‘Made in India,’ Faked in China

China is implicated in key fake-drug rings recently broken up across the Middle East and Latin America. Beijing must do more to clamp down on the entire fake industry, which flourishes within its borders.

Roger Bate a Legatum Fellow at the American Enterprise Institute and Tom Woods President of Woods International write an excellent article in The American, the Journal of the American Enterprise Institute about the huge role that China is playing in polluting the pharmaceutical supply chains around the globe by producing massive amounts of fake drugs that often times with lethal consequences.

Mr. Bate, a long time favorite of Secure Pharma Chain, along with Mr. Woods once again provides insightful analysis into one of the most insidious and deadly crimes of the 21st century.

Highlights of The American article include:

• Chinese manufacturers are faking drugs, endangering patients' lives, and undermining legitimate brands, especially those from India. Indian companies provide vast amounts of generic drugs to mid-income and developing nations. By some estimates, 80 percent of HIV drugs for the developing world come from India, and probably half the anti-malarials and antibiotics, too.

• From the counterfeiters' perspective, faking Indian drugs makes sense. Even in those categories where Indian products do not dominate the market, they may still be copied. In part this is because Western brand owners are more likely to go after those faking their brands, whereas Indian drug makers have smaller margins and hence spend less on brand enforcement.

• Criminals often manage to bypass… inspections by inserting their fake versions further along the distribution chain. So more often tip-offs from underworld contacts, probably disaffected parts of criminal networks, provide the greatest likelihood of intercepting fakes.

• Of course, sometimes the fakes make it to market, often with lethal effect. In 2009, our Nigerian colleague Thompson Ayodele came across another fake of an Indian drug in a Lagos pharmacy, this time an antibiotic. Later, we found out it too had been made in China. It is impossible to know how many patients had taken this fake antibiotic before authorities were alerted.

• Chinese gangs do not discriminate—every major drug company and every country has probably had drugs faked by the Chinese. China is implicated in key fake-drug rings recently broken up across the Middle East and Latin America. In fact, Chinese operators will fake in or for any location and they will fake anything popular. Take Artesunat, the brand of a Vietnamese anti-malarial made by the Ho Chi Minh–based company Mekophar Chemical Pharmaceutical, which is also widely faked. Ongoing research shows that fake Artesunat was found in Nigeria, Ghana, Kenya, Uganda, Tanzania, and Thailand; and it was all the handiwork of Chinese counterfeiters.

• Beijing must do more to clamp down on the entire fake industry, which flourishes within its borders.

Clearly China has become the primary incubator and exporter of the counterfeiting drug trade which now stretches beyond the globe. China must do more to protect supply chains from a criminal act that can cause death and create health care catastrophes among entire populations. All members of the pharmaceutical supply chain must take proactive steps to interdict and eradicate these deadly fakes and protect the consumer.

To read Mr. Bate and Mr. Woods article, visit: http://www.american.com/archive/2010/december/made-in-india-faked-in-china

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

American Enterprise Institute: How Safe Are Your Medicines?

A counterfeit drug has been described as the perfect murder weapon as it is very difficult to detect.

Roger Bate, the Legatum Fellow in Global Prosperity at the American Enterprise Institute and leading expert on the counterfeit drugs writes another outstanding piece on bogus medications and the deadly global problem it has become.

How Safe Are Your Medicines?, is jammed with relevant global information and statistics and is a necessary read for anyone who is part of the pharmaceutical supply chain.

Mr. Bate is a particular favorite of Secure Pharma Chain in that he clearly articulates and connects all of the many facets of this insidious criminal act and its consequences.

Here are but a few of the highlights of this first rate article published by the American Interprise Institute:

• A recent Pew poll shows that 54 percent of Americans distrust drugs made in India and 70 percent distrust drugs from China. With more and more medicines or their ingredients sourced from countries with inconsistent regulatory environments and significant levels of corruption, better-informed patients around the world are asking themselves how much they trust foreign drugs. This should be of concern to any exporting drug producer.

• A counterfeit drug has been described as the perfect murder weapon as it is very difficult to detect. Essentially a fake is a product pretending to be something it isn’t—a labeling fraud. By some estimates, perhaps hundreds of thousands of people are killed a year from fake drugs, especially in the poorest parts of Asia and much of Africa.

