Drug Counterfeiting, Adapt or Perish

"Adapt or perish, now as ever, is nature's inexorable imperative." H.G. Wells

The following is a re-posting of an opinion blog in Secure Pharma Chain blog from 2010:

By: Alan Clock, Senior Vice President, XStream Systems

For those of us knowledgeable about the issue of counterfeiting, we have long been aware of the huge growing menace that has seemingly lurked in the shadows of the collective consciousness of the public at large for some time now.

Even for those who have been at the forefront of this serious threat, which the FBI dubs “the crime of the 21st century”, currently there seems to be a heightened sense of concern about how quickly this criminal activity is proliferating. It would appear now that this threat is advancing well beyond even our own alarmist predictions.

To date, much of the death and destruction associated with counterfeiting activity has occurred off the radar screen from the populace of privileged, developed nations and instead in the isolated world of underdeveloped areas and their residents.

For some of us with the advantage of a prosperous free market system, we have been somewhat immune to the spectacle of the criminal poisoning of disadvantage populations, which happens routinely in Africa and Asia by the purveyors of this insidious transgression.

In 2010, the widely accepted World Health Organization’s estimate is that pharmaceutical counterfeits are a $75 billion industry with an annual growth percentage of 12-16%. The World Customs Institute estimates that food counterfeiting is a $49 billion annual enterprise.

According to the study of Counterfeiting Intelligence Bureau of the International Chamber of Commerce counterfeit goods make up conservatively 5 - 7% of World Trade which the International Anti-Counterfeiting Coalition calculates would make the current global counterfeit economy the world’s biggest single business.

We now find ourselves in a perfect storm that will expand counterfeit criminal activity well beyond our wildest estimates and make it far more deadly in scope and size. The primary elements feeding this calamity include:

· a worldwide economy in a downward spiral
· ineffective regulations and laws on the crime of counterfeiting
· spotty or careless enforcement of existing laws on counterfeiting
· disjointed supply chains that cross multiple governmental boundaries and jurisdictions
· huge taxes on critical commercial markets like healthcare that are squeezing both the business and the onsumer to look for cheaper goods
· a collective lack of knowledge and leadership by governments around the globe to protect their constituents
· industries that choose to ignore the threat to their businesses instead of protecting their brand and customers
· a collective lack awareness of the deadly nature of the threat of counterfeits by consumers worldwide, most consider this a harmless act

Until now, this criminal activity, although grand in its size has really been driven by single individuals or disparate organized entities that realize how lucrative and safe this nefarious criminal activity has become. Criminals understand that counterfeiting is the perfect crime:

· there are few ways to get caught
· if they do get caught their activity carries almost no significant ramifications
· most often their crime will not be discovered for some time giving them plenty of time to cover their tracks and escape
· they have a global marketplace where they can carry out transactions anonymously in cyberspace
· the profit margin derived from counterfeiting transcends what most businesses make in a legitimate activity

Even as this perfect crime expands to educated and developed nations, we now seem at the precipice of something far more dangerous and deadly as this menace seems likely to evolve into something much larger in size and scope and far more insidious as a whole.

Many experts now fear the inevitable, when terror organizations, who are not driven by greed but rather destruction, realize the relative ease and deadly effectiveness that a purposeful counterfeiting event could trigger in a region or nation. Be it in a consumer good, food stuff, electronics or medication, one single, simple adulteration could literally harm millions with relative impunity.

Adapt or Perish, the time is now for governments, industry and consumers to understand the need for solutions to protect themselves from the various nefarious sources that threaten their health and wellbeing.

Today there are many technologies and services available that can offer protection to industry and consumers from those who would seek to profit or cause destruction. Leaders in governments and industry around the globe need to act now to protect entire populations.

Although no one solution, to date provides a single, "iron clad" solution to this scourge, when appropriately layered, these existing solutions can and do create effective and efficient security to protect supply chains and consumers from fraudulent, adulterated and counterfeit products.

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

WHO Fears Growing Malaria Drug Resistance May Be Spreading

WHO officials say counterfeit drugs and poor storage are to blame.

Ron Corben in the November 28th issue of the Voice of America News, reports on a story from the World Health Organization regarding the growing issue of malaria drug resistance in Asia primarily caused by adulterated, fraudulent, sub-standard and counterfeit medications.

Highlights from the Voice of America News article include:

• World Health Organization officials say there are signs of growing drug resistance to mosquito-borne malaria, raising concern millions of people in Asia may be at risk.

• The Asia region accounts for more than 60 per cent of the global population at risk of the parasite with the main focus on India, Burma, Bangladesh, Indonesia and Papua New Guinea.

• But World Health Organization officials point to troubling signs a current drug combination based on artemisinin, originally drawn from a Chinese herb, is losing its potency against the malaria parasite.

• Artemisinin is largely given to patients in combination with other drugs rather than by itself in a bid to preserve the drug's long term effective strength.

• "The place where we are really concerned is on the Cambodian-Thai border," said Eva Marie Christophel a World Health Organization official in the Phillipines. "It would be disastrous if that spread because there's hardly anything in terms of new drugs in the pipeline for malaria or what is in the pipeline will take years, so we're really very much relying on arthemisinin based combination therapy."

