Digital Frontiers: What NFTs Can Do for Pharma

2021 was the year that non-fungible tokens, or NFTs, received widespread attention on the internet and entered the corporate world in a significant way. Now, these crypto assets and the blockchain technology that makes them possible may have major real-world applications for supply chain GMP, patient data management, and the future of pharma.

An Overview of NFTs — The Profitable, the Promotional, and the Practical

Spectators to the movement may recognize NFTs as profile pictures on major social media platforms that appear as variations of human or animal avatars, frequently colorful and occasionally stylized as pixel art — these represent membership to NFT clubs, the most well-known being the Bored Ape Yacht Club (BAYC) and Cryptopunks. With the rising visibility of NFTs on social media, due to their conspicuous imagery but also in part to their notoriously high price points,¹ various companies have seized upon the newfound public recognition to use NFTs as promotional tools, generating marketing hype around an existing brand. Major retailers like Adidas, Budweiser, and Pepsi have sold NFTs for profit, while the proceeds from Taco Bell² and ASICS’s NFT sales went to each company’s respective scholarship program.

The spectacle of NFTs on the internet has also given rise to a few common misconceptions about the technology. Chief among these is the misapprehension that NFTs are jpegs. Instead, an NFT is the digital receipt of a purchase, and it is recorded and stored on a blockchain, an encrypted and nearly tamper-proof digital ledger distributed across a network of computers. In short, an NFT is the deed to an asset — and while the underlying tech was originally developed to establish secure ownership of digital property, the asset in question does not need to be an image, or even digital. This is why NFTs can represent ownership of any tangible, real-world asset, as was the case with the NFT of real-world artwork that sold at a Christie’s auction for $69 million.³

This steep price underscores a major driver of public interest in NFTs — that aside from signifying group membership or generating marketing hype around an existing brand, NFTs have the potential to dramatically appreciate in value, with many enthusiasts viewing NFTs not just as collectibles but as speculative financial assets to be bought and sold like stocks. Nevertheless, this view of NFTs does not address the full implications of how they can be used. By leveraging NFTs to represent real-world objects, the people who buy and sell that object can securely track and verify the identity and origin of that object. This positions NFTs and the underlying blockchain technology as powerful tools in any industry that relies on complex supply chain logistics and massive amounts of data. In fact, the U.S. FDA and innovative companies are beginning to implement blockchain transactions in the pharma industry, where the use of NFTs is already underway in a number of new use cases.

Blockchain in Pharma

In the pharma industry, blockchain can be an invaluable tool in supply chain GMP, because it can verify the full custody of the drug securely and in real time. Various government, academic, and industry groups have begun to adopt this technology. The FDA is implementing the Drug Supply Chain Security Act (DSCSA), which calls for an electronic, interoperable system to track prescription drugs as they are distributed throughout the United States.⁴ The DSCSA outlines requirements to manufacturers and distributors to protect consumers from counterfeit and contaminated products. These security provisions will go into effect in 2023. Previously, the FDA commissioned a peer-reviewed 2020 study from UCLA to demonstrate the use of a DSCSA-compliant blockchain-based system in pharmaceutical supply. Another academic study from 2021 investigated the benefits and challenges of blockchain use in drug traceability for blockchain-based decentralized architectures Hyperledger Fabric and Besu. In order to allow key industry stakeholders to design and test proof of concept DSCSA-compliant supply chains, the FDA launched the DSCSA Pilot Project Program, which currently has a total of twenty pilots participating.⁵

While the pharmaceutical supply chain would undoubtedly benefit from the wider adoption of time-stamped, encrypted records of supply chain transactions, achieving DSCSA compliance is a complex and challenging process. One major challenge to implementing a unified, blockchain-based tracking system is that it would have to interface with all of the disparate legacy platforms used across the pharma supply chain, which span a variety of operating systems and levels of security.⁶ Nevertheless, a wide range of pharma companies have risen to the challenge and made significant progress towards applying blockchain to facilitate supply chain GMP.

In the industry, Singapore-based company Zuellig Pharma is using blockchain to capture, track, and trace drugs. This fosters supply chain transparency, and it allowed them to prevent accidents involving expired COVID-19 vaccines,⁷ the exact type of scenario that the FDA seeks to prevent with the DSCSA. In the United States, IBM now offers the IBM Supply Chain Intelligence Suite, providing companies with a platform to build their own blockchain ecosystem and share data with supply chain partners.

