Episode 95: Data, Trust and the Pharmaceutical Value Chain

Jon Prial: How's this for a pretty serious problem? Counterfeit drugs kill over a million people a year, costing the industry between 100 and$200 billion. What to do? Let's start with the data, shall we? Today, we're going to be talking about the pharmaceutical supply chain and the work that one company is doing with data to fix these problems. The story has lessons for us all around business development, transparency, trust, and building a powerful solution. It's going to be a great show, so stick around. I'm Jon Prial, and welcome to the Georgian Impact Podcast. So today with me is Shabbir Dahod, president and CEO of TraceLink. They're located outside of Boston. We're glad to have you with us today.

Shabbir Dahod: Yeah, glad to be here.

Jon Prial: What don't you tell us a bit about how TraceLink came to be?

Shabbir Dahod: So what we did was back actually in 2009, when we started the company, we saw that there was this significant issue with transparency in the pharmaceutical supply chain that caused counterfeit drugs to be introduced into the supply chain. And those kinds of drugs were killing over a million people a year, costing the industry anywhere from a hundred to$ 200 billion a year in revenue. And so what we did was we basically leveraged the technologies of today, have to do with the cloud and with a architecture that could build a network that could spend globally to basically create information exchange and transparencies so that we can know that authentic products are getting to the patients.

Jon Prial: Perfect. So yeah, there's a lot of ways we can go with this discussion and regulations. Obviously, there's a lot of standards, work that needs to be done, but I'd really like to spend some time and dive into what it takes for a company to build a valuable dataset, as well as all these valuable relationships that you've built across at ecosystem. I think that will be most interesting to our audience. So one piece just to get it started, so this big overarching market where we're protecting people, the ones that are getting the drugs and the pharmaceutical companies delivering the drugs, it's called Global Track and Trace. Could you just give me a 30- second definition of what that is?

Shabbir Dahod: So it's basically the ability to have a product that has a unique identifier. That says that if you took five bottles, each one had a different ID on it, and the ability for the pharmaceutical companies to create products with those IDs, and then the information about those products as they exchange hands through the supply chain, the information is exchanged with it. And so tracking and tracing is the ability to maintain the information history of a product as it moves through the supply chain.

Jon Prial: Now, I'm not sure how many people have this deep information management knowledge, I'll even say old school information management knowledge, but as I look at what you've done, is it fair to categorize what you've created as a multi- company master data management solution?

Shabbir Dahod: That's absolutely right. It's not just multi- company, it's industry- wide. And so what we do is that we create a master data solution. You can think of it as an industry ERP that interconnects all the way from the suppliers, which are contract manufacturers, through pharmaceutical companies, interval wholesalers, 3PL distributors, pharmacies, all the way down to the patient. And so we maintain a single master data of the products and the exchange of information that flows through each of the different entities through a network that we manage on a global basis.

Jon Prial: Perfect. It's often the old school thinking of MDM, it was helping a company get its internal data house in order, whether it was product or customer, but this really is taking it to the next level. This is really next gen MDM. So what type of data do you collect?

Shabbir Dahod: Through our customer base, we collect everything that starts with the actual definition of the products. As you know, MDM is a significant challenge for any one company, it's even a larger challenge for the industry. So we maintain the master data of all the different products that are available throughout the world. We also then, as the products are created, we know the serial numbers that are on those products. So we know the information at the very specific itemized level. And then as those transactions occur between the entities, whether contract manufacturers, the pharmaceutical industries, we exchange the information and manage to maintain that information for each of the entities on the supply chain all the way through the supply chain. So you have a combination of the master data, which has not just the information of the product, but the partners that are your suppliers and your customers. But then we also have the information about the individual products. And then we also have itemized individual entities, as well as all the transactions that occur to that product through the supply chain. That's why you can think of it as a industry- wide ERP.

Jon Prial: Interesting. So let's step back a bit to get to start it. I mean, this is a huge flywheel. How important is it to network effects, or what does it really take to get this flywheel going?

Shabbir Dahod: So what we did was we really analyzed how is it that other networks got started. And if you think about it in the social media context, it really started with individuals or organizations that had tremendous connectivity to them. So whether it was a star that joined Twitter or a particular Facebook college that joined, that attracted other people to also join and other colleges to join. So you look for what we term as centers of gravity, and obviously the major centers of gravity within the pharmaceutical industries, were the largest pharmacy companies in the world. So we targeted them because they have many, many products. They have many, many suppliers, they have many, many customers, and they have it at a global level. So we were very fortunate that we were able to get 17 of the top 20 pharmaceutical companies to become our customers, and then we also then from there got all the major contract manufacturers to become our customers. And then that's how the flywheel started because we sold to each one and then the wholesalers joined in and then hospitals joined in, and then we were able to now create a virtuous cycle.

