XStream Systems Stories and News for the Week of November 28, 2008

Here are a few of stories that we at XStream Systems think are noteworthy as it relates to the safety of our supply chain. Recent incidents such as the adulteration of heparin and the discovery of melamine in baby formula have heightened consumer’s awareness of safety risks to our food and drug supply.

U.S. pays millions for unapproved drugs
The availability of unapproved prescription drugs to the public may create a dangerous false sense of security. Dozens of deaths have been linked to them.
The medications date back decades, before the Food and Drug Administration tightened its review of drugs in the early 1960s.

Republican Lawmaker Asks GAO to Review FDA Handling of Heparin
The FDA may not have used all available postmarket surveillance tools when determining the likelihood that contaminated heparin caused patient fatalities, according to a Republican congressman. “Based on the available information … there is a serious and potentially troubling question about whether FDA availed itself [of] all of its tools to conduct comprehensive surveillance of heparin deaths,” Rep. Joe Barton (R-Texas), ranking member of the House Energy and Commerce Committee, says in a letter to the Government Accountability Office (GAO).

FDA Finds Melamine Traces In U.S. Infant Formula
Bloomberg News reported that the industrial chemical melamine was found in U.S. infant formula in trace amounts that pose no health concern, according to FDA. Since September, some 50,000 children in China were sickened by melamine-tainted milk and several died.

We at XStream Systems believe that molecular pharmaceutical authentication will play a major role in the coming years to protect us from contaminated, adulterated and counterfeit products. To learn more about how this can be done, please visit www.xstreamsytems.net.

Prescription Drugs Kill 300 Percent More Americans than Illegal Drugs

Death by prescription is on the rise. An analysis of 168,900 autopsies conducted in Florida in 2007 found that three times as many people were killed by legal drugs as by cocaine, heroin and all methamphetamines put together.

This trend is mirrored nationally as the DEA confirms that the number of people abusing prescription drugs in the United States has jumped 80 percent in six years to seven million.

While illegal drug use is down with teens, prescription abuse is on the increase. Prescriptions are often obtained without a prescription at an online pharmacy. This year, The National Center on Addiction and Substance Abuse at Columbia University reported that of the 365 websites that advertise controlled substances, 85% of them do not require a doctor’s prescription.

In answer to this growing problem the senate passed the Ryan Haight Online Pharmacy Consumer Protection Act to curb online prescription drug trafficking, abuse, and availability. The recently passed bill amends the Controlled Substance Act by requiring face-to-face prescribing, DEA-endorsement before a pharmacy can dispense, and stiffer penalties for violators.

The bill was named after Ryan Haight, a California honors student who died from an overdose of the painkiller Vicodin he obtain over the internet by posing as a 25 year old man with chronic back pain.

We at XStream System applaud this legislature to protect our citizens and encourage consumers to purchase prescriptions only through licensed brick and mortar pharmacies or online pharmacies certified through Verified Internet Pharmacy Practice Sites (VIPPS).

How Do You Classify Counterfeit Pharmaceuticals?

No Two Counterfeits Seem the Same...
By: Alan Clock, Senior Vice President, XStream Systems, Inc.

As our solution continues to discover counterfeit medications within the US Supply Chain, we have found that there is little official direction in the way of classifying pharmaceutical counterfeit incidents. What we are discovering is that within our universe of deployed and pilot units within the pharmaceutical supply chain (full line wholesalers, secondary distributors and reverse logistics) there is a wide variety of pharmaceutical counterfeit activities that do not fit into one easy classification.

What our end users have found within their inventories demonstrate a wide array of counterfeit medications with a variety of sophistication, quality and ways that they are introduced into the supply chain.

It seems apparent to us that these incidents should not be classified in one broad bucket and would require an industry or regulatory body to more granularly classify counterfeits so as to better understand and ultimately eliminate them as a health risk to all consumers.

