China Launches New Product Piracy Crackdown

According to Bloomberg News and the Associated Press, China's government is launching a new six-month crackdown on rampant copying and counterfeiting of software, medicines and other goods.

According to the reported announcement:

• The announcement comes amid complaints by industry groups that piracy of software and some other goods is growing despite repeated government pledges to stamp it out.

• Cabinet officials said the crackdown will target a wide array of products from illegally copied computer software to corn that is falsely labeled as organic.

• Fake or illegally copied music, designer clothes, medicines and other goods are widely available in China. Industry groups say Chinese piracy costs legitimate producers billions of dollars a year in lost sales.

China leads the way in fraudulent, adulterated, sub-standard and counterfeit medications that is exported to the developed and underdeveloped nation’s pharmaceutical supply chains.

Hopefully this announcement is a serious effort on behalf of the Chinese government to protect consumers around the globe from this potentially lethal crime.

To read the entire Bloomberg News story, visit: http://www.bloomberg.com/news/2010-11-30/china-launches-new-product-piracy-crackdown.html

To learn more about pharmaceutical anti-counterfeiting solutions, visit: http://www.xstreamsystems.net/.

BusinessWeek: Pfizer Taking the Financial Spoils of Counterfeiters

Simeon Bennett in the July 8th BusinessWeek, writes about Pfizer going after the financial spoils of convicted counterfeiters.

Overall this is an excellent encapsulation of a new tactic of Big Pharma of attacking counterfeiters financially while detailing with excellent statistics and examples of the overall danger of this issue.

Initially, the story details the case of Martin Hickman, who made a fortune and is now one of the first successes of Pfizer’s new strategy.

Hickman between 2003 and 2007 sold more that $8.9 million of bogus Viagra and other drugs via 150 websites according to Britain’s MHRA.

Hickman used the proceeds of his counterfeiting business to by a high end flat in Chelsea, a villa in Spain, Bentley, Range Rover and hundreds of thousands of dollars of jewelry.

According to Pfizer when Hickman was finally caught in 2007 for his illegal activities he was sentenced to only 3 months in jail for contempt of court and ordered to stop advertising Viagra on his websites. This lax penalty forced Pfizer to employ other tactics to fight counterfeiters.

Highlights from the BusinessWeek piece on Hickman and the Pfizer strategy are:

• “The point is to make them realize that there’s no sense from a business perspective in counterfeiting our products, because if we find you, we’re taking your money away,” says John P. Clark, a 55-year-old U.S. law enforcement veteran who now serves as New York-based Pfizer’s chief security officer.
• The spoils of Hickman’s crimes helped settle a trademark infringement lawsuit brought by the world’s largest drugmaker three years ago. It’s the biggest example of a new approach Pfizer is taking to fight counterfeiting of prescription drugs, an industry that’s almost doubled to $75 billion over five years, according to the New York-based Center for Medicine in the Public Interest.
• Pfizer, whose erectile dysfunction pill Viagra is one of the most copied medicines, once relied on local authorities and criminal courts to hunt down offenders. Now it’s taken matters into its own hands, hiring former U.S. customs officials, FBI agents, Turkish narcotics experts and Hong Kong police to hunt counterfeiters. In China, they’re tracking fakes to the source, raiding derelict warehouses for evidence of illegal drug-making. In the U.K., they’re using civil courts to hit fake pill peddlers where it hurts most.
• Previously, the company would refer cases of counterfeiting to regulators and police for criminal prosecution. Civil suits allow Pfizer to conduct investigations and raids itself with a judge’s authorization, according to Clark.
• In a second criminal prosecution in June last year, Hickman pleaded guilty to six counts of selling and supplying fake and unlicensed medicines and money laundering, and was sentenced to two years’ jail, according to the MHRA. The regulator is now taking legal action to seize his assets, William Mach, a spokesman for the MHRA, said in an e-mail.

