Will Blockchain Technology Usher in a Healthcare Data Revolution?
Digital blockchain concept.
The hacker collective known as the Dark Overlord first surfaced in June 2016, when it advertised more than 600,000 patient files from three U.S. healthcare organizations for sale on the dark web. The group, which also attempted to extort ransom from its victims, soon offered another 9 million records pilfered from health insurance companies and provider networks across the country.
Since 2009, federal regulators have counted nearly 5,000 major data breaches in the United States alone, affecting some 260 million individuals.
Last October, apparently seeking publicity as well as cash, the hackers stole a trove of potentially scandalous data from a celebrity plastic surgery clinic in London—including photos of in-progress genitalia- and breast-enhancement surgeries. "We have TBs [terabytes] of this shit. Databases, names, everything," a gang representative told a reporter. "There are some royal families in here."
Bandits like these are prowling healthcare's digital highways in growing numbers. Since 2009, federal regulators have counted nearly 5,000 major data breaches in the United States alone, affecting some 260 million individuals. Although hacker incidents represent less than 20 percent of the total breaches, they account for almost 80 percent of the affected patients. Such attacks expose patients to potential blackmail or identity theft, enable criminals to commit medical fraud or file false tax returns, and may even allow hostile state actors to sabotage electric grids or other infrastructure by e-mailing employees malware disguised as medical notices. According to the consulting agency Accenture, data theft will cost the healthcare industry $305 billion between 2015 and 2019, with annual totals doubling from $40 billion to $80 billion.
Blockchain could put patients in control of their own data, empowering them to access, share, and even sell their medical information as they see fit.
One possible solution to this crisis involves radically retooling the way healthcare data is stored and shared—by using blockchain, the still-emerging information technology that underlies cryptocurrencies such as Bitcoin. And blockchain-enabled IT systems, boosters say, could do much more than prevent the theft of medical data. Such networks could revolutionize healthcare delivery on many levels, creating efficiencies that would reduce medical errors, improve coordination between providers, drive down costs, and give researchers unprecedented insights into patterns of disease. Perhaps most transformative, blockchain could put patients in control of their own data, empowering them to access, share, and even sell their medical information as they see fit. Widespread adoption could result in "a new kind of healthcare economy, in which data and services are quantifiable and exchangeable, with strong guarantees around both the security and privacy of sensitive information," wrote W. Brian Smith, chief scientist of healthcare-blockchain startup PokitDok, in a recent white paper.
Around the world, entrepreneurs, corporations, and government agencies are hopping aboard the blockchain train. A survey by the IBM Institute for Business Value, released in late 2016, found that 16 percent of healthcare executives in 16 countries planned to begin implementing some form of the technology in the coming year; 90 percent planned to launch a pilot program in the next two years. In 2017, Estonia became the first country to switch its medical-records system to a blockchain-based framework. Great Britain and Dubai are exploring a similar move. Yet in countries with more fragmented health systems, most notably the U.S., the challenges remain formidable. Some of the most advanced healthcare applications envisioned for blockchain, moreover, raise technological and ethical questions whose answers may not arrive anytime soon.
By creating a detailed, comprehensive, and immutable timeline of medical transactions, blockchain-based recordkeeping could help providers gauge a patient's long-term health patterns in a way that's never before been possible.
What Exactly Is Blockchain, Anyway?
To understand the buzz around blockchain, it's necessary to grasp (at least loosely) how the technology works. Ordinary digital recordkeeping systems rely on a central administrator that acts as gatekeeper to a treasury of data; if you can sneak past the guard, you can often gain access to the entire hoard, and your intrusion may go undetected indefinitely. Blockchain, by contrast, employs a network of synchronized, replicated databases. Information is scattered among these nodes, rather than on a single server, and is exchanged through encrypted, peer-to-peer pathways. Each transaction is visible to every computer on the network, and must be approved by a majority in order to be successfully completed. Each batch of transactions, or "block," is date- and time-stamped, marked with the user's identity, and given a cryptographic code, which is posted to every node. These blocks form a "chain," preserved in an electronic ledger, that can be read by all users but can't be edited. Any unauthorized access, or attempt at tampering, can be quickly neutralized by these overlapping safeguards. Even if a hacker managed to break into the system, penetrating deeply would be extraordinarily difficult.
Because blockchain technology shares transaction records throughout a network, it could eliminate communication bottlenecks between different components of the healthcare system (primary care physicians, specialists, nurses, and so on). And because blockchain-based systems are designed to incorporate programs known as "smart contracts," which automate functions previously requiring human intervention, they could reduce dangerous slipups as well as tedious and costly paperwork. For example, when a patient gets a checkup, sees a specialist, and fills a prescription, all these actions could be automatically recorded on his or her electronic health record (EHR), checked for errors, submitted for billing, and entered on insurance claims—which could be adjudicated and reimbursed automatically as well. "Blockchain has the potential to remove a lot of intermediaries from existing workflows, whether digital or nondigital," says Kamaljit Behera, an industry analyst for the consulting firm Frost & Sullivan.
