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Blockchain&Healthcare-2017StrategyGuide

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2017 Strategy Guide for the Pharmaceutical Industry, Insurers & Healthcare Providers

© Axel Schumacher, PhD

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

The healthcare industry needs a revolution – and it is here now. Trusted and open R&D processes, auditable & secure transactions between parties, authenticated by mass collaboration and powered by collective self-interest, rather than by fewer and fewer pharmaceutical giants motivated by profit alone. This healthcare ecosystem is immune to exorbitant drug prices, tampering, fraud, or political control. The name of the technology that makes all this happen is blockchain, a tool that will fundamentally change the healthcare sector. Blockchain will prove to be indispensable in building a global precision-medicine ecosystem that optimally connects patients, clinicians, researchers, insurers and clinical laboratories to one another. Blockchain will improve data security, data sharing, interoperability, patient engagement, big data analytics, health information exchange, fighting counterfeit drugs, R&D processes, AI-based diagnostics and fostering vertical business models. Compared to the financial markets, the healthcare industry’s participation with the technology remains in its infancy – but this can change now. This strategy guide may direct you in starting this process to transform ideas into profitable and ethical business models.

Keywords: Blockchain, Precision Medicine, Data Security, Interoperability, Supply Chain, Big Data, Artificial Intelligence.

Major achievements in genomics, stem cell science, bionics, drug development, information technology, and diagnostic technologies have enabled a new era of healthcare delivery and treatment. This era of precision medicine will deliver the most appropriate therapy to a patient based on clinical and molecular features of their disease. Yet, most healthcare systems are in crisis, due to prohibitive costs, limited access to care, unclear reimbursement models, patient safety, and quality of care. It is evident that healthcare must change, and insurers, healthcare providers, pharmaceutical companies and patients must be prepared to respond and lead. Building a new precision health ecosystem can be achieved through

innovation, and by combining accurate diagnosis, rule-based therapies with the latest technology such as deep learning and blockchain technology. Blockchain - What is it? In a nutshell, a blockchain is a distributed tamperproof database, shared and maintained by multiple parties that secures all records that are added to it. Each record contains a timestamp and secure links to the previous record. Records can only be added to the database, never removed, with each new record cryptographically linked to all previous records in time. New records can only be added based on synchronous agreement or “distributed consensus” of

Public Key Cryptography. An unpredictable random number is used to begin generation of a pair of keys suitable for use by an asymmetric key algorithm. Anyone can encrypt data (e.g. private health data) using the public key, but only the holder of the paired private key can decrypt.

Reinventing healthcare: Towards a global, blockchain-based

precision medicine ecosystem.

A comprehensive Strategy Guide

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

the parties maintaining the database. By cryptographically linking the records it is impossible for one party to manipulate previous records without breaking the overall consistency of the database. Such a process eliminates the need for trust because participants in the blockchain can have mathematical certainty for every digital asset that constitutes the system you want to protect. When storing healthcare data in a blockchain, cryptography is used for encrypting the contents of a message or transaction, so that only intended users can open and read its contents. The encryption process works via ‘Public Key Cryptography’ or asymmetric cryptography, an encryption system that uses pairs of keys. First, a “public key” may be disseminated widely to everyone and a “private key” that is known only to its holder. Either key may be used to encrypt a message, but the other key must decrypt the message. Practically speaking, there are two use cases involving public and private keys. A patient can encode her health data with a public key and be sure that only the holder of the private key can

decrypt it. Second, the data can be encrypted with a private key. If the data, e.g. a hospital discharge letter, makes sense when it is decrypted using the corresponding public key, it is guaranteed that the holder of the private key is the party that encrypted the data. Such a process is equivalent to “signing” a message because it is analogous to someone putting her unique signature on a document.

Blockchain in healthcare The potential uses of blockchain technology in healthcare are multiple; blockchain technologies have advanced and have matured to hold the promise to unite the disparate processes in the pharmaceutical industry and healthcare ecosystem, reduce costs, improve regulatory compliance, increase data flow, and improve patient experience and outcomes. Slowly but steadily, life science organizations are getting interested in this new technology. Even the FDA started to think seriously about it by partnering with IBM Watson to work on a secure, efficient and scalable

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exchange of health data using blockchain technology. In particular, the two organizations intend to explore the exchange of health information from several sources, such as EHRs, clinical trials, genomic data, and data from mobile devices and wearables. However, starting blockchain projects for large enterprise adoption from scratch is difficult; many problems from integration, scalability, and identity- and contract management to compliance issues exist. So, how to get started in real life without running into bottlenecks and burning hundreds of millions of dollars? To find out, I recently strolled through the new Microsoft offices in Munich, to find out what is new in the local Bavarian blockchain scene. That day Microsoft hosted the DX Blockchain Day, mostly to advertise their Azure Project Bletchley – Blockchain as a Service (BaaS) for Enterprise Solutions. Project Bletchley is a middleware toolset for developers that functions in the cloud, supported by Azure that offers off-chain data communication with audit applications, machine learning, etc. Middleware is a general term for software that usually sits between the operating system and applications on different servers and serves to "glue together" separate, often complex and already existing, programs. Some software components that are frequently connected with middleware include enterprise applications and web services. Middleware should be introduced into the healthcare IT ecosystem to supply enterprise grade services around identity, security, cryptography, scale, tooling, management, monitoring and reporting for both on and off the blockchain. Project Bletchley addresses those services while providing an open platform, ensuring crucial performance, scale, and stability. The new building blocks of Microsoft's blockchain technology are so called cryptlets, which function when additional information is needed to execute a

transaction or contract, such as date and time, enabling all technology to work together in a secure, scalable way. A cryptlet can act as a smart contract surrogate, code that captures an agreement. Basically, the cryptlet contains the smart contract and executes it on behalf of the transaction contained within the

blockchain. Who is more interested in cryptlets can look into a recent Microsoft white paper focused on this topic that goes in depth about how cryptlets operate and show how Microsoft intends how to address many of the challenges associated with smart contracts.

My intention was not to talk about Project Bletchley. However, Microsoft’s Blockchain day and the buzzing activity of the blockchain community and entrepreneurs in Munich indicate that the blockchain ecosystem matured to a point where the technology finally becomes interesting for application outside of bitcoin transactions. I’m sure, 2017 is the year

DX Blockchain Day in Munich attracted entrepreneurs and blockchain geeks.

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distributed ledger technologies can provide the next wave of innovation that streamlines the way healthcare businesses work. Other tech giants such as Hewlett-Packard, Samsung, Huawei, or Amazon will likely deliver their own functionality that addresses shortcomings in the current blockchain offerings on the market. Already, IBM offers the Bluemix platform-as-a-service offering, where developers can create and test a blockchain on the cloud. Although Alphabet has been surprisingly silent with regard to the blockchain space, it is likely that the company is also interested in providing Blockchain-as-a-service products. Microsoft’s approach, to provide a blockchain ecosystem to build real solutions addressing real business problems while keeping the platform open may be the tipping point – other tech giants will follow. On the other side of early-movers are startups such as Taiwanese DTCO, a company which is involved in technological applications, providing a blockchain ecosystem for many applications. DTCO specializes in supply chain tracking and tracing, and also in blockchain asset management. The emergence of that kind of blockchain ecosystems means that now, pharmaceutical companies can implement distributed ledgers to revolutionize the way transactions occur and the way information (e.g. genomic data of millions of individuals) is stored and processed. Blockchain technology will become a game-changing force in any place where trading occurs, where trust is at a premium, and where people need their data protected from theft and misuse. Pharma’s new strategic partner: Patients For patients, the decision to participate in a clinical trial is a complex decision and often requires weighing the pros and cons of potential medical benefit vs. the unidentified risks of side effects plus the time, effort and commitment needed to comply with the study protocol. The decision to participate in a trial increases if there is a proper incentive. One solution could be that patients become the owners of their data and of the R&D efforts to find a cure. What more incentive to make the whole process working and profitable do you need? Having a process in place that is based on such blockchain technology could help working towards value for patients as the overarching goal for health care delivery. Here, value is defined as patient-

reported outcomes (PROs) relative to costs, lifting the implementation of eHealth and empowerment of patients to be involved in their own care process to a new level. Such a process may represent the next step in cybersecurity evolution, focusing on the management of “digital identities”. Patients will be able to monetize their data, for example, by anonymously selling controlled access to their health data to pharmaceutical companies. There could also be blockchain-based vehicles for issuing new shares of stock.

There are also significant incentives for researchers, who can participate in the blockchain network as "miners". These researchers can obtain better insight in their R&D efforts by earning ‘census level’, anonymized patient or R&D metadata from the blockchain in return for contributing the computational resources that sustain the network. This opens new opportunities to observe wide-reaching patterns in drug development, while still preserving the privacy of patients and lowering the overhead associated with traditional clinical trials. In this way blockchain technology enables the emergence of new data economics between data producer and data consumer, as the system supplies information to empower researchers while engaging patients and providers in the choice of how much and which metadata to release. Because blockchains can remain private, networks of health care providers or

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pharmaceutical companies can decide on the proper process and qualifications for onboarding new research entities into the system. Such methods prevent rogue, unregulated entities from joining the mining network. With this incentive model, researchers can access a dependable source of census-level medical data, which opens an opportunity to observe wide-reaching systemic patterns in medical treatment while preserving the privacy of individuals.

Blockchain technology is ideally suited to address most trust issues, such as patient consent, unclear data ownership, data integrity, or user authentication, basically all areas where data is transmitted from one entity to another. Overall, many opportunities exist to, for example, increase revenue cycle efficiency, initiate patient profiling for population health, improve audit logging, enhance patient experience and satisfaction, offer patient data as a service, and - decreased opportunities for patient identity theft and insurance fraud. Data Security Health data security must remain a top priority for pharmaceutical companies, biobanks and CROs of all sizes. Here, blockchain technology will be used to solve identity issues, including the vulnerability of the company to cyber-attacks, securing valuable IP and patient data. Health data are an increasingly popular target for hackers and sometimes sell for more money than even credit card numbers in an increasingly sophisticated black market such as the dark

web or darknet, where such private information is sold and resold. The consequences of even a single cyber-

attack penetrating a network can be devastating, resulting in enormous losses. Obviously, there is a significant security risk associated with centralized ownership of medical records. Indeed, more and more high-profile cyber-attacks have hit companies in recent years, such as Quest Diagnostics which provides diagnostic services to millions of Americans each year. Only recently the company joined the list of health care companies targeted by hackers when it announced a data breach that exposed the health information of about 34,000 people. The intruders accessed a mobile app called MyQuest on Nov. 26 last year. Data accessed included name, date of birth, lab results, and, in some instances, phone numbers. Other data breaches were even bigger, for example, last year when health insurance giant Anthem, (the second largest health insurer in America) announced a massive breach that compromised the data of 78.8 million people. The attackers gained unauthorized access to Anthem’s IT system and obtained personal information from customers such as their names, birthdays, medical IDs,

social security numbers, street addresses, email addresses and employment information, including income data. The start of 2017 was not much better as Protenus, a company that monitors health data breaches in the US. The Protenus Breach Barometer is

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a monthly snapshot of reported or disclosed breaches impacting the healthcare industry. On average, every day there are breaches in healthcare systems, with the majority (59.2%) of breached patient records - 230,044 records (for Jan 2017) - were attributable to insider incidents. Moreover, take note – such breaches are very expensive. According to the 2016 Ponemon Cost of Data Breach Study, about $7 million is the average total cost of a data breach. In one costly example, the Children’s Medical Center of Dallas after multiple HIPAA breaches was fined early this year a civil money penalty of $3.2 million. It is evident that despite regulations like the Health Insurance Portability and Accountability Act (HIPAA), healthcare organizations still aren't doing enough to protect themselves from such cyber-attacks, and those companies quickly have to take steps to prevent similar incidents from happening in the future. One step in the right direction could be the decentralization of the health – and R&D data. In this scenario, patients will need to control their own data. Dr. Eric Topol, Founder & Director of the San Diego-based Scripps Translational Science Institute, calls patient data ownership a future civil right. Of

course, new rules and guidelines may be needed to help healthcare professionals to understand how HIPAA and EU regulations would potentially apply to blockchain technology. In particular, client information would need to remain secure through any data transfer process, even across regulatory borders. Although 100% crime prevention is impossible, using blockchain, we gain now the possibility to have full detection, accountability, and audibility across highly complex systems. It is clear that a blockchain ecosystem needs the necessary physical, technical,

and administrative safeguards to make all processes possible. The best way to implement those components is probably through learning by doing. One organization that did the first step is the Beth Israel Deaconess Medical Center in Boston, a teaching hospital of Harvard Medical School. The center made blockchain technology a working reality by implementing a system called MedRec, a platform for managing medical records that use the Ethereum blockchain, a decentralized platform that supports applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. The MedRec software was developed by MIT researchers Ariel Ekblaw, Asaf Azaria, Thiago Vieira, and Andrew Lippman. At the Beth Israel Deaconess Medical Center, the software is helping users assign specific permissions for access and sharing according to their preferences. For example, healthcare providers can add a new record associated with a particular patient, who – in turn - can authorize sharing of records between providers. The party receiving new information gets an automated notification and can verify the proposed record before accepting or rejecting the data. This process keeps participants informed and engaged in the maintenance and accuracy of their records. The software achieves this by linking access to the patient’s medical records across the variety of their provider’s databases. By functioning as an interface between siloed health records, it also has the potential to include personal sources of data, for example from wearables or from genomic analysis with external service providers. MedRec stores all the contract data structures on the blockchain and associate references to disparate medical data with ownership and viewership permissions and record retrieval location, providing an immutable data-lifecycle log, even enabling later auditing, which is of increasing importance in regulated environments. The raw medical record content is never stored on the blockchain, but rather kept securely in the providers' existing data storage infrastructure. One advantage of such a system is that different parties can leverage the smart contract feature in blockchain technology that allows to specify policies how to handle the data. A policy can be designed to implement a set of rules

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which govern a particular medical record, for example, a policy may enforce that separate transactions representing consent are sent from both patients and healthcare provider, before granting access to the medical record to a third party. For more details find a MedRec whitepaper here. One thing is clear; blockchain is potentially extremely secure. A mathematical theorem, the Byzantine Generals Theorem, proves that it takes a coordinated attack between at least one-third of the nodes in the chain to successfully break a blockchain network. It does not guarantee 100% security, but to attack the blockchain itself successfully requires orders of magnitude more time and resources than most other security measures. Given the sensitivity of health data and the need for each interaction with data to be appropriately controlled and consistent with rules, it becomes clear that any medical ecosystem needs a clear audit trail for data that is nearly impossible to tamper with. One company that uses blockchain technology to make auditing task easier is the startup Factom. The

company provides solutions that help organizations to secure and share their data, for example by converting document management solution into a blockchain based document platform. Such a process eliminates lost documents, reduces audit time and prevents costly disputes.