• Most pills do not kill as poisons, they simply do not treat the conditions and diseases they were taken to control or cure. Entities from Interpol to the World Health Organization to large pharmaceutical companies are fighting this menace. Inadequate criminal legislation means that intellectual property law sometimes offers the only remedy to such potentially lethal activities.

• A less well-known but perhaps more pernicious problem exists with substandard medicines, which are legal, often made by politically connected local companies, but do not work properly. A patient who falls victim (or his survivors, if he succumbs) may be offered no recourse, even if someone suspects something. Finding somebody to blame is notoriously difficult.

• Political ramifications are rife—a few examples from Latin America will suffice. Take the case of the Cuban doctors servicing President Hugo Chavez’s health system in Venezuela. They are bringing drugs with them from Cuba, which are suspected to be of uncertain efficacy. Stories have leaked out of patients not responding to treatments, but no one knows for sure whether medical personnel have made mistakes, or—as seems more likely—drug quality is the cause. Patient have little recourse, especially since even an investigation would imply that a key ally of President Chavez might be at fault.

• In 2003, Brazil's drug regulatory authority, ANVISA, decided to phase out the very lightly regulated class of medicines known as “similars.” These products are made by legitimate manufacturers, but they only have to show basic chemical stability. They do not have to show that they are bioavailable (they work the same way in the body) as generic drugs. Brazil’s move began when a survey found that most substandard medicines on the market were from this class. However, similars are wildly popular with the general public, which believes these are nearly as good as branded versions, just cheaper because they don't have fancy packaging. So the Brazilian government revised its plan and allowed producers a grace period—until 2014—before they would have to conform to safety standards. Argentina allows similars and has no plans to phase them out. My ongoing analysis of these medicines leads me to believe that similars have far greater variability than proven generics. In other words it is not that the manufacturers cannot make good quality products, it is just that they do not do so consistently.

• A tragic case under investigation in Peru demonstrates some of the pitfalls. Dr. Raul Cordero of the national cancer institute administered a drug to five children suffering from lymphatic leukemia, which caused an adverse effect to the central nervous system and induced coma. Four of the children died.

• Not only are these drugs a danger for the patient, they contribute to an increasing distrust of the entire healthcare system. Patients not being treated effectively may look to bogus remedies or seek “better” treatment overseas, something only the rich can afford to do.

• Competition in the drug market, as in any market, is generally a good thing. It lowers prices and enables more patients to be treated. But this is only the case where the competitors trade in products of equal efficacy and safety, and unfortunately that is increasingly not the case in many parts of the world.

As this issue continues to grow and proliferate around the globe, it is vital that all members of the pharmaceutical supply chain take measures to protect their commercial brand, inventories and most importantly the health care consumer.

The issue of substandard, adulterated, fraudulent and counterfeit medications is a problem that will only grow and will only subside until the global supply chain utilizes technology and supply chain solutions to eradicate it.

To read all of Roger Bate’s American Enterprise Institute article, visit: http://www.american.com/archive/2010/september/how-safe-are-your-medicines.

To learn more about technologies for the detection of counterfeit medications, visit: http://www.xstreamsystems.net/.

WSJ: Delhi's Fake Drug Whitewash

“The (Indian) government's flawed research study endangers lives and crucial pharmaceutical investment.”

Roger Bate, a Legatum Fellow at the American Enterprise Institute and one of Secure Pharma Chain’s favorite international pharmaceutical counterfeiting experts, once again writes an excellent opinion piece in the September 2nd issue of the Wall Street Journal.

Mr. Bate focuses a very critical eye on the Indian Governments Central Drugs Standard Control Organization’s study on spurious drugs within the Indian Supply Chain.

Mr. Bate challenges CDSCO’s sampling methods, the contradictions with past accepted issues and reports of pharmacies likely knowing of inspections in advance.

This is especially worrisome given the fact as Mr. Bate points out that 45% of a Indian’s pharmaceutical market is exported to more than 200 countries and that every second child in the world is vaccinated with a vaccine made in India.

Mr. Bate questions examines CDSCO’s testing and sampling protocols which ultimately he determines to be "a whitewash of a crucial problem".

