to users as much as
possible like a normal computer while acquiring the
various security, auditability and decentralization
benefits of blockchain technology. Many developers
are trying to improve the blockchain on top of this. A
group of 30 companies called the Enterprise Ethereum
Alliance (EEA) was recently founded to connect large
companies to technology vendors to work on projects
using the blockchain. Companies involved in the
launch include JPMorgan, Accenture, Microsoft, Credit
Suisse, Thomson Reuters Corp and Intel. By May,
another 86 firms joined the alliance, which is adding
growing legitimacy to the cryptocurrency. The EEA will
work to enhance the privacy, security, and scalability
of the Ethereum blockchain, making it better suited to
business applications.
According to Google Trends, the interest in Ethereum spiked
in 2017. The horizontal axis represents time, and the vertical
is how often a term is searched for relative to the total number
of searches, globally.
Although it is difficult to predict – and I will not urge
anyone to invest in Ethereum - there is certainly good
potential for investors (I admit, I would probably
consider buying some Ethereum if I had the
resources). Several banks have already adapted
0
10
20
30
40
50
60
70
80
90
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19
Ethereum to develop and test blockchain trading
applications. Ethereum gives the promise of boundless
opportunities, but whether that promise is going to be
fulfilled, and to what extent, depends on how
widespread the Ethereum network will become, and
how innovative will the developers of particular
solutions be. Not all in the market are convinced that
the Ether rally will last, mainly because products like
Ethereum could be cloned. Nevertheless, Ethereum
won a large following among developers who view it
as a sophisticated way for companies to initiate and
track transactions and contracts of all sorts. That has
led some companies to bet that Ethereum will win the
race to become the standard blockchain for future
business operations, including healthcare.
Supply Chain
The Pharmaceutical Supply Chain is defined as the
management of product supply from raw material
sourcing to active pharmaceutical ingredient (API)
manufacturing through formulation, packaging, and
distribution to the patient. Traceability throughout
this process, especially on an international level, is
challenging.
Under the present systems, drug shipments can pass
through many hands, involving a lot of paperwork that
can be tampered with. Utilizing distributed ledgers can
improve revenue sharing, solve patent issues, traces
transfer of assets, and enables proof of work/service.
In particular, if participants in the blockchain could
chart the pharmaceutical supply chain from a batch
number and factory of origin all the way to distributor,
sale and storage and adherence, they could identify
issues much more granularly. If regulators or payers
identify a hotspot of patients having some sort of
problem taking a drug, they can easily trace the
problem back to the batch or improve the way
patients stick with their regimens.
Several companies and organization (e.g. IOTA,
Stratumn, or Guardtime) are already looking into
blockchain technology to provide supply chain or cold-
chain logistic solutions (as used in biobanking). One of
them is the Swiss start-up Modum.io. The company,
together with the University of Zurich combines
sensor devices and blockchain technology to make the
pharmaceutical supply chain more efficient. In
particular, their team is developing a blockchain
technology-based temperature tracking system for
medicinal products, an area that is increasingly
regulated. For example, according to recent changes
under the EU regulation, Good Distribution Practice of
Medicinal Products for Human Use (GDP 2013/C
Modum’s sensors can constantly measure the temperature conditions on batches of drugs in transport. When the shipment
is at its destination, a smart contract is activated and releases the shipment, if the cold chain was shown to be unbroken (no
temperature deviations recorded). The end-consumer as well as the sender are then receiving a report informing them about
the transfer of the goods or smart contract components such as due payments or insurance clauses in case there is the
need to cover damaged goods.

20
343/01), companies are required to report any
deviations, such as cold-chain disruptions, humidity or
light conditions to the distributor and the recipient of
the affected medicinal products.
How does it work? Medicinal shipments are equipped
with a sensor that, for example, monitors the
temperatures of the products. Upon arrival at the
destination, the sensor data is transferred to the
Ethereum blockchain, ensuring a tamper proof system
with guaranteed data integrity. What happens next is
that a smart contract is automatically triggered that
then compares the measurement data against
regulatory or customer requirements. Based on the
available information stored in the blockchain, the
product is either released, or both the sender and the
receiver of the shipment receive a notification that a
deviation occurred. Modum.io is also looking at
transactions in other areas of the supply chain, for
example, where batches of active pharmaceutical
ingredients are transported from a supplier to the
drug producers.