We at XStream Systems attempted to tackle this classification issue recently and found that our discussion denigrated into a very long discussion with little output. Usually we got stuck on the finer points of when, where and how and how this impacts the nature and ultimate “class” of the counterfeit.

Undeterred, I posed the question to several industry leaders at an Anti-Counterfeiting Conference that I attended in Washington DC with unfortunately the same results.

Ultimately, I went on-line and found the industry’s most trusted organization, the Pharmaceutical Security Institute’s definition and although they seemingly have the best take on the issue as a whole, they too defer to another organization, the World Health Organization for guidance:

PSI's definition of counterfeit medicines is built upon the definition utilized by the World Health Organization (WHO). Counterfeit medicines are products deliberately and fraudulently produced and/or mislabeled with respect to identity and/or source to make it appear to be a genuine product. This definition applies to both branded and generic products.

It still seems to me based on our recent experience that this definition and classification is not enough given the massive evolution and proliferation of the counterfeit pharmaceuticals. We need something better to drill down and interdict the problem at its various cores in order to eradicate it.

I now pose the question to the public...

How Do You Think Counterfeit Pharmaceuticals Should Be Classified?

I anxiously await your responses.

Scales “Weigh In” and are Found Inadequate

By Brian Mayo, President and CEO, XStream Systems, Inc.

While analytical instruments work well in a forensic laboratory environment, the pharmaceutical industry is struggling to detect counterfeit medications throughout the distribution chain. Sophisticated analytical instruments typically require access to the exposed medications and a highly trained operator to interpret the results. But what about the warehouse worker handling sealed prescription medicine? How does he/she know if any counterfeit products have been received in the large shipments that have been received? The bottles cannot be opened, and the warehouse workers are clearly not trained well enough to operate the analyzers even if they could get access to the medicines inside the bottles.

Often times wholesalers, dispensers, and re-packagers settle for an inexpensive and fast solution: a scale that weighs the bottles. Bottles are simply checked by weighing them and verifying if the weight is proper. Unfortunately counterfeiters can and have been matching the weights contained within each prescription bottle. The industry is being lured into a false sense of security. Checks are being done along the way and everything appears ok. Only after passing through many hands and finally being opened does one discover the truth, that the contents inside are not what was expected. By that time, the counterfeiter is long gone and untraceable.

The war against counterfeits is always a cat and mouse game. As new methods of checking for counterfeits are created, new methods of avoiding it usually follow. Multiple protection measures may be required over time. Hopefully enough checkpoints are put into place to discourage counterfeiters, who then go off looking for easier prey elsewhere. Just take a close look at a $20 bill to see its layered checking methods such as the serial numbers, special inks, special paper, imbedded thread, holographic images, and fine print resolution. These have evolved over time, as the counterfeiting schemes became more sophisticated.

Unfortunately the pharmaceutical industry is now the easy prey. Here we are, in the 21st century, with many companies still relying on weighing bottles of drugs to protect the public against counterfeit drugs. Why? Well, for one thing when this was implemented, counterfeit drugs did not seem prevalent. Counterfeit drugs did not seem to be such a big problem. Now they are a $40B industry and growing rapidly. A second reason is that the right authentication technology has, until now, not been available.

The next phase of combating counterfeit drugs centers around three very important requirements.

1. There needs to be the ability to penetrate inside sealed bottles and packages to reveal what’s truly inside.

2. There needs to be an analytical tool that somehow determines exactly what the drug is, and not just simply how much it weighs.

3. The new method needs to be easily done by anyone, anywhere in the supply chain.
All three of these very important requirements are met by the XT250™ Material Identification System offered by XStream Systems. Any warehouse worker can rapidly and easily authenticate drugs inside sealed bottles, by automatically verifying the drug’s molecular structure.

