June 2019, Volume XXXIII, No 3

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Blockchain technology

The future of medical innovation

igital finance is a rapidly evolving, disruptive technology incorporating elements effective for large-scale transactions in a globally integrated economy. The health care arena is particularly conducive to the concepts of “cryptocurrencies” such as bitcoin and the underlying technology of blockchain as an economic, integrative, and data management technology. Within clinical medicine, blockchain applications could address innovative—yet highly expensive—new therapies, unleashing potential advantages and creative economic opportunities. Large-scale financing of biomedical companies, drug development, genomic technologies, and molecular-based precision medicine will be greatly enhanced and accelerated by the opportunities and advantages of blockchain technologies and Initial Coin Offerings (ICOs) of cryptocurrencies.

A blockchain primer

This revolutionary technology is currently disrupting whole industries, offering unparalleled levels of both hope and hype. Simply referring to blockchain can skyrocket valuations of a company; Long Island Iced Tea, now Long Blockchain Corp., increased 500 percent in one day. The largely unregulated and dynamic blockchain industry currently holds a market valuation of around $250 billion. (U.S. individuals or businesses that use virtual currencies to pay for goods or services, sell or exchange them, or hold them as an investment may incur tax liability.)

But blockchain is about much more than the financial world. Blockchain may seem abstract, but it is tangible and easily applied to solve numerous problems. The point of blockchain is simplified, efficient, and secure data storage. At a micro level, a blockchain is simply a series of “blocks” linked together, thus forming a “chain.” A block is generally a data container that holds a record of recent “transactions” and a reference to the block before it. These blocks of information are then validated, linked to the other blocks, and put on the public ledger—the “blockchain.” From a macro lens, it is “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but literally everything of value,” according to Don and Alex Tapscott, authors of “Blockchain Revolution.” It provides an unalterable, distributed ledger system that may be used for the tracking of any sort of “transaction” across systems.

Users—individuals, governments, companies, or a combination of actors—can see the past and present conditions of whatever they are tracking without the need for “independent” verification by an intermediary. Further, this information is independently verified by an additional layer of processes.

When combined with artificial intelligence (AI) and Internet of Things (IoT) devices, blockchain provides a thorough and effective analytic system that is unparalleled in comparison to other current technologies. Each element works together to integrate systems, collect and analyze information, and make decisions. Blockchain technology is decentralized, trustless/peer-to-peer, immutable, and transparent.

The core of the distribution ledger technology, which underpins blockchain in the broadest context, is that it induces trust between parties, in the absence of a central core such as government. This is accomplished by ensuring that information cannot be unilaterally altered nor manipulated. Once smart contracts are added to the equation, which are already being given recognition by the courts, these trustless systems offer unparalleled capacity for parties to engage with each other with minimal interaction or prior connection.

Blockchain approaches are highly applicable to the current realities and needs of precision medicine.


People frequently conflate and/or confuse blockchain and cryptocurrencies. Bitcoin, perhaps the most commonly known cryptocurrency, utilizes blockchain technology and can be thought of as a blockchain application. Consider blockchain as the base technology, and cryptocurrency as the tokenized, monetized entity that is used to pay for and power the infrastructure of the overall network, incentivize users to employ a specific network, and play a role in transaction validation based upon governance structure. The creator of bitcoin, an anonymous user known only as Satoshi Nakamoto, announced the release of an “electronic cash system that uses a peer-to-peer network to prevent double spending” in late 2008. With this, Satoshi created a digital currency. Unlike the U.S. dollar, bitcoin does not depend on a central authority for governance. It relies instead on mathematics and cryptography to encode and thus enforce its rules, creating a trustless system that is recorded on a decentralized blockchain ledger.

People also frequently mistake bitcoin with Ethereum, a separate dominating cryptocurrency that serves very different functions. Bitcoin can be thought of as a stable commodity like gold, a store of value. Ethereum currency—Ether—is a commodity like oil or gas, a usable fuel that powers processes. When you buy Ether, you are in theory buying computational power on its platform to run programs and complete processes, such as smart contracts, as well as decentralized applications (dApps).