As it relates to the industry and the scope of the issue, Mr. Bennett’s piece includes:

• Pfizer isn’t alone in taking civil action. Eli Lilly & Co., the maker of the impotence drug Cialis, investigates phony pill makers with Pfizer because their products are often copied together, said Bruce Longbottom, legal counsel for Indianapolis- based Lilly.
• “The civil action gives the financial deterrent where they’re actually hit in the pocket book,” Longbottom said in a telephone interview. “We do think that sends a message that’s a little bit different from what a criminal action might give us.”
• International criminal syndicates are increasingly turning to prescription drugs because they offer higher returns and lower risks than narcotics, according to Aline Plancon, an Interpol officer who works with police worldwide to investigate counterfeiters.
• “These people mastered the technology of making pills, because they are doing narcotics,” she said. “They know that the risks of being punished are low compared to the benefit.” Plancon estimates that $1,000 spent making heroin can earn a return of $20,000. The same investment in copied medicines can earn as much as $450,000.
• The global trade in counterfeit drugs will rise to $90 billion by 2015, according to the Center for Medicine in the Public Interest. The Organization for Economic Cooperation and Development says it’s hard to put a value on the problem because of “a paucity of reliable data.” Trade in all counterfeit and pirated goods rose to about $250 billion in 2007 from about $200 billion in 2005, the OECD estimated in November.
• There were 2,003 discoveries of counterfeit, illegally diverted or stolen medicines worldwide last year, compared with 195 reported in 2002, according to the Pharmaceutical Security Institute, a Vienna, Virginia-based nonprofit organization that monitors fake medicines.

Bennett's backgrond on the human toll of counterfeiting include:

• Counterfeits take a toll on human life. Fake medicines against malaria and tuberculosis alone are responsible for about 700,000 deaths a year, the London-based International Policy Network estimated in a report last year.
• “A mother who buys fake medicine to treat malaria does not know that she is paying for her own death or that of her sick child,” Jacques Chirac, a former president of France, said in a speech to the World Customs Organization’s council on June 24. Chirac’s charitable foundation is working to combat fake drugs.
• In the U.K., Pfizer says its civil suits have reduced the availability of fake drugs over the Internet. The drugmaker says it has sued at least seven other counterfeiters there, and last month settled its first civil suit in the U.S.
• “Even if you have a few bucks, we’re going to take it,” Clark says. “It’s not going to be there in the Caymans, so you can’t turn around and just tap your bank account and start the operation over again.”

Secure Pharma Chain Blog is excited about Pfizer’s and Pharma's new strategy to go after the proceeds of this criminal act and encourages all members of the supply chain to take further proactive steps including the deployment of anti-counterfeiting technologies to interdict this deadly threat before it reaches consumers.

To learn more about anti-counterfeiting technology: http://www.xstreamsystems.net/.

To read the entire BusinessWeek article, visit: http://www.businessweek.com/news/2010-07-08/pfizer-spies-find-spanish-villa-gold-rolex-in-fake-viagra-bust.html.

Bloomberg: India May Send Officials to Inspect China Drug Units

In a story written by Thomas Abraham for Bloomberg News, India may be sending health officials to China to inspect manufacturing units of bulk drug suppliers to the South Asian nation.

The Press Trust of India is citing an un-named government official, that this action may be necessary to prevent cheap imports.

According to the Press Trust of India, “Indian Health officials want to verify drugs supplied to India are made at units certified by government agencies.”

To read the entire story, visit: http://www.bloomberg.com/apps/news?pid=20601091&sid=aC4k5.Pgfv.g.

This is an ironic twist given that both India and China’s pharmaceutical industries and supply chains have a notorious reputation around the globe.

Secure Pharma Chain Blog endorses any amount of increased regulatory scrutiny within either country to protect health care consumers around the globe.

To learn more about solutions that protects the pharmaceutical supply chain, visit: http://www.xstreamsystems.net/.