The majority of counterfeit drugs detected so far by the XT250 system had previously passed the weighing test. This indicates that counterfeiters are well aware of the weighing process in the supply chain and successfully circumvented those checks. Now that the XT250 system is verifying the molecular structure of the drug, counterfeiters can only reproduce the actual drug to avoid detection by the XT250 system. The counterfeiter’s job just got a whole lot harder… Counterfeiters, it’s now your move.

XStream Systems Stories and News for the Week of November 21, 2008

Here are a few of stories that we at XStream Systems think are noteworthy as it relates to the ever growing issues of counterfeit and adulterated medications. As counterfeits become more prevalent globally and domestically, science will play a strong role in protecting our nation’s supply chain and molecular pharmaceutical authentication will be an important part of solving this global problem:

Israel joins world effort to halt counterfeit drug sales
Inspectors went to the Tel Aviv package warehouse of the Israel Postal Company and other facilities last week, seizing drugs prohibited in Israel and others suspected of being counterfeit that had been shipped from India and China.

FDA: FDA Hosts Its First Science Writers Symposium
Recently FDA experts met with more than 50 journalists and science writers at the FDA’s first Science Writers Symposium. At this day-long event, FDA’s scientists and physicians presented on such research as the science behind the Salmonella outbreaks, melamine adulteration of food substances, and nutrigenomics – an emerging field that has the potential to prevent disease and maximize health by using genetic profiles to tailor what we eat. FDA experts also presented their novel discoveries to prevent pandemic flu, identify contaminated heparin, and analyze the safety of drug-eluting stents down to the molecular level.

FDA Warns Public of Extortion Scam by FDA Impersonators
The U.S. Food and Drug Administration is warning consumers about a fraudulent scheme to extort money from consumers by callers who falsely identify themselves as "FDA special agents" or other FDA officials. Several instances have been reported to the FDA of calls enticing consumers to purchase discounted prescription drugs by wiring funds to one of several locations in the Dominican Republic.

Daschle Accepts HHS Cabinet Post
Former Senate Majority Leader Tom Daschle has accepted President-elect Barack Obama's offer to be Secretary of Health and Human Services.

Will the FDA’s China Office Protect US Consumers?

The Washington Post, New York Times, Bloomberg News and a variety of other media outlets all have stories today announcing the Food and Drug Administration (FDA) deploying staff and opening its first office in Beijing, China.

This is the FDA’s reaction to China’s increasing role as a major exporter to the United States in food, drug and consumer products. Unfortunately China is also the world leader in exporting counterfeit, adulterated and contaminated products and the FDA is attempting to slow down the dangerous impact to US consumers. Recent high profile examples of counterfeit, adulterated and contaminated products include the recent heparin contamination which resulted in over 250 deaths in the US, the pet food contamination with melamine and the huge issue over lead paint on children’s toys. Most experts agree that these examples of toxic products within our consumer supply chain represent only a fraction of the dangerous products that are reaching our shores on a daily basis.

Apparently the FDA has plans this year to open up other offices throughout China and certify third-party inspectors who can approve and qualify the safety of exports to the United States.

The question is when will the FDA deploy a materials analysis technology that can look inside product packaging to inspect and protect the US consumer instead of throwing bodies at a high expense to attempt to catch the problem before it gets into our supply chain?

Stay tuned, we at XStream Systems are trying our best to introduce our revolutionary technology as a solution to catching the problem before it impacts our nations health.

Weekend News Highlights International Epidemic of Counterfeit Medications

XStream Systems found an op-ed article in the New York Times regarding the health epidemic in the third world regarding poor quality and counterfeit medications and a story reported by Bloomberg News about the seizure of millions in counterfeit malaria, HIV and tuberculosis drugs in SE Asia.

The phenomenon of counterfeit, adulterated and contaminated pharmaceuticals continues to grow and flourish as our global economy declines.

Until technology solutions such as XStream’s XT250 become ubiquitous, this malady will continue to proliferate and impact those beyond the third world.

Op-ed: More needs to be done to ensure safety, quality of drugs in the developing world.

