1. Tackling the U.S. opioid crisis using blockchain
Andrew Lee, Jen McGann,
Luis Suarez, Becca Wolfe
February 28, 2017

2. Very focused. I called this one out in the conclusion because you were focused on what is feasible. Would be good to know a bit more about the mechanics of the blockchain implementation. 85/100

3. Prescription drug abuse crisis in the US
The U.S. has a severe opioid epidemic Health and social costs related to prescription opioid abuse is $55 billion each year
Patient is prescribed a Schedule II drug
No monitoring to curb addictive behavior
Overdose, hospitalization, illegal sale of drug, death
Patient suffers from pain 1 2 4 3
Prescription drug abuse crisis in the US 5
Over 650,000 opioid prescriptions are dispensed daily
100 million Americans suffer from chronic pain
In 2014, 2 million Americans abused or were dependent on prescription opioids
Each day, an average of 78 people die from opioid overdoses
Addiction

4. Lack of technology to communicate Rx history
No universal method exists to track a prescription histories across all stakeholders
Cannot track prescription history from previous doctors
No transparency across state lines
Cannot see if patient has prescription filled from another insurer
If formulary changes even slightly, will not flag system
The Payer
The Doctor
Cannot see prescriptions filled at other pharmacies
No time for due diligence for each patient
The Pharmacist
Medication prescribed is very addictive
Easy to counterfeit a script
Can profit from selling drugs
The Patient

5. Current efforts have marginal impact
Lackluster regulation and monitoring is not addressing the source of the problem
Better education on prescribing habits (CMS, HHS)
Being trained to treat the consequence (addiction)
Last year, the federal government asked for an additional $1B of funding
The Payer
The Doctor
Databases available to log patient use (not mandatory and does not go across state lines)
The Pharmacist
Drugs come with a “black box” warning
The Patient

6. Our solution A new system for tracking and monitoring prescription data across stakeholders
Distributed among doctors, pharmacies, government
Transactions validated by trusted third party
Decentralized
Prescription tracking software powered by a decentralized database built on an Ethereum private blockchain
Each prescription creates a token for the patient to spend
Transactions enabled by Ethereum smart contracts
Smart
SSN used as each patient’s unique ID
Fingerprint used to prove identity at pick-up
Secure

7. How it works Prescription data will be made available to relevant stakeholders via a private blockchain
Prescription is entered into a database that every doctor and pharmacy has visibility into 2 3
Prescription enables a token that is valid to be spent once in different pharmacies for specific period of time
Prescription 1
A doctor validates that the patient needs an opioid by giving a prescription
While the medicine is being consumed the patient is not allowed to buy another opioid 5
Doctor
Token
Patient
Pharmacy validates that patient has a token, takes token in exchange for medicine and makes entry to the database
Pharmacy 4

8. Opiates: A Natural Pain Remedy Opioids: Synthetic Pain Medications
Initial Focus for Datapill: Opiates and Opioids
Focusing on one drug class increases feasibility of stakeholder alignment
Opiates: A Natural Pain Remedy
Types
Morphine – severe pain (before and after surgeries)
Codeine – milder pain, severe diaherrea
Heroin
Opium
Opioids: Synthetic Pain Medications
Methadone
Percocet, Percodan, OxyContin (oxycodone)
Vicodin, Lorcet, Lortab (hydrocodone)
Demerol (pethidine)
Dilaudid (hydromorphone)
Duragesic (fentanyl)
Alkaloids derived from the opium poppy
Synthetic drugs manufactured to work in a similar way to opiates
There are 48 classes of opiates/opioids listed as schedule 2 drugs. Within these classes there are almost 500 branded drugs and many more generic

