Illinois State House and Senate Pass Bill to Strengthen Penalties for Counterfeiting

Illinois State’s House and Senate recently passed an anti-counterfeiting bill (SB 1631) which strengthens penalties for those possessing, selling, marketing and transporting counterfeit goods. The bill was a collaborative effort between Senate Majority Whip Ira Silverstein, House Deputy Majority Leader Lou Lang, the U.S. Chamber, the Illinois Chamber of Commerce, the International Anti-Counterfeiting Coalition (IACC), and the International Trademark Association (INTA).

Counterfeiting and piracy costs the U.S. economy approximately $250 billion annually and exposes consumers to potentially harmful products. SB 1631 would impose criminal sentences for counterfeiting of up to 20 years with additional fines of up to $15 million depending upon the level of the offense. The legislation also requires mandatory forfeiture and destruction of counterfeit goods and requires restitution to victims.

We at XStream Systems commend the Illinois' legislative branch in passing this bill to protect its citizens against counterfeits. In addition to strengthening penalties for offenders, we encourage regulators to be proactive in improving supply chain and regulatory processes which act to interdict counterfeiting as a whole.

Fake Versions of Pfizer, Glaxo, J & J, Proctor & Gamble and Wyeth Products Seized in India

Yesterday, police in Ghazaiabad, India shut down a counterfeiting ring and seized fake medicines worth at least Rs. 5 million (over $100K USD) in the raid.

The company raided was registered as Avadh Pharma and is accused of manufacturing counterfeit versions of prestigious band name medicines including: Corex made by Pfizer, Iodex made by Glaxo, Benadryl of Johnson & Johnson, Vicks vaporub made by Proctor & Gamble and Anne French hair remover made by Wyeth. Following up on a tip they received, police raided the site where they recovered 50 cartons of packaged counterfeit finished product as well as an ample supply of packing materials and equipment.

The police also recovered stationery material of the firm, mentioning its name as Avadh Pharma with UP Trade Tax registration number 0073219360 as well as fake seals of different prestigious companies.

The arrested workers were identified as Raju Chaudhary, Rudal Singh, Lal Bhai and Mukesh Sahni. They confessed that they were working for Vinod Bhardwaj, who has fleed, the official stated.

Keeping It Real Report reveals 700,000 Die Each Year from Counterfeit Drugs

Do you think that the counterfeit drugs issue is a small issue? Think again! In poorer countries they can account for as much as half of the supply chain and they claim an estimated 700,000 lives a year. In addition, their very use can undermine the effectiveness of the legitimate drug, thus adding research time and dollars to its list of victims.

A report issued this month from the International policy network gives a good overview of the problem of counterfeits in poorer nations. Below is a some highlights of an article by Franklin Cudjoe from IMANI Health on the report:

Counterfeit drugs kill over 700,000 people every year - new report

A new report from the International Policy Network and sponsored by IMANI Center for Policy & Education details the shocking burden of fake drugs in less developed countries. Fake tuberculosis and malaria drugs alone are estimated to kill 700,000 people a year. That's equivalent to four fully laden jumbo jets crashing every day.

The report lays bare the ballooning problem of counterfeit and substandard drugs, which can constitute one third of the drug supply in certain African countries. These dodgy drugs result in unnecessary death and increased levels of drug resistance.

The report highlights more shocking evidence, such as:

• Nearly half the drugs sold in Ghana, Nigeria, Angola, Burundi, and the Congo are substandard

• About two thirds of artesunate (anti-malaria) drugs in Laos, Myanmar Cambodia and Vietnam contain insufficient active ingredient.

The entire article can be viewed at: www.modernghana.com

May 2009 report can be viewed at: www.africanliberty.org.

Considering the Source – WHO cracks down on GMPs of their suppliers BIG and small.

The finished product is only as good as the sum of its parts.

We are seeing a trend of stricter enforcement of Good Manufacturing Practices (GMPs). Even larger pharmaceutical manufacturers are feeling the pinch as the quality of their pharmaceutical ingredient suppliers are put to the test.

Recently The World Health Organization (WHO) announced they would suspend tuberculosis drugs from Wyeth Pakistan because they questioned the quality of the drug. Their shift in trust of the finish product stemmed from a switch in suppliers for one of its ingredients. The outsourcing of ingredients has become a challenge for manufacturers because consistent suppliers are not always accessible.

A summary of the article appears below and you can view the entire article at American Enterprise Institute website at: www.american.com.

Consider the Source
(Tuesday, May 19, 2009; by Roger Bate; Journal of American Enterprise Institute)
A recent case reveals that it is not only generic firms from middle-income countries that have problems with good manufacturing practice.

The World Health Organization (WHO) late last month announced it was suspending approval for all tuberculosis drugs produced by the Pakistan plant of a subsidiary of the U.S. drug company Wyeth, because it was “no longer assured of the quality of the product.” The drugs had been approved by WHO, which UN agencies, national governments, and other international organizations use to guide the procurement of millions of dollars of HIV/AIDS, malaria, and tuberculosis drugs for the world’s poorest patients.

According to a letter to the company posted on WHO’s website, Wyeth failed to inform WHO that it had changed suppliers for some of its active pharmaceutical ingredients (API) and had altered storage conditions. “They had been informed on a number of occasions”—directly and through communications to all suppliers—“about the importance of informing WHO,” Matthias Stahl, medical officer in charge of assessments at WHO’s drug approval program, told us. WHO’s most recent inspection of the site, in 2005, identified serious noncompliance with Good Manufacturing Practice (GMP), and since that time only limited corrective action had been taken.

The case reveals that it is not only generic firms from middle-income countries that have problems with GMP, as we have previously discussed regarding India’s largest drug company Ranbaxy. Wyeth and Ranbaxy, which are both reputable companies, will probably resolve their particular problems soon. But as more firms source more intermediate chemicals and API from myriad countries, we may be seeing the beginning of a trend.

XStream Systems understands this dilemma. A solution that addresses brand protection and integrity is the use of EDXRD technology for molecular pharmaceutical authentication. By screening products throughout the supply chain, authenticity and quality issues can be addressed on the spot before ever reaching the consumer. To learn more of this technology and how it can help visit: www.xstreamsystems.net.

Chinese Government Busts Online Counterfeit Drug Dealers

China has often been cited as a source for the counterfeit drug trade. In answer to this, Chinese government has been issuing stricter enforcement than they did in the past. The following article is shocking both in discussing the sheer numbers of fake drugs in China and in the number of places that government officials have shut down:

China's ministries work together to bust online counterfeit drug dealers

BEIJING, May 17, 2009 (Xinhua via COMTEX) -- People using the Internet to sell counterfeit medicines in China will face severe punishment as the government amps up the fight against illegal business in the next year, according to a consensus by 13 ministry departments Friday.

The ministerial departments held the meeting to launch a year-long campaign with aims to cut off circulation channels of fake drugs, mainly through online purchasing and postal delivery.

This marked the establishment of a mechanism that will more effectively coordinate different departments' work to curb the production and sale of fake products, said Shao Mingli, vice minister of health and the head of the SFDA.

The new mechanism will enable law enforcers to crack down on fake drugs from production to circulation, by closing down Web sites that advertise fake drugs, and by suspending bank and telephone accounts of companies allegedly involved in illegal trade, Shao said.

The SFDA said in February that law enforcers investigated nearly 300,000 cases of illegal activities related to medicine and medical apparatus in 2008, including the production and sale of fake drugs. A total of 363 production places of fake drugs were closed down and 94 people were charged.

To view the entire article visit: www.tmcnet.com

For comparison as to the extent of counterfeit drugs in China you need only look at the U.S. statistics to get the full impact of the severity involved. China had 300,000 cases of counterfeits/a year vs. US number of approximately 1759 cases/a year [according to the latest figure from Pharmaceutical Security Institute's (PSI)]

Experts Warn Public of 20 Percent Increase in Counterfeits

Fake Flu Medicines and Vaccines expected to be prolific in midst of H1N1 Flu Spread.

Reuters reported yesterday that experts are predicting a dramatic increase in fake goods. The bad economy has spurred an expansion across the black market – including counterfeit medicines, which could pose a public health risk. In light of the recent epidemic of H1N1 Flu, health organizations are warning consumers of the increased risk of fake drugs.

A recap of the story highlights follows:

Experts warn crisis brings more fake goods

MANILA (Reuters) - Global trade in counterfeit goods, including medicines, CDs and DVDs, is expected to rise to nearly $1 trillion this year as economies worldwide continue to slump, security experts said on Thursday.

An estimated $800 billion in fake cigarettes, branded shoes, bags and belts, and pirated movies flowed across the globe in 2007, Stephen Sayell, vice president of Hong Kong-based Asia Risk group, told Reuters.

That figure is expected to rise 20 percent this year.

"As the global financial crisis deepens, the demand for much cheaper consumer goods rises, boosting sales of counterfeiters and movie pirates," Sayell said on the sidelines of a three-day anti-terrorism seminar in Manila.

"We expect a boom in counterfeit medicines and vaccines against flu," Enoch said, warning of potential high risk of a public health threat because of the improper use of anti-viral drugs.

In the Philippines, the health department has already issued a warning against offers by some medical facilities to provide anti-flu shots against the deadly strain of A-H1N1 virus that originated from Mexico.

Last month, the World Health Organization (WHO) warned against the proliferation of fake anti-malaria medicines in the Mekong area, blaming the counterfeit drugs for the emergence of a new strain of malaria that could spread in the region.

(Reporting by Manny Mogato; Editing by Raju Gopalakrishnan and Alex Richardson)

To view the entire article from Reuters visit: uk.reuters.com

Swine Flu (H1N1 Flu) – Is There Really Cause for Worry?

So consumers want to know about the H1N1 influenza A (otherwise known as Swine Flu) and what does it mean to them? Is it all hype or is this something they should worry about? Well…the best answer is to stay informed, be cautious and be prepared.

Authorities agree that this strain of H1N1 Flu should not be dismissed as a threat just because it has started off as mild cases. This particular flu is genetically a descendant of the Spanish flu of 1918, which started mild, but returned to infect two-thirds of the population and kill over 50 million people. Scientists believe that the current flu will return at the peak of flu season this fall and it will be a stronger more viable foe than the one that stands before us today.

The H1N1 Flu currently has around 6500 confirmed cases in 33 countries globally, of which about 3,400 are in the United States. As to date, most deaths due to this strain have occurred in Mexico. The United States has three confirmed deaths, but those individuals also had underlying health issues that contributed to a more severe case that required hospitalization.

So what about natural immunization? There is very little natural immunity to this strain. There is a possibility that individuals who are in their 90’s and above would be immune since they were most likely exposed to the Spanish Flu. However, the rest of us are probably out of luck.

So what about immunization shots? There are several pharmaceutical companies working on these shots to be delivered in the fall. The problem is that vaccines are developed in hen eggs and take about 4 months for completion. It is unlikely that a mass immunization of the population is feasible and will probably be restricted to those most vulnerable.

So what about medication treatment for those with the flu? This is where the real danger is and consumers need to be cautious. When demand exceeds supply, unscrupulous individuals take advantage of the public. No country has enough flu medication to serve its entire population. Some areas such as UK have enough to accommodate around 80% of their population. This is rare as most do not have enough to cover 50%. Some areas such as California only have enough to cover around 25% of their population.

Beware! Already the public is being spammed with individuals trying to sell Tamiflu over the internet only to steal their credit card information. Expect to see some cases of counterfeit Tamiflu as this was the case when SARS became an issue a few years ago and resulted in counterfeit flu remedies infiltrating the marketplace.

So what can a consumer do to protect themselves? The H1N1 Flu travels the same way as other flues. If you don’t have the flu yet practice good hygiene (i.e. wash your hands frequently; always cover your mouth when you cough) to lessen the spread of the disease to yourself or others. If you think you have the flu, stay home. If you suspect the H1N1 flu see your doctor and get tested. Whatever you do, don’t order medication online except through a known pharmacy. You will need a prescription from your doctor and you should only buy medication through known sources!

For pharmaceutical wholesalers, test your inventories. Pharmacists trust you to give them safe efficient medication to supply the public. Forewarned is forearmed. Be prepared - Get your security procedures in place now to ensure you have the safest medication possible for your distribution chain.

Below are some helpful links for information on the H1N1 Flu:

For General Information and preventative measures visit: http://www.cdc.gov/h1n1flu/qa.htm

To view “How Time and Mutations Engineered the New H1N1 Strain” visit: www.washingtonpost.com.

To view statistics on US confirmed cases by state visit the Center for Disease Control at:www.cdc.gov.

To view statistics on global confirmed cases visit the World Health Organization at: www.who.int.

FDA Investigating Deaths of Heparin Patients

Two patients have died from adverse reactions to heparin at Beebe Medical Center in Delaware. Another patient hospitalized at Beebe is also experiencing the same adverse reaction. The deaths are being investigated by the Food and Drug Administrations (FDA) and Baxter Healthcare, who supplied the blood thinner to facility. It is uncertain what caused the reaction. Unlike last year’s recall in which patients developed low blood pressure, these patients developed intracranial bleeding.

Baxter stated that the active ingredient in the product was obtained from Pfizer and not bulk suppliers in China. Pfizer commented that while they do source heparin raw materials from China, they believe that the lot number in question was purchased domestically.

This reaction seems to be an isolated case and has not been reported as any other facilities.

The Delaware hospital where both patients died emphasized that it's not sure heparin caused the deaths. "We are not pointing fingers at Baxter," a Beebe Medical Center spokesman stated. "We don't know what's going on, but heparin is the only commonality that we were able to see ourselves."

Chinese Heparin Producers Get Warning Over Falsified Information

FDA issues letters to two more Chinese manufacturers regarding tainted Heparin

It reads like a bad sequel as more companies have been named in the tainted heparin scandal…

Two Chinese companies have been issued warnings from the FDA for falsifying information on Heparin. Shanghai No. 1 Biochemical & Pharmaceutical said they were manufacturing heparin, when in fact they were purchasing it from two outside companies. One supplier is no longer producing the medicinal product.

The other supplier, Qingdao Jiulong Biopharmaceuticals was also given a warning letter. Jiulong was found to have produced 19 lots of heparin contaminated with Over-Sulfated Chondroitin Sulfate (OSCS), a substance implicated in the U.S. deaths last year. The FDA further faulted them for not investigating how the substance got into the blood thinner and for exporting medicinal products without regulatory approval.

This warning letter was in response to the FDA’s inspection of Jiulong in August 2008. Jiulong told investigators that they did not ship directly to the United States. However, during inspections at U.S. facilities purchase orders were discovered indicating that the plant had been shipping heparin sodium to the U.S. since 2005. FDA also stated that in the past, the firm supplied heparin to Amphastar Pharmaceuticals Inc., a California company that supplies pre-filled syringes.

This story illustrates why analytical screening should be conducted throughout the supply chain – to ensure the quality of: those products supplied to your company, those products you supply to others, and ultimately the finished product consumed by the patient.

RFID Not Embraced by Pharma Industry as Anti-Counterfeiting Measure

A report put out by IDTechEx states that less than 1% of the RFID market was used by the Pharmaceutical Market. The global market share for RFID was $5.56 billion up 6% over last year but only 10 million tags were used in the pharmaceutical industry.

So why wouldn’t the pharma industry embrace it after 7 years of a highly intense campaign for its adoption as an anti-counterfeiting tool? The answer comes in its use.

It is primarily an inventory management security tool. You will see RFID tags on items at your local Wal-Mart. You will see them on all your computer software and that new video game that just came out, but not necessarily on Grandma’s medicine.

The truth is -RFID is very helpful at managing your inventory. It will tell you how much you have on stock. Some tags will even beep at the door if someone tries to make off with it without paying. It does help against shoplifting and employee theft. But it does not tell you what is inside. You are still only verifying the package.

To view the article discussing the report visit www.SecuringPharma.com.

IDTechEx is a knowledge based company specializing in RFID smart labels, smart packaging and Radio Frequency Identification RFID. The company gives strictly independent marketing, technical and business advice and services on these subjects.

US Drug makers Express Concern with USA Trading Partner Countries

The US Trade Representative (USTR) released its 2009 Special 301 Report on Friday May 1, 2009. According to the report, US drug makers have expressed concern over the policies of a number of USA’s trading partners - including Canada, France, Germany, Italy, Japan, New Zealand and Taiwan in regards to global intellectual property protection.

“In this time of economic uncertainty, we need to redouble our efforts to work with all of our trading partners – even our closest allies and neighbors such as Canada – to enhance protection and enforcement of intellectual property rights in the context of a rules-based trading system,” said the USTR, Ambassador Ron Kirk.

The USTR Priority Watch List for 2009 names countries requiring particular scrutiny - Algeria, Argentina, Canada, Chile, France, Germany, India, Indonesia, Israel, Italy, Japan, New Zealand, Pakistan, Taiwan, Thailand and Venezuela. Canada was added to list for the first time this year, due to “increasing concern about the continuing need for copyright reform, as well as continuing concern about weak border enforcement.”

Brazil, China, India, Indonesia and Russia are listed as areas where the manufacture of counterfeit drugs is rampant.

Indonesia joins the list for its counterfeit manufacturing, its counterfeit drug trade and the introduction last year’s law on the operation of foreign pharmaceutical companies that raises “significant market access concerns;”

China is also listed due to its regulatory lapse in the enforcement of active pharmaceutical ingredients (API) – since often these ingredients are not declared as a bulk chemical intended for use in pharmaceuticals by API makers to avoid regulatory oversight.

To read a recap on the USTR Report visit Pharma Times.

It is understandable that China’s lack of regulatory control for APIs would be of particular concern to the US since China provides 40% of the APIs for drugs. The impact of this danger was felt dramatically last year when an adulterated substance added by a Chinese supplier resulted in the heparin recall and almost 100 deaths in the United States.

XStream's XT250 System Verifies WHO Figure for Counterfeit Drugs in U.S.

Based on XStream Systems' usage data from end user XT250 systems, they can verify that the World Health Organization’s (WHO) estimate of 1% of the United States pharmaceutical supply chain being counterfeit, is accurate.

XStream System’s XT250 Materials Identification System verifies and authenticates materials within its sealed, unit of sale container. The standalone system is currently deployed in several pharmaceutical distribution companies that distribute pharmaceuticals throughout the United States.

“Based on our macro look at the data from the end user, we can confirm that the WHO estimates are reasonably accurate”, stated Alan Clock, Senior Vice President at XStream. “Our system is the only technology that can accurately authenticate pharmaceuticals within the supply chain without destroying the product or packaging so we have excellent visibility on what is going on literally inside the supply chain .”

“The XT250 is the only materials analysis technology that can keep up with the tremendous flow of drugs throughout the supply chain. We are seeing data that suggest between 0.67% and 1.4% of receivables and returns within these pharmaceutical distributor end users are likely counterfeit products or fraudulent medications,” explained Mr. Clock.

From the data, XStream is learning that authentication rejection/failure rates vary between pharmaceutical products, and even within a given pharmaceutical product the rejection rates can vary significantly over time. In some cases isolated bottles have been rejected, while in other cases entire lots have been rejected. “You can’t predict when the counterfeits will show up,” said Mr. Clock.

XStream’s data validates that the members of the pharmaceutical supply chain (manufacturers, distributors and dispensers) should be using authentication technology more and taking steps to screen as many pharmaceuticals as possible, as often as possible. Currently many regulatory officials have been advocating more frequent inspections at foreign manufacturing facilities as the primary solution to the problem of poor manufacturing and counterfeit medications in the supply chain. While inspections are needed, given the sheer quantity of places to inspect and global nature of these sites, inspectors have little chance of catching counterfeits. In addition, XStream’s data suggests that counterfeits are inserted at a multitude of sources all along the supply chain. The point of production is not the primary starting point for fake medications. Verification and authentication at each point along the supply chain is the most effective way to detect and interdict fraudulent and counterfeit pharmaceuticals.

“The good news is that the United States is one of the last of the developed countries to see an increase in counterfeit medications. The United Kingdom has already seen an increase in the last three years and it stands to reason it will not be long till we see significant increases domestically as well. Because of this impending proliferation, the XT250 is essential for the protection of the consumer since it is one of the only tools available which can act as a roadblock to counterfeiters.”, said Mr. Clock.

China's Bad Medicine and Its Impact on the US

The Wall Street Journal features an informative editorial by Roger Bate in today's issue on the counterfeiting drug trade in China. Roger Bate is an expert on counterfeit drugs and is the author of the book “Making a Killing: The Deadly Implications of the Counterfeit Drug Trade.”

Mr. Bates discusses the scope of the problem in China and what the Chinese government can do to combat the issue. The black market is a huge enterprise in China employing as many as 5 million Chinese citizens in the counterfeit market. This is an alarming fact seeing as China is the fourth largest pharmaceutical exporter and supplies 40% of the global supply of active pharmaceutical ingredients (API).

The scope of Chinese counterfeiting has been felt globally as shown in these most recent incidents cited by Mr. Bates: In the United Kingdom in March of this year, Chinese counterfeit pharmaceuticals amounting to $745,000 were seized. In January of this year, two people died and nine were hospitalized due to counterfeit diabetes drugs in Xinjiang province. Last year hundreds suffered adverse reactions and at least 95 died due to a chemical ingredient that is believe to have been deliberately adulterated by Chinese suppliers.

In his paper “The Problems and Potential of China’s Pharmaceutical Industry” Bates further discusses the problem and why the world should be concerned. He states:

“With more Americans opting to procure drugs directly from overseas, often by purchasing over the Internet, understanding the causes of the counterfeit and substandard problem in China—and what can be done to combat it—has never been more important.”

To combat counterfeit drugs, he stresses the importance of collecting reliable information and coordinating consistent unbiased regulatory enforcement.

To view the editorial visit the Wall Street journal at www.wsj.com.

To view the paper "The Problems and Potential of China’s Pharmaceutical Industry” by Roger Bates and Karen Porter, visit the American Enterprise Institute for Public Research at: www.aei.org

Egypt Seizes Large Amount Of Suspected Fake Drugs

Reported by Dow Jones last week: Egyptian authorities seized a large amount of suspected counterfeit drugs from a warehouse in Egypt and have one of the key individuals responsible in custody.

The seizure of counterfeit drugs used to treat conditions such as diabetes and cancer were part of Egypt’s crackdown on the distribution of spurious medicines, which is on the increase in the region. The head of Egypt's anti-fraud General Mustafa Amr stated to Dow Jones reporters that the counterfeit drugs found in the raid had originated in China and arrived in Egypt after passing through Syria. The individual arrested was a Jordanian residing in Egypt.

A Pfizer spokesman stated that they had been informed of the raid and added that 21,000 pills of suspected fake Dostinex were seized in the raids. The brand drug Dostinex is manufactured by Pfizer for the treatment of hyperprolactinaemia, which is the presence of abnormally high levels of the hormone prolactin in the blood.

Note: According to the Organisation for Economic Co-operation and Development (OECD), 7% of all counterfeit pharmaceuticals distributed globally are thought to originate in Egypt.