Pharmaceutical Counterfeiting: A Clear & Present Danger

Pharmaceutical counterfeiting is the perfect crime. The "drug supply channel" is ill equipped to prevent it. Counterfeiting is a dangerous and growing problem. The number of counterfeiting "attacks" are on the rise, the products targeted are on the increase, and the techniques are becoming more sophisticated.

Summarized below are four examples of the counterfeiter's "modus operandi":

1. Repackaging

   One of the largest counterfeiting attacks known involved more than 18 million doses of counterfeit Lipitor (a cholesterol lowering drug). Counterfeiters manufactured the tablets (that had some of the active ingredients). Bulk containers of the fakes were imported into the United States, emptied, filled with a different product, and then exported. At the same time, the counterfeit Lipitor was repackaged by an "assumed" legitimate company, then sold into the regular wholesale distribution chain.

   This is called "salting". The counterfeiter mixes real and fake product. This makes detection of the fakes more difficult. Thus, the repackaging of drugs creates many opportunities for criminals to conceal their fakes and introduce them into the legitimate supply channels.

2. Full Fakes

   Counterfeiters make fakes by using commercially available components (vials, containers, and stoppers). They even create the packaging. To quote the old saying: "The counterfeit product looks like a duck, and quacks like a duck, but it ain't no duck." In the past, fake Serostim (a powerful, injectable growth hormone to combat AIDS) was discovered in the supply chain. Other "Full Fakes" include Neupogen, Viagra, Evra birth control patches, Prolene surgical mesh, and Advantage tick pesticide.

3. Refilling & Dilution

   In this example the counterfeiters refill empty (primary or secondary) packaging, or, they dilute product in its original packaging.

   Drug imports foster many counterfeiting opportunities. Unregulated pharmaceutical products that are entering the United States through express shipments and U.S. mail (estimated at over four million packages per year) harbor a clear and present danger to the general public. There have been short-term (intensive) examinations at U.S. mail facilities. The results - more than 80% of the imported medicines violated U.S. drug laws.

4. Drug Diversion

   This is the process of obtaining product in one channel of distribution and selling it into another (higher priced) channel. In the world of pharmaceuticals, diverting product often violates contracts and laws, and often involves fraud. A typical and prevalent scam involves over-buying medicines at highly discounted prices (i.e., for use at nursing homes), and then diverting the discounted drugs back into the retail channel at higher prices.

   These often complex and intentionally confusing diversion channels are used to conceal counterfeits as well. The FDA Office of Criminal Investigations has stated that: ".they have never seen a case of counterfeiting that did not also involve drug diversion."

The Cost To Manufacurers

Here is an example of the terrible loss to manufacturers (and, to the general public). Johnson & Johnson (and its subsidiary, Ortho Biotech) received a call from FDA inspectors. They found 1,004 vials of Procrit that lacked authenticating tracing (pedigree) papers. This was a huge "red flag".

After confirming that the product was counterfeit, J&J began an all out process to alert medical professionals (involving hundreds of thousands of practitioners); J&J established a detailed webpage, and received more than 3,000 phone calls from medical professionals and patients asking questions. J&J also worked with the FDA, FBI, the Florida attorney general, and local police. Johnson & Johnson (Ortho), much to its credit, spent millions of dollars more repackaging the sensitive pharmaceutical (under cold room conditions), and alerting the supply channel.

What Motivates Counterfeiting?

Greed.

What Makes Counterfeiting Happen?

Two main factors:

1. Counterfeiting exists because people will take "easy money" by putting patients at risk for their own profit;
2. Counterfeiting also exists because people ignore "patient risks" for their own convenience (or out of ignorance).

Drug Distribution & Supply Chain Weakness

Many transactions in the drug distribution channel provide a possible opportunity for counterfeiting. The longer the distribution channel, the greater the vulnerability.

In addition, counterfeiters know about conflicting laws.

The FDA has direct authority over the approval and manufacturing of drugs. The states have principal authority over distribution, repackaging, dispensing, returns, and disposal of medicines. Unfortunately, most states do not have the resources or knowledge to regulate and monitor the industry. This federal/ state "gap" is a weakness.

The Drug Pedigree Problem

The drug pedigree is the record of the actual ownership and possession (traceability path) of a pharmaceutical unit, from the manufacturer to patient. Pedigrees are one of the important "controls" in the industry, yet current laws (and actual practice) work against full implementation of the pedigree intent. Many gaps in the pedigree "trail" create opportunities for diversion abuses.

Confusing Laws: The U.S. Congress declined to require "Authorized Distributors of Record" (ADR's) to pass along pedigree(s) from upstream suppliers. This effectively creates a "black-out" of upstream information. This renders the pedigrees incomplete.

The absence of a mandated pedigree requirement creates a potential "ticking time bomb"; it creates a major opportunity for criminals (and others) to intentionally (or inadvertently) hide the true background of the product they are selling.

Complicity

Criminals count on ignorance, greed, and loose practices of legitimate businesses. For example, manufacturers sometimes "dump product" to make sales quotas or to reduce overstocks. Never forget that for every seller there is a buyer.

Group purchasing organizations (GPO's) and wholesalers find discounted medicines very attractive in price (too good to pass up). Thus, they sometimes do not verify the background of the seller. Again, this lack of discipline places the patient at risk.

Cause & Effect

Counterfeiting is caused by greed. It is perpetuated by criminals that are intent on taking advantage of weaknesses in the distribution system, or the unwitting complicity of law abiding supply channel participants. Always remember, the longer the distribution channel, the greater the risk. The effect is patient risk (or, worse yet, harm).

Combating The Counterfeiters.

Each member of the drug supply channel has to understand that the solution must be a collaborative, united effort to assure the safety of products that pass through their hands. This includes confirming the legitimacy of the drug's source... the doctor; wholesaler, ADR, distributor, manufacturer, and API (Active Pharmaceutical Ingredient) sources.

All it takes is one bad apple: It could be one counterfeiter; one diluted product; one re-dated product; one product with fake labels; one false repackaging run. if any of these events occur, and the secure supply channel is broken, the patients are at risk. Find out how to protect your product from counterfeiting. Contact ATL Security Label SystemsT for a no obligation consultation.

ATL wishes to thank Lew Kontnik, Esq., whose various works were used as a reference for this document.