The Economist: The Spread of Counterfeiting, Knock-offs Catch On

Fake goods are proliferating, to the dismay of companies and governments, reports The Economist in a story that appeared in their March 4, 2010 edition.

The piece details the overall impact of counterfeiting in all marketplaces, its spread and impact to economies and consumers.

The impact of counterfeits hits everywhere, according to the article, “fake Porches and Ferraris zoom along the streets of China. A German bank has discovered an ersatz gold ingot made of tungsten in its reserves…NASA, America’s space agency, has even bought suspect materials.”

This story encapsulates how prevalent this criminal activity has become and that it not just a victimless crime of a bunch of knock-off purses or watches sold on the street corner.

Highlights of the article include:

· The OECD estimates that the international trade in counterfeit and pirated goods was worth around $250 billion in 2007. The International Anti-Counterfeiting Coalition (IACC), a lobby group, says the true figure is actually closer to $600 billion, because the OECD’s estimate does not include online piracy or counterfeits that are sold in the same country as they are made. Counterfeit goods make up 5-7% of world trade, according to the IACC.

· Several factors have contributed to the growth of counterfeiting in recent years. The shift of much of the world’s manufacturing to countries with poor protection of intellectual property has provided both the technology and the opportunity to make knock-offs. The internet in general and e-commerce sites like eBay in particular, have made it easier to distribute counterfeit goods. MarkMonitor, a firm that helps companies defend brands online, estimates that sales of counterfeit goods via the internet will reach $135 billion this year.

· The recession in the rich world may also have given a boost to counterfeit goods. Frederick Mostert of the Authentics Foundation, an anti-counterfeiting group, has noticed a “spike” in knock-offs this recession, as consumers short of money trade down from the real thing. Cost-cutting measures may also have made firms’ supply chains more vulnerable to counterfeit parts.

· Governments are also boosting their efforts to crack down on counterfeiting, which deprive them of tax revenue in addition to harming legitimate businesses. Counterfeiting and piracy cost G20 economies €62 billion ($85 billion) a year in lost taxes and higher spending on unemployment benefits, according to a study by Frontier Economics, a consultancy. For every dollar invested in the fight against counterfeiting in America, the government receives $5 in extra tax revenue, estimates the US Chamber of Commerce, a business lobby.

· In 2008 the value of fake goods seized at America’s borders increased by nearly 40% over the year before. It subsequently fell by 4% last year—far less than the 25% decline in imports overall. In Europe in 2008 customs services confiscated more than double the previous year’s haul of counterfeit goods.

· MarkMonitor raised the price of its online brand-protection service by 18% last year because demand was so high. America’s biggest firms spend $2m-4m a year to combat counterfeiting on average—a figure that is growing along with internet shopping.

· In China, where 80% of the world’s fake goods are thought to be produced, officials are loth to crack down on a thriving local business.

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

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

To read this excellent article which appeared in the March 4th edition of The Economist, visit: http://www.economist.com/.

WSJ: US Authorities Investigating Alleged Sales Of Counterfeit Insulin Test Strips

Peter Loftus in the Wall Street Journal reports that the US government is currently investigating a Florida businessman who Johnson & Johnson says sold counterfeit versions of its OneTouch diabetes test strips.

J & J has aggressively conducted this investigation, which it says involves participants in China, Pakistan and the US, for the last four years.

According to the WSJ, if charges are filed against the US distributor, Jacques Duplessis, it would be the first instance resulting from J&J's four-year effort. Notably, a 2006 FDA alert about the counterfeit strips warned that they could give inaccurate readings, causing diabetes patients to take either too much, or too little, insulin.

This incident is very relevant in that it shows that the prevalence of counterfeit medications and devices that have been a major issue in the rest of the world outside of the United States has been impacting our consumers and will likely proliferate further.

Secure Pharma Chain Blog encourages all members of the pharmaceutical supply chain to use a variety of technology solutions to secure their inventories specifically material authentication which allows the user to verify the molecular fingerprint of the tested material inside its unit-of-sale container.

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

To read the WSJ article, visit: http://online.wsj.com/article/SB10001424052702303591204575169990446786552.html.

New York Times Op/Ed: Are You Buying Illicit Drugs?

In a New York Times Op/Ed published on March 31st, author Katherine Eban and Aaron Graham, former DEA Agent write about the recent pharmaceutical thefts and how this trend is made possible by “our haphazardly regulated pharmaceutical supply chain and the dangerous gray market that intersects it.”