Fighting counterfeit drugs
Drug counterfeiting is a huge problem for Pharma and
consumers. The WHO estimates that up to 10% of
drugs sold around the world are counterfeits, but it
may be as high as 50% in some countries. A lot of those
‘drugs’ don’t contain any active ingredients
whatsoever, while others have incorrect quantities of
the correct ingredients. Counterfeit drugs are a
serious problem, harming people in unanticipated
ways. Patients may experience severe allergic
reactions, unexpected side effects, or a worsening of
their medical condition, sometimes leading to death.
For example, in 2013, it was discovered that over
8,000 patients died over a five-year period in a remote
Indian hospital because an antibiotic used to prevent
infection after surgery had no active ingredient.
In the United States and Europe, the problem is found
primarily related to lifestyle drugs, such as Viagra or
Cialis, rather than in life-extending medication.
Growth in counterfeiting may be spurred by the
economic incentives provided by an increasing volume
of inflated cost drugs. Also, the ability to sell drugs
directly to end-consumers through purchases over the
internet adds to the problem. Classically, to tackle
those problems, many countries decided to
implement pharmaceutical serialization practices,
such as recording, authenticating, maintaining and
sharing accurate records of items before dispatching
using track and trace technology.
In the US, those regulations are covered in the Drug
Quality and Security Act (DQSA) and The Drug Supply
Chain Security Act (DSCSA), pressuring Pharma to
implement systems that can provide the solutions
needed to improve the current state of the drug
supply chain. However, those programs and regulation
are heavily dependent on local national laws and
standards, and many pharmaceutical companies
struggle to identify the proper answer to work with
serialization.
The solution to the dilemma could be – again –
blockchain technology. A blockchain can provide the
3V’s (visibility, verification, and validation) to the drug
supply chain. Already, several projects and start-ups
(e.g. CargoChain, Chronicled, Everledger, Project
Provenance and Skuchain) deal with this issues,
investing in a trusted record of the provenance of
drugs. Another is the BlockRx Project, an initiative to
verify and enhance the integrity of the drug supply

21
chain and to accelerate new drug development by
leveraging the blockchain to support and manage the
Drug Development Lifecycle.
How can it work? In theory, the whole process could
start with a central authority, for example, the
pharmaceutical company that owns the drug IP, which
would decide who will participate in the blockchain,
e.g. suppliers, warehouses, quality controls,
distributors, retailers, etc. Once a drug ingredient is
manufactured, a notification is broadcast on the
blockchain network, and a hash is generated with all
the relevant manufacturing details, etc. The hash gets
printed on the drug package before the drug gets to
the assigned distributor. This procedure is registered
as a transaction, meaning a new hash is generated and
linked to the previous hash, containing further
information about shipment, cold chain control or
distributor details. Similarly, when the distributor then
ships to the retailer, the same process continues – the
blockchain grows.
Finally, the consumer who buys the drugs at the
pharmacy or via the internet receives the public key
on the invoice which allows her to verify that the drug
originates from the true manufacturer, without
tampering. The add-on benefit for the patient and
healthcare provider is that proper dosing can be
facilitated and better controlled. Finally, there is the
advantage that the blockchain works across borders,
helping countries to band together to share detection
technologies, to collaborate on a universal database of
legitimate pharmaceuticals and pass international
standards.
There are other ideas to connect blockchain
technology with ways to counteract the increase in
fake drugs on the market, including stronger state
licensure supervision of drug suppliers and the use of
Radio Frequency Identification Devices (RFID) to
accurately identify original drugs. Whatever approach
companies take, in the end, Big Pharma will spend
fewer resources on anti-counterfeiting workarounds
and regulatory compliance.
In summary, blockchain technology can reduce the
availability of fake drugs and save lives, and this is
surely one useful task the industry should embrace.