Blockchain “contracts”

Ether is the “what” or the currency that enables you to get things done, and smart contracts are the “how” or the means by which things get done. Smart contracts enable the direct and almost instantaneous payment for services upon their completion. Contracts may be written with terms that are met and validated in real time, until the fulfillment takes place and the pre-decided transaction completed. Using the Ethereum platform, programmers can create their own dApps and projects that run on their own currency. Thus, you can view the Ethereum platform like the internet, and dApps as websites that run within the framework. dApps frequently utilize their own tokens, further increasing simplicity and integration as well as token-specificity, accounting for execution of specific commands within smart contracts. These commands are defined by the Ethereum-20 token governance protocol, which applies to specific dApps and their functionality.

Tokens, whether on the bitcoin platform or created independently, are sometimes also referred to as “altcoins.” In fact, all non-bitcoin cryptocurrencies are generally classified as an alternative coin or an “altcoin.” Altcoins have varying purposes. Altcoins range from “joke coins” like Dogecoin to coins with real world applications, such as Ripple, a coin designed for money settlement and remittance payment.

Tokens also allow blockchain companies to finance in a completely new way. ICOs have taken the space by storm—jointly bringing in over $6.8 billion in 2017. They are known as the cryptocurrency variant of crowdfunding, and they operate in a similar manner. ICOs allow blockchain companies to raise money efficiently and effectively for projects (usually in bitcoin or Ethereum, which offer liquidity) from investors who get tokens from the platform in exchange. These tokens are not equivalent to equity, but still offer potential for strong short- and long-term return on investment. On the other hand, these investments are highly speculative and carry a higher risk profile. Because of the regulatory inaction as of yet (which may soon change), as well as regulatory uncertainty (as ICOs span national borders), there are few laws to protect consumers from bad ICOs. In fact, current regulation leaves room for ICOs to get around barriers to entry by labeling themselves as “crowdsales” or “donations,” even if this designation does not reflect reality.

There have been recent talks about labeling various cryptocurrencies as securities and requiring ICOs to register with the U.S. Securities and Exchange Commission (SEC). This has been put on hold, however, and, even if done, not all ICOs (as defined by functionality) would be categorized as an investment in a security. In every case, investors must conduct thorough due diligence and tread carefully.

Many use-cases for blockchain projects exist; however, some of the most promising use-cases on the horizon are in the field of medicine and health care.

Each year, 800,000 people die worldwide due to complications from taking counterfeit drugs.

Precision medicine and why it should be on the blockchain

Blockchain opportunities in the clinical setting focus on rapidly advancing yet expensive diagnostics and precise therapeutics not currently integrated into third-party private or public reimbursement programs. Health insurance has not prepared for the economic implications of advanced stem cell (iPSC) therapies, CAR-T cell applications, and the introduction of molecular medicine developments involving gene editing technologies such as CRISPR and TALENs. In many cases, costs are several hundred thousand dollars per treatment and exceed available patient resources. Genomic diagnostics and multiomic-based precision medicine involving potentially thousands of biomarkers (genomic, proteomic, metabolomic, epigenomic, and microbiomic) also may not be covered by traditional financial reimbursement schema.

The advent of genome editing treatments for degenerative neurologic diseases (Huntington’s, Parkinson’s), various forms of dementia, single-gene Mendelian disorders, and individualized molecular and cellular cancer therapies will further challenge current financial mechanisms for health care reimbursement.

Current approaches to health care costs impact the introduction and development of innovative clinical advances—and blockchain could help. New concepts of cost sharing, peer-to-peer economics, and blockchain approaches are highly applicable to the current realities and needs of precision medicine. Many of these technologies are emerging from the private sector, which needs innovative financial investment, increased data security, and verification tools. These will also generate new applications of blockchain to address the issues of cost containment, and allow the intrinsic value of their data to underwrite cost reductions for their products.

