Saturday, April 24, 2010

German Customs and the Economics of Pharmaceutical Counterfeiting

In an excellent piece by Phil Taylor in he writes about an international operation headed by customs officers in Germany that is attempting to disrupt the trade in counterfeit medicines focusing primarily sales via the Internet.

According to the story this effort,” has notched up some notable successes in its first 18 months”.
The operation named Project Blue is specifically targeted at the illegal trade in pharmaceuticals and is being conducted by a 12-member team from German Customs, under the leadership of Sieghart Vosseler.

The highlights on Project Blue are:

· "The cooperation of the financial sector made this a unique operation, and was a major contributory factor towards the success of Project Blue," said Vosseler, who heads the Organized Crime Investigations unit at German Customs.
· Few people are aware of the hugely complicated network that is operating when they make a purchase using a credit card, and particularly the fact that the likes of Visa and MasterCard never actually touch the money that changes hands.
· "The credit card companies provide the network for payment, but the actual money is handled by independent companies known as acquirers," said Vosseler. He cited a case last May in which a German Internet pharmacy was raided and a large quantity of fake medicines were seized, including products mimicking Pfizer's erectile dysfunction product Viagra (sildenafil citrate). The ringleader of the operation was in fact a career criminal - a burglar - who had decided to swap over to counterfeit medicines as the risks were low and the rewards high. The Project Blue taskforce were able to follow the financial transactions of the ring - which involved shifting large quantities of money (around €3m) through seven separate countries, and freeze their bank accounts.
· A total of seven arrests were made in the operation, which resulted in the seizure of more than 172,000 medicine units and nearly €390,000 in cash, as well as the confiscation of around €700,000-worth of assets such as cars and property.

The most notable highlight of the story, aside from the specifics on Project Blue are the explanation from the German customs official, Mr. Vosseler, regarding the economics of pharmaceutical counterfeiting which is what makes it so financially attractive and driving its proliferation:

· "There is a lot of money in counterfeit medicines," commented Vosseler, at a recent IQPC conference in Amsterdam, the Netherlands.
· He cited a study carried out at the University of Bonn which looked at the profit which can be made when a criminal invests a €1,000 stake in counterfeit goods. For counterfeit money the return would be around €3,000 (on an investment of €1,000), rising to a little under €7,000 for a fake credit card (on an investment of €1,000). Counterfeiting software gives an even better return at around €100,000 profit (on an investment of €1,000), but all are eclipsed by fake pharmaceuticals with a whopping €500,000 return (on an investment of €1,000).

The story provides excellent insight into the international fight that pharmaceutical counterfeiting has become and the huge financial gains that is driving it.

Secure Pharma Chain Blog continues to highlight medication counterfeiting as one of the most dangerous forms of this criminal activity and encourages all within the pharmaceutical supply chains to deploy a variety of solutions and technologies in their efforts to protect the healthcare of the consumer.

To learn more about anti-counterfeiting technologies, visit:

To read the entire story, visit:

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