How the Current Economy Will Drive Counterfeit and Fraudulent Medications

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

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 factors will 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 terrifying 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/.

Drug Authentication Evolves to Use Molecular Screening to Combat Fake Drugs

Life Science Leader, a magazine for key executives in the life science industry, recently published an article "Molecular Screening: It's Time to Stop Thinking Outside the Box with Counterfeit Drugs" by Brian Mayo, President and CTO of XStream Systems.

In the article, Mr. Mayo discusses the advancement of analytical methods as they have moved from the lab setting to the next generation of authentication by allowing screening of the product itself throughout the pharmaceutical supply chain.

By putting this non-destructive screening method in the hands of non-scientific personnel the industry has evolved it’s protection services from merely deterrents for diversion and counterfeit drugs to real authentication of the product “inside the box”.

It’s so simple and it makes sense that we spend so much money and time developing the drugs themselves – shouldn’t our authentication be centered on them as well.

To view more on molecular screening technology, please visit www.xstreamsystems.net

To view more on Life Science Leader…

Cargo Thefts on the Rise - Threaten Security of Pharmaceuticals

By Patricia Earl, V.P. Business Development, XStream Systems

As pointed out here by Purdue Pharma’s Chuck Forsaith, one of the key speakers at the recent 2009 National Cargo Theft Summit, Americans have an increasing issue with pharmaceuticals being stolen in transit from the manufacturer’s dock to the distributor’s dock or to the retailer. Chuck talked about why transportation – and trucking in particular – is so vulnerable to cargo theft these days and what shippers and carriers alike can do about it.

“On the street, one milligram of OxyContin is worth between 50 cents to $1, with single pill containing 80 milligrams. That means the street value of just ONE OxyContin tablet is between $40 and $80 – and Purdue Pharma typically ships 50 to 100 DRUMS worth in a single tractor-trailer load. Now you know why cargo thieves stalk the pharmaceutical industry like so many hungry wolves circling a herd of fat deer. While pharmaceuticals remain a relatively small part of the goods stolen by cargo thieves – making up just 6% of the total cargo theft “pie” as it were – the average value of a pharmaceutical cargo theft is very high, Forsaith explained; roughly $1.4 million per shipment. Overall pharmaceutical truckload shipments themselves can average anywhere from $10,000 per load (for over the counter or “OTC” products) to several million dollars (for the expensive bio-tech drugs).”

And that’s not the total picture, either, Mr. Forsaith stressed, cargo thieves have exactly zero overhead – meaning the entire shipment is 100% profit to them, no matter what they sell it for. And when it comes to potentially addictive medicines such as OxyContin, the sky’s the limit.

The National Cargo Theft Prevention Initiative created the original National Cargo Theft Strategy to combat cargo theft and this action has been sponsored by the federal government, in cooperation with private industry and state and local governments. Cargo theft incidents in the U.S present a clear and rising threat to the U.S. economy, the wellbeing and the national security of the United States of America. Since the first Cargo Theft Summit held in 2005 and subsequent gatherings held since, Cargo Theft has continued to be a rising nationwide issue with a significant economic impact on the U.S. economy and has a very high potential for use by terrorist organizations. Cargo crime accounts for an estimated direct merchandise loss of up to $ 25 billion dollars per year in the United States.

You can find more information on the website http://www.nationalcargothefttaskforce.org/.

Members of the pharmaceutical supply chain and domestic consumers should be aware of the proliferation and prevalence of counterfeit, adulterated, stolen, diverted or fraudulent medications. Distributors and dispensers should only purchase their inventories from legitimate supply chain members that utilize pedigrees and material authentication technologies to verify the medication and the chain of the transaction. Consumers need to only buy medications from licensed, known pharmacies that procure their inventories from the legitimate pharmaceutical supply chain and who use best, safe medication practices when dispensing drugs.

To learn more about material screening technology, visit: http://www.xstreamsystems.net/.

FreightWatch Releases September 2009 Cargo Theft Report

FreightWatch International (USA), an international logistics security company, has released it September 2009 Cargo Theft Report by commodity, location and date.

Of interest is the high level of cargo theft volume in California and Florida. The September Report shows eight incidents labeled as a pharmaceutical commodity:

• September 6th, a theft of a trailer in Clearwater, Florida which contained Albuterol.