Collaborative patient engagement
Patients could create and control a community of
providers, family members, and caregivers who could
view, edit, and share a centralized personal health
record. Ultimately, blockchain technology could
impact on how patients monitor their health
information. Patients would be able to approve or
deny any sharing or changes to their data, helping to
ensure a higher level of privacy and greater consumer
control. However, it does not end here; such a
platform can also help in providing secure health
management after a patient lost the ability to actively
understand and manage his health, for example when
affected by dementia.

22
Here, patients at early stages of their disease when
first signs of dementia occur (e.g. in Alzheimer’s or
when affected by frontotemporal dementia, which is
marked more by behavioral and emotional changes
than by cognitive impairment), patients can securely
grant other doctors access to their personal
information, as well as healthcare providers,
researchers, and their family. Blockchain supports
such data sharing by a concept called M-of-N
signatures or Multisignature (multisig) that refers to
requiring more than one key to authorize a transaction
on the blockchain. This means that there are a total of
N cryptographic keys, and at least M of them have to
be present in order to decrypt the data. In this way,
the patient can provide keys to authorized individuals
to grant access without the patient’s specific key. This
mechanism can be useful when, for example, a patient
is incapacitated and cannot provide consent to access
the data. M-of-N signatures would work even across
generation, by providing access to the health records
to the patient’s children and grandchildren, which
could be a valuable asset is managing diseases that run
in the family. Moreover, any authorization/consent
log persists forever in the distributed network, serving
as a backup to restore functionality. Using this backup,
patients can leave and rejoin the system as often as
they want, and regain access to their history by
accessing the latest blockchain on the network.
Shared data and incentives also facilitate collaboration
of health care professionals, which in turn offers the
possibility to run site-less studies. Those trials are
much cheaper and easier for patients, as they do not
have to travel long distances. Instead, patients can
participate in the trial at places outside of large trial-
sites, for example at home, at the local medical office
or laboratory, at specified pharmacists or mobile sites.
Because there is no need to have a physical site, the
clinical study can be more flexible, cover larger
geographical areas and reduce patient drop-out rates.
Another blockchain use-case would be the adoption of
electronic informed consent (eConsent) in clinical
trials. Informed consent is a complex process that
involves many stakeholders, from planning, collection,
to recording. Therefore, securing informed consent
from participants is a dynamic process. For example,
patients must be able to withdraw their consent at any
time during a trial, or – have to option to re-consent in
case study changes have occurred that may affect
their decision to continue participation. Here, the
introduction of blockchain technology in the form of
smart contracts, as a special form of eConsent
solutions, offers huge improvements to participant
on-boarding, a guarantee of validity and
documentation of the consent process in future
clinical trials. Researchers or healthcare providers can
act upon those directives stored in the blockchain. The
clinical trial software or any precision medicine
platform or EHR can interpret the contract as access
control decisions, assuring that the system is fully
adhering to patient demands.
From the patient
perspective
• Patients no longer need to coordinate the tedious task of gathering records
from various providers to send to their specialist, instead, they would only
need to provide access to the blockchain
• Patients retain control of their data and do not need to spend time and
energy keeping their data managed and up to date
• Better and more available data leads to better care for the patient
From the provider
perspective
• The true collaborative nature of creating and sharing data eliminates many
of the challenges of existing Health Information Exchange approaches
• Healthcare organizations do not have to compete for a data-driven
competitive advantage, because they all have access to the same
information
• Through existing contracts with patients and partner organizations, nodes
can broadcast alerts or potential threats
• Data can be shared for research activities including clinical trials, enabling
larger and more diverse patient populations

23
Having the patient on board, blockchain technology
also enables to develop patient-reported outcome
measures (PROMs), which include indicators of
disease state, dietary changes, lifestyle issues, pain
levels, or disease management experiences. Drug
developers, as well as healthcare providers, should
integrate this type of patient-provided data into their
data stream, care routines, and decision-making
processes.