• The World Health Organization is concerned that drug resistance could spread from the Cambodian-Thailand border region to Africa, following a similar pattern with anti-malaria drugs such as cloroquine and sulfadoxine-pyrimethamine in the 1960s and 1970s.

• In February 2009, WHO confirmed anti-malarial resistance at the Cambodian-Thailand border. But recent WHO studies found up to 20 per cent of patients at the Burma-Thailand border also showed signs of malarial parasites in the blood after the normal artemisinin combination therapy.

• "We noticed years ago that the disappearance time for parasites to disappear from the blood is increasing. Usually they disappear in two days or less," said Dr. Charles Delacollette, coordinator of the Bangkok-based WHO Mekong Malaria Program. "And we observe that there are an increasing proportion of patients showing parasites, still parasites in their blood after two days of artemisinin treatment, which was not the case before."

• Dr. Delacollette says the growing drug resistance is in part due to the sale of substandard and counterfeit drugs. In recent years, authorities cracked down against illegal factories in China. Meanwhile, counterfeit producers have been found elsewhere, including Cambodia and Burma.

• "Drugs are not quality, the quality of the drugs sold in private sector is selling any kind of drugs which are stored in very bad conditions, so they becoming substandard and also you have sellers which are selling counterfeit - purposely made counterfeit," said Dr. Delacollette.

The crime of adulterated, fraudulent, sub-standard and counterfeit drugs is a dangerous threat to populations around the globe.

To think that unscrupulous organized gangs can impact the health and well being of populations around the globe, especially for diseases and maladies that have long since been conquered by the advances in medical science is unconscionable.

Unfortunately the issue with malarial drugs is just the beginning of a much larger issue of drug resistant strains of diseases around the world. Drug resistant diseases know no borders and impact all societies, rich and poor.

The global supply chain must take proactive measures to protect their inventories from this insidious crime by deploying solutions to track and authenticate their inventories.

To read the entire Voice of America News story, visit: http://www.voanews.com/english/news/WHO-fears-growing-malaria-drug-resistance-may-be-spreading---110934814.htmlmalaria-drug-resistance-may-be-spreading---110934814.html

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

The Lancet: Tackling the Booming Trade in Counterfeit Drugs

The black market in counterfeit drugs is worth billions, but it does untold damage to the health of the poorest populations.

Nayanah Siva writes an exceptional article in the November 20th issue of The Lancet on international efforts to tackle the problem of counterfeit drugs.

The importance of this article is the excellent timely information and its historical perspective.

Highlights of The Lancet editorial article include:

• WHO are of the opinion that “studies can only give snapshots of the immediate situation. Counterfeiters are extremely flexible in the methods they use to mimic products and prevent their detection. They can change these methods from day to day, so when the results of a study are released, they may already be outdated.

• “In many cases where successful actions against counterfeit, illegal and substandard drugs were undertaken by authorities, little public information is forthcoming about the case…As a consequence it is difficult for the stakeholders to understand the nature and extent of the problem, let alone to develop strategies to combat illegal medicines.”

• Steve Allen, Senior Director of Pfizer Global Security told The Lancet “I saw [counterfeiting] first hand in Tanzania last year, where we had anti-malarial products being counterfeited, to the degree that they were using identical batch numbers, identical expiry dates, the packaging, to all intents and purposes, seemed to be absolutely genuine, the blisters looked genuine, the tablets looked as if they were genuine, you would not be able to tell the difference, I can promise you, I've seen them myself.” It was only after these tablets were tested in a laboratory in the UK that it was discovered they had no active ingredients at all. “I can't think of many more worst-case scenarios, you have a counterfeiter somewhere in the world manufacturing a medicine for someone [pregnant women], she believes she might die anyway from malaria but it also impacts the unborn child, it is one of the most despicable of crimes.”

• The problem, Allen explains, is that counterfeiting is a “relatively low-risk, high-reward business to be in…and that is why organized crime gangs are using this far more frequently. In 2006 our colleagues in the narcotics units in Istanbul raided a manufacturing plant for narcotics but actually discovered a large quantity of our erectile dysfunction products and at the same time recovered 378,000 ecstasy tablets alongside the ingredients to manufacture 150 kg of heroin.”

• Newton is deeply concerned about the substantial detrimental effects counterfeit medicines have on African populations. “The main consequences…are increased mortality and morbidity, endangering drug resistance and loss of medicine efficacy, loss of confidence in health systems and health workers, economic loss for patients, their families, health systems, and the producers and traders in good-quality medicines, adverse effects from incorrect active ingredients, a waste of enormous human efforts and financial outlay in the development and manufacture of medicines…”

• Allen emphasizes the importance of international collaboration among regulators, the pharmaceutical industry and political representatives, and thinks this strategy will have the best chances of tackling counterfeiting. “This is not just an issue for one company, it is not an issue for one country, it is an issue for all of us.”

• Counterfeit drug crime is a complex issue requiring international and regional initiatives among industry, government, charities, and law enforcement…More political will and collaboration between medicine regulatory authorities, police and customs is essential.