Recently, the company signed a deal with HealthNautica, a US health data software provider to secure documents which range from medical bills and client-physician communications to claims and disputes, thereby guaranteeing the authenticity of a sequence of events. Factom also builds applications on top of their Factom network, which can be used as a public utility. These applications leverage the

MedRec Architecture. Data entry begins with a physician adding a new record through the MedRec Provider App. The information is stored in the provider's existing database system with a hashed reference to the data. Appropriate viewing permissions is then posted to the blockchain through an Ethereum client and library of backend APIs. The patient can anytime retrieve and download this data from the provider's database, after the database gatekeeper checks the blockchain to confirm their access and ownership rights. The miners for MedRec are researchers who are rewarded with access to census-level data of the medical records.

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immutability of the blockchain and the scalability of the Factom network. Even some of the big tech giants think in this directions. For example, Google subsidiary DeepMind Technologies is undoubtedly convinced that technologies closely related to blockchain are essential for creating confidence in a healthcare ecosystem. DeepMind’s healthcare division is working on a product, DeepMind Health, which blends blockchain technology with more traditional data auditing techniques. Here, instead of a decentralized ledger held by multiple parties that must all approve the system's transactions, their team is planning to use a single ledger and decision tree structure that guarantees a tamper-proof, trusted audit trail. Like blockchain, DeepMind’s ledger will be ‘append-only,' meaning once a record of data use is added, it cannot later be erased.

Also, similar to blockchain, the ledger will make it possible for third parties to verify that nobody has tampered with any of the entries. The difference to classical blockchain is that no decentralized miners will verify the blockchain, but rather ‘trusted’ institutions, for example, hospitals or national bodies which can be relied on to check the integrity of ledgers. In this way, some of the wastefulness inherited in the blockchain

technology, and hence costs can be avoided. It is the goal of the company that their system will allow continuous verification of their platform, enabling healthcare providers to easily query the ledger to check for particular types of data use. Additionally, tree-like ‘blockchain’ should allow partners in the blockchain to run automated queries, effectively setting alarms that would be triggered if anything unusual took place, even checking the data processing itself, such as individual patients or patient groups. For technical details see the open this article explaining how it could work. Healthcare providers interested in blockchain technology may want to be aware of National Institute of Standards and Technology (NIST) standards, guidelines, and supportive documents to be up to date with the most current healthcare data encryption standards.

NIST develops guidelines for healthcare providers to help assess risk and then implement architectural strategies that allow organizations to decrease vulnerability and protect health data and information. NIST recently released a draft of updating standards (NISTIR 7977), which address the importance of encrypting sensitive data by transforming it into an unintelligible form until a recipient with a private key can unlock the information. The primary stakeholder of NIST is the US government. However their work is also of interest to the public and private sectors. Nevertheless, the industry should play a central role in developing new and improved standards and guidelines that can be used to secure blockchain health information systems. Overall, any security measures, such as healthcare data encryption or blockchain technology, may help healthcare organizations to confidently use novel technologies while knowing that PHI is being secured. Medical Devices & IoT The relationship between people and machines will change radically over the next years, in large part because of the adoption of small medical devices and Internet of Things (IoT) applications. So far, most

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mobility approaches do not provide a solution that simultaneously fulfills security needs while enabling mobile access without causing privacy and usability

concerns with their end users. Blockchain could support IoT applications by facilitating transaction processing and coordination among interacting devices and downstream analytical processes. For example, blockchain can make it easier to synthesize data from IoT devices for chronic disease management, remote monitoring, or patient-provider communication, enabling fee-for-value systems. Portable biosensors and health apps provide useful information for monitoring personal activities and physiology and will play an important role in managing health and enabling affordable health care. A blockchain can collect information from those mobile applications, as well as sensor technologies in fitness trackers and other wearables and integrate it through representational state transfer (REST) application programming interfaces (API). RESTful API’s, who are quickly gaining traction in healthcare Bio-IT, are methods of allowing communication between a web-based client and a server, making use of standards, such as HTTP (most widely used), URI, JSON, and XML. Interoperability is increasingly supported by FHIR (pronounced "fire") standards. FHIR stands for ‘Fast Healthcare Interoperability Resources’, a draft standard describing data formats and elements and an API for exchanging Electronic health records. The standard was created by the

Health Level Seven International (HL7) health-care standards organization and facilitates interoperation between legacy healthcare systems, to make it easy to

provide healthcare information to healthcare providers and individuals on a wide variety of devices from computers to tablets to cell phones. Using blockchain-supported wearables would be particularly useful to health care providers, who can assign risk scores to patients based on particular disease phenotypes or a combination of conditions, which in turn helps to deliver the most precise, timely, and cost-efficient combination of care services. However, improper health information exchange of biomedical data can put sensitive personal health information at risk. To protect the integrity and quality of a network of

interconnected medical devices or wearables, all components should participate in the blockchain. In addition, for interconnected IoT devices to work on a massive scale, a next generation of IoT architecture is needed. One solution could be that the future IoT ecosystem has to abolish the central role played by the cloud, but rather will be decentralized and self-managed, with minimum human intervention.

Medical devices will have the real-time health information of people and the relevant context to make accurate decisions by talking and collaborating with each other. We will probably see that cloud resources will assist in the decision-making process by

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providing additional contextual information supported by providing machine learning intelligence. Machine learning algorithms will increasingly improve the accuracy of decision-making as more devices participate and more tamper-proof data is available in the system. Already, detailed models were developed to integrate machine learning with blockchains. In one article, the authors designed a framework, ModelChain, which utilizes the metadata in transactions to disseminate the partial models and the meta-information to integrate privacy-preserving online machine learning with a private Blockchain network. The devices themselves will be able, autonomously and automatically to work with each other and arrange themselves into self-learning networks. For example, imagine a blood sugar monitor that monitors itself, sends anonymized performance data to the manufacturer for design improvements and alerts the patient’s physician if necessary. Using common languages and APIs, the IoT ecosystem will be technology agnostic, meaning that devices from a multitude of vendors, purposes, and protocols will be

able to interoperate in conjunction. Any piece of hardware and software will be interchangeable and interoperable within the device web, as they can always access information from a suitable blockchain. Such an IoT ecosystem will be fully distributed, meaning that the overall system functionality will not be channeled through centralized components such as server farms or isolated supercomputers. Use case: Medication adherence Patient behavior as a key element in influencing medication adherence. Often, procrastination, forgetfulness, confusion about treatments or simple disinterest in taking medications are the main causes. Patient behavior, especially with signs of dementia, in times of crisis or with mental health problems, is difficult to predict. Blockchain technology can provide solutions to this problem. First, the technology can be used to provide incentives, e.g. a cryptocurrency like bitcoin. For example, patients could use an app that allows users to earn cryptocurrency by following their prescription regimens, then using those rewards to buy items at participating retailers. Second, to go one

Tokenization to support the claims process. The cryptographic one-way hash is deterministic, meaning that it produces the same output (digest) given the exact same inputs every time. Anyone can check a token for validity by prompting for inputs and validating the resulting hash against the one that was established originally. These hash algorithms are carefully designed to be one way – making it impossible to determine the original inputs from the output alone. Tokenizing health data would allow for patients to be uniquely identified by the health plan and provider, with the token changing as the health plan information changes so one user is not tightly coupled to the same token. Loose coupling reduces the impact of a security breach because a compromised token would be limited to a specific time range. Providers and health plans could agree to the properties they each use for tokenizing during the contract negotiations but they would need to account for all the information to identify the provider and health plan.

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step further, smart medical devices could monitor adherence by either remembering the user to take the medication or by administering the drug itself. Regulated could this via smart contracts associated with the blockchain. Only if a particular condition is met (e.g. the patient had to take another drug or eats a meal), the smart contract is triggered and the medication administered. The possibilities are almost limitless. Interoperability & Data sharing The rise of the precision medicine era made it clear that R&D is all about interconnectivity and data sharing, which are already the norm of clinical practice. Data sharing ensures that precision medicine is brought to patients faster, cheaper, and with significantly less severe adverse effects, leveraging information from the interaction between labs, biobanks, business management, CROs, investigators, patients and a variety of other stakeholders. Moving omics data and other information into routine healthcare delivery will be critical for integrating precision medicine into health systems. Sharing private genomic, metabolic and other health data is instrumental in enabling the next wave of scientific and medical advancements. This sharing economy ultimately translates to better drugs and overall well-being for patients around the globe. However, current healthcare systems are not good at interconnectivity and interoperability. Even a simple process such as transferring patient data from one institution to another is complicated and expensive, and standards are so loosely defined that they wind up becoming interoperability barriers instead of enablers. The push toward interoperability, information is going to be exchanged across a legal landscape that has varying degrees and various levels of privacy and security rules and regulations. Here, blockchain technology can improve data security and transparency for internal and external business units and collaborators, with fine-grained verification and authorization of participants. Improved interconnectivity goes well beyond the R&D process and includes manufacturing, distribution, and retail areas. Blockchain technology will change how pharmaceutical companies manage and record data providing security and transparency across all stakeholders.

Interoperability not only means having the capability to exchange confidential information but also being able to use the exchanged information. To give an example: blockchain technology may have a special benefit in the claims process. To determine the cost shares, the health plan must first validate services received from the provider against the agreement they share, as well as any applicable regulatory requirements for that interaction.

For most countries, the claims process can be summarized as a dual interaction between healthcare providers and medical insurance companies. Usually, the healthcare provider records all the medical services and their costs offered to the patient (the policyholder). This record is sent to the policyholder’s insurance company, who can accept all expenditures and pay the bill in full, or reject the claim. During this claims process, there are two procedures needed to secure the data and ensure privacy when using blockchain technology. According to a whitepaper by Kyle Culver, the first process would be a cryptographic one-way hash process to "tokenize" the patient, provider and health plan identities. Once the identifying information has been tokenized, the remaining information needed to execute a smart contract can be stored in plain text, which would be the minimum amount of information needed to successfully adjudicate the claim and a URL to fetch additional details, reducing process time and friction, including compliance with contract terms. Translating agreements between healthcare stakeholders into smart contracts removes ambiguity, driving down administrative cost and processing time across the healthcare industry. Other benefits were described by Scott Gottlieb, MD, Resident Fellow at

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the American Enterprise Institute who argued in a hearing before the House Committee on Energy and Commerce that blockchain could also help payers create risk adjustment strategies that accurately match a patient’s health status. Such a risk adjustment system could be based on examining the severity of common chronic diseases among an insurer’s patient pool in which the blockchain might help create a more personalized approach to distributing such incentives. Already, some startups are working on blockchain platforms that connect providers, supporting their transition to value-based care regardless of their clinical affiliation. One of them is Simply Vital Health, which provides an online tool that monitors and records providers as they administer every step along the value chain.

The platform allows to follow clinically validated, and federally approved care plans to reduce denials, helps to monitor and manage costs for payment programs or contributes to track patients through their entire post-acute care journey. The healthcare provider can always monitor if all steps were followed or if a process has been overlooked. The crucial security of the blockchain, and its ability to completely deidentify users, may be able to make payers and patients more comfortable with the idea of assigning insurance beneficiaries a risk score based on their health status. Those scores would only be accessible to blockchain-approved parties. Decreased opportunities for patient identity theft and insurance fraud and makes it easier for payers and healthcare providers to engage in tailored risk stratification, health programs, and chronic disease management activities without the fear that the assigned risk score might negatively impact the patient’s employment status or insurance prices. Another enterprise solution is provided by PokitDok. Their API platform makes easier to integrate healthcare business data at scale. The company offers 5 types of solutions: clearinghouse (X12), private label marketplace, scheduling, identity management and

payment optimization. Their main product supports the X12 protocol which is one of the most popular Electronic data interchange (EDI) protocols, used in virtually every industry that exchanges EDI data, including healthcare. The X12 protocol is fundamental to the EDI communication process, allowing businesses to send business documents, communicate messages, and synchronize data quickly and securely with other business partners and vendors. Traditionally, for a business to transmit essential X12 transactions such as eligibility and benefits, claims, and authorizations, they would have to manually integrate with health plans or buy expensive and complicated practice management software. PokitDok has removed that layer, providing the ability to integrate with a realm of business solutions. Data, regardless of where it originates, is maintained and verified across an encrypted, distributed network that utilizes the Linux Foundation’s Hyperledger Sawtooth blockchain platform and Intel Software Guard Extensions (Intel SGX).

PokitDok provides the ability to submit encrypted transactions, monitor API activity, track the status of trading partners. One use case is to integrate information about a person's existing coverage into a health benefits exchange for an automated enrollment process. Health systems can check eligibility, benefit plan, and deductible status to instantly determine out-of-pocket costs and coverage.

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

Improving R&D Having access to functioning blockchain platforms can improve data sharing and IP issues in R&D. Just think about genomic data. Sharing data on an international level is difficult because all countries have different rules how to protect and transfer genomic information. Consequently, genomics research is filled with of several centralized data siloes that prevent researchers from seeing significant enough sample sizes for more efficacious analysis. Not surprisingly, genomic researchers turned their view on blockchain. In June 2016, the Global Alliance for Genomics and Health (GA4GH) announced a plan to use a federated data ecosystem for sharing genomic and clinical data based on blockchain technology. At first, the technology will be utilized for internationally sharing genomics data on somatic cancer variants, placing trust in the algorithms of the blockchain instead of trusting a foreign data provider. However, because blockchain is something that exists on the internet, it is very blind to national borders and as such could not always be compatible with national rules for sharing genomic data across borders. Particularly in the European Union, the General Data Protection Regulation has raised concerns among researchers because of its potential to undermine patient-oriented collaborative research and international data-sharing efforts. Here it is certainly helpful to foster lobbying by the biomedical research community to allow more research-friendly regulations. One of those efforts developed the Framework for Responsible Sharing of Genomic and Health-Related Data to reflect the rights of all people to benefit from scientific advances. An additional workaround could be the implementation of private blockchains, which exist in more regulated, centralized environments, controlled by a central, yet independent authority. Recording a genome and associated clinical information in such a blockchain can make information widely available while guaranteeing its authenticity and integrity. On the other hand, having whole genomes available can provide problems for individuals. The potential to identify specific individual genomes has not only disadvantages but also brings benefits, e.g. regarding intellectual property (IP).