The big ICT powerhouses such as Huawei, IBM,
Samsung, or Sony would be able to help to streamline
such processes via IoT ecosystems by placing patient-
generated health data tools directly into the hands of
millions of individuals. Collected health data could be
used in tailoring individualized care plans and aiding
R&D efforts, supporting medical research to tracking
medication adherence, thereby facilitating and
cultivating overall population health management on
a huge scale. Such measures are especially useful in a
time when the classic healthcare ecosystem is in the
process of transition to a value-based care system in
an attempt to reduce healthcare costs. In addition,
blockchain technology can support the development
of sophisticated of global personalized health
networks that empower patients in their health
journey, pioneering patient-centered measures of
disease and health. One way to improve patient-
centered care could also involve blockchain-based
crowdsourcing, basically an open bazaar where
providers could access certain parts of a blockchain for
health services, providing unparalleled transparency
in pricing and quality.
The challenges of data sharing involving patients
within the healthcare ecosystem are significant;
however blockchain offers genuine business value.
Peterson and colleagues from the Mayo Clinic
describe how a particular blockchain-based approach
to health information exchange networks can look like
in this paper, describing some of the benefits for the
participant.
Revolutionize EHR interoperability
Interoperability challenges between different
provider systems, country-specific regulations, as well
as the lack of clear data ownership, pose significant
barriers to effective electronic health record data
sharing. Furthermore, many healthcare providers are
reluctant in handing out data, sharing data only when
absolutely required. This extends to restricting
patients from accessing and sharing data about their
own health or charging large fees for this access. On
the other side, also patients may not want to allow
access to their data because many of them are
concerned about privacy and security of medical
records. Some patients withhold information entirely
from their health care provider because of these
concerns, especially in countries where historical
distrust to the system’ is widespread. Blockchain
technology can help here and eliminates data silos and
facilitates aggregation of clinical data from EHRs.
How would a solution look like? One possibility is to
use an interface that can orchestrate record access
across databases. Individuals that wish to view EHR
data are checked against a ledger and must be
authorized by each member of the blockchain, which
may provide an additional secure and tamper-proof
method of managing access to sensitive patient
information. Access should be fine grained and
hardwired into the blockchain and in some cases,
could limit the access to the EHR data by the patient.
Why should the patient also be restricted from looking
at his or her data? Because in some instances not all
provider records can or should be made available to
patients, i.e. psychotherapy notes, or physician
intellectual property, or when the health information
such as genetic information is indicative of a severe
predisposition, e.g. Huntington disease. In an ideal
scenario, the patient should be still informed about

24
such possibilities and give his consent (or not) if
appropriate. For example, he could in advance, before
submitting his DNA to a service provider decide if he
wants to be informed about the outcome or if the
information should only be shared between doctors.
One early project that tries to revolutionize EHR
interoperability is the Dutch company DDQ. Their
product Labchain is a decentralized blockchain
solution that was initially developed for Maastricht
University. Labchain, which can be connected to
standard laboratory information systems, replaces
traditional postal systems for securely exchanging
laboratory data, e.g. blood analyses results within the
hospital and also between different external
laboratories. The laboratory data themselves are not
stored on the blockchain. Instead, each transaction
has a reference (hash) to an XML-like file which is
hosted in a decentralized manner.
The developers use mini-computers running on the
Ethereum blockchain and torrent-like software for
decentralized file distribution. The Labchain project is
open for collaborators and volunteers as it has a big
research component and will be open-source. It is the
developer’s aim to provide an open, stable and
durable solution and a set of best practices for the
exchange of Electronic Health Records.
“off-chain” data storage: Nowadays, health data
means Big Data. This in turn means that replicating all
heath records to every member in the blockchain
would be bandwidth intensive, wasteful on network
resources and pose data throughput concerns.
However, there is a way around. Blockchain enables
interoperability and data exchange by leveraging a
system that is composed of so-called “on-chain” and
“off-chain” data storage. What does it mean? Let me
try to explain: Regarding the actual data stored on the
blockchain “on-chain,” there are three main options:
• Unencrypted data, which can be read by every
participant in the blockchain
• Encrypted data that can only be read by
participants with the appropriate decryption key
• Hashed data
In this case, a “hash” acts as a digital fingerprint,
representing a commitment to a particular portion of
data while keeping that real data hidden. The original
data, e.g. health data such as lab results or imaging
data is stored off-chain, stored in traditional
databases, by one of the interested parties, which can
reveal if necessary, e.g. through an immutable record
of a digitally signed access request.