9. $245M revenue opportunity It is important to contract with the federal government to create a national blockchain
Federal
State
State mandated conversion and use of technology
Cost of technology subsidized by state and federal
Doctor
Payer
Pharmacy
$45M
$183M
$17M
$1/Rx written, 10% - 25% Rx Reduction
Opioid Prescriptions1: 259M
$0.25 – $0.75 per Enrollee
Total Enrollees2: 319M
$250 - $300 annual fee per pharmacy
Total Pharmacies3: 62K
1National Institutes of Health, America’s Addiction to Opioids
2Kaiser Family Foundation, Market Share and Enrollment of Largest Three Insurers by State
3IMS Health, National Pharmacy Market Summary

10. Adoption to be state government mandated
Strong incentives across the healthcare ecosystem Datapill will serve as a shared source of truth across stakeholders
Increased accuracy and fidelity
Transparency incentivizes ethical behavior
The Doctor
Already top priority through Opioid Initiative1
Cost-savings for government-run health insurance
Government
Adoption to be state government mandated
The Pharmacist
Reduced liability, less fraudulent Rx filled
Increases efficiency of pharmacists
Payer
Cost-savings as currently bearing majority of over $55B annual cost of opioid abuse2
Patient
Reduced levels of addiction
Increased convenience through electronic storage of data
1US Department of Health and Human Services, The Opioid Epidemic
2Triple Pundit, Drug Companies, Corporate Responsibility and the Prescription Opioid Crisis

11. Steps to implementation State pilot programs will begin in two years followed by gradual national rollout
1H 2017
2H 2017
1H 2018
2H 2018
1H 2019
2H 2019
1H 2020
2H 2020
1H 2021
2H 2021
Secure funding
Live tests of proof of concept begin
Begin pilot in Florida and California
Launch in
2-4 additional states
Active in 10+ US states
Obtain contract with federal government
Build blockchain proof of concept
Test and refine product
Marketing/PR/training to educate stakeholders
Build partnerships with state governments
Expansion and continued rollout to additional states
1US Department of Health and Human Services, The Opioid Epidemic
2Triple Pundit, Drug Companies, Corporate Responsibility and the Prescription Opioid Crisis

12. Potential risks and mitigations Ensuring stakeholder buy-in early and conducting a gradual rollout will allow us to mitigate risks
Gain buy-in from federal and state governments to ensure adoption and accountability; first-to-market is critical
Model based on scale, adoption, and enforcement
Create public awareness around epidemic and encourage counter- lobbying from payers, providers, and pharmacists
Roadblocks from pharma lobbyists
After the proof of concept, many other functions can be built in to deal with special situations
Many variables to account for (losing pills, mail order, etc.)
Datapill algorithms will automate blockchain monitoring, eliminating time for due diligence by doctors and pharmacists
The blocks have to be written and validated in small periods of time

13. Future opportunities Plan to expand beyond opioids and to explore markets outside the U.S.
International expansion:
Expanding focus:
Prescription drug abuse is a worldwide problem
Outside of U.S., opioid abuse most prevalent in Western Europe & Australia
Healthcare ecosystems ripe for disruption
All prescriptions to be tracked by Datapill
Over 4B annually
Other commonly abused prescription drugs:
Depressants to treat anxiety and sleep disorders
Stimulants most often prescribed to treat ADHD
Prevalence of Opioid Use Worldwide
Opioids
259M prescriptions annually
UNODC World Drug Report 2015

14. Five-year projected cash flow Datapill is expected to start earning revenue in year 2 and turn profitable in year 3
Years 0 – 1 will be used to contract with the government and build the Datapill infrastructure
Year 2 will begin the pilot with California and Florida while other state discussions occur

15. Our valuation Using comparable discount and growth rates for technology startups, Datapill’s fair value is estimated at $429M
Revenue: Significant growth is not expected until year 4 once state-level discussions and implementations begin after the pilot states (FL and CA)
Cost: During ramp-up and preparation for implementations, labor will be a significant cost-driver
Estimated growth rates for revenues and costs

16. Seed round ask Startup costs mostly account for labor to begin software and blockchain development
Seed funding will provide runway for one year:
Management (x4)
Blockchain engineer
Developer
Programmer
Government Liaison
Investors will have opportunity to participate in subsequent funding rounds