Additionally, as one of the participating groups of the DSCSA Pilot Project Program, IBM, Merck, Walmart, and KPMG partnered in 2019 to conduct the DSCSA Interoperability Pilot.⁸ In 2020, they collectively announced that this drug-tracing blockchain pilot program built on Hyperledger Fabric exceeded the requirements outlined by the DSCSA.⁹ They were able to successfully use blockchain to connect differing IT systems, reduce the time that it took to alert the supply chain of a product recall from a few days down to a few seconds, and identify the compromised assets with greater precision.¹⁰ Their final report can be read here.

Meanwhile, the MediLedger Network, established in 2019, is a blockchain consortium for pharma supply whose members include Gilead, Pfizer, Amgen, Genentech, AmerisourceBergen, and McKesson.¹¹ The consortium seeks to give trading partners a unified view of contracts, pricing, and transactional data. Pharma’s Almanac discussed the consortium when covering the potential of blockchain in pharma in 2021.

While the use of blockchain in supply chain GMP is well established, if not universally adopted, the use of crypto-based technologies at the other end of the supply chain –– with the patient –– is far more speculative. Yet, even as drug products enter the healthcare space and reach the end user, there are opportunities where NFTs may be implemented.

NFTs as a Patient-Centric Innovation

In healthcare, NFTs may present solutions to a number of issues in patient data management and privacy. The United States produces over 1.2 billion clinical documents each year, but 80% of that information is unstructured or inaccessible.¹² Another major problem is that patient data are scattered between different clinics and healthcare providers and stored in electronic health record (EHR) systems that are not compatible with each other.¹³ Redundant treatments due to poor data management cost Americans billions of dollars each year.¹⁴ While personal health sensors and apps allow patients to proactively gather and manage their own health data, they may also present privacy concerns. For example, the pregnancy tracker app Ovia was found to sell users’ fertility data to their employers.¹⁵

Patients need a means to access their own health records, share it at will with various providers, and track and control where the information is sent. A few companies are providing NFT-based solutions to these problems. One such company is Aimedis, a Netherlands- and UAE-based company whose NFT-based platform DataXChange provides a virtual marketplace in which patients can tokenize their records at every step of the healthcare process, from medical history data, to prescriptions, to billing. According to Aimedis, tokenized medical history can ensure the authenticity and security of the record, while tokenized prescriptions would allow patients to receive accurate data about drug authenticity, origin, and expiration. As a secure domain for the transfer of information, DataXChange also allows patients to send their information voluntarily and anonymously to medical databases, contributing to a larger body of research that medical practitioners could use in order to provide better-informed care to patients.

Another service that is introducing NFTs to give patients greater control over their data is RightHash, a decentralized software engine developed by Atlanta-based blockchain developer company Acoer that aims to track and manage patient consent for clinical trials, as well as make patient rights and protections accessible.¹⁶ Acoer has also partnered with Consent Custody Corp., a data fiduciary that safeguards consent agreements and makes consent information accessible, to develop a comprehensive, blockchain-enabled platform for patient consent called ConsentHash. The platform would allow organizations to digitize and track consent information in a scalable and secure way.

Getting Conceptual: Where is Web3 in Pharma?

Thus far, the crypto-based technologies discussed here can and have been applied to solve real-world problems. These varied applications of both blockchain and NFTs in pharma and healthcare essentially apply new methods of secure record-keeping to existing problems in concrete and practical ways. However, some crypto concepts are more readily integrated into the pharma industry than others, and one buzzword is frequently absent from most overviews of blockchain in pharma. Crypto aficionados would be justified in wondering: what about Web3?

Web 3.0, colloquially known as Web3, is a new way to envision and structure the internet, as theorized by proponents of blockchain technology and cryptocurrency. Web3 calls for a return to the decentralized, open protocols of the early web, where most of the value was generated by users, without the corresponding regression back to niche forums with small userbases and bad interfaces. Its proponents essentially wish to enjoy the democratization of knowledge, global community, and polished functionality of the modern internet while divesting from its modern problems — namely, poor data security and centralized corporate control.¹⁷

Proponents of Web3 pose lofty goals for the future of the internet in general and remote collaboration in particular, and researchers and innovators have already implemented these concepts in the field of drug discovery and development in an unconventional way.

