A new report, Phony Drugs, Real Solutions: Practical Anti-counterfeiting Considerations, by technology product design and development firm Cambridge Consultants, gives an update of the problem of counterfeiting and diversion of pharmaceuticals and offers solutions to manufacturers for protecting their brands and consumers. The report’s authors conducted in-depth interviews with leaders from pharmaceutical and biotech sectors, as well as technology developers and industry bodies.

Internet pharmacies were seen as a major source of counterfeit drugs and a significant driver of the worldwide problem. The authors of the report analyzed more than 100 websites and found the following:

• 95.6% of online pharmacies researched are operating illegally
• 90.3% of websites do not require sight of a prescription
• 86% of online “pharmacy approval” stamps are fake
• 78.8% of websites are violating brand intellectual property
• 50% of medicines supplied by online pharmacies which conceal their physical address are fake.

“Although there has been some debate around the size of the worldwide counterfeit medicine market that has been estimated at $75 billion and upward, one cannot dispute that the unregulated growth of Internet pharmacies will only contribute to this problem,” Rainuka Gupta, Group Manager of Medical Technologies at Cambridge Consultants, said in a company statement. “Our research concluded that this presents both a dual threat to consumers and the industry alike. Easier access to cheaper drugs has exposed consumers to dangerous mixes of fake drugs and placebos. Meanwhile, pharmaceutical companies risk losing credibility and regulatory bodies risk losing control with the spread of these counterfeit medicines. As an industry, we need to better educate consumers on the threats associated with fake drugs, but we also must work together to coordinate and implement technologies that can detect and deter counterfeiters.”

The report gives further statistics on the spread of counterfeit drugs, stating that in Africa and Southeast Asia, the World Health Organization has estimated that about 50% of medicines could be fake. Worldwide, WHO estimated that 15% of all drugs are counterfeits. In the United States, the Customs and Border Protection Agency stated in 2008 that the value of seizures of counterfeit pharmaceuticals had increased to $11.1M in 2007, which is a 500% increase on 2006, says the report.

Regarding regulations, the authors acknowledge the complexities facing governments when drafting policies for counterfeiting and diversion. Regulations should be flexible, for example, so manufacturers can use new technologies to keep ahead of criminals, given the time needed to shape new regulations and enforce them. This is why many feel that regulations should focus on standards and not on specific technologies required to combat counterfeiting, according to the report.

The issue of punishing counterfeiters was also discussed by interviewees involved in the report, who believe that stricter laws and penalties are required. According to the report, “Currently, in some countries, counterfeit drugs are not illegal; or are a violation of trademark laws; and in many countries the punishment associated with counterfeiting is a fine, which is small in comparison to the revenues generated by the sale of counterfeit products, and not reflecting the potential harm of counterfeit drugs.”

Cambridge Consultants held a panel on counterfeiting during the 2010 BIO International Convention earlier this year, which featured representatives from Amgen, Genzyme, and BIO.  The panelists discussed three different types of technologies that can be deployed (anti-tamper packaging, serialization, and authentication) to fight against counterfeit pharmaceuticals. Given the global nature of counterfeiting and diversion carried out by organized criminals, the panel and research participants agreed that collaboration among various stakeholders, including manufacturers, supply chain partners, and law-enforcement entities, is critical to address the problem.

See related PharmTech articles:

Authentication and Pharmaceutical Protection: An Industry Roundtable (Pharmaceutical Technology magazine)

New Report Addresses Pharma Execs’ Top Supply-Chain Concerns (blog post)

Report: Online Drug Brand Abuse on the Rise (blog post)

New Report Focuses on Yahoo’s Rogue Pharmacy Advertisers (blog post)

Reports Point to Increased Counterfeit Drug Activity (blog post)