Why Peer-to-Peer Communication will Replace EDI in Exchanging Important Business Transaction Data

Juli Cooper
February 3, 2023
Blog Articles
June 23, 2023
June 23, 2023

EDI, or Electronic Data Interchange, has been the standard method of exchanging important business transaction data in the life sciences industry for decades (contracts, chargeback claims, credit memos, etc). However, as technology advances, it is becoming clear that EDI is not the future of trading in this industry. Instead, peer-to-peer transacting over the blockchain is poised to take its place. Those still using EDI continue to face an administrative burden.

Restrictive Standards and Organizational Interdependence

EDI Communications require direct connections or utilize a third-party service provider to communicate. However, organizations typically have conflicting standards that can cause communications to be fragmented. On the blockchain network, organizations submit to an agreed standard of governance and can manage customizations on a site-specific basis without the need for alignment between organizations.

Further, existing EDI standards leave little room for customization to account for specific business use cases and are minimally expressive in their data relative to a JSON message. When customization does occur, it requires multiple trading partners to align and increases organizational interdependence. Organizations must be fully aligned on the standards of each message, and this is difficult to achieve without the power of a peer-to-peer network.

Data Inaccuracies & Inefficiencies

EDI messages are issued in batches, causing individual messages to be delayed awaiting aggregation. Peer-to-peer communication, however, allows for instantaneous interchange.

In addition, EDI does not validate the presence of any data, or the data itself when present. The blockchain network, however, is able to instantly validate data visible to all parties. EDI messages further require change qualifiers and it is often difficult to determine an update or addition. The peer-to-peer network presents changes instantaneously.

High Implementation Costs

Enterprise EDI systems are tremendously costly, with software packages starting at around $30,000 for an annual license. In addition to the sign-on financial burden, implementations are time intensive and require specific expertise. Because of the niche product knowledge needed, companies often outsource implementation to high-priced EDI experts. If completed in-house, companies often need to hire entire teams to manage system implementation. Timewise, it typically takes 3–6 months to complete the process.

Because of all of this complexity, companies can be limited in the number of partners with whom they can transact. With a permissioned blockchain network, however, all partners are already on the same system and are able to share information freely.

High Maintenance Costs

Depending on volume, transaction Fees can reach $5 per EDI message. For Chargeback Claims (EDI 844) alone, a large distributor can expect to spend up to $87,000/year. On top of that, ongoing remote Administration of the EDI system can be upwards of $150/hour (with at least 1–2 hours per day being typical). Beyond that, continuing costs are compounded including trading partner setup and ongoing implementations. In total, maintenance costs reach $117,000 per year for a single message type.

Peer-to-Peer Transacting Through MediLedger

Through the MediLedger Network, manufacturers, wholesalers, and GPOs stay aligned on the latest state of the contract, and chargeback disputes/inquiries can be resolved in seconds with all parties looking at the exact same current historical data on the blockchain. With MediLedger, contracts are fully aligned and searchable, and dispute resolution and responding to customer inquiries can be done in seconds. Real-time, validated contract updates remove the risk of contract load delays and inaccuracies for wholesalers and improve pricing accuracy for customers.

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