Transcript Project Overview - Industrial Economics Institute

LeBow College of Business
Drexel University
Rx Roulette:
Counterfeit Pharmaceuticals in Developing Nations
Dr. Kristina M. Lybecker
December 6, 2003
Prepared for the conference, “Markets for Pharmaceuticals and the Health of
Developing Nations,” Toulouse, France, December 5-6, 2003.
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“As early as the fourth century BC people were
warned about the dangers of adulterated medicines,
and despite all the advances made over the years this
concern has not disappeared.”
World Health Organization.
“‘In the next ten years, spurious drugs will be the
single biggest problem’ in public health.”
Ranjit Roychoudhury, President of the Delhi Society for the Promotion of
the Use of Rational Drugs, as quoted in The Lancet.
“Some health officials in Africa have stated that
counterfeit medicines are a greater public health
threat than AIDS or malaria.”
Harvey Bale, President of the International Federation of Pharmaceutical
Manufacturers Associations (IFPMA), as quoted in The Lancet.
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Introduction

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
Challenge to Public Health
Characteristics of the Problem
Facilitating Factors
Available Strategies to Combat Counterfeiting
Conclusions
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Counterfeiting and Public Health

Mounting Evidence
 Health Consequences
 Less Visible Barrier to Access
 Therapeutic Failure
 Prolonged Illness & Death
 Global Microbial Resistance
 Loss of Confidence in the System

Squandered Resources
 $43.5 billion annually
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Dimensions of the Problem

Significant & Growing Problem
 Definition
 World Health Organization
 U.S. FDA
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Counterfeiting
Definition

“a counterfeit medicine is one which is
deliberately and fraudulently mislabeled with
respect to identity and/or source.
Counterfeiting can apply to both branded and
generic products and counterfeit products may
include products with the correct ingredients,
wrong ingredients, without active ingredients,
with incorrect quantity of active ingredient or
with fake packaging.”
World Health Organization (1997)
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Dimensions of the Problem

Estimates: HA!
 Magnitude of the Problem:
 World Health Organization estimate: 6% – 10%
 Some developing nations: more than 80%

Drugs: Aspirin to Zyprexa
 Nations: Global problem
 Financial Impact: $43.5 billion/year
 Sophistication: varied
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Dimensions of the Problem
Drug Quality

In two studies analyzing counterfeit medications, the
results show that:
 50 – 60% : no active ingredient
 15 – 20% : wrong active ingredient
 15 – 20% : incorrect quantity of active ingredient
 5% : correct active ingredient
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Counterfeiting Specifics &
Examples
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Dimensions of the Problem
Examples

Aspirin: “Because tablet-making machines are
easily obtainable, even counterfeit ‘aspirin’
tablets containing little or no acetylsalicylic
acid can be profitable, especially at open-air
markets such as those in African villages”
McGregor 1997
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Dimensions of the Problem
Examples

HIV and Cancer Drugs: “drugs to boost the
immune system of cancer and HIV patients
have become a favorite of counterfeiters. In
one case . . . criminals realized a $28 million
profit from a shipment of 11,000 boxes of
counterfeit Epogen and Procrit, which is also
often prescribed to cancer, AIDS and kidneyfailure patients”
Associated Press 2003
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Dimensions of the Problem
Examples

Children’s Vaccines: “As many as 80,000
children in Nigeria have gotten fake meningitis
vaccines. India has seen bogus polio vaccines”
Knox 2003
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Dimensions of the Problem
Examples