All members of the legitimate pharmaceutical supply chain (governments, manufacturers, distributors and dispensers) must take it upon themselves to proactively protect and interdict their inventories from adulterated, fraudulent, sub-standard and counterfeit medications. This is a critical step by all of the supply chain stakeholders as a way to protect their industry, individual businesses and most importantly the consumer.

Everyone must be made aware that the impact of counterfeit drugs knows no borders. What happens in underdeveloped nations will ultimately impact and effect populations in developed nations around the globe.

To read the entire The Lancet editorial article which appeared in Volume 376, visit: http://www.thelancet.com/journals/lancet/article/PIIS0140-6736%2810%2962118-6/fulltext

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

WHO Names Kenya as Safe Haven for Fake Drug Cartels

World Health Organization (WHO) has estimated that the Kenyan market for counterfeit, expired, diverted and otherwise illegal medicines is around $130m and propagated by weak border controls and cartels-believed to include Health Ministry Officials.

George Omondi and Mwangi Muiruri in Business Daily Africa, write an excellent article about a recent World Health Organization newsletter report describing Kenya as a “safe haven” for counterfeit drugs.

Included in the Business Daily Africa story:

• Kenya is a safe haven for a cartel that has choked the domestic market with counterfeit and untested medicine smuggled through informal channels, the World Health Organization has said, warning that the country could incur huge costs in mitigating the side effects of the drugs.

• The value of both genuine and fake medicines sold illegally to unsuspecting consumers is roughly $130 million annually, says the organization in its October newsletter.

• The value includes drugs donated by international agencies, those stolen from hospitals and expired or fake ones made by backstreet firms and routinely smuggled in through East Africa’s porous borders.

• The cartel — believed to include senior Health ministry officials— runs a complex web of informal trade, spanning the five East African Community countries, DR Congo and Southern Sudan.

• The rogue merchants, who devise elaborate schemes to disguise their activities, are aggressive and smart, according to WHO, which blames the menace on weaknesses in border controls. “They (cartel) establish fictitious front companies and use falsified documents to exploit weaknesses in border control as governments reduce border inspections to encourage free trade,” WHO says in the Newsletter.

• The concern over drugs safety comes just weeks after local pharmaceutical producers complained of frequent theft of narcotics in their premises by what they termed “ well co-ordinated cartels.” Drug companies are allowed to buy narcotics which they use as raw materials in making medicines under the strict watch of regulators.

• “This has become a well co-ordinated business because in most cases, we realise that up to five pharmaceutical companies have been raided and all their narcotics stolen in one night without any clue for arrests,” said a manager at one of the local pharmaceutical firms, which cannot be named for security reasons.

• The raids have sparked widespread fears over the authenticity of drugs sold over the counters and hospitals with the Pharmacy and Poisons Board (PPB), the government agency that regulates the sale of medicines, saying yesterday it had issued strict cross-border trade rules to tighten the noose on the cartels.

• The board’s head of pharmacovigilance department, which tracks the movement of drugs, Dr Jayesh Pandit, said the recent designation and gazettement of all entry and exit points for drugs would push the cartels out of business. “Our instruction to all regulatory and law enforcement agencies in the region is that any drug that is not inspected and cleared at the designated points should be confiscated immediately,” he said, adding that the international community had taken long in stamping out the cartels because of “too much” focus on infringement of intellectual property rights of big pharma, loss of monopoly or financial losses.

• “Unfortunately, lesser attention is given to the number of lives lost, number of severe drug reactions experienced and the morbidity associated with the murderous trade of counterfeiting,” said Dr Pandit

While disturbing, unfortunately this article and WHO report is not surprising.

Much like the more infamous illegal drug cartels in Central and South America, these bogus drug criminal organizations exact a tremendous amount of influence within small countries. The return on investment in fake medications is significantly higher than nearly all criminal endeavours. Populations will continue to be at risk as long as law enforcement and the legitimate supply chain allow these crooks to poison their consumers.

Hopefully this type of story will stimulate the pharmaceutical supply chain and average health care consumer in developed countries to become more engaged in pharmaceutical supply chain safety.

To read the entire Business Daily Africa article, visit: http://www.businessdailyafrica.com/Corporate%20News/WHO%20names%20Kenya%20as%20safe%20haven%20for%20fake%20drug%20cartels/-/539550/1050938/-/jud3flz/-/

To learn about pharmaceutical supply chain safety solutions, visit: http://www.xstreamsystems.net/

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/.

2010, The Year That Counterfeit Drugs Becomes a $75B Global Business

Alan Clock, SVP, XStream Systems, Inc.

As we find ourselves with a little over four months left in 2010, Secure Pharma Chain is re-posting a blog from January regarding the proliferation of counterfeit drugs globally this year.

In 2005, the Center for Medicines in the Public Interest (CMPI), released a report projecting global counterfeit drug sales to reach $75 billion in 2010. At the publication of the report, this projection was a 92% increase from the 2005 estimate of $39 billion of worldwide counterfeit drug sales. Most global experts then and now do not dispute this estimate. In fact, many would not argue the point that today, this estimate may be entirely too conservative and the real financial impact and overall number is much higher.

