The Governance Gap: Integrating Blockchain and AI for Drug Traceability and the Challenge of Regulatory Oversight

Abstract

The pharmaceutical supply chain faces unprecedented challenges in ensuring drug authenticity, safety and traceability across global distribution networks. Counterfeit drugs account for approximately 10% of the global pharmaceutical trade, causing significant public health risks and economic losses. This article examines the convergence of blockchain technology and artificial intelligence (AI) as transformative solutions for pharmaceutical traceability while critically analysing the regulatory governance gaps that threaten their implementation. Blockchain's immutable ledger capabilities combined with AI's predictive analytics provide unprecedented transparency and verification mechanisms throughout the drug supply chain . However, the integration of these technologies presents significant regulatory challenges: jurisdictional fragmentation, data privacy conflicts, liability attribution complexities and the absence of harmonized international standards. This research finds that the US How existing pharmaceutical regulations, including the Drug Supply Chain Security Act (DSCSA) and the EU's Falsified Medicines Directive, struggle to accommodate a decentralized technological framework. This article proposes a multi-stakeholder governance model incorporating regulatory sandboxes, adaptive legislation and international coordination mechanisms . By analysing case studies from pilot implementations and examining comparative regulatory approaches, this work demonstrates that technological innovation alone cannot address pharmaceutical supply chain vulnerabilities in line with legal and governance frameworks. Findings suggest that addressing this governance gap requires concerted action among regulators, technology developers, pharmaceutical companies and international organizations to create flexible yet robust oversight mechanisms that protect public health while promoting innovation.