The possible upsides don't end there. By creating a detailed, comprehensive, and immutable timeline of medical transactions, blockchain-based recordkeeping could help providers gauge a patient's long-term health patterns in a way that's never before been possible. In addition to data entered by their caregivers, individuals could use app-based technologies or wearables to transmit other information to their records, such as diet, exercise, and sleep patterns, adding new depth to their medical portraits.
Many experts expect healthcare blockchain to take root more slowly in the U.S. than in nations with government-run national health services.
Smart contracts could also allow patients to specify who has access to their data. "If you get an MRI and want your orthopedist to see it, you can add him to your network instead of carrying a CD into his office," explains Andrew Lippman, associate director of the MIT Media Lab, who helped create a prototype healthcare blockchain system called MedRec that's currently being tested at Beth Israel Deaconess Hospital in Boston. "Or you might make a smart contract to allow your son or daughter to access your healthcare records if something happens to you." Another option: permitting researchers to analyze your data for scientific purposes, whether anonymously or with your name attached.
The Recent History, and Looking Ahead
Over the past two years, a crowd of startups has begun vying for a piece of the emerging healthcare blockchain market. Some, like PokitDok and Atlanta-based Patientory, plan to mint proprietary cryptocurrencies, which investors can buy in lieu of stock, medical providers may earn as a reward for achieving better outcomes, and patients might score for meeting wellness goals or participating in clinical trials. (Patientory's initial coin offering, or ICO, raised more than $7 million in three days.) Several fledgling healthcare-blockchain companies have found powerful corporate partners: Intel for Silicon Valley's PokitDok, Kaiser Permanente for Patientory, Philips for Los Angeles-based Gem Health. At least one established provider network, Change Healthcare, is developing blockchain-based systems of its own. Two months ago, Change launched what it calls the first "enterprise-scale" blockchain network in U.S. healthcare—a system to track insurance claim submissions and remittances.
No one, however, has set a roll-out date for a full-blown, blockchain-based EHR system in this country. "We have yet to see anything move from the pilot phase to some kind of production status," says Debbie Bucci, an IT architect in the federal government's Office of the National Coordinator for Health Information Technology. Indeed, many experts expect healthcare blockchain to take root more slowly here than in nations with government-run national health services. In America, a typical patient may have dealings with a family doctor who keeps everything on paper, an assortment of hospitals that use different EHR systems, and an insurer whose system for processing claims is separate from that of the healthcare providers. To help bridge these gaps, a consortium called the Hyperledger Healthcare Working Group (which includes many of the leading players in the field) is developing standard protocols for blockchain interoperability and other functions. Adding to the complexity is the federal Health Insurance and Portability Act (HIPAA), which governs who can access patient data and under what circumstances. "Healthcare blockchain is in a very nascent stage," says Behera. "Coming up with regulations and other guidelines, and achieving large-scale implementation, will take some time."
The ethical implications of buying and selling personal genomic data in an electronic marketplace are doubtless open to debate.
How long? Behera, like other analysts, estimates that relatively simple applications, such as revenue-cycle management systems, could become commonplace in the next five years. More ambitious efforts might reach fruition in a decade or so. But once the infrastructure for healthcare blockchain is fully established, its uses could go far beyond keeping better EHRs.
A handful of scientists and entrepreneurs are already working to develop one visionary application: managing genomic data. Last month, Harvard University geneticist George Church—one of the most influential figures in his discipline—launched a business called Nebula Genomics. It aims to set up an exchange in which individuals can use "Neptune tokens" to purchase DNA sequencing, which will be stored in the company's blockchain-based system; research groups will be able to pay clients for their data using the same cryptocurrency. Luna DNA, founded by a team of biotech veterans in San Diego, plans a similar service, as does a Moscow-based startup called the Zenome Project.
Hossein Rahnama, CEO of the mobile-tech company Flybits and director of research at the Ryerson Centre for Cloud and Context-Aware Computing in Toronto, envisions a more personalized way of sharing genomic data via blockchain. His firm is working with a U.S. insurance company to develop a service that would allow clients in their 20s and 30s to connect with people in their 70s or 80s with similar genomes. The young clients would learn how the elders' lifestyle choices had influenced their health, so that they could modify their own habits accordingly. "It's intergenerational wisdom-sharing," explains Rahnama, who is 38. "I would actually pay to be a part of that network."
