How Blockchain Technology Will Impact Specialty Pharmacy
The benefits of adopting blockchain technology have not been overlooked by the health care industry and can have a direct and lasting impact on specialty pharmacy.
Modern society is evolving at a breakneck speed with technology continuing to drive progress, constantly changing and redefining how we interact with each other on a personal and professional level. Businesses are not immune to these changes. For example, the widespread use of social media has forced businesses to examine how they interact with their target market.
This is a visceral example of an adapt or die mentality that is now ingrained across nearly all industries, particularly health care. Another example of the need to constantly adapt is in the safety of proprietary and protected information in the health care industry. Just a few decades ago, businesses could protect all of their HIPAA information by keeping it under lock-and-key; however, we are now light-years away from that level of security.
The advent of blockchain technology is revolutionizing how businesses interact with each other, both within the same industry and between different industries. Blockchain technology was initially invented in 2008 to serve as the underlying public ledger for Bitcoin transactions, which is an entirely digitalized currency based upon the blockchain.
For an incredibility rudimentary explanation, as the name indicates, blockchain technology consists of a chain of linked digital blocks. Each block is a set of verified transactions that is essentially impervious to hacking, double spending, or manipulation due to complicated mathematical algorithmic reasons.
Further, each block contains pertinent information from the previous block, meaning each block depends on the previous blocks in the chain for functionality and integrity. Ultimately, the transaction details of each block are spread across a whole network of computers. Operating in a decentralized manner adds another layer of safety and further increases the near-impossibility of any successful attempt at hacking or manipulating the material and information contained in the individual blocks.
The benefits of adopting blockchain technology have not been overlooked by the health care industry and can have a direct and lasting impact on specialty pharmacy. The specialty drug market has grown from a $98 billion market in 2010 to $178 billion in 2015 and is expected to climb even higher to an estimated $282 billion by 2020.
With such high stakes, the need for an edge and improved safety of patient data are paramount to a company’s differentiation and survival. In fact, specialty pharmacy is already being impacted indirectly via a pilot program utilizing blockchain.
Five health care organizations, UnitedHealthcare and Optum—both part of UnitedHealth Group—Humana, Quest Diagnostics, and MultiPlan, recently launched a pilot program aimed at increasing organizational efficiency and decreasing costs through information sharing, all enabled via blockchain technology.
This program seeks to improve the quality of data and reduce the administrative costs involved with obtaining updated health care provider demographic data, which is a mandate from the Centers for Medicare and Medicaid Services that insurers must comply with to avoid being fined. BriovaRx, a specialty pharmacy under the OptumRx umbrella, could benefit directly from the success of this pilot.
As a specialty pharmacy, BriovaRx would constantly seek ways in which it could increase its data collection and disbursement efficiencies. This would increase its value to payers, health care providers, and manufacturers. It could also increase its value to patients, as the speed with which prior authorizations can be navigated and facilitated will drastically improve with increased data access.
With a successful pilot program, Optum could tap BriovaRx to further utilize blockchain technology to help differentiate itself in the market. Some of the general areas in which blockchain technology could benefit a specialty pharmacy are in the supply chain management of a specialty drug and with ensuring aggregation and secure sharing of patient data with applicable stakeholders.
Since data collection and sharing are often keystone components of agreements between specialty pharmacies and manufacturers, pharmacies that adopt this technology and incorporate its use into their RFPs may find themselves at a unique advantage over their peers. Although blockchain technology use by all players in the market will likely be the norm 5 to 10 years from now, one could argue that there is a “first-mover advantage” now with being one of the early adopters of blockchain technology.
At this point in the game, a specialty pharmacy that adopts this technology will put themselves at an advantage, and in theory, win more contracts now based on their unique competitive advantage. Once they prove themselves to be a valuable partner on a consistent basis, in the future, manufacturers will default to them with new business, regardless of whether the rest of the market catches up to adopting blockchain technology.
About the Author
Lee Feigert earned his PharmD from Duquesne University in Pittsburgh, PA. For over five years, he was employed in a transitional-care pharmacist role at a 300+ bed inpatient psychiatric hospital. Currently he is employed as a consultant pharmacist for a Program of All-Inclusive Care for the Elderly (PACE) program in Pennsylvania. He is currently enrolled in the Master of Science in Pharmacy Business Administration (MSPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines.