When, Not If, a Major Pharmaceutical Counterfeit Incident Will Impact the US Supply Chain In 2009

By: Alan Clock, Senior Vice President, XStream Systems, Inc.

As I have traveled around the country speaking with many pharmaceutical industry and supply chain thought leaders in 2008, it seems apparent to me that all those in the know realize that the United States will shortly be facing a major health care crisis caused by the introduction of large amounts of counterfeit pharmaceuticals into the supply chain.

The question among these leaders is not if, but when.

I am predicting something in 2009. And it won’t be something as subtle as the counterfeit heparin which officially wasn’t a counterfeit, but poor manufacturing process caused by counterfeit raw materials. The number of casualties will go well beyond the 250 or so officially considered killed by the bad heparin. I am guessing we in the United States will be dealing with something that will affect thousands of lives this time. Unfortunately this incident or number of incidents, will force many within the industry and regulatory agencies to finally act aggressively and begin doing things that will actually solve the problem.

Just for the record, I consider counterfeit raw materials a counterfeit and officially labeling it otherwise does not make the consequences any less deadly. I don’t believe officials will be able to pass the next incident off as bad manufacturing practices, because likely it will not be quite as subtle.

I don’t like to predict doom and gloom, but my outlook for this healthcare issue is based on some pretty significant evidence that points me to this ultimate conclusion.

• The continued rise in the estimated counterfeit percentage of the supply chain globally. Most experts believe that globally, in third world and developing countries that up to 50% of the medication within their supply chain is counterfeit or adulterated.

• The rise in percentage of counterfeit and adulterated medications in the supply chain in non-third world countries. Some European countries estimate averages above and beyond 10% of the medications within their supply chain are counterfeit or adulterated.

• The fact that over 90% of the raw materials and 60% of the production of medication globally (including Europe and the United States) is now done in countries with some of the highest rates of counterfeit medications within their supply chain.

• High death rates in Africa and Asia based on either the consumption of counterfeit or adulterated medications or diseases like malaria which were not properly treated because of counterfeit or adulterated drugs.

• The FDA hastily opening three major field offices in China and the deployment of thousands of inspectors overseas in an overt but questionable effort to somehow police hundreds of thousands manufacturers and suppliers importing billions of tons products into the United States into hundreds of ports of entry.

• The fact that nearly every major pharmaceutical manufacturer and pharmaceutical distributor in the United States has had to deal with significant liability because of a counterfeit or adulterated medication within their brand or distributed through their companies. The reality is though even after spending millions in attorneys, court cases and settlements there is still not a significant deterrent or protection of their inventories, in fact now given the increased globalization these same entities are in fact more vulnerable now than they were ten years ago.

• The global economy as it continues its slide will continue to fuel individuals and well financed organizations to continue their harmful but profitable enterprises of counterfeiting medications.

• Finally and of most significance to me is the fact that when XStream deployed an XT250 system within a small secondary distributor in the Southeast United States, our system discovered four individual counterfeit medications within the first sixty days of authenticating their inventory.

There are many more “signs” or evidence that I could point to but I think that I have made my point. This is one of those "perfect storm" issues where all of the elements of a significant disaster seem headed for a major collision and the United States consumer is the tiny boat hoping to stay afloat and above water.

I hope I am wrong, but unfortunately, I know I am right. Maybe not about the exact date but now it is a matter of when, not if.

About the author: Alan Clock is a veteran of over 20 years within the pharmaceutical industry. He has served in senior positions with pharmaceutical distribution companies and disease management organizations. He is currently the Senior Vice President of XStream Systems, a high tech start up focused on a revolutionary solution to the authentication of pharmaceutical products within their sealed unit of sale. He can be reached at aclock@xstreamsystems.net. For more information on XStream visit their website at www.xstreamsystem.net.