For the agrochemical and pharmaceutical companies, it can be very valuable to have the option to make genomes identifiable. For example, if a there is a dispute which company introduced new strains of crops or microorganisms, both claiming patents on them. In such cases, the blockchain will unambiguously show who entered the genomic data and when. One company that thinks already in this direction is Boston-based Medicinal Genomics (MGC), which was born from Courtagen Life Sciences. Through MGC’s proprietary StrainSEEK™ service, DNA sequencing is employed to record the unique fingerprint for various internal- and client- cannabis and hemp strains into the Bitcoin Blockchain database. This type of genetic registration ensures the consistency, safety, and branding integrity of strains used in the treatment of patients in states where medical cannabis is legal. Also, in case somebody later lays claim on one of those genomes, the blockchain record will show an earlier description of it. Ethically dubious companies, known as patent trolls that file even more dubious patents for the sole purpose of collecting licensing fees have no chance. Without convincing evidence of prior art, it is difficult for any company and inventor to challenge a claim by one of those patent trolls or competitors. Health information exchange The decentralized nature of the blockchain allows any approved participants to join an information exchange pool, without the need to build data exchange routes between affiliated organizations. In this way, blockchain technology may help patients keep sensitive information, so-called patient-generated health data (PGHD), such as mental health or substance abuse data from certain parties (e.g. insurances), while ensuring that medications are up-to-date across disparate organizations, and engage in more shared decision-making with their caregivers of their choosing. At the same time, patients (and providers) gain the trust that sensitive patient data is accurate, and that the health records moving between doctors, hospitals and other organizations is correct. Nowadays, patients often interact with a staggering number of health care providers through the course of their lives, leaving at each connection health data scattered, often across a particular jurisdiction's system.

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

Blockchain technology may help patients to transmit patient-reported outcome measures, e.g. via fitness trackers, wearables, and other generators of quantifiable lifestyle information. At the same time, the patient can keep sensitive information, such as substance abuse data, hidden from certain stakeholders, while ensuring that health data are up-to-date across disparate organizations. As a result, outcomes research and precision medicine initiatives can be better supported. In addition, this framework would allow stakeholders, e.g. employers or insurers to incentivize their client’s lifestyle change. Such a rewards program could measure blood biomarkers and issue "health certificates" that the stakeholder can verify via the blockchain and reward accordingly.

Imagine a diabetes patient is sent from her physician to another specialist to check for cardiovascular comorbidities such as hypertension or dyslipidemia and is then send further to another specialist to prevent a looming arthritis. Within the blockchain, such patients have better chances of fighting their disease and comorbidities because they would not need to take the time to gather all their health records from multiple doctors to send to their new specialist. Instead, the next specialist in line would simply be added to the existing blockchain from where she can access the same information as everyone else already participating in the chain. All the participants in the blockchain have the additional bonus that they know that the information transmitted between different providers has undergone validation and that there is a reduction in lost data, for example from indecipherable handwriting. Depending on the ease-of-use of a healthcare solution other benefits are possible, such as enhanced patient-doctor

communication; real-time emergency alerts and an increase in preventative care due to empowered and informed patients. While there are obvious benefits for patients, health practitioners also gain from using a blockchain platform, for example when healthcare providers have the opportunity to earn credits for their work. One platform that uses this system is called PointNurse. The platform is open to all licensed US healthcare and behavioral health professionals including nurses, doctors, physician assistants, psychologists, social workers, home health aides, and patient advocates. All of the members of the platform can perform online patient focused care outside of the hospital and clinic setting, utilizing team-based virtual clinic technology for private practices and a flex marketplace model to provision continuous longitudinal care for populations under contract. Members can connect with consumers and patients seeking navigation, referral, live consultations, disease management, remote monitoring, triage, and diagnosis. The most proactive nurses, doctors in the PointNurse community will not only earn income from their “virtual consults” with patients but can also participate in profit-sharing, meaning they get rewarded for contributing to the success of the platform. For example, a member who records a minimum number of on-call hours, who actively take calls, and who achieves certain performance levels, will earn credit towards future ownership of the community including earning a share of any profits.

The PointNurse app provides a “virtual visit” with a medical professional “from home, work or on the road.” The platform employs blockchain technology to give care credits to the healthcare professional. Patients can use the PointNurse site to find nurse practitioners & medical doctors.

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

In an ideal case scenario, patients are incentivized to take better care of their health. HealthCombix, aims to do exactly that, encouraging patient support groups by providing patients’ friends and family with “rewards for helping patients reach health goals.” In addition, the patients receive rewards for achieving their goals as well. Purpose-built kiosks and/or mobile apps are used by patients and caregivers to sign up, record care coordination, behavior, and vital data onto a block-chain network monitored by nurses and smart contracts. When goals are met, payouts in digital currency are made that can be redeemed by patients and caregivers at participating food, housing, and community outlets. Incentives are designed to encourage long-term engagement by both patient and caregivers. Another company that uses such a combination of incentives and blockchain technology to influence the choice people make is the Portland-based startup Healthcoin. The company developed a global, blockchain-enabled rewards platform designed to change people’s behaviors and prevent diabetes. The idea is simply that the platform tracks all of a person’s lifestyle choices that could influence the diabetes status. Users own their health information and choose whom to share it with, and a dashboard helps them track and understand their health. The same platform aligns employers, insurers, and the government behind user prevention efforts. Healthcoin provides the patient health data and aligns them along one reward. If value of the reward tokens depends on the user’s prevention network. For example, their employer can agree to reward the user for each healthcoin; a government can offer a tax break; a non-profit can create community recognition; or a fitness brand can offer a discount.

Healthcoin platform: Any user can submit their biomarkers (e.g. HbA1c levels, heart rate, weight, etc.) into the database. The blockchain network then automatically calculates their improvement and awards the user digital tokens, the “healthcoin.” Healthcoins can be used to decrease insurance costs, recognize achievement and demonstrate improvement with health care providers. Key to success is the network that does the work of prevention as a user needs the support of their network to fight diabetes. Blockchain activates that network because it builds trust and coordinates activity across silos. That is why it is a suitable technology for driving behavior change. The patient can share the information with friends, an employer, the government and public health organization, e.g. for using the information for diabetes research. Sharing their health data with friends creates a strong impetus for the patient to make the right choices to improve their health.

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Some companies started already developing more generic patient-centric systems, and one of them is startup YouBase. The company offers a privacy-enabled, peer-to-peer data layer for health information storage and exchange built on blockchain technology. Using encryption, digital signatures, digital wallets, and distributed data stores, it provides the framework for management of personal and medical data that’s focused on the individual. The core technology allows each personal data element to be assigned a blockchain-compatible personal wallet address that cannot be linked back to an individual without the proper private key. Their product consists of enterprise nodes for the exchange of health data. YouBase stores information safely and securely, all independently of any one company or data storage service. Even YouBase employees cannot access the data that is stored in the blockchain. It is up to the user to keep and use the data as she wishes. Much like digital currencies, the data is encrypted in a network,

and only the user has the keys to access it. With a YouBase digital wallet, a patient can use the keys to share information with those she chooses. Validated data would also address communication break-downs between hospital discharge and outpatient follow-up, the event where most serious medical errors involving miscommunication during patient transfers occur. If a patient is part of a clinical trial, blockchain can also provide additional accountability and transparency to trial reporting processes. For example, pharmaceutical companies or hospitals participating in the trial can store all the data on local servers or in the cloud, while the blockchain stores the links to pertinent clinical trials. All trials associated with a published study can then be curated and used in within individual blocks, timestamped and published on the blockchain to support larger precision medicine initiatives and R&D groups. Having access to the blockchain would offer the researchers the opportunity to easily upload links to additional

YouBase is a consumer-level technology and allows individuals to maintain their data and identity across various networks they use daily and share as they like. The platform combines blockchain compatible technologies which together deliver a secure and flexible container for data that is independent of any one single entity.

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data, for example negative data, which is often omitted from reports, for addition to the blockchain, increasing transparency and providing reliable historical information to future trial subjects. Blockchain-based trials could also help preventing selective or biased reporting of data. Often individual researchers are keen to report only positive results, which can produce unpleasant side-effects. The blockchain would help to prevent “hidden outcome switching,” the statistically flawed practice of secretly changing the focus of a clinical trial to fit the results with profound impact on clinical and public policy. Such problems are not rare at all; the COMPare project, which monitors clinical trials, found only nine out of 67 studies it has so far looked at had reported their results accurately, while 60 reported on outcomes they were not looking for, according to their original protocol. Using public keys for trial protocols uploaded to trial registries and added to journal submissions would allow other researchers to quickly check whether the correct results were being reported. That does not mean that pharmaceutical companies have to be entirely open, risking their competitive advantage. Using smart contracts, reporting details of SOPs could be hidden until a trial is completed. A central, immutable ledger of transactions would allow auditors and regulators such as the FDA or EMEA to rapidly monitor the flow of clinical data, avoiding after-the-fact verification. Hence, blockchain will speed up the R&D cycle and time to market of new drugs. Accurate reporting would also improve outside of clinical trials, such in preclinical studies and even academic lab, decreasing the chance of violation of the standard codes of scholarly conduct and ethical behavior in professional scientific research. In turn, many scientific journals would have the chance to make sure that data submitted to them were not tampered with, helping the journals dealing with suspected misconduct. Similarly, blockchain technology can provide the technical framework for patients to easily donate their data for clinical trial and other research initiatives. In this context, for patients, it is crucial that health data provided by individuals be secure, tamper proof, and monetizable.

Basically, data produced by individuals (e.g. blood sugar levels, heart rate, physical activities, galvanic skin response, blood pressure, etc..) should be work for the patient. For this to work, a data exchange platform is needed. The first such platform is the Healthbank cooperative, the ’world’s first citizen-owned medical data storage platform.'

The Healthbank allows people to store their data in a secure zone that only they can access. Using intelligent consent management, the system enables users to choose to make money from their data by connecting via the platform with medical research projects, online prescription services, and other commercial ventures. It is the goal that users can pick the research topic they want to support. Although Healthbank currently still runs on a centralized platform, the Cooperative is actively exploring options to tap into blockchain such as smart contracts. Collecting patient data that is stored on the blockchain also offers opportunities for population health management. One of the early movers in the field is Atlanta-based start-up Patientory. The company’s mission is to drive population health management by securely assisting healthcare organizations store and transmit data via blockchain cyber-security and smart contracts, while enabling physician coordinated care, enhanced by social media inspired peer to peer patient engagement. Their whitepaper can be downloaded here. The company developed a mobile app that enables users to store, view and track their healthcare data using HIPPA-complaint blockchain technology, giving users instant access to their medical history, doctor visit, medications, immunizations, and health insurance information. The patients can not only connect with care providers but also with other patients who have similar health issues or concerns. This allows patients greater control over their overall health across multiple care teams, both inside and outside the hospital. Doctors (and their healthcare organizations) use Patientory to get the patient’s

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complete and up-to-date medical history. They use PTOY tokens to secure private health information, rent computing power, servers, and data centers through a unique private infrastructure on the Ethereum blockchain. Also, smart contracts can be executed in relation to the patient care payment cycle.

Patientory claims that this way of digitization of healthcare data will not only increase healthcare quality and efficiency but also will reduce healthcare costs by billions each year. Of course, one has to keep in mind that the platform is specifically tailored to the US healthcare system. In April 2017, the company introduced the first crypto-token to the healthcare sector. The purpose of the tokens (PTOY) is to reward providers that work together and provide the best care to their patients. Tokens can be purchased in exchange for another cryptocurrency, in this case Ethereum (ETH). Ethereum Blockchain What is noteworthy when looking at all the new blockchain solution in the healthcare space (and other verticals) is that almost all platforms sit on top of the Ethereum blockchain. This is not surprising, because of its capacity for smart contracts and other complicated computing capacities. In this context, Ethereum is viewed as more agile and adaptable than Bitcoin. Like Bitcoin, Ethereum represents an own cryptocurrency, the ‘Ether.' While Bitcoin has more than doubled in price in 2017 alone, it has been outperformed by Ether, which was up over 3,000 percent by the end of May 2017. One reason is certainly that companies are more focused on how the Ethereum blockchain could be used in real-world applications. One advantage is that in Ethereum the block time is set to ~14 seconds compared to Bitcoins 10 minutes. Such speedup allows for faster transaction times which will prove to be useful for many blockchain platforms. Another benefit of Ethereum is that it offers a highly generalized platform

that allows users to make applications for a very wide variety of use cases with much less effort than it would take to create their own blockchain solution. The platform’s vision is that of “the world computer,” a system which looks and feels to users as much as possible like a normal computer while acquiring the various security, auditability and decentralization benefits of blockchain technology. Many developers are trying to improve the blockchain on top of this. A group of 30 companies called the Enterprise Ethereum Alliance (EEA) was recently founded to connect large companies to technology vendors to work on projects using the blockchain. Companies involved in the launch include JPMorgan, Accenture, Microsoft, Credit Suisse, Thomson Reuters Corp and Intel. By May, another 86 firms joined the alliance, which is adding growing legitimacy to the cryptocurrency. The EEA will work to enhance the privacy, security, and scalability of the Ethereum blockchain, making it better suited to business applications.