• September 8th, a theft of a trailer in Evansville, Indiana containing $500,000 in baby formula.


• September 8th, a theft of a trailer in Tampa, Florida with an unreported pharmaceutical cargo.


• September 8th, a theft of a trailer in Jacksonville, Florida of pharmaceutical soy protein worth $50,000.


• September 16th, a theft of a trailer in Whiteland, Indiana which contained $50,000 of OTC medications.


• September 16th, a theft of a trailer in Louisville, Kentucky which contained OTC medications.


• September 25th, a theft of a trailer in Jacksonville, Florida which contained OTC medications worth $250,000.


• September 29th, a theft of a trailer in Jacksonville, Florida which contained Tylenol.

Members of the pharmaceutical supply chain and domestic consumers should be aware of these incidents and the prevalence of counterfeit, adulterated, stolen or fraudulent medications.

To learn more about FreightWatch’s September 2009 Cargo Theft Report visit: www.freightwatchusa.com.

U.S. Customs Seizes Fifty Pounds Of Counterfeit Viagra in Miami

As reported on many newswires and through an official press release, the United States Customs and Border Protection announced that in October, they intercepted 21,600 counterfeit Viagra tablets bound for another country.

The interception of counterfeit product, which weighed in at nearly 50 lbs. was passing through the Miami International Airport from India and was spotted by a suspicious Customs and Border Patrol Agent.

"We just know it's not authentic, but we don't know what's in it," said Customs and Border Protection spokesman Jose Castellano. "If something is counterfeit, there's no telling what they were manufactured with, and it could be harmful."

This is yet another cautionary tale about the prevalence and potential danger of counterfeit medications. This fraudulent shipment, valued at well over $300,000 (at the wholesale acquistion cost of the legitimate drug), could have negatively affected the health or caused a fatal reaction to nearly 22,000 consumers.

Know where you are buying your prescriptions and make certain that they purchase drugs from a trustworthy source of supply that utilizes track and trace and material screening technologies to verify and authenticate their pharmaceuticals inventories. Never purchase any drug from a source other than a licensed, well established pharmacy that requires a prescription from your physician.

To learn more about material screening technologies used to protect the pharmaceutical supply chain, visit: http://www.xstreamsystems.net/.

To view a News Video on the seizure visit: cbs4.com.

20,000 or more Patients Receive Adulterated Prescriptions in “Medicine Mafia” Scheme

As the investigation proceeds in the “Medicine Mafia” Story, officials are just getting a glimpse of the extent of the problem. Authorities are uncovering well-entrenched criminal organizations going back maybe 5 years. At least seven large unions are involved in the scheme and up to fifty unions are under investigation.

Most of the substances in question were for life saving medications for cancer, HIV/AIDS, genetic disorders, and hemophilia. Suspects are accused of distributing expired, diluted, and fake medications.

Argentina’s Superintendent of Health Services estimated that a minimum of 20,000 patients received the illegal pharmaceuticals.


To view more information on counterfeit drugs, read the International Federation of Pharmaceutical Manufacturers and Associations (IFRMA) document on “Counterfeit Medicine: The Global Public Health Risks” at: www.ifpma.org.

Zanola to Remain Free Pending the "Medicine Mafia" trial

Recent events in Argentina have shocked citizens as those in the power to protect their health have been implicated in the "Medicine Mafia" scandal where top leaders are accussed of distributing counterfeit, aduterated,and expired medications for life threatening diseases. Here is one of the latest developments in the case from Buenos Aires Herald:

Federal Judge Norberto Oyarbide authorized Bank Clerks' union leader Juan José Zanola to remain free pending a trial in which he is charged with adultering medicines.

Zanola will have to pay three million and and his girlfriend Paula Aballay, a million pesos bail money for that freedom.

According to Federal Judge Norberto Oyarbide, Zanola would have been "highly compromised" in the purchase of the adulterated medicine from San Javier pharmaceuticals for the Bank Clerks' health centre. The pharma company is owned by businessman Néstor Lorenzo, currently in prison. San Javier manufactured drugs for cancer and aids patients.

To view entire article visit: www.buenosairesherald.com.