According to the Op/Ed, “As soon as medicines leave manufacturers' loading docks, they enter a market teeming with middlemen, many legitimate, but some not. The drugs may move through a dozen hands, through small secondary wholesalers and repackagers. With so many middlemen involved, thieves can easily unload stolen drugs, which may be resold to pharmacies and hospitals and dispensed."

Ms. Eban and Mr. Graham then go onto detail to describe some of the more egregious recent incidents of pharmaceutical theft, diversion and counterfeiting.

Ultimately Ms. Eban and Mr. Graham conclude that the most effective way to deal with this growing epidemic which threatens the healthcare of consumers everywhere is through technologies that Track and Trace drugs throughout the supply chain. While Track and Trace technologies are important, they are limited in their effectiveness in that they were initially designed and implemented as inventory management tools. Basically these tools tell the supply chain where the box has been.

We at Secure Pharma Chain Blog believe that while it is important to know where the drug has been, ultimately knowing what is inside the box properly protects both the supply chain and the consumer. Track and Trace technologies require a comprehensive and complex, daisy chain of data flow while Authentication Technologies like XStream Systems’ XT250 can tell you what is inside the box and if it is safe to consume without maintaining an elaborate transaction pedigree.

The best solution is a multi-layered approach of a variety of solutions that thwart the opportunity for criminal organizations to profit from their deadly activities.

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

To read the New York Times Op/Ed, visit: http://www.nytimes.com/2010/04/01/opinion/01eban.html?scp=1&sq=%2b%22Food+and+Drug+Administration%22&st=nyt.

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

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: www.xstreamsystems.net.

Interpol: Counterfeit Hotspots

The map above created by Interpol, shows by color code, the countries and continents and the severity of the issue of counterfeit activity within that area. Interpol labels this map as Global Counterfeiting Hotspots.

The color codes are red for severe, yellow for serious and green for significant.

This map shows counterfeiting activity in general but even with that clearly Asia and Middle East seem to dominate the areas that Interpol considers serious.

As it relates to drug counterfeiting, the World Health Organization estimates that the global market place for fake drugs will exceed $75 billion in 2010 and with a growth rate of 12-16%. If Interpol were to make a map exclusive to drug counterfeiting, it would be likely that there would be many more reds and yellows and less green..

To find out more about anti-counterfeiting solutions for the pharmaceutical supply chain, visit: http://www.xstreamsystems.net/.

Report Examines Adulteration, Counterfeiting of Products

The Grocery Manufacturers Association (GMA) and A.T. Kearny, very diligently lay out an excellent industry primer for the various members of the supply chain to learn about the impact and economics of adulteration and counterfeiting of products in a recently released study.


The report, Consumer Product Fraud: Deterrence and Detection, suggests that a shared library of ingredient data could reduce analytical costs and increase quality.

GMA and A.T. Kearny estimate the economic adulteration and counterfeiting of global food and consumer products is expected to cost their specific industry $10 to $15 billion a year.

Sales of counterfeit drugs world wide are estimated by the World Health Organization at reaching $75 billion in 2010.

According to the study, "the cost of one adulteration incident costs a company between 2% to 15% of its annual revenues depending upon the size of the company. This translates to $400 million to a $10 billion dollar company and $60 million to a smaller $500 million dollar a year company."

The GMA study obviously centers primarily on the food and consumer products industry but has relevance and great insight for nearly all industry supply chains as it relates to effective strategies and the economics on counterfeit products. Much can be taken by other consumer related industries, like Pharma, including relevant statistics.

Secure Pharma Chain Blog highly recommends that all members of the supply chain, manufacturers, distributors and dispensers read this report as an introduction into crafting tactics and policy towards dealing with fraudulent, adulterated and counterfeit products.

To read the report, visit: http://www.gmaonline.org/publications/consumerproductfraud.pdf.



To learn more about technologies and solutions that can effectively protect consumer product supply chains, visit: http://www.xstreamsystems.net/.

The Decade of the Counterfeit-Part Two

The is the second and final installment of a two part opinion blog by Alan Clock, Senior Vice President at XStream Systems, Inc.

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?

We now live in a worldwide, global economy. Trade and industry superpowers have emerged beyond the traditional European and North American developed nations. Comprehensively all industries have had enormous movement of production into underdeveloped nations, even those that have a tradition of trade riddled with fraud, counterfeiting and corruption. These countries with well know nefarious sources of supply, now find themselves as a primary producers of everyday consumer products that are in foodstuffs, household goods and medications on the retail shelves of Main Street USA.

The reality, unknown by many, is that this counterfeit phenomenon is growing and going well beyond the borders of the undeveloped world. Today, not one product, not one place, not one person is immune from the impact of counterfeit and fraudulent products. It is likely that we will continue to see this counterfeit boom continue unabated indefinitely.