Jon Prial: So to get started, to make those first calls, you had to really talk about your infrastructure, privacy and trust. How comfortable were you back when all this started, and where are you with that today?

Shabbir Dahod: We were actually very shy about talking about the cloud back in 2009, because you have to remember that people associated Amazon with bookstore. AWS was not a term that was really well understood, or people were even confused by the fact that why would a bookstore have a computing platform left for sale or utility. So we were initially a little shy to talk about it, but then what we realized is that when we actually reached the CIO level of these top four or five pharma companies, this 15- person company actually became legitimized because once they understood that it's not them that's going to build the infrastructure, but they're going to leverage an infrastructure like AWS, which is significantly larger than any infrastructure they would ever imagine themselves having and the fact that that particular infrastructure is what was required for the massive volumes of data and the massive connectivity across the network, it actually became obvious to them that they should move to the cloud. And again, by getting some of the first and most major companies to make that transition, then they became a beacon for everybody else in the industry.

Jon Prial: I can't even imagine that conversation with a CIO is saying," Oh, by the way, you see your data center that you spent your lifetime in the past 10 years working on? Yeah, it's kind of a little small now."

Shabbir Dahod: Exactly, exactly. Because when you think about it, let's say a major pharma company may ship a billion units a year, and then they have to maintain that data for nine to 10 years. So that immediately becomes 10 billion records. Each of those records then has information flowing just within their own supply network of about 10 events inaudible. So now you've gone from a billion to 10 billion, to a hundred billion records that have to be managed and maintained and queryable in case the FDA says, " Well, we think there's a suspicious product in the supply chain. Can you tell us information about that specific item?"

Jon Prial: So let's continue down this path. Let's just scale. That's an enormous amount of data. So how much of what you capture is really static than transactional, versus some of the real- time movement of product to this network?

Shabbir Dahod: Oh, I would say the majority, 99 plus percent, is movement. So it's events on products as they go through their life cycle, through the supply chain and all the different parts of the supply chain. And then it's that time series information that accumulates across the whole industry. And that becomes a very valuable data set that is all canonicalized for us across the whole industry that now becomes a valuable resource for the industry to leverage beyond just preventing counterfeit drugs.

Jon Prial: Let me do some more basics on protecting the products here. It goes back probably to the days of the original Tylenol disaster and those anti- tampering devices. Are you focused at the bottle level, the wholesale replacement theft pill? What are the different types of problems that are being solved here with this massive dataset?

Shabbir Dahod: It is the individual salable item. So it's at the bottle level that either goes into the pharmacy or out to the patient. So for instance, in the US, usually, it's into the pharmacy, and then they take pills out into brown bottles. So it's the bottles that go into the pharmacy. In the EU, 90% of the products are actually in the form factor that goes to the patient. So there's a seal number, unique identifier on that particular package that uniquely identifies that individual package by itself.

Jon Prial: And when will we get to the point where RFIDs are on each bottle? Are we going to get to that point as we think about the internet of things?

Shabbir Dahod: Yeah, they're... Actually, when we started the first company that was in the space and supplies scape, and that was back in 2003, and we actually started with some of the work that was being done at the Auto- ID labs. So the term the internet of things was actually coined back in those days at the Auto- ID lab. So we were very much still understand how this fits in because the whole concept is that barcode that's on the product can now be physically tied to a network, which is TraceLink, to now verify and track that product as well. And so it's just that the carrier is not a RFID because it was just too expensive for the industry to put that on the majority of the products that are in the supply chain. There are some companies that are putting RFID tags on the products or on the cases in order to track them because they see business value in doing that, but it's not necessary in order to meet the legal requirements.

Jon Prial: Right. Because what made me think about it is we... I'm not really sure where it will end up landing. I know when this first came out, and I forget I met them in a Walmart that was putting RFIDs on pallets, for example, and there were scanners coming into the warehouses. Then they were talking about putting RFIDs on things like razor blades, and their cheaper solution was to put the razor blades behind a locked case in the CVS so that they never really got to that level. So you don't see this happening in the near term as well, in the pharmaceutical world as part of that inaudible?

Shabbir Dahod: Oh. it does happen actually. Some of the razor blades and the p... If you actually look at some of the bottles that you purchase where there's nutraceuticals and so forth, you will see an RFID tag on there. You'd be surprised how many things are actually RFID tagged to the consumer level. And there are companies that have very high value products that they will put RFID tags on it, and they'll also put very expensive, active tags on it to measure temperature and humidity and vibration as well. And so it all depends. It's an option, and it's usually driven more by business value than compliance requirements, but you'd be surprised how many items actually do have RFID tags on them.