Highlighted in the WSJ opinion piece:

· The proliferation of fake drugs is one of the greatest dangers facing India today. It threatens lives, discourages patients from using life-saving innovations and deters much-needed pharmaceutical investment. So it's more than a bit worrying to see the Indian government touting a new study that is little more than a whitewash of this crucial problem.

· After literally months of leaks about the results, the "Report on Countrywide Survey For Spurious Drugs" was released by the Central Drugs Standard Control Organization in July. The report, conducted over a period of seven months last year, found that of 24,136 samples, 11 or 0.045%, were fake.

· The CDSCO took pains to point out that their results flatly contradict reports over the past decade from scholars and industry groups claiming fake drug rates ranging from 3% to 35%. Indeed, the author expresses a clear aim to overcome the "apprehensions about the availability of safe and genuine medicines in India."

· But the report's results fail to pass even the most cursory of inspections. Not only are there discrepancies with international studies, but there are unexplained internal inconsistencies which undermine the findings. The report says, for instance, that its authors had no useful information about areas known for counterfeit drugs. This is inconceivable: New Delhi's Bhagirath Palace and certain markets in Agra and Aligarh are known to me, a foreigner, as major locations of the fake drugs trade.

· It's reasonable to assume the report generated untrustworthy findings because the samples were biased. Vijay Karan, a former Delhi police chief, told me that many pharmacists are routinely aware of when and by whom government surveys would be done. The report itself notes retail pharmacists in cities "refused to sale. . . the schedule drug without prescription." But of the 70 or more pharmacies in cities we visited in our studies at the American Enterprise Institute, none demanded prescriptions. Either pharmacists voluntarily and drastically changed policy in the past year—or they were alerted to who the covert buyers really were and reacted by following the letter of the law, not their usual practice.

· Conducting covert surveys requires following a careful protocol. In our peer-reviewed studies for the Public Library of Science One Journal, we were grilled by reviewers about how interviews were conducted, since poor sampling might have biased the results. Yet the CDSCO report includes only a single sentence on the importance of sampling protocols. Nowhere in the report is the drug-collection protocol actually discussed.

In the final analysis, the CDSCO report is a well-conducted analysis of probably dubious data, which makes the results useless. If this were a minor report, that might be a passable error. But given the life-threatening nature of fake drugs, it's not something the government should tolerate. A Pew poll last month found that 54% of Americans distrust drugs made in India. No wonder.

Mr. Bate’s critical analysis of the CDSCO survey is important in that it calls out those who are entrusted with a population's public safety who have fallen short of their responsibility of accurately summarizing this important issue.

Adulterated, fraudulent and counterfeit drugs are an international crime and a health care epidemic; a government that turns a blind eye and chooses to ignore the issue and proclaim a supply chain safe when common sense and history dictates otherwise invites deadly consequences.

Secure Pharma Chain encourages the pharmaceutical supply chain to protect itself by deploying technologies to protect their inventories and defend consumers from bogus, deadly medicines.

To read the entire Wall Street Journal Opinion, visit: http://online.wsj.com/article/SB10001424052748703882304575465170785077144.html

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

AEI: Roger Bate's Speech to Drug Policy Group

Roger Bate, long considered one of the foremost authorities on counterfeit and fraudulent medications around the globe gave a speech to Harvard Medical School, Department of Population Medicine, Drug Policy Research Group on March 3, 2010.

The American Enterprise Institute for Public Policy Research recently published the text of the speech online.

In this excellent speech, Mr. Bate explores, as the cause, consequences and possible solutions for fighting this deadly global epidemic.

Here are some interesting highlights from the speech:

· Although it's easy to buy fake drugs over the Internet, focusing on the dangers is not helpful. We should be helping people know which sites sell good drugs.

· As we've seen above most counterfeiters are most interested in the packaging--the product must look the part (whether it's a Louis Vutton purse, a Rolex watch or an antibiotic).

· Some fake drugs are hardly fake in a quality sense at all, being made in very good conditions; often midnight runs in an otherwise legitimate organization. Indeed, some obviously try to make great copies since they want repeat business. But often they're really unhygienic, even if they're made with the correct ingredients.