How this phenomenon is happening is both complex and simple. This is a global event which adds to its complexity, but it is driven by easy money which is very straightforward to understand.

As such, some of the major factors driving the unprecedented proliferation of counterfeit products around the globe decade include:

• Global economies and worldwide supply chains. As companies become more global and procure raw materials and contract production overseas due to lower costs and expense, the supply chains become much more difficult to control and monitor. Companies lose control over their production, intellectual property and quality control. Regulatory processes and enforcement in third world countries lag behind the developed world and institutional control. Nefarious vendors can contaminate for quick profit a product by providing poor quality or adulterated raw materials prior to production. Without adequate controls manufacturers, distributors, retailers and consumers find themselves vulnerable to poor quality, contaminated or fraudulent materials. Often by the time an issue is discovered the product is well within distribution, its source difficult to pinpoint with the perpetrators long gone. Unfortunately by that time the impact of the bogus product has been borne by thousands.


• Ineffective laws and regulations. As a global economy expands, products move across multiple borders making them increasingly vulnerable and allowing for organizations to take advantage of legal loopholes, breaks in regulatory authority and the ability for law enforcement to adequately monitor movement of goods and services. Penalties for criminal activities also exacerbate the situation. A criminal organization can make more profit with less risk of being caught or with any significant legal ramifications by counterfeiting than almost any other criminal activity. Basically it is easier to counterfeit products, with much less risk and much more profit than in any other legitimate or illegitimate activity.


• Growth of the internet and unrestricted, instant access to millions of consumers. In the 21st century, counterfeit organizations can directly or indirectly market and sell their wares online, 24 hours a day in relative anonymity. These organizations can set up websites and fulfill transactions with only a few key strokes and completely camouflage their operation. By the time a regulatory body, law enforcement agency or consumer finds a fake product the marketing source or website and operation is long gone into a hazy cyber world.


• The global financial meltdown that occurred in the last half of the decade has caused many retailers and consumers to look at the price of materials, focusing less on quality and authenticity. As incomes and profits fall, so do the standards of the producer or consumer as they scramble to find the products and materials that they rely on. This is a dangerous environment where counterfeit organizations thrive. A perfect scenario for fraudulent activity occurs when members of the supply chain focus on price over cost and fraud. The criminals know that by the time their crime is discovered they have little chance of being held accountable.


• The lack of brand protection and security by members of the supply chain. Many manufacturers, distributors and retailers have been slow to realize the huge impact that counterfeit products have and could have to their businesses. Many have had and continue to show a lack of strategy in dealing with this issue, ostensibly because they have not educated themselves on the problem or they do not have the necessary solution to effectively deal with it. Regrettably until most of these organizations face the liability or brand erosion of a catastrophic event caused by fraudulent activity they simply ignore the issue altogether.


• The lack of implementation or acceptance of comprehensive solutions to combat counterfeiting. There have been scores of regulatory bodies, legislation and industry groups make attempts to implement comprehensive solutions to counterfeit activities. Most initiatives prove to be ineffective, based on their lack of acceptance, expense and their complicated approach. Functionally most of these solutions are based on a transactional approach. A transactional approach relies on the supply chain to continually interact and exchange data. This constant information exchange in real time is difficult at best and extraordinarily expensive at worst especially when you are dealing with a far reaching, global supply chain.
  
  Additionally transactional methods only deal with the product package and not the material or product itself. Some of the largest and most egregious fraud and counterfeit events of the past several years were products that had pristine transactional pedigrees but the product on the inside of the package was adulterated or fraudulent, causing harm to thousands of end use consumers and millions in losses to the brand.
  
  To date, most industries seem to have taken a wait-and-see approach driven by the cost of current solutions, which ultimately means that the initiatives die as the events which caused the activity loses momentum over time. The reality is that eventually business leaders within the supply chain have a “hear-no-evil, see-no-evil” attitude as it relates to this issue because they posses few answers and have little to no government or industry leadership to the mandate or guide them.

The dilemma of the next decade is how to marshal our resolve as a society globally and properly respond to the multiple factors which have driven this decade of fraudulent, adulterated and counterfeit products that have proliferated in the 21st century.

First and foremost, to win this battle, there needs to be a universal awareness of how prevalent and how dangerous this issue actually has become. Consumer’s awareness and their rejection of products that are not vetted and authenticated is critical.

Additionally, regulatory authorities across the globe need to be motivated, synchronized and resourced appropriately so as to eliminate the shadows and safe havens that allow counterfeiters to thrive.