J&J Unit Recalls More OTC Drugs

Late Tuesday, Johnson & Johnson's McNeil Consumer Products division announced the inclusion of several other of its hugely popular brands to its massive OTC recall. It is now recall four lots of Benadryl allergy tablets and one specific lot of its Extra Strength Tylenol gel pills.

Including this recent recall announcement Johnson & Johnson’s McNeil Consumer Products division has issued four recalls over the past twelve months.

Various media outlets are reporting on this development:

The New York Times: "The Johnson & Johnson unit whose recall of liquid children's Tylenol and other pediatric medicines is under Congressional investigation said on Tuesday evening that it was recalling additional over-the-counter drugs." Specifically, McNeil Consumer Healthcare "said that it was recalling four lots of certain Benadryl allergy tablets and one lot of Extra Strength Tylenol gel pills." According to a company statement, "'the products were inadvertently omitted' from an earlier recall -- one preceding the children's drug recall -- involving medicines made at a company plant in Puerto Rico." Although the drugmaker maintains that the chances of experiencing serious side effects are nil, it began recalling products from the Las Piedras plant in November after consumers were reportedly overcome by a mildew-like odor.

The Wall Street Journal: The smell purportedly prompted stomach pain, diarrhea, and nausea. The unit has since identified the manufacturing issue.

Bloomberg News: "the odor has been linked to trace amounts of a chemical called 2,4,6-tribromoanisole, or TBA, found on storage pallets."

Reuters: US House of Representatives Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) said, "This latest recall is further evidence that there are wide-ranging problems at Johnson & Johnson." He added, "I am troubled by what we have learned so far in our investigation, and this latest development adds to my concern."

The recent proliferation of recalls generated from pharma manufacturers due to poor quality production, inadequate quality control, cargo theft and various other adulterations to the consumer product strengthens the concept of material authentication by all members of the pharmaceutical supply chain. Material authentication, inside the products unit-of-sale container protects the members of the suppy chains inventories and the end use consumer.

To read the various reports on this recent announcement and the J&J recall from The New York Times, Wall Street Journal, Bloomberg News and Reuters, visit these sites:

http://www.nytimes.com/2010/06/16/health/16drug.html.

http://online.wsj.com/article/SB10001424052748704009804575309132577939048.html?mod=googlenews_wsj.

http://www.bloomberg.com/apps/news?pid=20601202&sid=awltXaS.MHl4.

http://www.reuters.com/article/idUSN159754220100615.

To learn more about pharmaceutical supply chain security solutions that protect the supply chain and consumers from poor quality, fraudulent, adulterated and counterfeit drugs, visit: http://www.xstreamsystems.net/.

Bloomberg News: FDA Says Perrigo Failed To Protect Consumers From Tablets Containing Metal Shavings

In a recent Bloomberg News article, according to US regulators Perrigo failed to protect consumers from ibuprofen tablets contaminated with metal shavings, four years after the company recalled similarly tainted acetaminophen pills.

Perrigo was forced to pull the ibuprofen from the market after the tablets were released by its Allegan, Michigan, plant, according to an April 29 warning letter sent outby the Food and Drug Administration" on Tuesday.

According to the FDA, Perrigo "failed to thoroughly investigate why some tablets were the wrong size and didn't inspect packaging equipment between batches."

The warning follows Perrigo’s 2006 recall of 11 million bottles of acetaminophen pills containing pieces of wire as long as 8 millimeters (0.32 inches). The FDA ordered the company to fix its quality-control issues or face product seizure, injunction or a ban on exports or new product approvals.

Perrigo is the world’s largest maker of non-prescription, store branded drugs.

To read the Bloomberg News report, visit: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEYk_t22lj18.

Secure Pharma Chain blog, endorses that all members of the pharmaceutical supply chain utilize authentication technologies to verify the authenticity and quality of their inventories and protect the consumer from fraudulent, adulterated and counterfeit materials.

To learn more about supply chain authentication solutions, visit: http://www.xstreamsystems.net/.