In the early days of blockchain, when making data
requests outside a smart contract, the authenticity
was broken for dependent transactions. For example,
a patient running a phone app may request to view her
medical information. When she clicks on her lab
results tab, a call is made to the health care providers’
smart contract to access that information that resides
outside of the existing smart contract.
What should developers do?
The described processes need secure interoperation
and communication, which can be provided by new
blockchain innovation such as the before mentioned
Cryptlets as part of Microsoft's blockchain middleware
Bletchley. However, the connection of Big Data, AI
services, and downstream data analytics is still an
undiscovered area. Here is an opportunity for early
movers to provide novel solutions and business
solutions that cover several parts of an AI-based
healthcare ecosystem. If possible, developers should
aim to provide an end-to-end solution, not only niche
solutions, to make it easier for healthcare companies
to adopt a system. Such a platform must combine
intelligent, decision-making algorithms with massive
amounts of disparate data. Users from all areas of
healthcare (e.g. scientists, nurses, physicians, insurers,
lab-heads, CROs, and patients) - usually without
domain expertise - will benefit from a platforms' pre-
built algorithms and other features that curb the
learning curve. Ideally, platforms will offer a variety of
up-to-date machine learning algorithms and simplistic
workflows, workflow lifecycle management, with such
features as drag-and-drop modeling and visual
interfaces that easily connect data to downstream

25
solutions. These algorithms should include
functionality for image recognition, natural language
processing, recommendation systems, and predictive
analytics, in addition to other machine learning
capabilities.
Support of vertical business models
The precision medicine ecosystem will be largely built
upon collaborations and partnerships as organizations
recognize the need to work together in order to
develop the large volumes of patient data required to
generate new insights. However, making meaning of
the enormous amount of medical data and creating
scientific knowledge, will vastly exceed the capacity of
even the largest institutions.
Data must be shared to achieve the promise of
precision medicine. In addition to sharing data, a
blockchain ecosystem allows sharing of assets,
providing opportunities for investors within a specific
ecosystem to invest in projects or pharmaceutical
companies that are part of the same blockchain. As
such, blockchain technology is ideally suited to be
used in vertical business models. In general, vertical
business solutions tend to be specific to a given
industry or a particular group of customers within a
given niche ecosystem. An example of such healthcare
verticals would be the collective knowledge in
understanding the requirements of Electronic Health
or Patient Records across all blockchain participants
needs, e.g. lab services, diagnostics, and public health
services. Here, investors interact with one another
using pseudonyms, and their real identities are
encrypted. Investors can be large corporations, funds,
or even countries, but also single patients. The
investment can be money in the form of a
cryptocurrency, computing time, ideas, molecular
structures, patents or even biospecimen; basically
everything that can have real value to a company.
Verticals are increasingly important for the healthcare
industry, enabling market domination through
consistency and long-term asset building. In fact, the
healthcare industry represents one of the largest
vertical markets. However, it is made up of a vast and
complex network of sub-markets, each with very
different objectives, business models, needs and
problems to solve.
Healthcare is also a vibrant and dynamic ecosystem
with many established vendors with established
relationships that could be easily be mirrored in a
blockchain solution. Companies that decide to work
together will have the benefit of improved efficiency
in contracts execution, improving efficiency and
transparency in executing any digital agreement,
reducing excessive manual contact and monitoring. In
addition, all the participants in the same ecosystem
can save resources as the blockchain can remove the
need for trusted intermediaries as it relies on a peer-
to-peer system to confirm transaction validity. But
most of all, companies gain from all the shared data
stored in the system.