Finally, industry and supply chains need to understand and realize the profit, loss and liability that exist if they do not deal with counterfeits head on. Each of the stakeholders of the consumer supply chain, from corporations to consumer, need to push for sophisticated solutions and eliminate this potentially deadly threat.

Vital to these three primary steps is the realization from all; manufacturer to consumer, is the understanding what this counterfeiting is currently, but what it can become if not properly addressed.

Most ominous is the potential for counterfeiting to evolve beyond the simple criminal act to becoming a massive terror threat is very real. As it stands today, millions die each year from individual criminal counterfeit acts, if done with a coordinated murderous intent; a terrorist element could comprehensively impact the health and mortality of an entire country or society.

Fortunately the solutions are at hand, today there are technologies that can be comprehensively layered to protect the various members of the supply chain, within individual channels to follow transactions, screen materials and authenticate the validity of products at each step of the sequence as it makes its way to the consumer.

One such solution is a technology known as EDXRD. This innovative technology allows the user to molecularly screen the product inside its original container without destroying or degrading the product, thus minimizing the need for Track and Trace or transactional solutions. Basically this solution adds functionality from the transactional and looking at the outside of the container to looking inside the container with Molecular Screening. Ultimately, this type of solution provides each member of the supply chain the confidence to know that their inventories safe and efficacious.

In the end, layered deployment of technology solutions, consumer awareness and a coordinated regulatory/law enforcement process will be the most effective strategy to lessen this very dangerous, criminal activity. When the criminal elements realize that there is little profit and a realistic chance that they will be held accountable for their actions, the deadly issue of counterfeit and fraudulent products will drastically decline and the Decade of the Counterfeit will become a brief historical story of how technology and public awareness save the day.

Alan Clock, Senior Vice-President of XStream Systems has over 20 years of pharmaceutical, healthcare and sales distribution experience. Mr. Clock has an impressive track record of promoting comprehensive solutions to healthcare providers, distributors, large corporate entities, group purchasing organizations, employer groups and managed care organizations. He has held senior sales executive and national account roles for major Fortune 100 healthcare industry leaders and has successfully negotiated and sold billions of dollars in multi-year pharmaceutical service, software, equipment, packaging and consulting agreements.

Coming This Week a Two Part Blog Series: The Decade of the Counterfeit

Coming later this week, Secure Pharma Chain Blog will be presenting in a two part blog series a recent opinion paper written by Alan Clock, Senior Vice President at XStream Systems, Inc.

The paper, titled The Decade of the Counterfeit, discusses how the first decade of the 21st century has emerged due to the globalization of the world's economy as a time where counterfeit, fraudulent and adulterated products have proliferated and touch each and every product, brand and consumer around the globe.

The following is an exerpt from The Decade of the Counterfeit:

The first decade of the 21st century could carry many labels given the rise of global terrorism, 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 are impacting a greater number of consumers universally 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 contemporary counterfeiters goes well beyond what has traditionally been considered to be a victimless crime.

Today’s counterfeit products include every product that is used today, running the gamut from commercial aircraft parts to sophisticated electronics, and from consumer goods to food and life saving healthcare products. These include all of the products 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.

To learn more about XStream Systems, Inc. visit our website at: http://www.xstreamsystems.net/.

Pharmaceutical Commerce: FDA Counterfeit Drug Investigations Reach New High in 2009

In the December 23rd online edition of Pharmaceutical Commerce, they reported on the FDA’s statistics on Counterfeit Drug Investigations. It is believed that the number of investigations is an indicator of the increase in counterfeit drug activity and represents a fraction of the overall activity within the United States. The entire online posting appears below:

At the HDMA Track & Trace Seminar (National Harbor, MD, Nov. 30-Dec. 1), David Dorsey, Acting Deputy Administrator for Policy at FDA, revealed the FY 2009 (which ended last September) figure for counterfeit-drug investigations opened by FDA’s Office of Criminal Investigations: a new record of 65.

FDA cautions that this count is not a direct measure of the volume of counterfeit activity—but on the other hand, where there’s smoke there’s fire. Dorsey also said that the agency is working toward its mandated March 2010 deadline for making recommendations on a “serial numeric identifier” program for drug tracking, as specified in the FDA Amendments Act of 2007.

Meanwhile, newer legislation, such as the Buyer-Matheson bill from the 2008 session (H.R. 5389) is expected to be re-introduced in the current Congress. That bill would mandate a national track-and-trace system to prevent counterfeiting and diversion.

Visit Pharmaceutical Commerce and read the story online at: www.pharmaceuticalcommerce.com/frontEnd/1339-counterfeit_drugs_FDA_Office_of_Criminal_Investigations_OCI.html

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/.