In 2010, we as a society face a global health catastrophe that will impact people of all countries, race, religion and economic strata.

What will be the key factor that will turn this issue around in the new decade?

"The business of selling fake prescription drugs to unsuspecting consumers is burgeoning, and is a global industry," stated Peter Pitts in 2005, senior fellow for health care studies at the Pacific Research Institute and director of the CMPI. "Nearly $39 billion, or 11 per cent of global pharmaceutical commerce will be counterfeit this year (2005)," added Mr. Pitts. "By 2010, that number will nearly double. We must enact controls to strengthen the security of our health care system from outside threats."

At the time that this report was published, Dr. Scott Gottlieb, Deputy Commissioner for Medical and Scientific Affairs at the U.S. Food and Drug Administration stated. "The increasing flow of counterfeit drugs represents a significant public health threat. We must step up our efforts to safeguard the drug supply -- we certainly should not weaken those controls."

Even with these dire predictions and public support for action in 2005, there has been little appreciable progress in the domestic and international efforts to stem the flow of this worldwide health care crisis. Regulatory, law enforcement and industry efforts to date have been inconsistent overall and seemingly lack an overall perspective of the severity and impact of this issue.

One of the most startling examples of the deadly impact of the global counterfeit medication epidemic is the World Health Organization’s (WHO) estimate that nearly 2,000 children die each day in Africa as a result of bogus drugs. Counterfeit medications in underdeveloped countries not only do not treat illness and disease but are now a major factor in creating drug resistant strains of deadly diseases such as malaria, tuberculosis and HIV/AIDS.

With the proliferation of counterfeit medications and the impact to people all over the world, the issue, in its extreme, is only now beginning to garner important public awareness.

The public awakening to this deadly scourge is the first critically important step in motivating public and industry leadership to move forward and take action.

With a motivated and aware public, elected and industry leaders will be encouraged to step up their efforts to protect their constituents, businesses and customers.

When properly inspired, these leaders will look to strengthening regulatory authority and in expanding their technology/ processes to thwart these nefarious sources of a deadly criminal act.

To learn more about technologies that are used to combat counterfeit medications, visit: http://www.xstreamsystems.net/.

How the Current Economy Will Drive Counterfeit and Fraudulent Medications

By: Alan Clock, Senior Vice President, XStream Systems, Inc.

The following is a re-post of a Secure Pharma Chain commentary blog from October 30th, 2009.

The World Health Organization (WHO) has estimated that in 2010 the value of counterfeit medications worldwide will be approximately $75 billion. This is an increase from $35b in 2006 and it is now estimated that 10% of the global pharmaceutical supply chain is or will be counterfeit or fraudulent.

Although this estimate is dramatic in its size and growth, the WHO came up with this estimate prior to the true realization of the global financial meltdown and its impact on the world’s economies. As the impact of the financial meltdown continues to trickle through the populations of the developed countries it is anticipated by many that the worldwide estimates of counterfeit and fraudulent drugs may in fact grow beyond the $75b and begin to mirror the growth to those of emerging and non-developed countries.

Several economic factors will likelly drive this growth beyond the 2010 WHO estimates:

The rising costs of pharmaceuticals will simply become too much for many consumers to afford, especially when coupled with job loss, loss of health benefits or underemployment. Affordability will drive many to nefarious sources like the internet and many will fall prey to unscrupulous deals for bogus medications.

The lack of comprehensive laws or the ability to catch those who counterfeit, adulterate or fraudulent deal in bogus pharmaceuticals. Simply put it is very unlikely that those who perpetrate the crime will be caught or suffer any real consequence for their deeds.

The high profitability of the crime of counterfeit and fraudulent medications. It is widely accepted that anyone dealing in this crime will likely profit many times more than others dealing illicit street drugs.

Lack of regulatory oversight of the legitimate pharmaceutical supply chain which allows for systematic gaps in the supply chain that can be exploited by those with criminal intent.

The globalization of the manufacturing and raw materials process. Most medications consumed in developed countries have been outsourced to non-developed countries for economic reasons. This creates huge gaps in the quality of the product and lack of regulatory oversight which is critical and necessary for the protection of the supply chain from criminal enterprises.

Solutions to this issue within the pharmaceutical supply chain are also heavily impacted by the global economy. Track and Trace, Taggants, Serialization, Pedigree and Authentication solutions are all very effective in dealing with counterfeit, fraudulent and adulterated drugs but diminishing capital expenditures budgets and tight margins by manufacturers, repackagers, distributors and dispensers are hampering the deployment of the tools needed to eradicate this very dangerous threat to public health. Without regulatory mandates or incentives, businesses cannot easily justify the expense of solutions until or unless their business is or has been affected by counterfeit and fraudulent medications.

The initial WHO estimates were troubling enough but it would appear that based on the current economic conditions their predictions may prove to be more optimistic than what we may ultimately realize in our global pharmaceutical supply chain.