KV to Shut Down Ethex

According to published reports from Bloomberg News, the Associated Press and the St. Louis Post Dispatch, KV Pharmaceuticals has reached an agreement with the U.S. Department of Justice regarding an investigation into Ethex Corp, its generic pharmaceutical marketing and distribution subsidiary.

KV Pharmaceutical must pay $27.6 million in fines and an administrative forfeiture to cover costs of the investigation. Additionally KV plans on ceasing operation of its Ethex generic drug business.

This agreement comes after Ethex plead guilty to criminal charges for not disclosing issues with two to its drugs.

The agreement with the U.S. Attorney and the Department of Justice is subject to court approval and revolves around the 2008 investigation into Ethex which halted production and recalled drugs after making oversized tablets.

Specifically Ethex plans to plead guilty to two felony counts of failure in 2008 to file field alerts for the generic drugs Dextroamphetamine and Propafenone.

These incidents of substandard medications were significant and could have adversely affected the health of many consumers. Had material screening been in place within the supply chain, these substandard materials would have been intercepted prior to them reaching a dispenser and ultimately the consumer.

To learn more about material screening solutions within the pharmaceutical supply chain, visit: http://www.xstreamsystems.net/.

Bloomberg: Interpol Investigation Leads to Drug Seizures, Arrests in Asia

Bloomberg News has posted an online story reporting on a huge seizure of millions of counterfeit unit of sale packs of counterfeit medications. The operation coded named Operation Storm II was coordinated by Interpol and included counterfeit medications from the branded manufacturers Pfizer, Bristol-Meyers Squibb and Teva.

The entire Bloomberg News story appears below:

Police seized more than 20 million packs of counterfeit medicines, arrested at least 33 people and closed more than 100 illegal pharmacies in a series of raids in eight Southeast Asian nations coordinated by Interpol.

Counterfeit versions of Pfizer Inc.’s Viagra for erectile dysfunction, Bristol-Myers Squibb Co.’s blood thinner Plavix and Teva Pharmaceutical Industries Ltd.’s morning-after pill Plan B were among the products seized, Aline Plancon, an Interpol officer who coordinated the raids, said Jan. 26 in an e-mail from Jakarta. The haul also included fake aspirin, antibiotics, malaria treatments and hair-loss medicines, she said.

The seizures and arrests, part of an investigation called Operation Storm II, are the second round of raids in two years in Asia as international and local police crackdown on widening sales of fake medicines.

Asia is the world’s biggest producer of all counterfeit products, the Organization for Economic Cooperation and Development said in 2007 report. About 40 percent of 1,047 arrests related to fake drugs worldwide in 2008 were made in Asia, according to the Washington-based Pharmaceutical Security Institute.

In raids between July and November, police in Cambodia, China, Laos, Indonesia, Myanmar, Singapore, Thailand and Vietnam seized more than 12.2 million packs of fake drugs, Plancon said. An additional 8 million packs of medicines that had passed their expiry dates, were unregistered, or had been diverted from their intended destinations were also confiscated, she said.

Authorities from the eight countries involved plan to form a network to exchange information; coordinate enforcement and forensic investigations; and raise awareness in the region, Plancon said. Interpol is also creating a unit focused on fighting fake drugs, she said.
The new unit will help “dismantle the transnational criminals who threaten lives,” Plancon said. “This crime is a plague that needs to be addressed seriously and consistently in each and every country and region of the world.”

In 2008, police seized more than $6.7 million of counterfeit medicines and made 27 arrests in 200 raids across the region as part of Operation Storm I.

To read learn more about anti-counterfeiting technologies that protect the pharmaceutical supply chain, visit: www.xstreamsystems.net.

To read the entire Bloomberg post, follow this link: http://www.bloomberg.com/apps/news?pid=20601080&sid=aktGpE2o.ohM

Fake Malaria Drugs Spread, Breed Resistance to Lethal Parasite

In an October 9th story written by Simeon Bennett which appeared on Bloomberg.com, fake malaria drugs from China are breeding resistance to life-saving medications in Cambodia and threatening to derail global efforts to eradicate the disease, a study funded by the Bill and Melinda Gates Foundation found.

