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See	discussions,	stats,	and	author	profiles	for	this	publication	at:	https://www.researchgate.net/publication/317936859
Bl...
2017 Strategy Guide
for the Pharmaceutical Industry, Insurers & Healthcare Providers
© Axel Schumacher, PhD
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
The healthcare industry needs a revolution – and it is here...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
the parties maintaining the database. By
cryptographically ...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
exchange of health data using blockchain technology.
In par...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
distributed ledger technologies can provide the next
wave o...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
pharmaceutical companies can decide on the proper
process a...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
a monthly snapshot of reported or disclosed breaches
impact...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
which govern a particular medical record, for example,
a po...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
immutability of the blockchain and the scalability of
the F...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
mobility approaches do not provide a solution that
simultan...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
providing additional contextual information
supported by p...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
step further, smart medical devices could monitor
adherenc...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
the American Enterprise Institute who argued in a
hearing ...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Improving R&D
Having access to functioning blockchain plat...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Blockchain technology may help patients to transmit patien...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
In an ideal case scenario, patients are incentivized to
ta...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Some companies started already developing more
generic pat...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
data, for example negative data, which is often
omitted fr...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
complete and up-to-date medical history. They use
PTOY tok...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Ethereum to develop and test blockchain trading
applicatio...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
343/01), companies are required to report any
deviations, ...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
chain and to accelerate new drug development by
leveraging...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Here, patients at early stages of their disease when
first...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
Having the patient on board, blockchain technology
also en...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
such possibilities and give his consent (or not) if
approp...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
solutions. These algorithms should include
functionality f...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
result in higher risk of certain conditions, including
dia...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
only a very few people can invest and participants
could o...
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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘
respective to ethnic diversity and other demographics
and ...
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
A.Schumacher (2017) Blockchain & Healthcare:  A Strategy Guide
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A.Schumacher (2017) Blockchain & Healthcare: A Strategy Guide

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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.

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A.Schumacher (2017) Blockchain & Healthcare: A Strategy Guide

  1. 1. See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/317936859 Blockchain & Healthcare - 2017 Strategy Guide Method · June 2017 CITATIONS 0 READS 841 1 author: Some of the authors of this publication are also working on these related projects: Epigenetics of Neurobiological disorders View project Axel Schumacher Open for opportunities, Munich 42 PUBLICATIONS 1,600 CITATIONS SEE PROFILE All content following this page was uploaded by Axel Schumacher on 27 June 2017. The user has requested enhancement of the downloaded file.
  2. 2. 2017 Strategy Guide for the Pharmaceutical Industry, Insurers & Healthcare Providers © Axel Schumacher, PhD
  3. 3. 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
  4. 4. 2 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  5. 5. 3 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  6. 6. 4 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  7. 7. 5 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  8. 8. 6 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  9. 9. 7 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  10. 10. 8 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  11. 11. 9 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  12. 12. 10 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  13. 13. 11 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  14. 14. 12 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  15. 15. 13 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  16. 16. 14 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  17. 17. 15 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  18. 18. 16 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  19. 19. 17 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  20. 20. 18 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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 90 100
  21. 21. 19 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  22. 22. 20 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  23. 23. 21 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.
  24. 24. 22 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  25. 25. 23 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  26. 26. 24 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  27. 27. 25 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  28. 28. 26 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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,
  29. 29. 27 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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
  30. 30. 28 Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘ 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.

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