According to Google Trends, the interest in Ethereum spiked in 2017. The horizontal axis represents time, and the vertical is how often a term is searched for relative to the total number of searches, globally. Although it is difficult to predict – and I will not urge anyone to invest in Ethereum - there is certainly good potential for investors (I admit, I would probably consider buying some Ethereum if I had the resources). Several banks have already adapted

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Schumacher’s Strategy Guide ‚Blockchain & Healthcare – 2017‘

Ethereum to develop and test blockchain trading applications. Ethereum gives the promise of boundless opportunities, but whether that promise is going to be fulfilled, and to what extent, depends on how widespread the Ethereum network will become, and how innovative will the developers of particular solutions be. Not all in the market are convinced that the Ether rally will last, mainly because products like Ethereum could be cloned. Nevertheless, Ethereum won a large following among developers who view it as a sophisticated way for companies to initiate and track transactions and contracts of all sorts. That has led some companies to bet that Ethereum will win the race to become the standard blockchain for future business operations, including healthcare. Supply Chain The Pharmaceutical Supply Chain is defined as the management of product supply from raw material sourcing to active pharmaceutical ingredient (API) manufacturing through formulation, packaging, and distribution to the patient. Traceability throughout this process, especially on an international level, is challenging. Under the present systems, drug shipments can pass through many hands, involving a lot of paperwork that

can be tampered with. Utilizing distributed ledgers can improve revenue sharing, solve patent issues, traces transfer of assets, and enables proof of work/service. In particular, if participants in the blockchain could chart the pharmaceutical supply chain from a batch number and factory of origin all the way to distributor, sale and storage and adherence, they could identify issues much more granularly. If regulators or payers identify a hotspot of patients having some sort of problem taking a drug, they can easily trace the problem back to the batch or improve the way patients stick with their regimens. Several companies and organization (e.g. IOTA, Stratumn, or Guardtime) are already looking into blockchain technology to provide supply chain or cold-chain logistic solutions (as used in biobanking). One of them is the Swiss start-up Modum.io. The company, together with the University of Zurich combines sensor devices and blockchain technology to make the pharmaceutical supply chain more efficient. In particular, their team is developing a blockchain technology-based temperature tracking system for medicinal products, an area that is increasingly regulated. For example, according to recent changes under the EU regulation, Good Distribution Practice of Medicinal Products for Human Use (GDP 2013/C

Modum’s sensors can constantly measure the temperature conditions on batches of drugs in transport. When the shipment is at its destination, a smart contract is activated and releases the shipment, if the cold chain was shown to be unbroken (no temperature deviations recorded). The end-consumer as well as the sender are then receiving a report informing them about the transfer of the goods or smart contract components such as due payments or insurance clauses in case there is the need to cover damaged goods.

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343/01), companies are required to report any deviations, such as cold-chain disruptions, humidity or light conditions to the distributor and the recipient of the affected medicinal products. How does it work? Medicinal shipments are equipped with a sensor that, for example, monitors the temperatures of the products. Upon arrival at the destination, the sensor data is transferred to the Ethereum blockchain, ensuring a tamper proof system with guaranteed data integrity. What happens next is that a smart contract is automatically triggered that then compares the measurement data against regulatory or customer requirements. Based on the available information stored in the blockchain, the product is either released, or both the sender and the receiver of the shipment receive a notification that a deviation occurred. Modum.io is also looking at transactions in other areas of the supply chain, for example, where batches of active pharmaceutical ingredients are transported from a supplier to the drug producers. Fighting counterfeit drugs Drug counterfeiting is a huge problem for Pharma and consumers. The WHO estimates that up to 10% of drugs sold around the world are counterfeits, but it may be as high as 50% in some countries. A lot of those ‘drugs’ don’t contain any active ingredients whatsoever, while others have incorrect quantities of the correct ingredients. Counterfeit drugs are a serious problem, harming people in unanticipated ways. Patients may experience severe allergic reactions, unexpected side effects, or a worsening of their medical condition, sometimes leading to death.

For example, in 2013, it was discovered that over 8,000 patients died over a five-year period in a remote Indian hospital because an antibiotic used to prevent infection after surgery had no active ingredient. In the United States and Europe, the problem is found primarily related to lifestyle drugs, such as Viagra or Cialis, rather than in life-extending medication. Growth in counterfeiting may be spurred by the economic incentives provided by an increasing volume of inflated cost drugs. Also, the ability to sell drugs directly to end-consumers through purchases over the internet adds to the problem. Classically, to tackle those problems, many countries decided to implement pharmaceutical serialization practices, such as recording, authenticating, maintaining and sharing accurate records of items before dispatching using track and trace technology. In the US, those regulations are covered in the Drug Quality and Security Act (DQSA) and The Drug Supply Chain Security Act (DSCSA), pressuring Pharma to implement systems that can provide the solutions needed to improve the current state of the drug supply chain. However, those programs and regulation are heavily dependent on local national laws and standards, and many pharmaceutical companies struggle to identify the proper answer to work with serialization.

The solution to the dilemma could be – again – blockchain technology. A blockchain can provide the 3V’s (visibility, verification, and validation) to the drug supply chain. Already, several projects and start-ups (e.g. CargoChain, Chronicled, Everledger, Project Provenance and Skuchain) deal with this issues, investing in a trusted record of the provenance of drugs. Another is the BlockRx Project, an initiative to verify and enhance the integrity of the drug supply

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chain and to accelerate new drug development by leveraging the blockchain to support and manage the Drug Development Lifecycle. How can it work? In theory, the whole process could start with a central authority, for example, the pharmaceutical company that owns the drug IP, which would decide who will participate in the blockchain, e.g. suppliers, warehouses, quality controls, distributors, retailers, etc. Once a drug ingredient is manufactured, a notification is broadcast on the blockchain network, and a hash is generated with all the relevant manufacturing details, etc. The hash gets printed on the drug package before the drug gets to the assigned distributor. This procedure is registered as a transaction, meaning a new hash is generated and linked to the previous hash, containing further information about shipment, cold chain control or distributor details. Similarly, when the distributor then ships to the retailer, the same process continues – the blockchain grows. Finally, the consumer who buys the drugs at the pharmacy or via the internet receives the public key on the invoice which allows her to verify that the drug originates from the true manufacturer, without tampering. The add-on benefit for the patient and healthcare provider is that proper dosing can be facilitated and better controlled. Finally, there is the advantage that the blockchain works across borders,

helping countries to band together to share detection technologies, to collaborate on a universal database of legitimate pharmaceuticals and pass international standards. There are other ideas to connect blockchain technology with ways to counteract the increase in fake drugs on the market, including stronger state licensure supervision of drug suppliers and the use of Radio Frequency Identification Devices (RFID) to accurately identify original drugs. Whatever approach companies take, in the end, Big Pharma will spend fewer resources on anti-counterfeiting workarounds and regulatory compliance. In summary, blockchain technology can reduce the availability of fake drugs and save lives, and this is surely one useful task the industry should embrace. Collaborative patient engagement Patients could create and control a community of providers, family members, and caregivers who could view, edit, and share a centralized personal health record. Ultimately, blockchain technology could impact on how patients monitor their health information. Patients would be able to approve or deny any sharing or changes to their data, helping to ensure a higher level of privacy and greater consumer control. However, it does not end here; such a platform can also help in providing secure health management after a patient lost the ability to actively understand and manage his health, for example when affected by dementia.

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Here, patients at early stages of their disease when first signs of dementia occur (e.g. in Alzheimer’s or when affected by frontotemporal dementia, which is marked more by behavioral and emotional changes than by cognitive impairment), patients can securely grant other doctors access to their personal information, as well as healthcare providers, researchers, and their family. Blockchain supports such data sharing by a concept called M-of-N signatures or Multisignature (multisig) that refers to requiring more than one key to authorize a transaction on the blockchain. This means that there are a total of N cryptographic keys, and at least M of them have to be present in order to decrypt the data. In this way, the patient can provide keys to authorized individuals to grant access without the patient’s specific key. This mechanism can be useful when, for example, a patient is incapacitated and cannot provide consent to access the data. M-of-N signatures would work even across generation, by providing access to the health records to the patient’s children and grandchildren, which could be a valuable asset is managing diseases that run in the family. Moreover, any authorization/consent log persists forever in the distributed network, serving as a backup to restore functionality. Using this backup, patients can leave and rejoin the system as often as they want, and regain access to their history by accessing the latest blockchain on the network. Shared data and incentives also facilitate collaboration of health care professionals, which in turn offers the

possibility to run site-less studies. Those trials are much cheaper and easier for patients, as they do not have to travel long distances. Instead, patients can participate in the trial at places outside of large trial-sites, for example at home, at the local medical office or laboratory, at specified pharmacists or mobile sites. Because there is no need to have a physical site, the clinical study can be more flexible, cover larger geographical areas and reduce patient drop-out rates. Another blockchain use-case would be the adoption of electronic informed consent (eConsent) in clinical trials. Informed consent is a complex process that involves many stakeholders, from planning, collection, to recording. Therefore, securing informed consent from participants is a dynamic process. For example, patients must be able to withdraw their consent at any time during a trial, or – have to option to re-consent in case study changes have occurred that may affect their decision to continue participation. Here, the introduction of blockchain technology in the form of smart contracts, as a special form of eConsent solutions, offers huge improvements to participant on-boarding, a guarantee of validity and documentation of the consent process in future clinical trials. Researchers or healthcare providers can act upon those directives stored in the blockchain. The clinical trial software or any precision medicine platform or EHR can interpret the contract as access control decisions, assuring that the system is fully adhering to patient demands.

From the patient perspective

• Patients no longer need to coordinate the tedious task of gathering records from various providers to send to their specialist, instead, they would only need to provide access to the blockchain

• Patients retain control of their data and do not need to spend time and energy keeping their data managed and up to date

• Better and more available data leads to better care for the patient

From the provider perspective

• The true collaborative nature of creating and sharing data eliminates many of the challenges of existing Health Information Exchange approaches

• Healthcare organizations do not have to compete for a data-driven competitive advantage, because they all have access to the same information

• Through existing contracts with patients and partner organizations, nodes can broadcast alerts or potential threats

• Data can be shared for research activities including clinical trials, enabling larger and more diverse patient populations

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Having the patient on board, blockchain technology also enables to develop patient-reported outcome measures (PROMs), which include indicators of disease state, dietary changes, lifestyle issues, pain levels, or disease management experiences. Drug developers, as well as healthcare providers, should integrate this type of patient-provided data into their data stream, care routines, and decision-making processes. The big ICT powerhouses such as Huawei, IBM, Samsung, or Sony would be able to help to streamline such processes via IoT ecosystems by placing patient-generated health data tools directly into the hands of millions of individuals. Collected health data could be used in tailoring individualized care plans and aiding R&D efforts, supporting medical research to tracking medication adherence, thereby facilitating and cultivating overall population health management on a huge scale. Such measures are especially useful in a time when the classic healthcare ecosystem is in the process of transition to a value-based care system in an attempt to reduce healthcare costs. In addition, blockchain technology can support the development of sophisticated of global personalized health networks that empower patients in their health journey, pioneering patient-centered measures of disease and health. One way to improve patient-centered care could also involve blockchain-based crowdsourcing, basically an open bazaar where providers could access certain parts of a blockchain for health services, providing unparalleled transparency in pricing and quality.

The challenges of data sharing involving patients within the healthcare ecosystem are significant; however blockchain offers genuine business value. Peterson and colleagues from the Mayo Clinic describe how a particular blockchain-based approach to health information exchange networks can look like in this paper, describing some of the benefits for the participant. Revolutionize EHR interoperability Interoperability challenges between different provider systems, country-specific regulations, as well as the lack of clear data ownership, pose significant barriers to effective electronic health record data sharing. Furthermore, many healthcare providers are reluctant in handing out data, sharing data only when absolutely required. This extends to restricting patients from accessing and sharing data about their own health or charging large fees for this access. On the other side, also patients may not want to allow access to their data because many of them are concerned about privacy and security of medical records. Some patients withhold information entirely from their health care provider because of these concerns, especially in countries where historical distrust to the system’ is widespread. Blockchain technology can help here and eliminates data silos and facilitates aggregation of clinical data from EHRs. How would a solution look like? One possibility is to use an interface that can orchestrate record access across databases. Individuals that wish to view EHR data are checked against a ledger and must be authorized by each member of the blockchain, which may provide an additional secure and tamper-proof method of managing access to sensitive patient information. Access should be fine grained and hardwired into the blockchain and in some cases, could limit the access to the EHR data by the patient. Why should the patient also be restricted from looking at his or her data? Because in some instances not all provider records can or should be made available to patients, i.e. psychotherapy notes, or physician intellectual property, or when the health information such as genetic information is indicative of a severe predisposition, e.g. Huntington disease. In an ideal scenario, the patient should be still informed about

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such possibilities and give his consent (or not) if appropriate. For example, he could in advance, before submitting his DNA to a service provider decide if he wants to be informed about the outcome or if the information should only be shared between doctors. One early project that tries to revolutionize EHR interoperability is the Dutch company DDQ. Their product Labchain is a decentralized blockchain solution that was initially developed for Maastricht University. Labchain, which can be connected to standard laboratory information systems, replaces traditional postal systems for securely exchanging laboratory data, e.g. blood analyses results within the hospital and also between different external laboratories. The laboratory data themselves are not stored on the blockchain. Instead, each transaction has a reference (hash) to an XML-like file which is hosted in a decentralized manner.