Ponstan: Authorities “interdicted millions of
yellow tablets that were virtually
indistinguishable from the genuine product –
including the company logo. These tablets were
made of boric acid, floor wax, and lead-based
yellow paint used for road markings. Sacks of
these ‘raw materials’ were stacked throughout
the counterfeiter’s site”
Christian 2001
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Counterfeiting Operation
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Counterfeiters GMP
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Serostim®
Source: FDA website
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Viagra
In October 2002, 1,233 packages of unapproved Viagra were found at the Miami international mail facility.
Over 80,000 tablets were found at JFK airport. Counterfeit product found in Malaysia; it has appeared in
Mexico. Counterfeit box and tablet package is excellent. Replicated the Pfizer logo, blister card, foil backing
and hologram. (Source: PhRMA, Thanks to Dr. Marv Shepherd)
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Zantac
Manufactured in Taiwan, discovered in United Kingdom. Excellent packaging of counterfeit, even
includes counterfeit package insert. (Source: PhRMA, Thanks to Dr. Marv Shepherd)
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Deca-Durabolin
Counterfeit
Genuine
An anemia product used to treat renal insufficiency was purchased in Mexico and illegally
imported to the U.S. Packaging is very similar to original, but in testing the counterfeit product, it
only contained sesame seed oil. (Source: PhRMA, Thanks to Dr. Marv Shepherd)
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Ponstan
Ponstan is an anti-inflammatory product. This counterfeit was found in Columbia. First is the
yellow powder; it consist of boric acid, floor wax, yellow highway paint. Pressed into tablets
and placed in foil packs with labeling. (Source: PhRMA, Thanks to Dr. Marv Shepherd)
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Procrit®
Three Batches of Counterfeit Procrit® (epoetin alfa) by Ortho Biotech, found March, 2003 Product
contained no active ingredient and may contain bacterial contamination (Acinetobacter and
Pseudomonas). (Source: Dr. Marv Shepherd)
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Prozac
Photos taken from a plant in Asia. Manufactured in China, shipped to Taiwan and from there shipped
around the world. Package in counterfeit Lilly blister packs. There is no assurance of quality,
manufacturing processes or conditions. (Source: Dr. Marv Shepherd)
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Manufacturing Facility for
Counterfeit Panadol
(Source: PhRMA Thanks to Dr. Marv Shepherd)
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Dimensions of the Problem
Common Threads
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Small numbers of very costly drugs
Large quantities of less costly drugs
Expensive branded drugs
Clear injectibles
Simple tablets
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Facilitating Factors
WHO’s List
Counterfeiting is facilitated where:
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weak drug regulatory control and enforcement,
scarcity and/or erratic supply of basic medicines,
extended, relatively unregulated markets and
distribution chains,
price differentials,
lack of effective intellectual property protection,
due regard is not paid to quality assurance
World Health Organization 1992
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Facilitating Factors
The Attraction
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Organized Crime
Less Dangerous
Less Risky
Difficult Detection
Naiveté of Law Enforcement
Negligible punishment
Enhanced IPRs
Changing Technology
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Facilitating Factors
Negligible Punishment

“In Malaysia the maximum fine for
manufacturing counterfeit medicine is 25,000
ringgit ($6,580). . . The law also allows for a
maximum three-year jail sentence, but a
representative of the Pharmaceutical
Association of Malaysia says no one has ever
done time for making fake medicine in
Malaysia”
Saywell & McManus 2002
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Facilitating Factors
Negligible Punishment

In Vietnam, 64 per cent of all artesunate (a key
antimalarial drug in Southeast Asia) samples
tested were found to be fake. Nevertheless,
while prison terms of “20 years have been given
in Vietnam for trading in fake sildenafil
(Viagra) . . . there have been no prosecutions of
fake antimalarial traders”
Newton et al. 2001
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Facilitating Factors
Enhanced IPR Protection

Changing Market Conditions
 Increased Intellectual Property Rights
 Focus on two elements
 Access to medicines
 Research on neglected diseases

Exacerbating the Problems of Counterfeiting
 “First pass” at Enforcement
 “Wholehearted” approach to Enforcement
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Facilitating Factors
Changing Technology

Desktop Publishing
 Available Equipment on eBay
 Distinctive bottles replaced by uniform vials
 Internet sourcing
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Strategies for
Combating Counterfeiting

Parallel Imports
 Local Production
 Enforcement Efforts
 Education
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Strategies
Parallel Imports

Disappointing Results
 Israel, the Philippines and Kenya

Low-priced markets see prices increase
 Evidence in EU

Variety of Packaging
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Strategies
Local Production

“DAP often did not advocate local production,
particularly in countries with populations of less than
25 million . . . the value component in local-drug
production was small and that quality and reliability of
supplies were frequently questionable . . . DAP
recommended that they start with packaging from bulk
and only gradually move towards simple formulation of
drugs”
Lauridsen 1997
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Strategies
Local Production

Self-sufficiency solution
 High Fixed Costs
 Supplies
 Questionable quality & reliability

Alternative: Bulk Purchase Programs
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Strategies
Enforcement

Technology
 Deter counterfeiters
 Facilitate authentication

Raise the costs to the counterfeiter
 Security features
 Overt
 Covert
 Forensic
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Conclusions
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Critical Timing
Important Tradeoff
 Access to safe medicines vs. rewards to innovation
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
Vulnerable Populations
Need for Change with Safeguards
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Thank you for your attention.
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