Jon Prial: That's very cool, and it's just more data for you, and obviously it's just a matter of the right interfaces and sucking in the data. So that's very interesting, that's cool. In terms of the value, obviously it starts with this massive data set that you really collected here. What ends up in terms of the number of solutions that you want to continue to deliver to your customers?

Shabbir Dahod: We think that there's not just dozens, but hundreds of solutions that we can bring to market that spend everywhere, obviously from the continual safety of the patients, whether it's recalls, adverse events, management and so forth, where if you are taking a particular product, and you're getting an adverse event and that wasn't really the product, wasn't the conditions under which it was held. So do you want to do a trace back of that product and understand exactly what occurred to tie that with the patient? Then you also have financial because now that you have a specific product, oftentimes in the pharmaceutical industry, products are sold at different prices to different entities, that also occurs in the consumer world. And so what you can now do is have a perfect reconciliation of the product to exactly whom you sold it to so that if you take a return, you have their exact credit. If you do a contract management on that particular product down to the endpoint, you can have verification of those transactions and make sure there's fidelity and no fraud going on. You also have the ability to do better inventory management across the industry, and to prevent out of stocks. It keeps going on and on all the way down to things having to do with connecting the patient and the devices the patient has on them to then tie that to the particular product and the regimen they're taking and the outcomes those are being tracked. And so there's a range of different solutions that we will be bringing to market, but ultimately, our approach to that is to really continue to create an open platform where we can enable not just us to build solutions for the industry, but to also allow our customers and third parties to also build solutions on top of our platform with the data side.

Jon Prial: That's great. It's amazing the richness of what you can do once you've got this built. As you think about talking to your partners and bringing third parties in, then let's go back a little, one more time and talk about trust. And you're obviously selling trust to your customers. Have you seen them yet sell trust downstream to the end users, is that beginning to evolve?

Shabbir Dahod: I think it's just starting in the conversations at this point, but I think ultimately, the main reason why pharmaceutical companies are doing this is that they want to be the trusted company that secures the product all the way down to the supply chain. And that goes for every entity that participates all the way through the supply chain. And I think that eventually, the consumer will need to be able to scan that product and be able to pull down the full trace history of that product and all the attributes of that product. And that's really creating the trust bond all the way down to the patient as well.

Jon Prial: Fantastic. And we just had a conversation, and you didn't use the term pedigree, and in all my readings, the word pedigree seems to be one of the hot words. Is it no longer a hot word, is it just something you don't use often?

Shabbir Dahod: Well, the thing is that the industry moved from that definition. So just to give you a little history lesson, if that is inaudible.

Jon Prial: That's very fascinating. No, please.

Shabbir Dahod: So the way this problem started was actually, there was some kind of drugs they had discovered in the 1980s as the pharmaceutical industry was actually still nascent at that time and growing. And so there was a law passed in 1987 called the Prescription Drug Marketing Act, which required that you maintain pedigrees of products all the way through the supply chain. However, this is prior to the internet, prior to SSL and all these other technologies. And so the only way to do that was in paper. And that was deemed as not feasible for another 15 years, and then in 2003 is when we came into the marketplace and we recognized that we can implement this electronically. And that's where we were working with MIT, and then we demonstrated how you could do that electronically to the FDA. We then implemented a pedigree solution in a prior company called Supply Scale that implemented those laws. As time moved on, the industry refined those laws and regulations, and then moved to a new terminology, which is really about transaction histories versus pedigrees. They're more or less synonymous, but that's kind of a bit of a history lesson.

Jon Prial: No, that's very cool. And it since we're playing fun with words here, let me do one more as we wrap this up. So at the peak earlier this year, in company quarterly reports to the public, blockchain was mentioned 173 times. And since now, this last quarter, the number's fallen by as much as 80%. So we'll see where this goes. From your perspective, would you see a technology like a blockchain helping out?

Shabbir Dahod: Oh, definitely. We're actually working on a solution right now. Actually we think this is the right time to enter the market as we go through, as you know, the Gartner Hype Cycle. We go from... We're now approaching the trough of disillusionment, which is exactly the right time to enter the market. We got the real solution and a real practical approach. And we'll be introducing it in Q1 into the marketplace, and we think it's a very applicable solution, leveraging blockchain in the pharmaceutical industry within our platform.

Jon Prial: That is fantastic, great insights, great input. Congratulations on building such a large data set and getting all these players together and where you see the value going. It's been a pleasure chatting with you, and look forward to seeing you again. Shabbir, thank you so much for being with us today.

Shabbir Dahod: Thank you very much for your time as well.