Magazine Article | March 12, 2011

Government And Industry Come Together To Stop $75 Billion Drug Counterfeit Ring

Source: Life Science Leader

By Cindy Dubin

Anticounterfeiting specialists believe that medicine counterfeiting is expected to increase this year, according to a survey by Pharma IQ. The current global market for counterfeit drug sales accounts for $75 billion, according to the National Association of Boards of Pharmacy. An estimated 1% to 2% of drugs in North America are counterfeit, according to the group’s website, and those percentages can rise to nearly 50% in Asia and Africa.

Counterfeit drugs are designed to fool consumers by using misleading packaging and mimicking the shape, color, size, and imprints of genuine drugs. Often, counterfeits contain just trace amounts of the purported active ingredients and sometimes no active ingredients at all.

In December 2010, Google and Microsoft announced they would help establish a nonprofit organization targeting illegal Internet pharmacies, according to the White House Office of Management and Budget. The group is composed of companies that serve as Internet choke points and was in response to a call from the Obama administration for private efforts to police illegal pharmacies.

In addition to increasing the security of the distribution chain and raising consumer awareness to the life-threatening dangers of fake drug consumption, life science leaders are actively investing in methods meant to disrupt counterfeit drug production and sales. For instance, many pharmaceutical manufacturers and distributors believe RFID could be the key to eliminating costly counterfeiting and supply chain theft.

Two big pharma security executives recently spoke exclusively with Life Science Leader about their anticounterfeiting efforts, which include a layered approach. They are Ron Guido, VP of global brand protection & supply chain integrity at Johnson & Johnson, and Mark Geraci, VP of corporate security at Purdue Pharma.

Has Your Company Experienced Issues Associated With Counterfeiting, And If So, How Did It Respond?
Guido: Johnson & Johnson companies take a variety of approaches to identify and mitigate the risks of counterfeit healthcare products. They include a range of product and packaging security measures that help distinguish the authentic product from a counterfeit and aid in minimizing the potential for tampering. We have also incorporated additional safeguards into our supply chain operations — from sourcing of ingredients and manufacturing through distribution — to help minimize the risk of counterfeit products entering the system.

Geraci: Fortunately, in the United States, Purdue Pharma has not experienced a significant counterfeiting problem. We believe part of the reason for this is a result of  our aggressive security efforts to minimize the likelihood of this occurring.  

How Is Your Company Complying With The FDA’s Guidance On Numerical Identification For Prescription Drug Packages?
Guido: We have active projects in place to comply with all regulatory and legislative actions, including those designed to help protect patients and consumers from fake products. Typically, compliance requires major modifications to hardware such as packaging lines and labeling or printing equipment as well as IT-based planning systems extending from internal enterprise resource planning (ERP) systems through the company’s distribution and logistics processes. In essence, each individual unit of sale must now become a “batch of one” with additional data tracking requirements in order to create a chain of custody or “pedigree” from point of production through to the point of dispensing or administration. All stakeholders in the supply chain are investing significant time and money to comply with the various anticounterfeiting regulations around the world and are collaborating with each other to realign their business processes accordingly.

Geraci: Purdue employs RFID technology on packaging components of certain products, a technology we believe will be one of the accepted forms of compliance with the FDA’s guidance concerning ePedigree.

Experts Believe That Counterfeiting Will Increase More Than 60% In 2011. To What Do You Attribute This Increase?
Guido: The current volume of counterfeits is unknown, as is any reliable projection of trends.  However, we do know that criminals have recognized that counterfeiting of healthcare products can be very profitable for them, and unfortunately the penalties are less than for many other crimes with similar consequences to human health. This low risk/high profit scenario is attracting many organized crime groups and other unethical profiteers to the business of healthcare product commerce.