The developers use mini-computers running on the Ethereum blockchain and torrent-like software for decentralized file distribution. The Labchain project is open for collaborators and volunteers as it has a big research component and will be open-source. It is the developer’s aim to provide an open, stable and durable solution and a set of best practices for the exchange of Electronic Health Records. “off-chain” data storage: Nowadays, health data means Big Data. This in turn means that replicating all heath records to every member in the blockchain would be bandwidth intensive, wasteful on network resources and pose data throughput concerns. However, there is a way around. Blockchain enables interoperability and data exchange by leveraging a system that is composed of so-called “on-chain” and “off-chain” data storage. What does it mean? Let me try to explain: Regarding the actual data stored on the blockchain “on-chain,” there are three main options:

• Unencrypted data, which can be read by every participant in the blockchain

• Encrypted data that can only be read by participants with the appropriate decryption key

• Hashed data In this case, a “hash” acts as a digital fingerprint, representing a commitment to a particular portion of data while keeping that real data hidden. The original data, e.g. health data such as lab results or imaging data is stored off-chain, stored in traditional databases, by one of the interested parties, which can reveal if necessary, e.g. through an immutable record of a digitally signed access request. In the early days of blockchain, when making data requests outside a smart contract, the authenticity was broken for dependent transactions. For example, a patient running a phone app may request to view her medical information. When she clicks on her lab results tab, a call is made to the health care providers’ smart contract to access that information that resides outside of the existing smart contract. What should developers do? The described processes need secure interoperation and communication, which can be provided by new blockchain innovation such as the before mentioned Cryptlets as part of Microsoft's blockchain middleware Bletchley. However, the connection of Big Data, AI services, and downstream data analytics is still an undiscovered area. Here is an opportunity for early movers to provide novel solutions and business solutions that cover several parts of an AI-based healthcare ecosystem. If possible, developers should aim to provide an end-to-end solution, not only niche solutions, to make it easier for healthcare companies to adopt a system. Such a platform must combine intelligent, decision-making algorithms with massive amounts of disparate data. Users from all areas of healthcare (e.g. scientists, nurses, physicians, insurers, lab-heads, CROs, and patients) - usually without domain expertise - will benefit from a platforms' pre-built algorithms and other features that curb the learning curve. Ideally, platforms will offer a variety of up-to-date machine learning algorithms and simplistic workflows, workflow lifecycle management, with such features as drag-and-drop modeling and visual interfaces that easily connect data to downstream

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solutions. These algorithms should include functionality for image recognition, natural language processing, recommendation systems, and predictive analytics, in addition to other machine learning capabilities. Support of vertical business models The precision medicine ecosystem will be largely built upon collaborations and partnerships as organizations recognize the need to work together in order to develop the large volumes of patient data required to generate new insights. However, making meaning of the enormous amount of medical data and creating scientific knowledge, will vastly exceed the capacity of even the largest institutions. Data must be shared to achieve the promise of precision medicine. In addition to sharing data, a blockchain ecosystem allows sharing of assets, providing opportunities for investors within a specific ecosystem to invest in projects or pharmaceutical companies that are part of the same blockchain. As such, blockchain technology is ideally suited to be used in vertical business models. In general, vertical business solutions tend to be specific to a given industry or a particular group of customers within a given niche ecosystem. An example of such healthcare verticals would be the collective knowledge in understanding the requirements of Electronic Health or Patient Records across all blockchain participants needs, e.g. lab services, diagnostics, and public health services. Here, investors interact with one another using pseudonyms, and their real identities are encrypted. Investors can be large corporations, funds, or even countries, but also single patients. The investment can be money in the form of a cryptocurrency, computing time, ideas, molecular structures, patents or even biospecimen; basically everything that can have real value to a company. Verticals are increasingly important for the healthcare industry, enabling market domination through consistency and long-term asset building. In fact, the healthcare industry represents one of the largest vertical markets. However, it is made up of a vast and complex network of sub-markets, each with very different objectives, business models, needs and problems to solve.

Healthcare is also a vibrant and dynamic ecosystem with many established vendors with established relationships that could be easily be mirrored in a blockchain solution. Companies that decide to work together will have the benefit of improved efficiency in contracts execution, improving efficiency and transparency in executing any digital agreement, reducing excessive manual contact and monitoring. In addition, all the participants in the same ecosystem can save resources as the blockchain can remove the need for trusted intermediaries as it relies on a peer-to-peer system to confirm transaction validity. But most of all, companies gain from all the shared data stored in the system.

The significant cost associated with drug development is linked to the ability to get high-quality and validated data sets from patients. Significant amounts of resources are spent in developing and capturing such data sets. Cross-industry collaborations will be key for breaking down big data siloes, harnessing the collective knowledge of top researchers and the IP of different organizations. Healthcare organizations do not have to fight for a data-driven competitive advantage because they all have access to the same information. This approach will enable organizations to collaborate in trials or on outcomes-based care. For example, insurers and researchers at a pharmaceutical company can share securely de-identified electronic health record data from patients participating in the blockchain community to study gene-environment interaction. At the same time, the system can return this health information to the participating patients, reducing unnecessary tests and interventions, informing them about genetic mutations that could

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result in higher risk of certain conditions, including diabetes, cancer, and cardiovascular disease, while the patient data remains anonymous to the researchers or partner laboratories. This type of collaboration, leveraging different resources and domain knowledge, will increase the availability of health data, which will, in turn, allow investigators to move more quickly towards new breakthroughs in drug development. Using blockchain in vertical business models increases the likelihood that researchers, patients, and health care providers can trust the data and ensure that as many individuals as possible have access to it – increasing the chance of breakthroughs. Traditionally, companies often are reluctant to share data because of privacy concerns, and –more importantly – because they fear that sending information will give others a competitive advantage. Using smart contracts and data security can ease the process significantly. ‘Digital Identity’ An open, global pharmaceutical company entirely build on top of blockchain technology Did you hear about Digital Identity, the new pharmaceutical company that is fully based on blockchain, cryptlets, and tangles? No? OK, let me give you an introduction. The idea behind this future global player is that a whole pharmaceutical ecosystem can be placed on top of blockchain technology, paving the way to trusted and open R&D processes, trusted transactions between parties, powered by collective self-interest of a global community of independent investors. Although the company still represents a for-profit entity, this pharma ecosystem is at the same time immune to exorbitant drug prices, tampering, fraud, or political control which are destroying the healthcare system in many countries. Digital Identity shares may be publicly traded if shareholders pass a resolution to do so.

The business structure of Digital Identity means a fair exchange of benefits. What the company earns is automatically distributed to its members. There are many ways in how the company can be structured in the long-run. One option is to provide shares that can be issued as a result of an investment process that in many ways is comparable to a process that a typical startup goes through when funded in a classic economy.

In particular, the company must provide evidence to investors that its shares have real-world value (IP, property, goods, contracts, etc..). The initial valuation is used by blockchain participants (either the whole community or dedicated experts) to determine the price they are willing to pay or receive to affect a sale of the business. The initial valuation of Digital Identity matters because it determines the share of the company that must be given away to the investor community in exchange for money, keeping in mind that the valuation of the company at the early stage is a lot about the growth potential, as opposed to the present value. When it comes to causing a shift in how companies get funded, it made perfect sense to position the enterprise at the point where the money originates: worldwide on the blockchain. If the company would rely only on classical investments,

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only a very few people can invest and participants could only raise capital from accredited investors, venture capitalists, and banks. Easing the flow of capital. Digital Identity is a company where basically everybody can invest in, therefore offering more opportunities for investments, bringing in more private investors, collaborators, VCs, banks and other businesses and making such a venture a much more attractive environment to put your money into. People can invest cryptocurrency worth 10 million Dollar or merely worth 10 Cents. Traditionally, private investing, whether it is angel investing or venture capital investing has been very opaque and segmented. Now, even teenagers are able to use their pocket money to invest in Digital Identity by using their smartphones. This could build a whole new awareness in the young for dealing with money, economic issues and building an open, beneficial

society for everyone. Short term, the company can help in bringing communities a little closer to embracing blockchain. Those distributed investors interact with each other to support business decisions, but such interactions are bound as in a single

organization. In effect, blockchain-based funding is more efficient than traditional fundraising. It has lower costs associated, particularly for auditing and transactions. Overall, a cryptocurrency investment can be an attractive investment. Nowadays it is relatively easy to obtain cryptocurrencies (such as Bitcoin), convert, or sell as easily as buying them. Cryptocurrencies are not yet widely adopted in most populations; however, this will change quickly, already there are more and more physical and online stores that support cryptocurrency, mainly Bitcoin. A truly global company. Precision medicine requires not only big data but diverse data, and that means pharma has to go global. People all over the world will have access to the company; the farmer in Kenia, the carpenter in Brazil, the Investment-Banker on Wall-Street, the school teacher in China, the lawyer in Belarus, or the student in Buenos Aires. Due to the built-in trust system (transactions are encoded on the

blockchain), independently of any central authority, also people can invest in the pharmaceutical company that are under normal circumstances banned from investing, either due to local law or because they do not have access to a regular banking system. Investors also have the benefit of choosing to invest in projects that have meaning or align with something that they are passionate about. The blockchain-investor can potentially see that product or idea grows into something that makes a difference in the world. For developing countries, participating in such a healthcare infrastructure can help them improving people's health and giving them the

chance to lift themselves out of hunger and poverty. Here, blockchain can empower the poorest, especially women to transform their lives, giving the people tools to lead healthy, productive lives. A company without borders ensures appropriate participant inclusion with

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respective to ethnic diversity and other demographics and better inclusion of those who are medically disenfranchised. Smart Contracts. Using smart contracts gives the company managers the stability to scale up the enterprise, but not hold anyone to long term contracts that would tie their hands. Terms of a deal could state that the invested funds must stay put for the first six months or that R&D efforts exclude any studies based on genome sequencing (for whatever reason). Automated, smart contract also provide accountability, providing clear commitments to all the stakeholders and abiding by them.

For example, patient groups, which are increasingly important partners for the pharmaceutical industry, may demand that all the money invested by them is going only in R&D efforts related to a specific indication. Let’s say a major Diabetes Patient group want to make sure that their money is directly used for the development of a new drug against diabetes. In addition, the patient organizations provide Digital Identity with important advice from their perspective, potentially biospecimen or a pool of individuals that are willing to participate in clinical trials. The contract can then specify that any drug or companion diagnostic developed in this process is transparent, meaning not protected by patents, or that the price for the drug is limited to the lowest possible price to the public (where the company is still not making a net loss but remains profitable). Any combination of contracts can be envisioned.

Remember Martin Shkreli, the CEO of Turing Pharmaceuticals, who in 2015 infamously raised the price of the critical drug Daraprim (pyrimethamine) by more than 5000%? Consequently, he became the global lightning rod for growing outrage over soaring prescription drug prices, and several US Congressional probes have been launched since then on the pricing issues of drugs. Turing Pharmaceuticals was only one of several companies under fire for price increases on older drugs that lack competition. Other famous examples include Mylan, the maker of emergency allergy shot EpiPen, and Valeant Pharmaceuticals, both companies have been questioned by Congress and subjected to severe condemnation by the public. Because the CEO of Digital Identity cannot hide anything from the shareholders, a similar abuse of power is impossible, keeping a lid on soaring drug prices. It is understandable that a company wants to make a profit and we should remember that developing drugs is an incredibly high-risk business. For that reason, new, innovative drugs are typically priced higher under the argument that it's an incentive for more R&D down the line. Making money is OK, but patients that are at the same time shareholders are unlikely to cause exorbitant drug prices.

In the end, there are many incentives for the patients to invest in the company and vice versa; interacting with patient organizations enables Digital Identity to learn about and understand unmet patient needs, as well as barriers to treatment success. As a result, the company becomes a place to build traction, proof, and validation, coming with all kinds of benefits. Working with committed patient groups will gain the company early adopters and loyal advocates. Market validation is one of the most powerful tools in the entrepreneurial world. Traditionally an expensive and lengthy process, validation is now faster, more scalable and available to anyone, everywhere. People who view the companies campaign and choose to contribute resources, IP, or biospecimen as early adopters are ones that believe in the success of the company in the long run. Early adopters, especially the ones that have shares of the company, are more likely to spread the word without asking for anything in return. They care about the venture’s brand and message and are likely to be loyal supporters and clients.

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Transparency. Another important advantage of an open, blockchain based pharmaceutical company is the transparency of the blockchain. Less risk through openness can help spur the growth of the enterprise and much faster developments of therapeutics or companion diagnostics. More openness inspires confidence, which in turn leads to better commerce. In addition, transparency will also result in better healthcare, especially for people in developing countries. For example, in Africa almost all health data, if at all, is still collected on paper by health workers. Only rarely, when resources permit, the data is manually transferred to the electronic database. Getting reliable health data in low-income countries will dramatically change health outcomes and prepares the global community to deal with disease outbreaks. If health data is stored on the blockchain, the global blockchain community can – in real-time- observe if critical epidemics are about to start, improving pandemic preparedness on a never seen before scale.

Obtaining Digital Identity shares in exchange for IP. Blockchain technology provides an opportunity for crowdsourced brainstorming to refine the companies’ idea. Being global and open, the company enables participants from diverse - and traditionally competing - backgrounds and positions to experiment with, propose and debate innovative ideas in a collaborative setting. Having access to many intellectual resources means to be able to cover all the holes that the venture might have at an early stage. Scientists and business managers can engage the crowd of supporters and receive comments, feedback, and ideas – in exchange for equity. The community itself can determine the value of any input, or if the

community agrees, by expert groups or upper management. This feedback, e.g. from external scientists, medical doctors, inventors, business strategist or other individuals with domain expertise is extremely valuable, as it can help understand some aspects of the business that were previously un-thought of. The flow of information can also go the other way, for example giving the company an opportunity of pre-selling. Having access to their stakeholders (i.e. patients) gives Digital Identity the ability to pre-sell a healthcare product, service or concept before it reaches the market. This could happen as a form of dividends payment to shareholders, additionally an effective way to gauge user reaction and analyze the global healthcare market to finally decide whether to pursue a given concept or not. With the pharmaceutical industry evolving away from classical blockbuster business models and becoming more efficient and precise, there is no better time than now to take advantage of the associated benefits! Now we have the chance for assimilating, analyzing, and integrating omic data, electronic medical records, data obtained with mHealth devices, and other data of millions of people. Everybody will benefit when people can focus on innovating rather than getting bogged down in territorial and jurisdictional issues. Blockchains will make the healthcare industry faster, more efficient, more secure, and less risky. In building the evidence base for precision medicine, longitudinal post-market data on diverse populations can be collected continuously; the blockchain does not forget. Oh… before I forget to mention – you probably noticed already - Digital Identity is not yet listed on any stock market; investing some of your bitcoins or Euros will still need some time. Why? Because the enterprise does not yet exist at this moment in space and time. But maybe the revolution is starting right here. Together blockchain experts, entrepreneurs and healthcare professionals can leverage their global business development experience and project management skills, healthcare expertise and depth of industry knowledge, to start a company like Digital Identity (it can have any name). This project offers a way to deliver sustainable returns to investors, disrupting healthcare businesses with distributed ledger technology. Pharma R&D will be more secure, more

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democratic, affordable and sustainable, bringing down barriers to unlock global opportunities. Towards a blockchain ecosystem The single most important driver for spurring the adoption of blockchain technology is probably the availability of open platforms that enable incentives for participants to innovate and try to provide better healthcare at lower costs. Some companies are already paving the way for investment ecosystem utilizing blockchain technology. One of the very first is the Berlin-based startup Neufund, which is building a blockchain-based and investor-directed platform which bridges the world of cryptocurrency and equity.