Anti-Counterfeiting: Thinking Inside the Box

The Autumn 2009 issue of Pharmaceutical Manufacturer and Packing Sourcer (PMPS) features an editorial article written by XStream Systems’ Senior Vice President, Alan Clock.

The editorial piece discusses analyzes the various segments of anti-counterfeiting technology and introducing EDXRD and material screening as a robust tool in combating counterfeit, adulterated and fraudulent medications within the global supply chain.

The phrase, “Thinking Inside the Box” refers to EDXRD’s capability to screen and authenticate materials inside their sealed, unit-of-sale containers without destroying or degrading the materials. This unique solution allows all members of the pharmaceutical supply chain to efficiently, accurately and inexpensively test and screen product to ensure that their inventories are safe and efficacious.

Here is an excerpt from the article:

Today, the various members of the pharmaceutical supply chain find themselves in an expanding global marketplace and in the midst of an ever growing epidemic that threatens each relevant party. As globalization increases, so too does the risk of counterfeit, substandard or fraudulent medications within the supply chain. This increase in risk threatens both the economic and physical health of the pharmaceutical industry and its consumers. Here are a few staggering statistics related to this scourge:

• The World Health Organization (WHO) conservatively estimates that counterfeit medications will be a $75 billion global industry in 2010.
• The WHO projects the annual growth of counterfeit medications to be between 12 and 16 per cent annually, worldwide.
• According to the WHO, more than 2,000 children in Africa alone die each day as a result of taking counterfeit medications.
• The WHO reports that, across the world, 10 per cent of pharmaceuticals are counterfeit, fraudulent or adulterated. Proliferation and percentages are much higher in developing countries in Asia, Africa and South America, with up to 50 per cent of the supply chain projected to be identified as counterfeit or adulterated.

TRACK AND TRACE

To date, nearly all of the solutions for this global epidemic emphasize what are known as ‘track and trace’ methods (such as barcodes, holograms, RFID, pedigree, taggants and serialization). These solutions are primarily based on traditional technology for inventory control and security and are common within most sophisticated supply chains. They are incredibly effective in tracking products, especially in direct or short supply chains, where the additional cost can be justified in their inventory control capabilities because the members of the supply chain use common systems and tools for tracking, distribution and sales. However, track and trace solutions have their limitations. They generally require some sort of addition to the outside of the box or package, and a common technology to be read and documented. These processes and technologies add further cost to the product and are difficult to maintain across large global supply chains. In addition, because of its external placement, the track and trace item may be easily replicated, and it does not verify that the material inside the package is safe and efficacious.

To read the complete article either visit PMPS at www.samedanltd.com/magazine/15/issue/122/article/2531 or visit XStream Systems website at www.xstreamsystems.net.

US Anti-Depressant Market Drives Counterfeit Medications

By: Alan Clock, Senior Vice President, XStream Systems

An article printed in the August issue of the Archives of General Psychiatry has been reported on by every major US media outlet. The crux of the article centers on the statistic that “about 10 percent of Americans -- or 27 million people -- were taking antidepressants in 2005. This was double the number from the same study in 1996.

This surge in prescriptions vaulted anti-depressants, as a therapeutic class of pharmaceuticals, to become some of the top selling medications in the United States. Although the data used in the study is no longer tracked, it is presumed the number of Americans using anti-depressants continues to climb at a steady rate.

Most of the stories and reporting of this study has primarily focused on the prescribing and demographics of the study but as an additional take for Secure Pharma Chain Blog, we consider the proliferation as a correlation to anti-depressants now becoming, as a therapeutic class of pharmaceuticals, some of the most highly counterfeited and adulterated drugs both in the United States and worldwide.

In nearly every study, regulatory or published report within the United States and abroad, anti-depressants are among the top in value and in volume, highly counterfeited and adulterated drugs.

Clearly this is not a huge revelation, the cost of these medications are high, the number of people who take these medications is high and the issue regarding the wish for patients to conceal that they are taking these medications have led to many concealing their efforts to procure these products.

In many cases, it is difficult for the patient or health care provider to discover that they are not taking the proper prescribed therapy because of the nature of the illness that it is intended to relieve. Most patients will never realize that their drugs are counterfeit at all and will attribute their ineffectiveness to other issues.

As the market for anti-depressants continues to climb so will the need for patients and providers to diligently seek out authentic medications.

Here are a few thoughts on how to protect you and your family as a patient against counterfeit medications:

• Always buy pharmaceuticals from a trusted, brick and mortar, licensed pharmacy in your community.


• If you purchase from the internet, only purchase from sites that are sponsored by a licensed, established pharmacy like a retail chain or from site that is verified by the National Association of Boards of Pharmacy.