· (Mr. Bate’s into three drug catagories) direct, indirect and long run impacts. Drugs can kill directly; if they have heavy metal, bacterial, fungal or other contamination (over-sulfated chondroitin sulfate contaminated heparin was the cause of a hundred US deaths two years ago). Drugs without active ingredients (such as the fake Cipro we saw before) allow people to die from otherwise treatable infections (this kills the most people, tens of thousands, even hundreds of thousands in poor nations). And drugs with some active ingredient may accelerate the process of natural selection of more robust microbes to previously effective drugs.

· The few counterfeiters I've spoken with, think nothing of making Rifampicin with 25% or 40% active ingredient to pass simple dye tests (they will quote prices to you based on API concentrations), and given Rifampicin's BCS classification and its problems of solubility--anything less than good manufacture will probably encourage resistance, possibly contributing to MDR-TB.

· The economics is quite simple, the demand for drugs runs into hundreds of billions of dollars globally, and the returns to fakery can be vast.

· So why is it that such traders can flourish? Take Viagra. It costs $60/kg to buy in China or India, and one kg on prescription in 25 mg tablets in US would sell for up to $200,000. That is a vast mark up and to some it's worth the risks.

· Counterfeiting immediate etymology comes from the French contrefait, to imitate, and it is largely a legal definition, not one derived for public health. Although there is no universally agreed upon definition, the WHO’s the most widely cited. And it is largely a matter of labeling, and the faking of a label (often but not always a trademark) that defines a product as counterfeit. Some countries, such as China, require demonstration of harm from the product for a charge of counterfeiting to stick.

· …going after criminals might be the best policy action for importers into the rich world, but may not address the major problems in mid-income and poorer nations.

· NAFDAC has done a great job. As the authority in charge of combating fakes in Nigeria it has probably overseen a reduction in fakes in the past few years from maybe 40% to far less than 20%. (My own sampling using visual identification, TLC and disintegration, showed failure rates of 32% in 2007, 16% in 2009 and just now I think about 8-10%--but the counterfeiters may be coming more sophisticated and adding enough API to fool simple tests, such as assays with thin layer chromatography--but there is little doubt quality improvements have occurred across Nigeria thanks to NAFDAC).

· Corporations do a good job to defend their brands and this does help in improving quality, but they are woeful at releasing that information and make it hard to know where faking is taking place. Company lawyers prevent PowerPoint presentations and other information from being used by others to improve knowledge and scholarship in this area. The Pharmaceutical Security Institute, comprised of big Pharma, almost certainly has the best data on fake drugs but unless you're a Pharma member you can't access it.

· Probably the single biggest problem in the developing world is the lack of State support for good federal laws in China and India. Drug manufacturing is regulated by the states in both countries and the federal agents can do nothing if state agents do not wish to enforce the laws properly.

Mr. Bate in this speech and its text is probably the most up-to-date global analysis of this growing epidemic. His statistics and updates are very relevant for those involved in the pharmaceutical global supply chain.

Secure Pharma Chain Blog endorses his conclusions and encourages the integration of technologies within the various pharmaceutical supply chain as one of the more robust ways in diluting and ultimately eradicating the issue of fraudulent, adulterated and counterfeit medications.

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

To read the entire text of the speech, visit: http://www.aei.org/speech/100125.

Making a Killing: The Deadly Implications of the Counterfeit Drug Trade

This book written by Roger Bate and published by American Enterprise Institute for Public Policy Research is an excellent encapsulation of the growing danger that is facing consumers globally. In his book Bate masterfully researches the history, scope, globalization, causes and current solutions on the issue of counterfeit pharmaceuticals.

Unfortunately this is an issue that far too few industry and government thought leaders are aware of, adequately educated on or are taking the proper steps to protect their company or constituents against.

Bate recommendations seem to be fixed primarily on dated technologies such as e-pedigrees and RFID as the answer to protecting the drug supply chain. Regrettably he seems unaware of other technologies like XStream Systems' XT250 that can authenticate medications inside a sealed container and which teamed with or in a standalone fashion can properly protect inventories throughout the global and domestic pharmaceutical supply chain. Here’s hoping that as Bate follows up on this well written book, he goes beyond his excellent foundation of the issue and deeper and further in researching potential solutions.

All-in-all, Making a Killing is an excellent book that is a must read for everyone involved in the healthcare industry and the pharmaceutical supply chain.