The Economist: Fake Drugs

Counterfeit drugs used to be a problem for poor countries. Now they threaten the rich world, too.

In the September 2nd edition of The Economist, they have an excellent piece on the issue of counterfeit drugs.

The Economist story focuses on updated statistics, industry insight, on how globally there is lax regulatory enforcement/punishment and how this deadly crime is impacting health care outside of the third world.

Highlighted in The Economist:

· Drug smugglers can expect harsh penalties nearly everywhere—if the drugs in question are heroin or cocaine. Those who smuggle counterfeit medicines, by contrast, have often faced lax enforcement and light punishment. Some governments deem drug-counterfeiting a trivial offence, little more than a common irritant.

· The pharmaceutical industry has persuaded several governments to stiffen regulations against fake drugs and to conduct more aggressive raids (see chart). Companies are also devising novel technologies to outfox the criminals. Even the Catholic church is joining the cause, issuing a stern statement in August that it is in “the best interest of all concerned that smuggling of counterfeit drugs be fought against”.

· Counterfeit drugs can kill. Studies of anti-infective treatments in Africa and South-East Asia have found that perhaps 15-30% are fakes. The UN estimates that roughly half of the anti-malarial drugs sold in Africa—worth some $438m a year—are counterfeits.

· Roger Bate of the American Enterprise Institute, a think-tank in Washington, DC, cautions that any such estimates should be treated with care. The countries with the most fakes may not be cracking down, so official figures will look rosy; in contrast, countries with a smaller counterfeit trade that are vigilant may end up with more seizures. The World Health Organization agrees, and has recently taken its estimates off its website. Even so, Mr Bate says his field work has convinced him that counterfeits kill at least 100,000 people a year, mostly in the poor world.

· Now it appears that fakes are taking off in the rich world too. Yes, Viagra still tops the list of knock-offs seen by Pfizer, says John Clark, the American drug firm’s global head of security; but fake versions of at least 20 of its products (including Lipitor, a blockbuster cholesterol drug) have been detected in the legitimate supply chains of at least 44 countries. Mr Clark’s intelligence comes from Pfizer’s global network of informants, consumer tip-offs and in-store inspections. He sees worrying trends.

· Counterfeiters used to operate chiefly in developing countries, says Mr Clark, but now his firm sees fakes coming from such rich and well-regulated places as Canada and Britain. And the crooks are growing more technologically sophisticated: some can even counterfeit the holograms on packets that are meant to reassure customers that pills are genuine.

· A consumer study funded by Pfizer recently found that nearly a fifth of Europeans polled in 14 countries had obtained medicines through illicit channels. That, the firm reckons, makes for a grey market in the EU of over €10 billion ($12.8 billion). Terry Hisey of Deloitte, a consultancy, thinks the global market for fakes could be worth between $75 billion and $200 billion a year. Those staggering sums, he argues, help explain the emergence of a flurry of new technologies and companies hoping to help the drugs industry “secure its global supply chain”.

The Economist outlines several technologies used in the fight against counterfeit drugs but comments:

· Thomas Kubic of the Pharmaceutical Security Institute, an industry-funded outfit, gives warning that this war will be hard to win. After more than 30 years as an investigator, he is sure that crooks will eventually find a way around any defence.

· Even so, he thinks novel approaches such as mobile-based validation may “harden the target”, just as a burglar alarm makes your home somewhat trickier to rob. If the cost and complexity of faking drugs goes up, crooks may choose to fake Gucci handbags instead. This would still be theft, not to mention a crime against fashion. But it will not kill anyone.

Secure Pharma Chain endorses the concept of a multiple layered approach of deploying technologies to protect the global supply chain.

As this article points out the professional counterfeiter can fake nearly all overt methods of labeling or tracking the packaging which is why Secure Pharma Chain thinks that authentication, the actual testing of the material inside the container should be the centerpiece of a robust, layered approach to make certain that the medications are genuine.

Authentication technologies have advanced to the point that they can verify products inside their sealed container without destroying the packaging or degrading the contents.

Knowing what is inside the box is crucial in protecting consumers from this deadly criminal act.

To read the entire, excellent article, visit: http://www.economist.com/node/16943895?story_id=16943895&fsrc=scn/tw/te/rss/pe.

To learn more about authentication anti-counterfeiting technologies, 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.