• Never, ever purchase prescription drugs from an internet site or a pharmacy that does require a prescription from your physician. Sites that offer a physician prescription on-line are not legitimate.


• Carefully examine your medications for differences in size, color, consistency and taste. If you notice any differences immediately notify your pharmacist or physician.

The best way to protect you and your family from counterfeit medications is that if the price or the deal sounds too good to be true, it probably is and you should not purchase those drugs.

Realize that in this world where a criminal individual or enterprise can make far more money with far less risk by manufacturing, distributing and selling counterfeit medications than in selling illicit drugs, everyone needs to be on guard against this crime that will impact your health and the health of your family.

CRS Report for Congress: Intellectual Property Rights and International Trade

The Congressional Research Service (CRS) prepared a report on Intellectual Property Rights and International Trade. The report is authored by Shayerah Ilias and Ian F. Fergusson and was published in July 2008. There were many interesting pieces of information as it relates to the pharmaceutical supply chain and although somewhat dated the data points are very relevant as it relates to the size, scope and impact on commercial interests globally.

In the opening summary, Ilias and Fergusson wrote:

“This report provides background on intellectual property rights (IPR) and discusses the role of U.S. international trade policy in enhancing IPR protection and enforcement abroad. IPR are legal rights granted by governments to encourage innovation and creative output by ensuring that creators reap the benefits of their inventions or works and they may take the form of patents, trade secrets, copyrights, trademarks, or geographical indications. U.S. industries that rely on IPR contribute significantly to U.S. economic growth, employment, and trade with other countries. Counterfeiting and piracy in other countries may result in the loss of billions of dollars of revenue for U.S. firms as well as the loss of jobs. Responsibility for developing IPR policy, engaging in IPR-related international negotiations, and enforcing IPR laws cuts across several different U.S. Government agencies. The main structures for coordinating interagency efforts are the National Intellectual Property Law Enforcement Coordinating Council (NIPLECC) and the Strategy Targeting Organized Piracy (STOP!).”

Here are some of the interesting pieces of information contained within the CSR report as it relates to pharmaceuticals:

• Department of Homeland Security (DHS) provides data on counterfeit goods seized by category. Seizures of counterfeit pharmaceuticals increased significantly, from $2.3 million in 2006 (1% of total) to $11.1 million in 2007 (6%).


• According to U.S. customs data, pharmaceuticals accounted for only 1% of all goods seized in 2006, with a domestic value of $2.2 million. Still, there is growing concern about the vulnerability of the U.S. medicine supply and distribution chain, especially in light of recent high-profile cases about counterfeit drugs entering the United States.


• PhRMA provides annual estimates of U.S. pharmaceutical industry losses from foreign violations of data exclusivity and patent protection. In its 2007 Special 301 submission to the USTR (covering the period of October 2006 to September 2006), PhRMA contended that its member companies sustained damages totaling an estimated $21.7 million from data exclusivity and patent violations in 24 countries. Damages reported in the 2007 submission were nearly double those reported in the prior year’s submission (covering October 2005 to September 2005). While the total loss associated with IPR infringement grew, damages as a percentage of sales declined from the 2006 submission to the 2007 submission. At the time of reporting for 2008 Special 301 submissions, PhRMA was not able to provide damage estimates due to trade barriers associated with intellectual property protection and market access.


• U.S. CBP and L.A. Strategic Trade Center, “FY2006 Top IPR Commodities Seized,” November 7, 2006, [http://www.cbp.gov]. Because of the costs and resources required to conduct physical inspections, many counterfeit products escape inspection, making it difficult to determine the fraction of pirated goods caught. As a result, seizure statistics from the DHS agencies do not reflect on the overall size of the counterfeit market and total losses.

As we have said many times, XStream Systems believes in a comprehensive strategy to combat counterfeit and adulterated pharmaceuticals. XStream believes that this solution should include verification and screening of the materials inside their unit of sale containers. XStream’s XT250, using EDXRD, allows for the complete verification of the material, without opening the container or destroying/degrading the product being authenticated.

To view the CRS report, follow this link:
http://fpc.state.gov/documents/organization/109543.pdf

Fake Flu Vaccine Warning in the Philippines

The Philippines Daily Inquirer ran the following story about Bureau of Food and Drugs warning consumers and pharmacy providers about a fake flu vaccine.

As previously warned in the blog, it is anticipated that the incidents of counterfeit and fraudulent vaccines and anti-viral medications will grow as the H1N1 epidemic continues throughout the flu seasons globally.

XStream cautions all members of the pharmaceutical supply chain to all transactional and verification procedures available to properly authenticate their inventories while warning all consumers to purchase medications only from legitimate, licensed pharmacies.

