Cambridge Consultants creates blockchain-based platform to help manage drug costs
Development firm Cambridge Consultants has designed an open market trading platform for drug price negotiation that's based on a public blockchain.
The company says it's an effort to help fix the lack of transparency around how drug prices are set – that by creating a set of so-called smart contracts on the Ethereum blockchain, it will enable a trust-based mechanism for the trading of drug products as if they were commodities.
"Drug pricing in the U.S. healthcare system is broken because of the way the market is set up,” said Jaquie Finn, Head of Digital Health, Cambridge Consultants. "By moving to an open market that creates price competition and improves access, there is an enormous opportunity to fix it, providing the right technology is in place."
The platform uses a set of five smart contracts that sit on top of the public blockchain to enable and authorize trades, according to Cambridge Consultants. Beyond sell-side and buy-side contracts, contracts for sale and for products required, the trading platform also includes a smart contract for FDA approvals that automatically validates buy/sell orders, ensuring the products being sold have regulatory approval.
The goal is to harness the unique properties of the blockchain to create an open system where each stakeholder – from pharmaceutical and insurance companies to the individual patient – can benefit. By using a public blockchain rather than private ones that are often used in various healthcare pilots, the network aims to allow for more traders to have access, thereby creating more trust thanks to the distributed parties being involved.
By enabling transparent formulary design, pharmaceutical companies of all sizes can be listed on the exchange, according to Cambridge Consultants, giving consumers more choice and reducing the need to set high list prices – leading to lower out-of-pocket expenses.
"Blockchain is best known as the key innovation behind digital currencies, but the opportunity is to use it to build a trust fabric in any industry that requires the linking of large volumes of dynamic data while maintaining traceability – including in healthcare," said Finn.