In an op-ed in the New York Times (11/15, A21), Roger Bate, author, director of the health advocacy group Africa Fighting Malaria, and resident fellow at the American Enterprise Institute, wrote that, "if aid organizations are serious about combating the spread of deadly diseases in the developing world, they must do more to ensure the safety and quality of drugs."

According to Bate, the importations of counterfeit medicines "are only part of the problem." Bate explained that in order "deal with the scarcity of drugs, many poor governments have turned to local production." Still, "local producers often make low-quality" medicines. "Many poor countries," he wrote, "lack the regulatory structure needed to monitor safety and effectiveness. Some do not even have laws against selling substandard drugs, and none have sophisticated agencies like the" Food and Drug Administration (FDA).

Bate concluded that aid organizations must first "give technical and financial support to governments' sincere efforts to maintain strict drug inspection standards." Second, they should "always refuse to subsidize any low-quality drugs." And finally, organizations need to "insist that only brand-name and generic products approved by stringent drug agencies like the FDA be distributed."


Interpol seizes more than $6.65 million of counterfeit medicines in Southeast Asia.

Bloomberg News (11/17, Bennett) reports, "Interpol seized more than $6.65 million of counterfeit medicines against malaria, HIV, and tuberculosis in Southeast Asia and made 27 arrests, disrupting the region's fake drug trade for the second time in three years."

According to Aline Plancon, an officer involved in the "five-month investigation called Operation Storm," officials "seized more than 16 million pills, including fake antibiotics for pneumonia and child-related illnesses." Operation Storm "involved almost 200 raids" conducted across "Cambodia, China, Laos, Myanmar, Singapore, Thailand, and Vietnam."

Health officials were particularly concerned by "copies of a class of malaria drugs called artemisinins." Fake "artemisinin-based treatments containing small amounts of the medicine are helping the parasite responsible for malaria to evade authentic drugs in patients near Cambodia's border with Thailand, a recent study showed."

Government Seizes Contaminated Heparin STILL in the US Supply Chain?

In a news report, the Federal Agents seized contaminated Heparin a full seven months following the recall. Read the full story.

It seems shocking that after confirmed deaths of over 250 people that this type of product would still be in the domestic supply chain. “I think that this is an illustration of how many gaps that remain in the process and the system that leaves the US consumer at risk,” stated Alan Clock, SVP of XStream Systems. “Those within the supply chain that believe that they are not vulnerable or that the burden of product safety lay elsewhere are in for a rude awakening when not if the next counterfeit or adulterated products hit their warehouse or store shelves.”

To learn more about XStream Systems revolutionary materials analysis solution to counterfeit, contaminated or adulterated products please visit us at www.xstreamsystems.net.

How do Recalls Affect Consumer Loyalty?

A new study release by Deloitte shows that safety issues costs companies millions of revenue dollars. The study shows that when consumers hear of product safety and/or quality issues, more than half of them switch products for nine months or more, increasing the likelihood that they would discontinue the brand use entirely.

Modern consumers are less tolerant of recalls and over 49 percent are extremely concerned with product safety. Those population segments with the greatest concern are women (53%) and seniors (56% of those over the age of 55).

In addition, recent recalls from China have left the public with a distrust of items manufactured there. Over 73 percent stated they were extremely apprehensive about items manufactured in China.

To see how loyalty is affected, just look at last year’s recall issue where thousands of pets died from tainted products resulting in the largest recall of pet food in US history. Today, pet owners, even in this economic downturn, are reluctant to change to a cheaper pet food. ….

A recent article by the associated press stated “That's because many pet owners, who upgraded their kibble after contaminated pet food killed or sickened thousands of animals last year are leery of switching back…..”

So what can companies do to assure their customers that their products are safe? Consumers want safety information on the package, on the company website, and from the government. Furthermore, testing materials for consumer safety is a necessity.

Build and they shall come – But, test and assure and they will stay.