To learn more about solutions to combat counterfeit, fraudulent and adulterated medication, visit: http://www.xstreamsystems.net/.

Counterfeiting, Adapt or Perish

By: Alan Clock, Senior Vice President, XStream Systems

"Adapt or perish, now as ever, is nature's inexorable imperative." - H.G. Wells

The following is a re-post of a Secure Pharma Chain commentary blog originally posted in February 2010.

For those of us knowledgeable about the issue of counterfeiting, we have long been aware of the huge growing menace that has seemingly lurked in the shadows of the collective consciousness of the public at large for some time now.

Even for those who have been at the forefront of this serious threat, which the FBI dubs “the crime of the 21st century”, currently there seems to be a heightened sense of concern about how quickly this criminal activity is proliferating. It would appear now that this threat is advancing well beyond even our own alarmist predictions.

To date, much of the death and destruction associated with counterfeiting activity has occurred off the radar screen from the populace of privileged, developed nations and instead in the isolated world of underdeveloped areas and their residents.

For some of us with the advantage of a prosperous free market system, we have been somewhat immune to the spectacle of the criminal poisoning of disadvantage populations, which happens routinely in Africa and Asia by the purveyors of this insidious transgression.

In 2010, the widely accepted World Health Organization’s estimate is that pharmaceutical counterfeits are a $75 billion industry with an annual growth percentage of 12-16%. The World Customs Institute estimates that food counterfeiting is a $49 billion annual enterprise.

According to the study of Counterfeiting Intelligence Bureau of the International Chamber of Commerce counterfeit goods make up conservatively 5 - 7% of World Trade which the International Anti-Counterfeiting Coalition calculates would make the current global counterfeit economy the world’s biggest single business.

We now find ourselves in a perfect storm that will expand counterfeit criminal activity well beyond our wildest estimates and make it far more deadly in scope and size. The primary elements feeding this calamity include:

· a worldwide economy in a downward spiral

· ineffective regulations and laws on the crime of counterfeiting

· spotty or careless enforcement of existing laws on counterfeiting

· disjointed supply chains that cross multiple governmental boundaries and jurisdictions

· huge taxes on critical commercial markets like health care that are squeezing both the business and the consumer to look for cheaper goods

· a collective lack of knowledge and leadership by governments around the globe to protect their constituents

· industries that choose to ignore the threat to their businesses instead of protecting their brand and customers

· a collective lack awareness of the deadly nature of the threat of counterfeits by consumers worldwide, most consider this a harmless act

Until now, this criminal activity, although grand in its size has really been driven by single individuals or disparate organized entities that realize how lucrative and safe this nefarious criminal activity has become. Criminals understand that counterfeiting is the perfect crime:

· there are few ways to get caught

· if they do get caught their activity carries almost no significant ramifications

· most often their crime will not be discovered for some time giving them plenty of time to cover their tracks and escape

· they have a global marketplace where they can carry out transactions anonymously in cyberspace

· the profit margin derived from counterfeiting transcends what most businesses make in a legitimate activity

Even as this perfect crime expands to educated and developed nations, we now seem at the precipice of something far more dangerous and deadly as this menace seems likely to evolve into something much larger in size and scope and far more insidious as a whole.

Many experts now fear the inevitable, when terror organizations, who are not driven by greed but rather destruction, realize the relative ease and deadly effectiveness that a purposeful counterfeiting event could trigger in a region or nation. Be it in a consumer good, food stuff, electronics or medication, one single, simple adulteration could literally harm millions with relative impunity.

Adapt or Perish. The time is now for governments, industry and consumers to understand the need for solutions to protect themselves from the various nefarious sources that threaten their health and well being.

Today there are many technologies and services available that can offer protection to industry and consumers from those who would seek to profit or cause destruction. Leaders in governments and industry around the globe need to act now to protect entire populations.

Although no one solution, to date provides a single, "iron clad" solution to this scourge, when appropriately layered, these existing solutions can and do create effective and efficient security to protect supply chains and consumers from fraudulent, adulterated and counterfeit products.

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

The Decade of the Counterfeit-Part One

This is the first installment of a two part opinion blog by Alan Clock, Senior Vice President at XStream Systems, Inc.

The first decade of the 21st century could carry many labels given the rise of global terrorism, a bursting housing bubble and a worldwide financial meltdown. However one very appropriate label, albeit lesser known by the masses, would be the Decade of the Counterfeit.

Although counterfeit materials and fraudulent supplies have been around for centuries, with the emergence of far reaching global supply chains and an expanding worldwide economy, the criminal activity of producing counterfeit goods have propagated and is impacting a greater number of consumers more than ever before.

In modern times counterfeit products go well beyond the conventional bogus purses and knock off apparel that we traditionally associate with this fraudulent activity. The scope and audacity of the contemporary counterfeiter goes well beyond what has traditionally been considered to be a victimless crime.

Today’s counterfeit products include every product that is used today. This runs the gamut from commercial aircraft parts to sophisticated electronics, and from consumer goods to food and life saving healthcare products. Counterfeited products include all of the goods that consumers rely upon for their safety and well being. At best, these bogus products fall short of their consumer’s expectation while at worst they threaten a population’s safety and overall health.