Bureau of Food and Drugs Warn Public vs Flu Vaccine Imitation

MANILA, Philippines (07/29/2009) – (UPDATE) The Bureau of Food and Drugs (BFAD) warned the public and drugstore owners against a fake flu vaccine using the brand name Vaxigrip.

"Reports have it that this flu vaccine purportedly contains only distilled water," the BFAD said in a public health advisory dated July 28, but issued only on Wednesday.

"In view of these (news) reports, the BFAD strongly warns all drugstore owners and their pharmacists to exercise due diligence in buying this vaccine and any other drugs and medicines" from the manufacturers of Vaxigrip, the BFAD stated in its advisory.

“Finally, all consumers are advised to purchase vaccines and other drugs and medicines only from outlets duly licensed by BFAD and to demand receipts as well,” BFAD continued.

It asked the public to report cases of counterfeit drugs to BFAD’s Regulation Division at 809-4390 local 1131.

To view article visit: newsinfo.inquirer.net

Fake Drugs – Where Do They Come From and Who’s Distributing Them?

Profile of a Counterfeiter – 26 Busted in Purported International Drug Ring

It seems like every week we see a news story on fake drugs being found, being seized, or worse their effects on the unsuspecting buyer. So it lends the questions – Where do they come from? Who’s distributing them?

The answer can be almost as scary as the fake drugs themselves. Counterfeiters come from a variety of backgrounds, some with pharmaceutical experience and some not --such as in our last story about the self-taught chemist, Fernando Reis, who started off counterfeiting steroids and then expanded his operation to Fake Viagra. Perhaps the most unsettling of the group are those who are professional criminals. These individuals have a variety of interests including gun trafficking, illegal drugs, counterfeit apparel and other illegal activities.

Newsday recently reported on an international Drug Ring that was also trafficking Oxycodone, anabolic steroids, untaxed cigarettes and counterfeit sneakers. The Federal authorities have charged 26 people in the case. Twenty-one have been arrested and five are still at-large. Among those being sought are two New Jersey men, Myfit Dika of Wyckoff and Kujtim Lika of Little Falls, both 44, who are believed to be major figures in the ring.

The investigation began in 2003 in the Balkans, Canada and the Netherlands and they eventually tracked the suspects to New Jersey, New York, Philadelphia and Chicago, the FBI said.

This particular case portrays the dangers and challenges of tackling counterfeiting. Investigations into organized crime rings take longer and global supply chains involve cooperation between governmental regulatory agencies to bring them down. The longer the investigation, the longer the public is exposed.

Most disturbing is the question of medication safety and are they getting into the legitimate supply chain? Many would say not, but they have….

...And do you really feel comfortable wondering if that same guy who is supplying the fake Nikes made overseas just may be supplying the same medicine that controls your heartbeat????

Pfizer Helps Shut Down Steroid Counterfeiters

One drug class that has been susceptible to counterfeiting has been Steroids. These drugs are often sold to weightlifters and athletes wanting to bulk up.

This month, Fernando Reis, the mastermind behind the underground lab Azorian World Order as well as a large-scale British Dragon counterfeit operation pleaded guilty to 15 counts of trafficking and importing anabolic steroids and prescription drugs into Canada.

Interestingly enough, he was also manufacturing fake Viagra, which ended up being his downfall. Last year, Pfizer hired a private investigation firm to investigate the illicit business(es) of Fernando Reis after discovering counterfeit sildenafil citrate packaged to resemble brand name Viagra. Their investigation and cooperation with the local authorities led to his arrest by Waterloo Regional Police and Kitchener Royal Canadian Mounted Police (RCMP) on April 11, 2008.

The RCMP seized 600,000 capsules and 582,000 tablets of various anabolic steroids and prohormones, ancillary medications and other prescription drugs, as well as dietary supplements from a Kitchener U-Haul storage unit and his Kitchener residence. Also, unprocessed anabolic steroids and erectile-dysfunction drugs from China were seized from a private mail box at the Instant Print Copy Centre & Mail Boxes in Markham.

Federal prosecutor Catrina Braid said in an agreed statement of facts that the steroid seizure is believed to be one of the biggest ever in Canada. More than $1 million in deposits were made to various bank accounts held by Reis between 2002 and 2008.

In a plea deal, he was sentenced to 22 months in jail and 2 months probation.

BBC: Seized Drugs 'Were Counterfeit'

The following story about a major counterfeit drug raid in the UK was posted on the BBC Online. This story illustrates how pervasive and relatively common counterfeit and fraudulent medications are becoming within communities and everyday life within developed countries:

More than £250,000 of counterfeit, unlicensed and withdrawn medicines have been seized during raids in Stoke-on-Trent, the drug regulatory agency said.