The significant cost associated with drug development
is linked to the ability to get high-quality and validated
data sets from patients. Significant amounts of
resources are spent in developing and capturing such
data sets. Cross-industry collaborations will be key for
breaking down big data siloes, harnessing the
collective knowledge of top researchers and the IP of
different organizations. Healthcare organizations do
not have to fight for a data-driven competitive
advantage because they all have access to the same
information. This approach will enable organizations
to collaborate in trials or on outcomes-based care. For
example, insurers and researchers at a pharmaceutical
company can share securely de-identified electronic
health record data from patients participating in the
blockchain community to study gene-environment
interaction. At the same time, the system can return
this health information to the participating patients,
reducing unnecessary tests and interventions,
informing them about genetic mutations that could

26
result in higher risk of certain conditions, including
diabetes, cancer, and cardiovascular disease, while
the patient data remains anonymous to the
researchers or partner laboratories. This type of
collaboration, leveraging different resources and
domain knowledge, will increase the availability of
health data, which will, in turn, allow investigators to
move more quickly towards new breakthroughs in
drug development.
Using blockchain in vertical business models increases
the likelihood that researchers, patients, and health
care providers can trust the data and ensure that as
many individuals as possible have access to it –
increasing the chance of breakthroughs. Traditionally,
companies often are reluctant to share data because
of privacy concerns, and –more importantly – because
they fear that sending information will give others a
competitive advantage. Using smart contracts and
data security can ease the process significantly.
‘Digital Identity’
An open, global pharmaceutical company entirely
build on top of blockchain technology
Did you hear about Digital Identity, the new
pharmaceutical company that is fully based on
blockchain, cryptlets, and tangles? No?
OK, let me give you an introduction. The idea behind
this future global player is that a whole
pharmaceutical ecosystem can be placed on top of
blockchain technology, paving the way to trusted and
open R&D processes, trusted transactions between
parties, powered by collective self-interest of a global
community of independent investors.
Although the company still
represents a for-profit entity, this
pharma ecosystem is at the same
time immune to exorbitant drug
prices, tampering, fraud, or political
control which are destroying the
healthcare system in many
countries. Digital Identity shares may
be publicly traded if shareholders
pass a resolution to do so.
The business structure of Digital Identity means a fair
exchange of benefits. What the company earns is
automatically distributed to its members. There are
many ways in how the company can be structured in
the long-run. One option is to provide shares that can
be issued as a result of an investment process that in
many ways is comparable to a process that a typical
startup goes through when funded in a classic
economy.
In particular, the company must provide evidence to
investors that its shares have real-world value (IP,
property, goods, contracts, etc..). The initial valuation
is used by blockchain participants (either the whole
community or dedicated experts) to determine the
price they are willing to pay or receive to affect a sale
of the business. The initial valuation of Digital Identity
matters because it determines the share of the
company that must be given away to the investor
community in exchange for money, keeping in mind
that the valuation of the company at the early stage is
a lot about the growth potential, as opposed to the
present value. When it comes to causing a shift in how
companies get funded, it made perfect sense to
position the enterprise at the point where the money
originates: worldwide on the blockchain. If the
company would rely only on classical investments,

27
only a very few people can invest and participants
could only raise capital from accredited investors,
venture capitalists, and banks.
Easing the flow of capital. Digital Identity is a
company where basically everybody can invest in,
therefore offering more opportunities for
investments, bringing in more private investors,
collaborators, VCs, banks and other businesses and
making such a venture a much more attractive
environment to put your money into. People can
invest cryptocurrency worth 10 million Dollar or
merely worth 10 Cents. Traditionally, private
investing, whether it is angel investing or venture
capital investing has been very opaque and
segmented. Now, even teenagers are able to use their
pocket money to invest in Digital Identity by using
their smartphones. This could build a whole new
awareness in the young for dealing with money,
economic issues and building an open, beneficial
society for everyone. Short term, the company can
help in bringing communities a little closer to
embracing blockchain. Those distributed investors
interact with each other to support business decisions,
but such interactions are bound as in a single
organization. In effect, blockchain-based funding is
more efficient than traditional fundraising. It has
lower costs associated, particularly for auditing and
transactions. Overall, a cryptocurrency investment
can be an attractive investment. Nowadays it is
relatively easy to obtain cryptocurrencies (such as
Bitcoin), convert, or sell as easily as buying them.
Cryptocurrencies are not yet widely adopted in most
populations; however, this will change quickly, already
there are more and more physical and online stores
that support cryptocurrency, mainly Bitcoin.