Decentralized Drug Discovery

In the spirit of decentralized spaces where community members collaborate to solve real-world problems, organizations known as decentralized autonomous organizations (DAOs) use blockchain technology to provide secure platforms where researchers can collaborate independently of companies or academic institutions without the risk of having their work stolen.¹⁸ These platforms enable trustless and permissionless interactions between users, named thus because blockchain precludes the need for a trusted third party, such as a bank or corporate service provider, to monitor interactions between users to ensure fairness, and because a service provider does not need to approve the transaction in order for it to take place.^18,19

A decentralized platform called Molecule is using NFT technology to help establish various pharma DAOs, such as VitaDAO and PsyDAO, through which researchers can connect with interested biopharma investors. Molecule also acts as a management system for the intellectual property (IP) generated by the researchers’ efforts. In doing so, it could potentially cause a paradigm shift in IP rights management, because Molecule is the first organization to mint IPs as NFTs and “fractionalize” them — in other words, Molecule distributes the ownership of the NFT across multiple stakeholders so that the IP is owned in part by all relevant parties, allowing users and collaborators to directly benefit from and control the fruits of their research.

As a decentralized platform itself, Molecule is backed by investors that appreciate the unconventional, including First Principles, Lunar Ventures, and Signature Ventures. Their investment portfolios lend an interesting perspective on what they see as the next big thing in blockchain, NFTs, and Web3. In its investment portfolio, First Principles lists Molecule among other organizations that disrupt traditional finance, decentralize assets, and democratize ownership. Another major category of its investment portfolio is “Blockchain, Web 3.0, and Fixing the Attention Economy,” a category that includes companies that First Principles describes as offering breakthroughs in data sovereignty, digital identity, and privacy. Meanwhile, Lunar Ventures specializes in backing startup companies that specialize in machine learning, data science, and cloud computing, while Signature Ventures invests in organizations that seek to apply blockchain infrastructure, distributed ledgers, information security, and crypto asset management services to a number of fields.

Fostering Pharma Communities

Despite these novel formats of collaborative drug discovery and the investors interested in them, until the legal status of DAOs is determined — in other words, ironically, until a project fundamentally built upon the principles of decentralization and deregulation can exist within a regulatory framework²⁰ — it is unlikely that DAOs will have a greater presence in the pharma landscape, or that their existence at the periphery of pharma will affect how the industry at large will continue to operate strategically, legally, or financially.²¹ If the pharma industry is to incorporate elements of more open collaboration, it will have to be companies themselves that foster this method of community building from within. Today, RoosterBio is the first life science industrial to use crypto technologies to transform the power of community and cultivate value in individual contributors.

RoosterBio’s new Club RegenMed initiative is an industry, educational, and networking community for customers and connections who are interested in advances in regenerative medicine and human mesenchymal stem/stromal cell (hMSC) research. A core part of the club’s activities will be holding virtual roundtables covering topics central to advanced therapies, including cell and exosome product characterization, manufacturing scale-up, QC release, and entrepreneurship. To generate interest and build a community where members are not just onlookers but engaged participants in the discussion, the RoosterBio team is offering NFTs as membership tokens, which are free for anyone who requests one. The tokens offer members more opportunities for participation in the community — while any interested party can attend their virtual roundtables, token holders will be able to drive discussion topics and network with one another in person at RoosterBio-hosted events.

The two creators and leaders of the initiative, RoosterBio founder and Chief Product Officer Jon Rowley, Ph.D., and Product Specialist Trey Picou, Ph.D., have a deep appreciation for both the promotional potential of NFTs as utilized by major corporations and an understanding of Web3 and the importance of engaged communities and user-generated value. While the club is primarily focused on regenerative medicine, the enthusiasm surrounding NFTs brought the club a diverse and enthusiastic group of early adopters who now also look to Rowley and Picou as leaders in launching NFTs from within a non-crypto-native company and into a non-crypto-native industry. Meet the creators of Club RegenMed and read about how they are leveraging NFTs to bring the regenerative medicine community together, now on Pharma’s Almanac.

NFTs and the Future of Pharma

The use of NFTs in pharma is only partially realized and still partly speculative. The blockchain technology on which it is based and its applications across the industry are still in their infancy. Moving forward, NFTs may continue to unlock new advancements in marketing, supply chain GMP, patient data privacy, collaborative discovery, and as of yet untapped niches in the field. If 2021 is to be remembered as the year that NFTs were introduced as a concept to the public at large,²² then in the following years we may see the further adoption and development of the technology to strengthen and evolve the pharma industry as we know it.

References

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