A woman aged 50 was bailed on suspicion of illegally selling prescription drugs after the morning raids on Tuesday, March 3rd.

The Medicines and Healthcare products Regulatory Agency (MHRA) said a couple in their 60s was being questioned.

It said the drugs were the "tip of the iceberg" of an expected multi-million-pound illegal online medicine business.

For the full story follow this link:
http://news.bbc.co.uk/go/em/fr/-/2/hi/uk_news/england/staffordshire/7924072.stm

XStream Systems Stories and News for the Week of November 28, 2008

Here are a few of stories that we at XStream Systems think are noteworthy as it relates to the safety of our supply chain. Recent incidents such as the adulteration of heparin and the discovery of melamine in baby formula have heightened consumer’s awareness of safety risks to our food and drug supply.

U.S. pays millions for unapproved drugs
The availability of unapproved prescription drugs to the public may create a dangerous false sense of security. Dozens of deaths have been linked to them.
The medications date back decades, before the Food and Drug Administration tightened its review of drugs in the early 1960s.

Republican Lawmaker Asks GAO to Review FDA Handling of Heparin
The FDA may not have used all available postmarket surveillance tools when determining the likelihood that contaminated heparin caused patient fatalities, according to a Republican congressman. “Based on the available information … there is a serious and potentially troubling question about whether FDA availed itself [of] all of its tools to conduct comprehensive surveillance of heparin deaths,” Rep. Joe Barton (R-Texas), ranking member of the House Energy and Commerce Committee, says in a letter to the Government Accountability Office (GAO).

FDA Finds Melamine Traces In U.S. Infant Formula
Bloomberg News reported that the industrial chemical melamine was found in U.S. infant formula in trace amounts that pose no health concern, according to FDA. Since September, some 50,000 children in China were sickened by melamine-tainted milk and several died.

We at XStream Systems believe that molecular pharmaceutical authentication will play a major role in the coming years to protect us from contaminated, adulterated and counterfeit products. To learn more about how this can be done, please visit www.xstreamsytems.net.

Do counterfeiters have no shame?

Who would target innocent children in the pursuit of money? Fourteen babies have been hospitalized with kidney stones after drinking what is thought to be counterfeit baby formula. This recent scheme seems targeted toward the poorer rural areas of China where young families have turned to discounted milk powder to lower their household costs.

Why did they choose infant formula? – Well, just as in the case of the adulterated heparin, as demand exceeds supply so does the increased risk of susceptibility to counterfeiting. Over the past few years, increases in the cost of raw milk coupled with the decrease of dairy farming have further complicated this matter.

Sanlu, one of the four largest powdered milk companies in China, has stated that the product labeled as theirs is a fake and has sent their own personnel to investigate. This, however, is little consolation to the poor rural families whose babies are now suffering.

This is not the first case of deadly Chinese baby formula. In 2004, thirteen infants died and 170 were left malnutrition and underdeveloped by counterfeit formulas with little or no nutritional value which were sold under 45 different brands and manufactured in over 141 different factories.

The mere expanse of the operation is disheartening and its implications frightening in light of the fact that China is one of the largest exporters in pharmaceutical ingredients to the U.S.

We must fortify our inspection and authentication methods to ensure our brands integrity. Fool me once shame on you …. Fool me twice shame on me.

Track and Trace versus Inspection and Authentication Technologies?

In a comparison of Track and Trace versus Inspection and Authentication technologies it is apparent that Track and Trace solutions such as RFID, bar coding, holograms, tracing and pedigree products are not a one-size-fits-all solution to protecting the domestic and global pharmaceutical supply chain.

Track and Trace products might be sufficient, when employed throughout the Supply Chain to protect it from Drug Diversion which is one source of counterfeit activity, but these Track and Trace technologies cannot provide full protection for the product within the package. For example, how can anyone expect a Track and Trace product to determine if, either in the manufacturing or distribution process, the wrong ingredient was purposely or accidentally added into the product? Pedigree or Serialization may help, after a threat has propagated to the general public and was detected by other means, to help backtrack to the source of the problem. But by then it may be too late and the consumer will have already suffered.…

Only through the use of Inspection and Authentication technology such as XStream Systems’ XT250 Pharmaceutical Authentication System can those within the drug supply chain immediately inspect and authenticate the product within the container. Don’t let problems reach the general public. Stop the issues in their tracks.

For more information on XStream Systems and the XT250™ Pharmaceutical Authentication System, visit their website at www.xstreamsystems.net.