An insidious example of how counterfeit activity can create a deadly consequence and cause thousands to die is documented by the issue of counterfeit drugs causing drug resistant disease strains in underdeveloped countries in Africa and Asia.

With medical science producing drugs that can effectively cure or curb diseases such as tuberculosis, malaria and HIV/AIDS, unscrupulous counterfeiters are producing fake drugs with only a trace of the real drug’s active ingredient. The counterfeiters put only enough of the real ingredients in to fool rudimentary testing processes. The unfortunate side effect of these bogus treatments is that not only do they not provide any therapeutic cure, they actually create more dangerous strains of the disease that are impervious and resistant to the known drug regimens used to treat the illness.

The World Health Organization estimates that upwards of 2,000 children per day die as a result of taking counterfeits medications in Africa alone.

Well over 1 million children die in Africa and Asia die each year because of counterfeit drug medications.

A few global statistics from the World Health Organization regarding pharmaceuticals, even further energizes the debate regarding the label Decade of the Counterfeit:

• In 2010, the World Health Organization (WHO) conservatively estimates that counterfeit medications will be a $75 billion industry worldwide.


• The WHO projects growth of counterfeit medications to be over 12-16% annually, worldwide.


• The WHO Reports that globally 10% of Pharmaceuticals are counterfeit, fraudulent or adulterated.

How do we as a society both domestically and globally solve this growing threat and eliminate the danger that looms as its deadly consequence to us all?

View Part Two of the opinion blog tomorrow on Secure Pharma Chain Blog.

Are Counterfeit Products Contributing to Drug Resistant Strains of H1N1?

As reported in many media outlets, European physicians and the World Health Organization (WHO) are investigating drug resistant strains of the H1N1 virus.

To date, H1N1 has been effectively treated by anti-viral medication Tamiflu and Relenza.

As also reported in many media outlets and in SecurePharmChainBlog.com there is an emerging proliferation of organized crime organizations making hundreds of millions of dollars by counterfeiting and selling via the Internet the anti-viral drugs used to treat the H1N1 virus.

With the malaria and tuberculosis healthcare epidemics in Africa and Asia, counterfeit medications have been a significant contributor to the increase of drug resistant strains and are a considerable factor in the deaths of hundreds of thousands across the globe. In these incidents, unscrupulous counterfeiters manufacturer medications with just enough of the active ingredient to fool rudimentary testing devices. These counterfeit medications are more than just worthless, they actually facilitate drug resistant strains of the illness.

This begs the question of the correlation and impact on counterfeit drugs to the emergence of drug resistant strains of the H1N1 virus.

Are counterfeit medications contributing to drug resistant strains of the H1N1 virus?

XStream Systems encourages all drug regulatory agencies to utilize robust screening methods in the testing of all medications within the pharmaceutical supply chain. XStream's XT250 allows the end users to deploy as system within the supply chain and materially screen products for active ingredients, excepients and packaging, non-destructively, within its sealed unit-of-sale container.

To learn more about the XT250, visit XStream at: http://www.xstreamsystems.net/.

Fox News: Gangs Making 'Millions of Dollars' Selling Fake H1N1 Drugs Online

The Reuters new story was posted on Fox News on November 16, 2009 and deals with the ever increasing issue of counterfeit, fraudulent and adulterated drugs related to the H1N1 pandemic.

Criminal gangs are making millions of dollars out of the H1N1 flu pandemic by selling fake flu drugs over the internet, a web security firm said on Monday.

Sophos, a British security software firm said it had intercepted hundreds of millions of fake pharmaceutical spam adverts and websites this year, many of them trying to sell counterfeit antiviral drugs like Tamiflu to worried customers.

Tamiflu, an antiviral marketed by Switzerland's Roche Holding and known generically as oseltamivir, is the frontline drug recommended by the World Health Organization to treat and slow the progression of flu symptoms. GlaxoSmithKline makes another antiviral for flu, known as Relenza.

Sophos said many of the gangs behind the sites were based in Russia and the top five countries buying fake Tamiflu and other medicines on the internet were the United States, Germany, Britain, Canada and France.

Sophos spokesman Graham Cluley said a "worrying trend" toward stockpiling Tamiflu had already been seen in Britain — Europe's worst-hit country in the H1N1 pandemic so far.

"As more and more cases of swine flu....come to light, it is essential that we all resist the panic-induced temptation to purchase Tamiflu online," he said.

The criminal gangs working behind the scenes at fake internet pharmacies are putting their customers' health, personal information and credit card details at risk."

The Geneva-based WHO, which declared H1N1 swine flu a pandemic in June, updated its guidance to doctors last week to say that antiviral drugs should be given even before tests conclude that an at-risk patient has the pandemic virus.

Sophos said criminal gangs were operating medicines websites branded as the "Canadian Pharmacy" to try to appear genuine.

It said its research showed that on one network operated out of Russia, called Glavmed, it was possible to earn an average of $16,000 a day promoting pharmaceutical websites.

"But the criminals can be members of more than one affiliate network, and some have boasted of earning more than $100,000 per day," it said in a statement.