Neufund is an ecosystem of smart contracts operating on the Ethereum blockchain. The platform creates a new type of ownership that is neither money nor

stock, but crypto-tokens which represent equity. If needed, the tokens are as liquid as a regular currency, representing value of the business operating in the real ‘off-chain’-world. Using blockchain and smart contracts allows NEUFUND to increase the speed of capital flow, diversify tech innovation funding and reduce transaction costs for investing. The ultimate goal of the company is to unlock the resources of blockchain (e.g. crypto-assets) to fund startups and all forms of technological innovation and disruption, and to provide the cryptocurrencies community with a new source of interesting investment proposals

While initially, the platform is going to be utilized exclusively by their own Neufund fund, that will only act as the seed of what they hope to grow to be the largest investment ecosystem on the blockchain. As such, the founders try to gradually expand their

Neufund is an ecosystem of off-chain and on-chain (distributed) organizations with legal and smart contracts backing them. It is also an interaction system where different actors are involved. Each organizational entity will have both an off-chain (real-world companies and partnerships established by legal contracts) and an on-chain (distributed organizations established by smart contracts) representations. Actors will interact with one another but such interactions will be bound as in a single organization. Within Neufund participants have a platform operator (Neufund GmbH) which is currently purely off-chain, a Neufund VC entity (Neufund VC Partnership and Neufund VC DO) and many startup entities that represent projects that are funded on the platform. A crucial part of this ecosystem is the Investment Community; holders of crypto assets that may invest in Neufund VC or startups.

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platform’s capabilities and with that open up the platform to startups and funds of all sizes, industries, and jurisdictions to take part in a truly open investment ecosystem.

Open data usage in a vertical healthcare ecosystem. With the rapid improvement in computational power and machine learning algorithms, blockchain technology can help facilitate a mechanism to compensate an AI service provider for the development and execution of novel machine learning algorithms. For example, developing algorithms that can look at a radiology image or CT scan and make diagnosis predictions are time-consuming to develop, but once developed are easy to execute. A radiologist at a hospital that participates in the blockchain could use the AI results as a reference standard to improve

her own diagnosis. The AI provider, in turn, gets compensated when the diagnosis by the algorithm matches that of the radiologist. The final diagnosis or treatment option is then funneled back into a clinical decision support system. This provides an incentive for the AI provider to refine and keep improving the accuracy of their algorithms. The blockchain also provides an audit trail of what the AI provider diagnosed and the final official diagnosis of the radiologist. In some cases, the AI patient data could be stored on the blockchain itself so that patients and healthcare providers could work together to harmonize their efforts with other members of a care team. Thus, such a blockchain framework, based on vertical business models holds the potential of significantly reducing the cost of developing new drugs, diagnostic tools, and clinical regimes.

Artificial intelligence (AI) has huge potential to revolutionize medicine and to uncover new insights into hidden patterns of treatment and disease. But realizing that potential will mean going beyond just clinical parameters. Intelligent algorithms mine enormous amounts of structured and unstructured data from many sources of the precision medicine ecosystem and provide scientific insight and business intelligence to the members of the blockchain. In this scenario, the AI becomes the brain of the blockchain. So, a central hub of the blockchain could be represented by an AI service provider that specializes in developing novel machine learning algorithms. Associated hospitals and medical offices would be allowed to run those algorithms over their data and publish the AI diagnosis output back to the blockchain. Using natural language processing (NLP) and deep learning algorithms, verticals will have an enormous opportunity to develop new revenue streams through personalized healthcare services. Trust in AI technology is vital for wider use and adoption, and blockchain can deliver that trust.

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To build such a blockchain ecosystem, all participants require access to an open healthcare platform and high-speed computing cluster. In an ideal case-scenario, an ICT firm would collaborate with a software provider to build this precision medicine platform, where external partners can interact with via APIs. One early attempt to build such a platform solution was realized by the California-based startup Gem. The company seeks to connect all the disparate arms of the healthcare industry by creating a shared healthcare ecosystem leveraging a heavily patient-driven component. Their operating system GemOS features various management consoles that apply to use cases across multiple verticals including healthcare (for their whitepaper look here). The idea is that a community of industry and healthcare

providers can establish trusted pipelines for data exchange and carry-out multi-party processes. GemOS provides the basic infrastructure needed to access, query, program, record, and authenticate information on a blockchain. For example, on the patient level, mobile apps can record lifestyle and various health metrics, while healthcare providers collect and store the patient’s clinical records, pharmaceutical companies may store related omics-data, and the insurance companies keep records of their claims. While these data siloes are currently separated, Gem’s system seeks to create an ecosystem where these records can interact. GemOS uses many internal services to achieve this goal. These services do everything from isolating sensitive data, to mapping your business logic onto a blockchain. This separation of services allows for highly optimized systems that do one thing very well, separates sensitive information

GemOS works as middleware, managing the details of participating in a blockchain network, serving as an abstraction layer on top of the blockchain services. The platform connects existing systems to blockchain networks, enabling the automation of arbitrary business processes using the data and identities of those existing systems. The platform provides the necessary foundation elements to not only utilize blockchains, but to also power any complex business rules processing required to produce valuable automation. The infrastructure allows applications to securely register, authenticate, permission and share data with the same transparency and individual control that Bitcoin has brought to financial transactions. With GemOS, developers can send information or events to the GemOS API to register that activity on the blockchain. If the information is sensitive (e.g. genomic data), Gem takes care of all the cryptography that keeps the data transparent and secure at the same time. If the information is not sensitive (e.g. the patient gave permission to use her data), that information is stored directly on the blockchain.

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thereby increasing the security of the system while allowing for more efficient scaling. GemOS currently has four such services: • ‘Data’ provides a secure environment where information is stored, permissioned and shared between parties on the blockchain. This service supports multiple backend datastore drivers, schema validation, canonical serialization, encryption, and document hashing. • ‘Identity’ ensures all actions taken on the blockchain can definitively be traced to their originator. This adds integrity to your data as there is no way to hide who has acted upon it and how. To accomplish this identity provides secure key management and signing capabilities. It supports multiple formats and protocols, allowing for secure management of organizational identities. • ‘Network’ provides a generic blockchain-agnostic interface for creating and interacting with arbitrary resources on one or more blockchains. • ‘Logic’ is a rules engine that executes code both on-chain via smart contracts, and off-chain. This is where business functions and automation processes are baked into the system. It is understandable that the startup, which raised $10.9 million total equity funding, was rated the second most popular business development of the year by Bitcoin Magazine. The advantage that a platform like GemOS provides is that it sits on top of the blockchains to rapidly build useful distributed applications. GemOS manages the blockchain infrastructure and, at the same time, provides high-level services such as identity management, data persistence, cryptography, business intelligence and rules management on top of it. Similar kind of services are known of non-blockchain middleware solutions such as iRODS. In contrast to other middleware, GemOS also provides the necessary abstraction layer to generalize applications to utilize any lower-level blockchain services like Ethereum, Hyperledger or the Azure Blockchain Service. Basically, the user can choose between Ethereum, Hyperledger, or any other blockchain protocol, depending on their specific use-

case. Such a modular blockchain platform enables partners to build distributed applications to solve healthcare-specific use cases. GemOS is still relatively unknown in the pharmaceutical ecosystem; a reason why I talked to the founder and CEO of Gem, Micah Winkelspecht, to find out more. A. Schumacher: Micah, Gem has grown to become a forerunner in blockchain technology’s applications for healthcare. If you look forward a few years; where do you see GemOS in the global healthcare ecosystem? M. Winkelspecht: I see a slow but steady adoption of our blockchain technology in the healthcare space with the first substantive use cases to hit the market later this year and into mid 2018 when it starts to become real. Blockchains are not a panacea for all of the healthcare industry’s ailments. But they do offer a powerful solution to the problems of data inefficiencies that result in tremendous duplication of tests, waste of human capital, medical errors, and spiraling costs. What we’re moving towards is creating a whole new data paradigm that blockchain enables. But we can’t boil the ocean. What you will see is the healthcare industry slowly evolving towards this technology with simple projects that deliver immediate ROI and then scaling -- first within their organizations, and then across multiple data silos. That’s when the full benefits of blockchains will become apparent, as literally trillions of dollars of efficiency will become unlocked from these silos. It’s definitely going to happen. But it’s not going to be overnight. A. Schumacher: Let’s assume a diagnostic company wants to share complex health data with collaborators within a distributed network of laboratories, researchers, and hospitals, applying big data analytics and machine learning. How difficult would it be for them to connect and adapt applications to GemOS? Do you also plan to provide your own solutions? M. Winkelspecht: Not difficult at all. In fact, it's quite simple. There are three steps to securely sharing your data through GemOS: Register,

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permission and share. The diagnostic company would first register all the assets they wish to securely share by submitting it to the GemOS API. Next, they add permissions to record who can read, write and administer the registered asset. In your example, the diagnostic company would grant read access to the researchers, laboratories, and hospitals. Once those permissions are in place, those entities can simply pull the data from the GemOS API. We are also open to providing our own solutions to build on top of our platform if the need arises but it is not our main focus. Our main focus is on making the process outlined above as easy as possible for our customers through tools like automatic notifications when a data asset changes, configurable data models around your shared assets, tracking the history of a data set, etc.

Gem Founder & CEO, Micah Winkelspecht A. Schumacher: What is the major difference and benefit to other ‘classical’ middleware solutions like iRODS or Nirvana that also have highly-configurable rule engines? M. Winkelspecht: This is a great question. iRODS is an ongoing research and software development effort to provide software infrastructure solutions that enable collaborative research. Currently, it’s mainly used in universities and scientific community. The software systems are implemented as middleware that interacts with remote storage systems on behalf of the users.

The goal of the iRODS team is to develop generic software that can be used to implement all distributed data management applications, through changing the management policies and procedures. With GemOS, you can essentially do a similar data management, but facilitated through blockchain.

• Here the identities of the data and their access to the data are secured cryptographically unlike iRODS

• Also, the availability of data or the update to any data point is essentially notified to all the parties interested in the specific data

• You can also build a marketplace to facilitate data exchange through the blockchain where all the requests and accesses are recorded and the provenance is stored.

A. Schumacher: Nowadays it is almost impossible for pharmaceutical companies and healthcare providers to transfer patient data between the European Union and the US, resulting in huge problems for researchers which work in global teams. In 2016, US and EU officials announced an agreement on a revised Safe Harbor accord, to be known as Privacy Shield. Some analysts question, whether it will sufficiently address the broader issues about the US data protection framework raised by the EU. Do you think that blockchain, at some point in time, could be a solution to this dilemma? M. Winkelspecht: Blockchain technology has definitely some important characteristics which will help solve use cases like this. The security of the data and the auditing of data are two key challenges of cross border data flow. Managing data rights through a blockchain helps secure all transactions cryptographically and provide audit trail and provenance of all data access. A. Schumacher: Gem is a company that has come a long way in a relatively short time, with a growing staff, already outgrowing its Venice, CA office. Do you plan to branch out; maybe even to Europe?

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M. Winkelspecht: We’ve worked closely with Philips on an important project to create a unified view into a patient’s entire medical journey. We’re currently working with another big company on managing data related to EU residents. It’s an important demonstration of blockchain’s applicability to help multinationals comply with the GDPR regulation due to take effect in Europe in May 2018. It’s an area where we’re developing considerable expertise. And we’re getting attention from other European companies and media. So, it’s not out of the realm of possibility that Gem could have several European customers by the end of next year. At least, that’s my hope. The first company that establishes a practical and easy to use platform (or middleware solution) could be very successful and highly profitable. Indeed, most successful companies today, e.g. Google, Facebook, Amazon or Apple, make the bulk of their revenue with platforms. Their platforms are so valuable and important because they allow billions of clients to access and connect business ecosystems. The rise of those platforms illustrates the importance for managers in the healthcare sector to learn to think differently about their businesses. Pharmaceutical companies may want to rethink their business model and achieve competitive advantage by widening and deepen connections using blockchain platforms. Whatever blockchain solution is used in healthcare, one thing is for sure needed: all participant, patients, and physicians need to be well educated about possibilities in such a way that all interested parties can understand the concept, ultimately leading to improved data utility and patient care. Where to go from here? No, blockchain technology will likely not revolutionize healthcare immediately; for that – the healthcare sector is far too innovation-averse. Many hospitals and physicians do not even use electronic health record systems, especially in Europe where many health care providers are very skeptical about putting confidential data into the cloud.

Also, in the healthcare sector, blockchain startups are still working on proof-of-concept, rather than applying their technology in practical ways.