Describe Your Company’s Investment In Bar Coding And RFID Technologies And How They Are Being (Or Will Be) Applied.
Guido: We currently use or have piloted many different technologies, including bar coding and RFID, and will continue to do so. We also use 3-D imagery to help authenticate packaging. Such a system, when shared with customs and law enforcement agents, is effective in both increasing the ability of the officer to identify counterfeit product and also in expediting the process of notification and investigation of the incident. In general, we have found the best anticounterfeiting approach is a combination or layering of technologies on the product and/or packaging supported by well-designed processes to safeguard the movement of goods through the supply chain.

Geraci: We believe technology such as RFID and 2-D bar coding are important steps in the fight against product counterfeiting. Just putting such technology on products will not stop counterfeiting from occurring; however, it does significantly aid in the detection of illegal product. It is also our belief that such steps go a long way in acting as a deterrent for those intent on participating in counterfeiting activities.

What Precautions Are You Taking Against Online Counterfeit Sales?
Guido: We have used programs to monitor online sales and to take action. These actions have taken multiple forms ranging from “cease and desist” letters to the websites, to notifying health authorities of suspect sites, to legal actions. The online sale of prescription products is very risky, particularly when the website does not list a legitimate address or phone number and/or doesn’t require a prescription. Therefore, we strongly endorse recent initiatives by industry and government to monitor and police the sale of healthcare products on the Internet.

Geraci: Purdue Pharma’s corporate security team has a rigorous brand protection program. A significant part of this program is dedicated to monitoring unlawful sites attempting to sell Purdue’s products. We work closely with our law department to take appropriate legal action against such sites, and when deemed appropriate, refer our investigative results to law enforcement officials.

How Much Have You Relied On Pharmaceutical Associations In Your Anticounterfeiting Efforts?
Guido: The industry and trade associations have been highly proactive in their efforts to help safeguard the supply chain, primarily in coalescing members’ perspectives around public-private sector initiatives and proposed legislation. The challenges of detecting and preventing counterfeit healthcare products demand alignment among all stakeholders. Due to the serious consequences that counterfeits have on our patients and consumers, industry and trade associations such as PhRMA, EFPIA, Advamed, Euromed, NACDS, HMDA, and CHPA have been instrumental in raising awareness to the issue and organizing actions within their memberships.

Furthermore, the spread of counterfeiting around the world combined with the globalization of healthcare product production and commerce has resulted in increased cross-border alliances among regulators and other government agencies. Such international cooperation is vital to sustainable global success against counterfeiters rather than taking a local or regional approach. Simply stated, our best defense against the counterfeiters of healthcare products is to mobilize the respective talents, expertise, and best practices of all stakeholders across industry segments worldwide.

Geraci: Industry associations such as PhRMA have been very supportive in helping pharmaceutical companies in their anticounterfeiting efforts. Of particular note is the work conducted by the Pharmaceutical Security Institute (PSI), a not-for-profit membership organization dedicated to protecting health and sharing information on the counterfeiting of pharmaceuticals and initiating law enforcement actions through the appropriate authorities. PSI, led by top corporate security representatives from approximately 25 major pharmaceutical companies, has made a significant impact in addressing the serious threat that counterfeit pharmaceuticals represent to world health.

What Advice Do You Have To Life Science Leaders About Drug Counterfeiting Or Anticounterfeiting Efforts?
Guido: As I mentioned, I am pleased to see the urgent and collaborative response to the growing threat of counterfeits among all stakeholders across the industry, notably manufacturers, distributors, dispensers, and government agencies. The next step, in my opinion, is to conduct effective public awareness campaigns regarding the dangers of purchasing medications from unknown sources.

Brand protection is a relatively new business discipline that is here to stay in the life sciences industry. If your products are good, they will be subjected to the threats of counterfeiting and diversion to the gray market. Instead of ignoring these brand attacks we must build organizational capabilities, competencies, and operational processes that mitigate the risks of counterfeits entering the supply chain. Most importantly, though, we must share best practices among all stakeholders. Our patients and customers rightfully expect our best efforts in this endeavor.