The pandemic H1N1 flu virus has now spread to 206 countries since it was first discovered in March. There have been more than 6,250 deaths to date, mostly in the Americas region, according to the latest WHO toll.

To view the story on-line visit:
http://www.foxnews.com/story/0,2933,575327,00.html?test=l

To learn more about pharmaceutical counterfeit solutions, visit: http://www.xstreamsystems.net/

Business Standard: WHO to Revive Talks on Fake Drugs

Joe C. Mathew of the India Business Standard in their Saturday, September 5, 2009 edition reports on the upcoming meeting annual meeting of the World Health Organization. The World Health Organization Meeting will be tackling the fake drugs and their definition:

• The matter had to be taken out of WHO’s annual meet — the World Health Assembly (WHA) — agenda early this year due to protests from countries like India, which felt the proposed definition would harm seamless movement of genuine medicines between developing and least developed nations.


• The meeting of the WHO’s South-East Asia region, beginning in Nepal on September 7, is to revive the talks on counterfeit definition. The meeting is expected to hear various lobby groups on the possible changes that can be made to the current definition.


• The main point of contention is known to be the way ‘substandard medicine’ will be described.


• “A medicine which does not meet the quality standards is easy to be classified as a substandard medicine. But how do you classify a medicine that meets the quality standards but has been given marketing approval based on information that was deliberately false? This is the issue that needs to be tackled,” said an official.


• Representatives of the domestic drug industry said they were not aware of the development. The issue of counterfeit medicines was on the agenda of the 62nd WHA in May 2009, but was deferred till the next year’s meet due to lack of consensus.

To view the entire article visit: http://www.business-standard.com/india/news/who-to-revive-talksfake-drugs/369038/

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.

Vested Interests in Counterfeit Drugs

The following article by Bright Simmons appeared in Business Daily Africa and deals with the complicated politics of global anti-counterfeiting initiatives.

Apparently many countries are not convinced that a collaborative international initiative is advantageous for all in respect to global pharmaceutical supply chain security.

February 23, 2009:
Counterfeit drugs are flooding into Africa, where up to one in three medicines can be fake, causing widespread suffering and death.

The World Health Organisation wants an international agreement to tackle the threat but is being thwarted by members such as India and Brazil, more concerned with vested interests than African patients.

To fight counterfeits, the WHO’s International Medical Products Anti-Counterfeiting Taskforce (IMPACT) first needs to define them—but this new definition is opposed by an unholy coalition ranging from global anti-corporate activists to Indian and Brazilian pharmaceutical associations and heavily-lobbied governments.

They claim the definition would covertly introduce stricter patent protection and prevent generics manufacturers from exporting cheap drugs to Africa (generics are copies of drugs whose patents have expired, although some are in dispute). They accuse IMPACT of being a front for Western “Big Pharma.”

But IMPACT principally consists of and is led by national drug-regulatory authorities. Participation is open to every WHO member, so power lies mainly with developing countries that have negligible pharmaceutical sectors—and where counterfeit drugs are most common. A leading light in IMPACT has been Nigerian cabinet minister Dora Akunyili, the famous fighter against counterfeit drugs.

Moreover, there is no basis in the accusation that the new definition of “counterfeit” would stifle the trade of good quality generic medicines through tougher patent enforcement. The new definition states: “disputes concerning patents must not be confused with counterfeiting.”

This seems clear enough. If IMPACT threatens the global trade in quality generics, as its opponents claim, why do international generics associations support it?

In December the European Generic-medicines Association (EGA) welcomed the new definition, specifically because it “puts an end to any confusion with alleged patent infringement products which have nothing to do with counterfeiting.” The International Generic Pharmaceuticals Alliance was a founder of IMPACT.

Indeed its fundamental principles match those of reputable Indian organisations such as the Confederation of Indian Industry (CII): fakes and sub-standards have “tainted the image of many Indian brands,” it notes, “…placing patients’ health at risk.”

The Organisation for Economic Cooperation and Development (OECD) estimated last year that up to 75 per cent of the world’s counterfeit drugs come from India, most of which end up in Africa.

Strange alliance
But a strange alliance of anti-business activists and business associations purporting to represent India’s best interests has successfully lobbied the government to oppose IMPACT. The Indian Pharmaceutical Association says the counterfeit definition would harm the drug industry.

The SME Pharma Industries Confederation (SPIC), called “for safeguarding the export interests of the SME (small- and medium-sized enterprises) sector” by opposing it.

Indian delegates subsequently blocked IMPACT’s progress at the recent WHO Executive Board meeting and are threatening to prevent progress at May’s World Health Assembly (WHA): all the horse-trading will be done in coming months because WHA decisions are based on consensus.

But India’s own world-class and brand-conscious major producers stand to lose from India’s opposition to IMPACT. Fake versions of successful Indian generics have begun to flood the market, not least in India itself, losing them money, damaging their image and increasing disease.

Another fake argument is that “counterfeiting is an issue of trademark violation and has no bearing on public health,” to quote anti-patent campaigner KM Gopakumar of the Indian Centre for Trade and Development (CENTAD) think-tank.