The ethical implications of buying and selling personal genomic data in an electronic marketplace are doubtless open to debate. Such commerce could greatly expand the pool of subjects for research in many areas of medicine, enabling the kinds of breakthroughs that only Big Data can provide. Yet it could also lead millions to surrender the most private information of all—the secrets of their cells—to buyers with less benign intentions. The Dark Overlord, one might argue, could not hope for a more satisfying victory.
These scenarios, however, are pure conjecture. After the first web page was posted, in 1991, Lippman observes, "a whole universe developed that you couldn't have imagined on Day 1." The same, he adds, is likely true for healthcare blockchain. "Our vision is to make medical records useful for you and for society, and to give you more control over your own identity. Time will tell."
Breakthrough therapies are breaking patients' banks. Key changes could improve access, experts say.
Single-treatment therapies are revolutionizing medicine. But insurers and patients wonder whether they can afford treatment and, if they can, whether the high costs are worthwhile.
CSL Behring’s new gene therapy for hemophilia, Hemgenix, costs $3.5 million for one treatment, but helps the body create substances that allow blood to clot. It appears to be a cure, eliminating the need for other treatments for many years at least.
Likewise, Novartis’s Kymriah mobilizes the body’s immune system to fight B-cell lymphoma, but at a cost $475,000. For patients who respond, it seems to offer years of life without the cancer progressing.
These single-treatment therapies are at the forefront of a new, bold era of medicine. Unfortunately, they also come with new, bold prices that leave insurers and patients wondering whether they can afford treatment and, if they can, whether the high costs are worthwhile.
“Most pharmaceutical leaders are there to improve and save people’s lives,” says Jeremy Levin, chairman and CEO of Ovid Therapeutics, and immediate past chairman of the Biotechnology Innovation Organization. If the therapeutics they develop are too expensive for payers to authorize, patients aren’t helped.
“The right to receive care and the right of pharmaceuticals developers to profit should never be at odds,” Levin stresses. And yet, sometimes they are.
Leigh Turner, executive director of the bioethics program, University of California, Irvine, notes this same tension between drug developers that are “seeking to maximize profits by charging as much as the market will bear for cell and gene therapy products and other medical interventions, and payers trying to control costs while also attempting to provide access to medical products with promising safety and efficacy profiles.”
Why Payers Balk
Health insurers can become skittish around extremely high prices, yet these therapies often accompany significant overall savings. For perspective, the estimated annual treatment cost for hemophilia exceeds $300,000. With Hemgenix, payers would break even after about 12 years.
But, in 12 years, will the patient still have that insurer? Therein lies the rub. U.S. payers, are used to a “pay-as-you-go” model, in which the lifetime costs of therapies typically are shared by multiple payers over many years, as patients change jobs. Single treatment therapeutics eliminate that cost-sharing ability.
"As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket,” says Patricia Goldsmith, the CEO of CancerCare.
“There is a phenomenally complex, bureaucratic reimbursement system that has grown, layer upon layer, during several decades,” Levin says. As medicine has innovated, payment systems haven’t kept up.
Therefore, biopharma companies begin working with insurance companies and their pharmacy benefit managers (PBMs), which act on an insurer’s behalf to decide which drugs to cover and by how much, early in the drug approval process. Their goal is to make sophisticated new drugs available while still earning a return on their investment.
New Payment Models
Pay-for-performance is one increasingly popular strategy, Turner says. “These models typically link payments to evidence generation and clinically significant outcomes.”
A biotech company called bluebird bio, for example, offers value-based pricing for Zynteglo, a $2.8 million possible cure for the rare blood disorder known as beta thalassaemia. It generally eliminates patients’ need for blood transfusions. The company is so sure it works that it will refund 80 percent of the cost of the therapy if patients need blood transfusions related to that condition within five years of being treated with Zynteglo.
In his February 2023 State of the Union speech, President Biden proposed three pilot programs to reduce drug costs. One of them, the Cell and Gene Therapy Access Model calls on the federal Centers for Medicare & Medicaid Services to establish outcomes-based agreements with manufacturers for certain cell and gene therapies.
A mortgage-style payment system is another, albeit rare, approach. Amortized payments spread the cost of treatments over decades, and let people change employers without losing their healthcare benefits.
Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
The new payment models that are being discussed aren’t solutions to high prices, says Bill Kramer, senior advisor for health policy at Purchaser Business Group on Health (PBGH), a nonprofit that seeks to lower health care costs. He points out that innovative pricing models, although well-intended, may distract from the real problem of high prices. They are attempts to “soften the blow. The best thing would be to charge a reasonable price to begin with,” he says.