A truly global company. Precision medicine requires
not only big data but diverse data, and that means
pharma has to go global. People all over the world will
have access to the company; the farmer in Kenia, the
carpenter in Brazil, the Investment-Banker on Wall-
Street, the school teacher in China, the lawyer in
Belarus, or the student in Buenos Aires. Due to the
built-in trust system (transactions are encoded on the
blockchain), independently of
any central authority, also
people can invest in the
pharmaceutical company that
are under normal
circumstances banned from
investing, either due to local law
or because they do not have
access to a regular banking
system. Investors also have the
benefit of choosing to invest in
projects that have meaning or
align with something that they
are passionate about. The
blockchain-investor can
potentially see that product or
idea grows into something that
makes a difference in the world.
For developing countries,
participating in such a
healthcare infrastructure can
help them improving people's
health and giving them the
chance to lift themselves out of hunger and poverty.
Here, blockchain can empower the poorest, especially
women to transform their lives, giving the people tools
to lead healthy, productive lives. A company without
borders ensures appropriate participant inclusion with

28
respective to ethnic diversity and other demographics
and better inclusion of those who are medically
disenfranchised.
Smart Contracts. Using smart contracts gives the
company managers the stability to scale up the
enterprise, but not hold anyone to long term contracts
that would tie their hands. Terms of a deal could state
that the invested funds must stay put for the first six
months or that R&D efforts exclude any studies based
on genome sequencing (for whatever reason).
Automated, smart contract also provide
accountability, providing clear commitments to all the
stakeholders and abiding by them.
For example, patient groups, which are increasingly
important partners for the pharmaceutical industry,
may demand that all the money invested by them is
going only in R&D efforts related to a specific
indication. Let’s say a major Diabetes Patient group
want to make sure that their money is directly used for
the development of a new drug against diabetes. In
addition, the patient organizations provide Digital
Identity with important advice from their perspective,
potentially biospecimen or a pool of individuals that
are willing to participate in clinical trials. The contract
can then specify that any drug or companion
diagnostic developed in this process is transparent,
meaning not protected by patents, or that the price
for the drug is limited to the lowest possible price to
the public (where the company is still not making a net
loss but remains profitable). Any combination of
contracts can be envisioned.
Remember Martin Shkreli, the CEO of Turing
Pharmaceuticals, who in 2015 infamously raised the
price of the critical drug Daraprim (pyrimethamine) by
more than 5000%? Consequently, he became the
global lightning rod for growing outrage over soaring
prescription drug prices, and several US Congressional
probes have been launched since then on the pricing
issues of drugs. Turing Pharmaceuticals was only one
of several companies under fire for price increases on
older drugs that lack competition. Other famous
examples include Mylan, the maker of emergency
allergy shot EpiPen, and Valeant Pharmaceuticals,
both companies have been questioned by Congress
and subjected to severe condemnation by the public.
Because the CEO of Digital Identity cannot hide
anything from the shareholders, a similar abuse of
power is impossible, keeping a lid on soaring drug
prices. It is understandable that a company wants to
make a profit and we should remember that
developing drugs is an incredibly high-risk business.
For that reason, new, innovative drugs are typically
priced higher under the argument that it's an incentive
for more R&D down the line. Making money is OK, but
patients that are at the same time shareholders are
unlikely to cause exorbitant drug prices.
In the end, there are many incentives for the patients
to invest in the company and vice versa; interacting
with patient organizations enables Digital Identity to
learn about and understand unmet patient needs, as
well as barriers to treatment success. As a result, the
company becomes a place to build traction, proof, and
validation, coming with all kinds of benefits. Working
with committed patient groups will gain the company
early adopters and loyal advocates. Market validation
is one of the most powerful tools in the
entrepreneurial world. Traditionally an expensive and
lengthy process, validation is now faster, more
scalable and available to anyone, everywhere. People
who view the companies campaign and choose to
contribute resources, IP, or biospecimen as early
adopters are ones that believe in the success of the
company in the long run. Early adopters, especially the
ones that have shares of the company, are more likely
to spread the word without asking for anything in
return. They care about the venture’s brand and
message and are likely to be loyal supporters and
clients.

Reinventing healthcare with blockchain

Reinventing healthcare with blockchain

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