The following are some interesting facts from Mr. Bennett’s story about the study:

• Among more than 700 packets of pills sold at private drugstores in Cambodia and Thailand, 60 percent were found to be substandard or counterfeit around the border, compared with less than 5 percent in other areas in Thailand. Previous studies have suggested about one-third of malaria drugs in western Cambodia are fake.


• Substandard treatments are contributing to growing resistance to genuine medicines in the area, he said. That threatens to unravel progress made against the disease in Africa, which has 90 percent of the world’s malaria cases, if the resistant strain spreads there, researchers have warned.


• The pills tested in the $350,000 Gates-funded study were mostly from China and touted to contain artesunate, part of a family of drugs called artemisinins that are the most potent weapons against malaria… the study completed last week found that some had no active ingredient, while others contained small amounts, which fuel resistance by favoring the survival of the hardiest parasites, he said.


• Treatments derived from artemisinin are taking almost twice as long to clear the parasites in patients in western Cambodia than in northwestern Thailand, showing the drugs are losing their potency against the disease, a study published in July in the New England Journal of Medicine showed.


• “This is a very, very large problem potentially for the whole world,” said Nick White, director of the Bangkok-based Mahidol Oxford Tropical Medicine Research Unit, which is studying drug-resistant malaria in the areas around the Thai- Cambodia border. “The scale and the speed of the response have been unfortunately too small,” he said.

The worldwide epidemic of counterfeit drugs continues to grow and impact the healthcare of people around the world.

XStream Systems’ revolutionary technology allows for those within the supply chain to screen and verify medications inside their unit-of-sale container without degrading or destroying the material. This type of verification is a vital solution to the proliferation of counterfeit, adulterated and fraudulent drugs and it impact to the healthcare of populations around the world.

To read the story, follow this link: www.bloomberg.com.

Another Recall Concerning Inferior Drugs

Pharmaceutical recalls concerning the substandard production, size, dosage and quality of the product already within the domestic supply chain have proliferated recently within the United States.

These broad recalls seemingly demonstrate a broad lack of regulatory control and inspection at the point of manufacturing and import.

We believe that it is important that all of the members of the pharmaceutical supply chain engage in materials authentication and verification in order to protect their inventories from shoddy product that will impact the health of the consumer.


Caraco Recalls Generic Pills Over Irregular Sizes (Update1)

Caraco Pharmaceutical Laboratories Ltd. recalled generic heart tablets that may contain the wrong amount of medicine, sending the drugmaker down the most in four months in New York trading.

The voluntary recall covers 0.125 milligram and 0.25 milligram digoxin tablets distributed before today and within the expiration date of September 2011, according to statements released today by the company and the U.S. Food and Drug Administration. Size differences among the pills may mean they have too much or too little of the active ingredient.

The full article can be viewed on www.bloomberg.com.

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.

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."

Are Counterfeit Medicines on the Rise?

The prevalence of counterfeit medicines has often been thought as rare in developed countries. This view is changing and changing fast as seizures of counterfeits are on the rise overseas and here in the United States, but perhaps most alarming is the rate of which they are increasing as portrayed in a recent article in Bloomberg News.

According to Pharmaceutical Security Institute, an organization of 26 drug makers, seizures of counterfeits jumped 24 percent in 2007, which amounted to 403 different fake medications confiscated in 99 countries in 1,513 incidents.

Troubling is the fact that copies of 19 of the world’s 25 best-selling medications are among those seized by industry security, customs agents and police last year, according to data compiled by Bloomberg News.

These trends emphasize a need to strengthen our security measures here in the U.S. against an emerging sophisticated criminal element, which seeks to profit at the expense of our health.

We must take a proactive approach to secure our supply chain and most importantly protect our consumers!