Instead, he proposes making better use of research on cost and clinical effectiveness. The Institute for Clinical and Economic Review (ICER) conducts such research in the U.S., determining whether the benefits of specific drugs justify their proposed prices. ICER is an independent non-profit research institute. Its reports typically assess the degrees of improvement new therapies offer and suggest prices that would reflect that. “Publicizing that data is very important,” Kramer says. “Their results aren’t used to the extent they could and should be.” Pharmaceutical companies tend to price their therapies higher than ICER’s recommendations.
Drug Development Costs Soar
Drug developers have long pointed to the onerous costs of drug development as a reason for high prices.
A 2020 study found the average cost to bring a drug to market exceeded $1.1 billion, while other studies have estimated overall costs as high as $2.6 billion. The development timeframe is about 10 years. That’s because modern therapeutics target precise mechanisms to create better outcomes, but also have high failure rates. Only about 14 percent of all drugs that enter clinical trials are approved by the FDA. Pharma companies, therefore, have an exigent need to earn a profit.
Skewed Incentives Increase Costs
Pricing isn’t solely at the discretion of pharma companies, though. “What patients end up paying has much more to do with their PBMs than the actual price of the drug,” Patricia Goldsmith, CEO, CancerCare, says. Transparency is vital.
PBMs control patients’ access to therapies at three levels, through price negotiations, pricing tiers and pharmacy management.
When negotiating with drug manufacturers, Goldsmith says, “PBMs exchange a preferred spot on a formulary (the insurer’s or healthcare provider’s list of acceptable drugs) for cash-base rebates.” Unfortunately, 25 percent of the time, those rebates are not passed to insurers, according to the PBGH report.
Then, PBMs use pricing tiers to steer patients and physicians to certain drugs. For example, Kramer says, “Sometimes PBMs put a high-cost brand name drug in a preferred tier and a lower-cost competitor in a less preferred, higher-cost tier.” As the PBGH report elaborates, “(PBMs) are incentivized to include the highest-priced drugs…since both manufacturing rebates, as well as the administrative fees they charge…are calculated as a percentage of the drug’s price.
Finally, by steering patients to certain pharmacies, PBMs coordinate patients’ access to treatments, control patients’ out-of-pocket costs and receive management fees from the pharmacies.
Therefore, Goldsmith says, “As long as formularies are based on profits to middlemen…Americans’ healthcare costs will continue to skyrocket.”
Transparency into drug pricing will help curb costs, as will new payment strategies. What will make the most impact, however, may well be the development of a new reimbursement system designed to handle dramatic, breakthrough drugs. As Kramer says, “We need a better system to identify drugs that offer dramatic improvements in clinical care.”
In today's podcast episode, law professor Gaia Bernstein talks about the challenges of keeping control over our thoughts and actions, even when some powerful forces are pushing in the other direction.
Each afternoon, kids walk through my neighborhood, on their way back home from school, and almost all of them are walking alone, staring down at their phones. It's a troubling site. This daily parade of the zombie children just can’t bode well for the future.
That’s one reason I felt like Gaia Bernstein’s new book was talking directly to me. A law professor at Seton Hall, Gaia makes a strong argument that people are so addicted to tech at this point, we need some big, system level changes to social media platforms and other addictive technologies, instead of just blaming the individual and expecting them to fix these issues.
Gaia’s book is called Unwired: Gaining Control Over Addictive Technologies. It’s fascinating and I had a chance to talk with her about it for today’s podcast. At its heart, our conversation is really about how and whether we can maintain control over our thoughts and actions, even when some powerful forces are pushing in the other direction.
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We discuss the idea that, in certain situations, maybe it's not reasonable to expect that we’ll be able to enjoy personal freedom and autonomy. We also talk about how to be a good parent when it sometimes seems like our kids prefer to be raised by their iPads; so-called educational video games that actually don’t have anything to do with education; the root causes of tech addictions for people of all ages; and what kinds of changes we should be supporting.
Gaia is Seton’s Hall’s Technology, Privacy and Policy Professor of Law, as well as Co-Director of the Institute for Privacy Protection, and Co-Director of the Gibbons Institute of Law Science and Technology. She’s the founding director of the Institute for Privacy Protection. She created and spearheaded the Institute’s nationally recognized Outreach Program, which educated parents and students about technology overuse and privacy.
Professor Bernstein's scholarship has been published in leading law reviews including the law reviews of Vanderbilt, Boston College, Boston University, and U.C. Davis. Her work has been selected to the Stanford-Yale Junior Faculty Forum and received extensive media coverage. Gaia joined Seton Hall's faculty in 2004. Before that, she was a fellow at the Engelberg Center of Innovation Law & Policy and at the Information Law Institute of the New York University School of Law. She holds a J.S.D. from the New York University School of Law, an LL.M. from Harvard Law School, and a J.D. from Boston University.
Gaia’s work on this topic is groundbreaking I hope you’ll listen to the conversation and then consider pre-ordering her new book. It comes out on March 28.