One potential example would be long-term, multi-patient clinical research studies involving complex, multifactor studies of newborn infants, followed over many years to identify and characterize the determinants and financial challenges of adult-onset disorders.

Clinical implementation of these advanced procedures will, by necessity, require a global effort incorporating private and public sector advancements in ways that previous medical endeavors have not. Blockchain is particularly applicable to this aspect of development, incorporating financial realities with the required data security and verification elements.

One particularly interesting example that addresses many aforementioned concerns comes in Nebula Genomics, which is in the realm of genomic sequencing. Companies like 23andMe and Ancestry.com offer well-marketed, popularized genetic data services for individuals; however, they are encountering worrisome problems, more specifically related to sequencing costs, data protection, data acquisition, and the memory cost of genomic “big data.” With these challenges in mind, Nebula Genomics is innovating and enabling the enhanced commercialization of genomic sequencing.

How? It all involves their nebula token economy. Through token incentives and pay schemes, individuals will have their genomic data subsidized by buyers in the research or pharmaceutical industries, lowering the cost of sequencing. In fact, after some time, individuals should actually be able to make money from their data through this licensing process. The data is safe because of memory-efficient encryption, which minimizes the data footprint while keeping it secure, accessible, and available; further, the system will keep sellers anonymous while making buyers completely transparent. Individuals have complete control over who can use their data and how they can use it, so they have peace of mind. Blockchain smart contracts are integrated so that whenever users make the decision to sell their data, payment is instant, as is the transfer of data to the end-user, creating a win-win for researchers and individuals alike. The lowered sequencing costs and benefits will incentivize more people to sequence their genome, thereby cyclically growing the data marketplace. Comprehensive datasets are created anonymously through smart surveying tools and AI.

Blockchain could be used in many instances across the clinical care cycle to solve issues ranging from data access to data security to product verification/reliability and more. One of the most intuitive (and thus most common and wide-ranging) health care applications relates to digitizing and sharing of health records. Currently, patients’ health records are fragmented across the health care system; further, even if effectively shared, data hygiene is a consistent problem due to frequent changes to patient identifiers (e.g. name, address, insurance policy). If comprehensive, quickly accessible health records were available, effective health care provision for everyone, from doctors to insurance companies, would increase exponentially. Blockchain solutions aim to create a Master Patient Index (MPI) that could safely and securely enable the sharing of health information in a streamlined system, even enabling patients to set “permissions settings” for their data. You could let a designee have access to your entire file, while ensuring your ophthalmologist wouldn’t be able to access your sexual health history.

An MPI that includes one’s genomic data provides many possibilities for patients. One example is the option to sell one’s genomic data (or demographic, fitness, nutrition, or innumerable other kinds of personal data) for scientific research or other purposes. This could help solve the massive patient recruitment and retention problem impacting clinical trials: over 50 percent of trials are delayed, 30 percent of successfully recruited patients drop off, and 85 percent fail to retain enough patients to continue. Further, for trials that do complete, 80 percent are delayed by at least one month. At an estimated cost anywhere from $600,000 to $8 million per day for trials, the waste of time and money is substantial.

Genomic data, quickly available, could help identify patients who not only qualify for clinical trials, but would benefit from participation. Genomic information could also enable machine learning applications that use these diverse, wide-ranging data sets to show the positive or negative health impacts of specific behaviors, genomic traits, biomarkers, or other personal identifiers. This, in turn, would allow doctors and patients to attempt to alter behaviors for positive health outcomes or to monitor certain aspects of their health that appear to be at risk.

One example of this is related to precision medicine, an emerging field that combines robust and comprehensive data sets of multiple natures over a patient’s life-cycle to determine likely health risks and outcomes. However, the personal sale of genomic data raises some ethical concerns—and requires further verification within service providers’ dAPPs to ensure that people do not provide untrue information to attempt to make their own data more valuable.