IMPACT’s definition makes no specific mention of trademark violation but does of course outlaw “false representation” and “fake packaging”: if the packet is fake, do you really expect to find real medicine inside?Without trademark protection, manufacturers cannot protect against counterfeits.

Cheap drugs are a boon to health but they must be of a high standard, lest they do more harm than good. IMPACT cannot save Africa but nor does it set out to do so. It merely provides guidance to countries.

IMPACT’s definition can serve as a template for an African legislature tightening laws against counterfeiting--or improving trademark law to help genuine brands compete. African governments must not allow fake accusations to obstruct the campaign against fakes.

Simons is an executive of Ghana’s IMANI and is also involved in developing SMS verification for medicines.

WHO Knows the Definition of a Counterfeit Medication?

By: Alan Clock, Senior Vice President, XStream Systems

Back in November 2008, I presented the question on this blog and on several professional networking sites; How Do You Classify Counterfeit Pharmaceuticals? In this blog, I related the conundrum that I have found in discussions both within our organization and I have had in speaking with experienced industry thought leaders; What is the definition of a counterfeit pharmaceutical?

Thanks to all who did respond to my open ended question, basically your input further demonstrated my point that the definition of counterfeit pharmaceuticals is not as easy as one might think and clearly those in the know have many different perspectives and views.

As many of those who are involved in defeating counterfeit medications know, it is very important for the industry, regulatory agencies and healthcare consumers to have a full understanding and scope of this insidious problem. Counterfeiting of medications as we know it today threatens to rob whole populations of their health and confidence in our system of providing safe and effective healthcare. Having a clear universal definition of the problem is a basic starting point for us to be effective in dealing with this global plague.

In my blog, I ultimately turned to the World Health Organization (WHO) for some clarity and found that their broad definition surprisingly very open ended as well.
Apparently the WHO has attempted in its most recent Executive Board Meeting in January to draft a more precise definition of “counterfeit” as it relates to medication and medical devices. They also attempted to properly delineate the organizations mandate to tackle the problem. Ultimately they, like the rest of us wound up stalled in their attempt.

It appears that they too realized the broad scope of the issue and recognized that it is difficult to do battle against a serious world health issue when one cannot properly identify and define the opponent.

According to published reports the WHO Executive Board disagreed over the refined definition and had to postpone their efforts until their May World Health Assembly in Geneva, Switzerland.

Here is hoping that this important organization comes to a consensus and gives us all some guidance as to a proper definition of scope of this very important problem. As of late, most within the pharmaceutical supply chain have relied on WHO statistics as a baseline for understanding the scope of counterfeit medications. The WHO is acknowledged as the standard of global guidance and their efforts are important in defeating this threat to healthcare worldwide.

Largest European Seizure: Two Million Counterfeit Pills Seized in Brussels Airport

Two million counterfeit pills have been seized in Brussels Airport. The seizure of the drugs which originated in Mumbai, Indian and were bound for West Africa is the largest confiscation of counterfeit medicine in Europe.

The three Indian shipments contained counterfeit pharmaceuticals labeled as Tramal, a painkiller, and Fansidar, an anti-malaria drug.

Africa already has the daunting task of trying to control its malaria outbreaks without further obstacles of fake treatments. Many countries, organizations, and businesses have been aiding Africa to fight malaria and therefore, counterfeit medicine is a real threat to their work. In some countries up to 60% of anti-malaria drugs are fake and are aiding in the drugs resistance to current therapies.

Furthermore, the biggest victims are the children, because according to the Worlds Health Organization (WHO) a majority of malaria deaths are children under the age of five and Fasidar is one of the drugs given to pregnant women for the prevention of malaria.

The scope and intent of this particular case leads us to ask – Is any medication safe? How can we protect our most vulnerable medications? We believe the answer can be found in pharmaceutical authentication which verifies the drug itself. With nothing added and nothing destroyed; the method can be programmed to test various oral medications.

To learn more of this fascinating technology, see XStream Systems website at http://www.xstreamsystems.net/products.html.

WHO Combats Malaria

The World Health Organization has declared tomorrow, April 25, 2008 as World Malaria Day.

A day dedicated to education and understanding this dreaded disease. Malaria is preventable and curable with the right medication. Sadly however, the most common medications are also highly counterfeited, with a rate as high as 85% in some countries, such as Nigeria. Patients are left with what was to be their hope now becoming their downfall.

Even more tragic, those most vulnerable to the disease are young children and pregnant mothers. More than a million die each year.

WHO has declared war and has vowed to eliminate Malaria. Please take a moment to reflect on their accomplishments in this humanitarian effort.

Tip of the Iceberg

When giving presentations across the country, there is one slide in particular that seems to stand out and really hit hard on the counterfeit pharma issue and what is really out there. This image contains a quote which says it all. It states, “Most of the counterfeits are detected largely by accident. It means that we are just seeing the tip of the iceberg...We presume there is an iceberg to be found somewhere under the tip, but no one has been able to put their head under the water.” By Valerio Reggi, World Health Organization (WHO) 2007.