From my experience in the precision medicine software market I estimate that the pharmaceutical industry is usually 5-10 years behind in adopting innovative technologies, compared to other industries; for sure blockchain is still a very new concept for the precision medicine ecosystem. The good news is, blockchain offers economic scalability, meaning you can start small. If the company manages to be profitable, the owners can scale up the core business-prototype to take advantage of all benefits blockchain offers. Before pharma executives start large blockchain projects, they have to check whether the technology is suitable to the companies’ needs. Not all R&D projects gain from a blockchain solution, yet many do. As such, I argue for a continual learning process in the precision medicine ecosystem. One move in that direction is the use of game theory -- the mathematics concerned with the analysis of strategies dealing with competitive situations, (for example, seeing an innovative approach but too afraid considering because nobody ever did it before) – enabling logical decision making. Who’s interested in strategies to get started in the blockchain space may want to read a whitepaper ‘Blockchain: Opportunities for Health Care’ by Deloitte, the multinational professional advisory services firm. Deloitte argues that capitalizing on blockchain technology now has the potential to

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connect fragmented healthcare systems to generate insights and to better assess the value of care. Waiting too long may prove disadvantageous. Indeed, according to Gartner’s Hype Cycle for Emerging Technologies 2016, blockchain is still – and will be for the next 5-10 years - an innovation trigger, before reaching the peak of inflated expectations. The blockchain start-up scene is strong though, and practical innovations are developed at a significant pace. Some are still cautious, for example, blockchain data startup Tierion argued that blockchain presents more pitfalls than promises at this early stage. However, they are optimistic about the impact of blockchain in the years to come. Indeed, the company moved itself into the healthcare space, partnering with Philips to join Philips' Blockchain Lab. Together they are exploring how blockchain technology can be used in healthcare. Others, such as Forrester, a research firm titled its 2015 blockchain report “Don’t Believe in Miracles,” advising enterprises to wait 5-10

years before introducing blockchain, in part because of legal restrictions. But do we really want to wait so long? When we apply game-theory, we see that this is exactly the opposite of what a thought leader and innovator should do now. Others propose that, while a blockchain-based solutions may be an option at some point in the future, the near term may requires a bridge solution. Solutions, solutions, solutions The use of blockchain technology in pharmaceutical R&D and precision medicine is not an initiative that ‘in theory’ could come true, sometimes in the future; it is an approach where already many solutions are available or pre-designed. For example, in Sep 2016, the Use of Blockchain in Health IT and Health-related Research Challenge was concluded. This ideation challenge attracted many innovators to put forward ideas on the topic of Blockchain Technology and the

Gartner’s Hype Cycle for Emerging Technologies 2016 claims that blockchain is still an innovation trigger. The Gartner Hype Cycle report (adapted here to show some significant technologies) provides cross-industry perspective to the latest innovations entering the world economy, covering over 2,000 technologies, providing trends that will have the single greatest impact on an organization’s strategic planning.

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potential use in Health IT to address privacy, security, and scalability challenges of managing EHR and resources. The entries that won the challenge were selected based on several factors, including the papers’ proposed solutions or recommendations for market viability; creativity; ability to inform and foster transformative change. One of the winners was the OPAL/Enigma project - which creates a peer-to-peer (P2P) network that enables parties to jointly store and analyze data with complete privacy, based on highly optimized version of multi-party computation with a ‘secret-sharing’, an auditable, tamper - proof distributed ledger records and controls access through smart contracts and digital identities. Distributed networks with privacy maximizing algorithms can maximize security for data processing, in compliance with HIPAA, confidentiality and other regulatory and ethical requirements without the limited scalability of current distributed processing platforms. OPAL/Enigma envisions distributed data repository architecture on a P2P network where data is encrypted at its repository so that raw data is never released. The data remains secure during storage and analysis because data can be only queried if the data that are permissioned by digital identity credentials for specific data operations is defined by legally binding smart contracts. At the level of the data repository node, data is encrypted in storage as well as during computation, which counters internal data theft. The data repository owner has full control over the granularity of answers to queries and therefore privacy. The strength of the OPAL/Enigma project is that it can be used to improve new forms of clinical trials, for example, adaptive trials. An adaptive clinical trial evaluates a treatment by observing participant outcomes or side-effects on a prescribed schedule and modifying parameters of the trial protocol in accord with those observations. Modifications may include dosage, sample size, and choice of drug, patient selection criteria, and biomarkers. Adaptive trials often use data borrowing techniques between treatment arms in order to evolve and statistically learn the best fit between a therapy and a group of individuals with a given biomarker. Executing such trials requires an

infrastructure which allows data abstraction from electronic health records, secure data handling with regards to patient confidentiality, data sharing capabilities (e.g. for statistical analysis across pharma competitors) and regulatory compliance. Here, the OPAL/Enigma platform helps to permit analyzing the data stored by the system with external applications while keeping the data itself private and under full control of its owners. Blockchain-based individual clinical data support various Precision Medicine Initiatives around the globe in which researchers, providers, and patients work together to develop individualized care. Researchers will be able to search for a trial-related information on the blockchain, confirm when it occurred, and verify the authenticity of the original protocol.

Next to the big software giant Microsoft, other heavyweights in the ICT-industry try to move into the healthcare and blockchain space. One of them is the IT- and Smartphone giant Huawei, who recently joined the Hyperledger blockchain project. Another forerunner is IBM, one of the founding members of the Hyperledger Project and leading voice in developing collaborative open standards for distributed ledgers and smart contracts. The Hyperledger project was initiated by the Linux Foundation in 2015 and is an open source effort created to advance cross-industry blockchain technologies. It is a global collaboration including leaders in finance, healthcare, banking, IoT, supply chain, manufacturing, and technology.

With the joint collaboration between members, the project intends to build an open platform, meet the demands of users in various industries, and simplify

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business processes. The project is of special interest to healthcare organizations because it launched a dedicated Healthcare Working Group committed to help the healthcare industry realize the full potential of open source blockchain technologies. The Healthcare Working Group will house and foster technical and business-level conversations about appropriate applications for blockchain technology in the healthcare industry – such as described in my article. This working group is open to everyone interested in positive, open collaboration towards blockchain adoption in healthcare. In May 2017, the Hyperledger consortium announced that Change Healthcare has joined as a Premier Member of the project. One of America’s largest healthcare IT companies, Change Healthcare is the first healthcare organization to join Hyperledger at the top membership level. Beyond Blockchain Blockchain can be confidently termed one of the most innovative technologies for the past few decades. Yet, we also have to remind ourselves that blockchain technology is still not very old and still suffers from some ‘kids-diseases.' For example, it is not entirely clear how to scale blockchain technology or how to solve incompatibility issues with existing IT systems. Also, in some rare instances, the absolute

immutability of the blockchain may be a hurdle standing in the way of blockchain's adoption. Think about potential regulatory restrictions in light of the new European Union's General Data Protection Regulation regarding consumer data privacy and ownership rights or the US Fair Credit Reporting Act, among others. Such regulatory frameworks may require personal data to be capable of being redacted or censored, something that is not possible on an incontrovertible platform. As a consequence, in specific circumstances, an editable blockchain capability may be needed, to adapt to an imperfect world where human error or unexpected events require flexibility. In addition, there are still insufficient data standards, interoperability bottlenecks, and even concerns about security. However, the evolution of the technology is in full swing, and newer adaptions of the classical ‘Blockchain 1.0’ are already reality, such as new distributed ledger concepts, tree-like ledgers, some specifically designed for machine-to-machine interactions (which can come in handy once the machines take over the earth). Technological innovations are successful because each new product is relatively more efficient and effective than its predecessor. One of those innovations is called the “tangle.” While the classical blockchain framework is not ideal for machine-to-machine

transaction, which will increasingly important for mobile health applications and wearables, the tangle is a micro-transaction cryptotoken specifically designed for the Internet-of-Things (IoT). In the currently available blockchain systems, one must pay a fee for making a transaction. As a consequence, transferring a very small amount, a so-called micro-payment (which is a central part of device-to-device interactions), just makes no sense since one would also have to pay the fee which is many times larger. For example, the Tangle ledger

The Tangle or Directed Acyclic Graph (DAG) chain represents a collection of nodes or vertices, while allowing connectivity between nodes but with no circular edgings. In other words, it is a kind of network where each node is linked to others in one direction only, and you never end up where you started. The IOTA Tangle architecture makes users and validators one and the same; to issue a transaction on the Tangle, users must approve other transactions, thereby contributing to the network’s security. The Tangle is the first distributed ledger to achieve scalability, no fee transactions, data integrity and transmission as well as quantum-computing protection. You can read the whitepaper here.

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IOTA can settle transactions with zero fees so devices can trade exact amounts of resources on-demand, as well as store data from sensors and data-loggers securely and verified on the ledger. According to the developers, IOTA a revolutionary new blockless distributed ledger that is scalable, lightweight and for the first time ever makes it possible to transfer value without any fees. Iota claims its technology enables the ability to include checkpoints for transactions, which should increase the security of blockchains. These “value-added” aspects are pivotal Contrary to today’s Blockchains, consensus is no longer decoupled but instead an intrinsic part of the system, leading to decentralized and self-regulating peer-to-peer network. Yet, Tangle ledgers may not fully replace the blockchain; rather it will likely act as an addition to the current blockchain ecosystem by acting as an oracle for smart contract platforms like Ethereum and Rootstock. Where to start? - Learn from Estonia Maybe you are thinking now. Great. Please, somebody – not me – should do the first large-scale blockchain project. If it works, we will invest in it too. Luckily, this already happened… In 2016, the Baltic country of Estonia was the first government in the world to have embraced the blockchain technology in live production systems for ensuring the integrity of healthcare records, logs, and systems. There is a reason why Estonia did go in this direction, Estonia learned it the hard way. In 2007, the Estonian Government was the victim of what is considered the first instance of a state-sponsored cyberattack that paralyzed the government for a long time. A three-week wave of massive cyber-attacks directed by Russia disabled the websites of government ministries, political parties, newspapers, banks, and companies. So, under the auspices of the Estonian Government, a team of scientists joined forces with Amsterdam-based software security

company Guardtime, a leader in cyber-security using blockchain's Keyless Signature Infrastructure (KSI), to provide authentication on a massive scale. Now, unknown to most people, Estonia is one of the most digitally advanced countries in the world. Citizens carry smart cards through which they can access almost all government services including viewing their personal health records. By deploying blockchain, the Estonian Government ensured that every access or change to health-care records and the supply chain for digital data is verifiable using the blockchain, guaranteeing system, process, and operational integrity. The platform provides real-time alerts to cyber-attacks, enabling to react to any incidents immediately before potentially larger-scale damages can occur. With traditional cyber security like firewalls, attacks can go undetected for months, and it is tougher to identify how and what data has been stolen or tampered with.

It seems that other countries are following in Estonia’s footsteps. For example, the United Arab Emirates largest private sector healthcare provider, NMC Health, has announced a partnership with UAE’s telecom service provider Du to test Guardtime's KSI Blockchain technology in the country. NMC Health comprises a network of 30 healthcare facilities and caters to over 11,000 patients a day. This Proof of Concept (POC) will promote innovation and the use of next generation technologies to enhance UAE’s

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position as a center for innovation and knowledge economy. Elsewhere, announced by Chief Scientific Advisor Sir Mark Walport, the UK Government is planning to evaluate blockchain tech to secure welfare payments and also considering using it to secure hospital records. As we could see, investing in innovations within the healthcare sector make sense. The question that remains for business managers is: Where to start? The healthcare industry is made up of many different areas where the adoption of blockchain solutions would make sense, and each has different dynamics. Investments in the healthcare sector are affected by many variables, including positive trends related to demographics and negative trends related to reimbursement and regional regulatory obstacles. As a start, we should look at those healthcare areas where already a lot of money is invested. For that, it is worth looking at the Health Technology Category Innovation Quadrant by Venture Scanner, an analyst and technology powered startup research firm. Through Venture Scanner, it is possible to research the categories that make up a sector, learn about the companies within categories, and analyze funding and operational data.

According to their research, the money is going in areas where we can expect a high need for innovation and a good chance of short-term returns of investment. Those areas are primarily the precision medicine ecosystem (or personalized medicine), ‘Health Insurance/Payments’, ‘Online Health Destinations’, and IoT Fitness. Examples of those categories include disease-specific genetic testing, more cost-efficient analytic solutions for healthcare providers, and consumer personalized reports, health insurance marketplaces and platforms to manage and automate health benefits, websites that provide symptom checklists, drug information, and health resources, and personal fitness and wellness solutions such as wearables that track fitness stats, monitor heart rate, and sports-specific data collection solutions. If possible, companies and blockchain enthusiasts should think of joining groups to explore and build novel platforms together. One potential partner in this space is the startup Hashed Health, that has raised $1.85m at the beginning of 2017 and which sits at the heart of a healthcare-focused blockchain consortium.

The Hashed Health Model Hashed Health is responsible for educating its members, organizing multi-sector proof of concepts (POC’s), navigating regulatory hurdles, developing technology, supporting technical standards, and providing blockchain / distributed ledger network support. Members are supposed to join various workgroups focused on specific business problems such as security, revenue cycle, payments, supply chain & pharma, consumerism, and legal. These workgroups will meet regularly to learn and advance opportunities. By leveraging Hashed Health’s value-added services, consortium members work with Hashed Health to make these opportunities actionable.

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Hashed Health’s backers positioned the new funding as a way for the consortium to advance its work. So, what are they doing? Hashed Health is leading a consortium of healthcare companies focused on accelerating innovation using blockchain and distributed ledger technologies. To empower its consortium members, Hashed Health provides value-added services such as product management, product development, regulatory guidance, and technology support services for blockchain solutions and blockchain networks. The company argues that their healthcare experts focus on making sure the business problem drives the appropriate technical solution. They try to help members launch new industry level solutions and provide exposure to existing networks who are actively exploring, piloting, or using existing solutions.

For larger companies or governments that are interested in entering the blockchain space, (next to various blockchain organization and user groups), another new player in the blockchain ecosystem may be a good place to get help. In March 2017, Don Tapscott and Alex Tapscott, co-authors of the best-selling book ‘Blockchain Revolution’ announced the formation of the non-profit Blockchain Research Institute (BRI) in Toronto. The BRI is a landmark initiative on the potential of blockchain across industries and also within the functions of organizations. Through a series of major research projects led by global experts, the RBI scientist try to identify and explain key application opportunities, issues, strategies and approaches that enable companies and governments to capitalize on blockchain technology.

Health Technology Category Innovation Quadrant. The Innovation Quadrant provides a snapshot of the average funding of start-ups and average age for the different Health Technology categories and how they compare with one another. Heavyweights, which are still missing in the healthcare sector, are comprised of companies that have reached maturity with significant financing. Established areas have average funding and high average age and are comprised of companies that have reached maturity with less financing. Most categories belong to the ‘Pioneers’, which are comprised of companies that are less mature with earlier stages of financing. The most important healthcare fields are the Disruptors, categories with high average funding and low average age that are comprised of less mature companies with significant financing.

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In the beginning, they will be studying eight target vertical opportunities and seven horizontal opportunities, as well as several overarching issues such as regulation and societal change.