The use of blockchain to minimize and eliminate fraud is also promising. Each year, 800,000 people die worldwide due to complications from taking counterfeit drugs. The pharmaceutical industry suffers an annual loss of up to $200 billion because of the production and sale of fake drugs. Blockchain has already been widely used across the supply chain to verify everything from designer handbags to luxury alcohol brands, so its use in verifying manufacturing materials, date, and location is certainly possible. The Chronicled Smart Supply Chain Platform has teamed up with The LinkLab to work on the MediLedger Project. This project was designed to comply with the U.S. Drug Supply Chain Security Act and GS1 Standards, while also being interoperable for the most efficient and effective practical application in the pharmaceutical industry. It aims to improve the track-and-trace capabilities for prescription medicines, from raw materials sourced and used to temperature during drug transport to countless other aspects across the supply chain. Supply chain components that were once unlinkable can now be connected. The open network allows full privacy and protection of business intelligence, while still allowing for the necessary levels of verification and reporting across the supply chain. For the end user, it allows identity provisioning, app-based verification, and counterfeit product fraud reporting integrated with law enforcement.

Also related to fraud is billing and claims for health insurance. Smart contracts could be instated that automatically link satisfactory completion of a procedure with billing to create a seamless transaction for clinics and patients. Further, blockchain could be used to double-verify patients’ treatments in clinics to ensure insurance claims are both real and accurate. Blockchain-based double verification would help insurance companies verify claims and ensure that patients and care providers are on the same page before bills come back in the mail. SimplyVital Health is a company that is already doing this. They are seeking to increase the level of security and transparency throughout the entire clinical cycle of care. More specifically, SimplyVital Health is challenging the status quo of the reimbursement and billing process. ConnectingCare centralizes different medical organizations onto a single platform. Here, records are shared across the network for shared patients, enabling better communication and more synergistic collaboration for treatment. Further, embedded algorithms utilizing AI analyze financial and clinical data to provide actionable suggestions for treatment to optimize cost and patient outcomes in real time.

The idea is that providers both can and must work together to minimize cost and duration of care for the patient. For example, in the modern context, orthopedic surgeons and physical therapists are relatively disconnected, resulting in wasted money and time for both patients and the entire health care system. The ConnectingCare system aims to prevent that by tying reimbursement to variables like patient outcomes and cost, as well as interoperability and coordination between providers, monitored by an audit trail. Thus, the system drives providers to collaborate in the patient’s best interest and focus on results and patient follow-up. Further, by examining the patients’ treatment and results, the system can suggest beneficial paths of treatments for the same individual and other individuals thereafter. Interestingly, another SimplyVital Health product, the HealthNexus data validation and governance protocol, which utilizes Ethereum’s system to safely share health data, is the first health care blockchain protocol to be HIPPA-compliant.

Summing up

Health care finance and innovation implementation are facing an economic paralysis as a consequence of factors such as accelerating technological advancement, population growth, governmental and regulatory changes, decentralized markets, and a critical need for transformation of capital services. In addition, rapid accumulation of digital content, data storage limitations, data verification and security issues, developments in AI applications for clinical medicine, and rapidly evolving legal and ethical issues regarding emerging biotechnologies all make blockchain-based technologies exciting opportunities to address challenging issues effectively and concurrently.

David R. Brown, MD, FACE, is senior vice president of biomedical innovation at DHB Global.

Joey Wilson, MS Tsinghua University (global affairs), is a DPhil candidate at Cambridge University (Oncology).

Charlie Hu, MSc Neyrode Business Universiteit (financial management), is Chinese blockchain advisor and cofounder of the DAOONE Blockchain Community.

Douglas Corley, BSc Creighton University (biological sciences), is CEO of DHB Global. 


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© Minnesota Physician Publishing · All Rights Reserved. 2019


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