The BRI is funded by a joint public-private partnership involving governments and some of the world’s biggest corporations, as well as new blockchain startups. Although still lacking a major healthcare player, founding members include Accenture, IBM, SAP, Digital Asset, NASDAQ, PepsiCo, Centrica, Liberty Global, the Government of Ontario, University Health Network and blockchain pioneers Nuco, Paycase, Artlery, Votem, Cosmos, YouBase and WISeKey. Affiliate organizations include Hyperledger, The Chamber of Digital Commerce, coala.io and the newly created Enterprise Ethereum Alliance; their primary role will be to help minimize the amount of redundant work, avoiding duplicating anything that’s already being done. All those BRI-members realized that there is the need to enable a research hub that will allow private and public-sector researchers from around the world to pool their resources and work together on the best ways to advance building blockchain-based model economies. The BRI is very outspoken about the problems in healthcare, arguing that the root of systemic healthcare problems is our industrial-age thinking about delivering healthcare, where data is hoarded, patients are assumed to be ignorant, and where

healthcare is only available when you are in the system. The BRI will work on several projects to fix healthcare problems, based on a set of new principles — collaboration, openness, and integrity, and where the patient co-creates their own data with full transparency into it, (fully in line with my proposal of the open pharmaceutical organization Digital Identity). A central part of BRI’s work will be focused on utilizing blockchain to move beyond the simple custodianship of current healthcare databases, and turn global energies to how we use and manipulate databases.

It will be interesting to observe how much efforts of the BRI will go in the disruptive potential of blockchain in the healthcare ecosystem. From my own experience, I know that Don Tapscott is deeply committed to the issue of healthcare, especially mental health. I ran into Don many years ago at the Center for Addiction and Mental Health (CAMH), during a time when he was a member of the Board of Trustees of the Clarke Institute of Psychiatry and Chair of the ‘Centered on Hope’ Campaign for the CAMH Foundation. In addition, he was a founding member of the Committee of Advisors of the Business & Economic Roundtable on Addiction & Mental Health. I asked Don Tapscott to give me a deeper insight in what the BRI is all about: Axel: Don, you have launched the BRI to provide industry players with actionable information on blockchain applications. For that, the new Institute will bring together the leading thinkers, researchers, and entrepreneurs in the blockchain space. How far are you with this project; is the institute already fully operational? Don: Yes, the Institute has been launched. We are actively recruiting 40 project leaders to run 40 projects and some are underway now. We’re also

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welcoming new members to the program and I’m pleased to say that every week new Blue-chip companies, governments and blockchain pioneers are joining the initiative. Big companies pay $200,000 but there is differential pricing for other organizations. Axel: You founded the institute in Toronto. The cities Discovery District is probably the most concentrated area of academic research in the world. However, regarding commercialization, Canadian scientists have a poor track record of cashing in on their research. Do you see a chance that blockchain can help improve the situation? Don: Actually, there is massive innovation and commercialization underway in the greater Toronto region. Alex and I conducted a research project for the federal government and found that this part of Canada is emerging arguably as the global center for blockchain innovation. There are five big banks that are all investing significantly. There are great computer science schools and talent. Ethereum was invented by a Torontonian, and there is a strong ecosystem here. The two biggest incubators of North America are in the Toronto region - MaRS and the DMZ at Ryerson Governments at all levels are actively supporting blockchain innovation and we are proud to say that the Federal government, Ontario

government, City of Toronto, University Health Network, Toronto Stock Exchange (TMX) and Bank of Canada are all members of our program. The region also has Global thought leadership, being home to the co-authors of the only best seller on the topic, and now home to the Blockchain Research Institute which is doing the most ambitious investigation into the strategic issues around blockchain. Axel: Impressive. I also know you are also deeply committed to healthcare, particularly to the issue of mental health. For example, you endowed the Tapscott Chair in Schizophrenia Studies at the Center for Addiction and Mental Health in Toronto; (coincidentally the laboratory I worked in for many years and whose research is based on my invention of a high-throughput epigenetic technology. It’s a small world). In this context, do you expect that blockchain technology can help to revolutionize medicine and the healthcare sector? Don: This is one of the major topics we’re investigating in the Blockchain Research Institute. To me, the biggest opportunity centers around the patient record as being part of a cryptographically secure, portable and Anonymous identity. The University Health Network in Toronto is a real leader on this topic.

Don Tapscott, CEO of The Tapscott Group, is one of the world’s leading authorities on the impact of technology on business and society. He was ranked the 4th most influential management thinker in the world by ‘Thinkers50’ and the world’s best known Blockchain Insider. Don has authored over 15 books including Blockchain Revolution, Wikinomics, Paradigm Shift, Growing Up Digital, and The Digital Economy.

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Axel: Many healthcare systems all over the world face significant problems, often because delivering healthcare is totally outdated. Some of the research projects at the BRI deal specifically with such healthcare issues, trying to tackle problems based on a set of new principles — collaboration, openness, and integrity, and where the patient co-creates their own data. Can you tell us me more about those projects? Don: As I said earlier the health record, as part of a universal identity is key. The healthcare system in many countries is under extreme strain, where every stakeholder, from healthcare providers to insurers, drug companies and most of all patients, all suffer as a result. Though there are many culprits, the root of the problem is our industrial-age thinking about delivering healthcare, where data is hoarded, patients are assumed to be ignorant, and where healthcare is only available when you’re in the system. This leads to costly and ineffective care. Blockchain promises to change that. We can fix healthcare by basing it on a set of new principles — collaboration, openness, and integrity, and where the patient co-creates their own data with full transparency into it. Patients and frontline health care providers are separated by a labyrinth of relationships between jurisdictions, professional services, specialists, and other providers. The digital processes used are really for the logistics of handling paper documents. There are several paper trails per doctor-patient or patient-provider interaction, and lots of data entry duplication. The process is the same as before anyone had ever heard of a computer, except the information moves between separate data silos much faster. In short, a lot of time and effort goes into managing data between organizations. Another way to put this is that we used to expend energy maintaining databases. The invention of blockchains means we can move beyond the simple custodianship of a database and turn our energies to how we use and manipulate databases — less about maintaining a database, more about managing a system of record. Axel: Two dozen companies and the Canadian government are the Founding Members of the BRI, but I assume it is the goal of the institute to

make global business more efficient. Is the Institute also open to foreign governments to join? Don: Of course. Expect announcements of a number of US government departments and also National governments in other countries to join the Institute. Most of our funding already comes from outside of Canada. Axel: If you could give just one piece of advice for professionals that are interested in blockchain technology…. What would it be? Don: First of all get yourself educated. Get a bitcoin wallet on your mobile phone and buy something. This will take a few minutes. You learn more about public key cryptography in minutes doing that then anything else you can do. I would encourage anyone to watch my TED Talk on blockchain and also Alex’s TED talk called “How Blockchain is eating Wall Street”. And of course, I do encourage everybody to read Blockchain Revolution. We spent 18 months on this book and I’m very proud of it after 16 books this may end up being my most important. A lot of the future success of the blockchain institute will depend on their perseverance and their strategic goals. What gives us hope is that, beyond deep research, the ‘big thing’ the BRI claims focusing on is execution. Their member services executives are compensated based on how well the BRI-members implement the strategies that the BRI experts provide them with. It’s a business model that’s probably different from anything we’ve ever seen. Conclusions 2017 is the year healthcare administrators and managers need to learn and strategize how their organization could utilize blockchain. Pharmaceutical and biotech companies are faced with numerous industry challenges including increasing competition by new players outside of the classical pharma ecosystem (companies such as Verily, iCarbonX, Foundation Medicine, GRAIL, InnVentis, or Human Longevity), globalization, lower margins and patent expiration. Pressure to innovate processes is also rising from regulatory agencies; in 2018 the new EU data protection regime called the General Data

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Protection Regulation (GDPR) will be in place, so all those companies dealing with sensitive and identifiable data will be working hard to ensure they are compliant in time or face the consequences, which include huge fines for infringement. It is clear that we have a disconnect between innovation and economic growth, particularly in the healthcare sector. It is also clear that benefits of architecting a data auditing system that can help guarantee higher levels of transparency, accountability, and trust will be crucial for the continued advancement of the healthcare industry. All over the world, healthcare ecosystems are now rapidly shifting to “outcome based” accountable care, which can be much easier achieved by adopting innovative technologies such as blockchain. Enabling ‘individualized health information’ to be securely and easily accessed provides the necessary building block for the creation or real-time precision medicine.

From my experience as a trained scientist, inventor and tech-geek, I am convinced that the driving force of innovation is the relentless, exponential progress of science and technology, combined with developing new business models that can translate this new

science into economic value. Obviously, that implies that organizations have to take risks, and most established companies struggle with this as they cannot start from scratch, they are too afraid applying business models that are radically different from their predecessors. That is why we need an exponential change in the way businesses are organized, starting fresh. Changing the way a pharmaceutical company is structured and doing its business, for example leveraging blockchain technology, could be one solution. Adapting to ever-changing technological advancements is key to survival. As the potential and usability of blockchain develops, business leaders should keep an eye out for more ways how this technology could help to stay competitive and enhance business efficiency. Many sectors of the healthcare ecosystem can benefit from blockchain technology; the most important are listed here: • Clinical Administration & Backend - scheduling, patient transfers, billing, compliance

• Medical Devices & Diagnostics - monitoring, detection equipment

• Doctor and Healthcare Service Search - services to search for doctors, healthcare plans, and specialized healthcare

• Doctor Network and Resources - collaboration platform across hospitals & social networks that identify and share best practices

• Electronic Health/Medical Records - platforms for electronic medical charts, schedules, prescription tracking, & referral letters

• Gamification of Health - gamification solutions for health and fitness

• Precision Medicine - genetic, metabolomic and epigenetic testing, analytic solutions, patient personalized reports

• Healthcare Marketing & Campaign Management - healthcare-specific CRM platforms

• Healthcare Mobile Communications/Messaging - secure messaging for doctors, data sharing amongst healthcare professionals

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• Supply Chain - cold chain logistics, biobanking, drug shipping

• Health Insurance and Payments - health insurance marketplaces & platforms to manage and automate health benefits

• IoT Fitness - healthy eating trackers, exercise tracking wristbands, smartphone-controlled devices

• IoT Health Care - glucose monitors, sleep trackers, pain relief wearables

• Medical Big Data - data management, solutions to normalize & link data across different systems, predictive analytics

• Mobile Fitness/Health Apps - fitness apps, mindfulness exercises

• Nutrition Science & Advice - nutrition information, nutraceuticals, lifestyle plans

• Online Health Communities - online communities that connect patients & doctors, generalized medical information

• Online Health Advice/Counselling - symptom checklists, drug information, and resources that discuss more specific issues

• Patient Engagement and Education - in-hospital multimedia systems, clinical trial recruiting, patient relationship management

• Population Health Management - population data management, coordinated care across populations

• Remote Monitoring & Family Care Management - services that provide caregivers to senior citizens, alert systems for in-home care

• Telehealth/Telemedicine - patients to doctor video conferencing, remote monitoring, remote diagnosis

Of course, blockchain has limitations and is not suited for application to all scenarios in pharmaceutical R&D, however, the integration of blockchain technology within the healthcare sector can create seismic changes in how individuals receive medical care and how drugs will be developed. Building relationships with others in the blockchain ecosystem is a key aspect of reducing risk for a company that wants to enter this new market. Creating an open blockchain ecosystem will take some time, but if done properly, the combination of distributed ledgers and cloud technology can usher in a new fair, yet profitable collaborative economy. To do this requires a confluence of catalysts that bring blockchain applications in pharmaceutical R&D from potential to reality. Experts, especially all blockchain geeks, must engage the next generation of stakeholders in science, politics, finance and the public and inform and educate them in art and science of what is possible and what is not. The fruit of this effort may be an organization that is in the position to be the next big enabler and driver of an intelligent and healthier world. As blockchain technology is steadily improved, workable solutions will evolve, and a new generation of powerful, blockchain-based applications will shape the next era of healthcare business. At some day, all of us will be touched by blockchain technology, and its influence will multiply. By combining science with new technologies and some entrepreneurial spirit, we can transform data into actionable insights to improve healthcare around the globe.

Axel Schumacher

About the Author Axel has a track record as visionary scientist, inventor and business manager in academic, clinical and pharmaceutical environments. He managed international R&D and marketing programs across Europe and North-America. He strives to translate scientific discoveries into practical applications to help understand, treat & prevent complex disorders, but also to promote cutting-edge technologies that could transform medicine and the way we age. Axel is also a co-founder and head of biobanking & biomarker development of InnVentis. InnVentis is a vertically integrated company that provides an ecosystem for algorithm-based Precision Medicine, creating proprietary molecular and real-world reference databases for secure & precise real-time diagnostics, disease monitoring, and treatment decisions. InnVentis represents the convergence of connected health, multi-omics, diagnostics, machine learning and other breakthrough technologies. Axel’s expertise: Epigenetics | Complex disorders | Biomarker Discovery | NGS | Biobanking | Scientific Marketing | Competitive Strategy | Business Intelligence | Innovation | Precision Medicine

www.linkedin.com/in/draxelschumacher dr.a.schumacher@gmail.com @MethylogiX

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The healthcare industry needs a revolution – and it is here now. Trusted and open R&D processes, auditable & secure transactions between parties, authenticated by mass collaboration and powered by collective self-interest, rather than by fewer and fewer pharmaceutical giants motivated by profit alone. This healthcare ecosystem is immune to exorbitant drug prices, tampering, fraud, or political control. The name of the technology that makes all this happen is blockchain, a tool that will fundamentally change the healthcare sector. Blockchain will prove to be indispensable in building a global precision-medicine ecosystem that optimally connects patients, clinicians, researchers, insurers and clinical laboratories to one another. Blockchain will improve data security, data sharing, interoperability, patient engagement, big data analytics, health information exchange, fighting counterfeit drugs, R&D processes, AI-based diagnostics and fostering vertical business models. Compared to the financial markets, the healthcare industry’s participation with the technology remains in its infancy – but this can change now. This strategy guide may direct you in starting this process to transform ideas into profitable and ethical business models. Copyright © 2017 by Dr. Axel Schumacher All rights reserved. No part of this publication may be reproduced, distributed or sold without the prior permission of the author, except in the case of brief quotations embodied in reviews and certain other noncommercial uses. If in doubt, just ask. If you want the support the author, please consider inviting him for a beer or buying the eBook version of the Strategy Guide. Stock Photo Credit: Source: https://www.gfxtraz.com/ Creative Commons (Attribution 3.0).

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Reinventing healthcare: Towards a global, blockchain-based

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