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  • Posted by Nicole Watkins
  • July 27, 2016
  • Blogs

The Cost of Counterfeits

The Cost of Counterfeits

The sale of counterfeit drugs is growing at twice the rate of legitimate pharmaceuticals and pharma companies stand to lose more than just profits from the fallout of counterfeit identification.

If you discover the Rolex watch you bought on holiday is not a bargain but actually a fake you’d be pretty peeved, but other than a hit to the wallet and maybe to your pride you would be no worse off. If you took a counterfeit drug on the other hand, the consequences could be far more serious.

In 2011 the World Economic Forum estimated that the sales of counterfeit medicine had reached $200 billion[1]; an increase of 90% since 2005, contributing to approximately 10% of all pharmaceutical sales globally. In developed markets, counterfeit drugs only account for around 1% of sales, but in ‘pharmerging countries’ such Africa, Asia and South America they are estimated to be accountable for up to 33% of pharmaceutical sales. With 1% of 4 billion prescriptions in the US amounting to 40 million prescriptions in the US each year, even in the west, counterfeiting is no small problem[2]. The sale of counterfeit drugs is growing at twice the rate of legitimate pharmaceuticals and pharma companies stand to lose more than just profits from the fallout of counterfeit identification.

Traditionally, the market in the west has been for counterfeits of so-called ‘lifestyle drugs’ purchased online or illegally from prescribed users. Counterfeiting of these drugs is a major issue –over half of Pfizer’s 8.3 million drug seizures in 2010 came from Viagra alone. The majority are purchased online from unlicensed sites and sold to customers keen to avoid a prescription, or looking for a cheaper remedy for their erectile dysfunction[3]. But now counterfeiters are also targeting more expensive drugs and employing sophisticated methods to enter the market.

One area of vulnerability lies in the traceability of drugs. Counterfeiters target small, secondary wholesalers across the world who are less likely to trace the origins of each drug, and who allow repackaged and co-mingled counterfeits to enter the legitimate supply chain. Co-mingled drugs in genuine packaging pose a challenging problem in the detection of counterfeits. Counterfeits of Lipitor (a statin manufactured by Pfizer for reducing cholesterol) were detected because patients complained of a bitter taste from quickly-dissolving tablets. It is estimated that in excess of 600,000 patients may have received a counterfeit 30-day supply, prompting the recall of more than 18 million fake and repackaged tablets across 15 US states[5]. The EU is in the process of introducing mandatory serialisation of all drugs in order to crackdown on counterfeits. A unique serial number linked to the individual production data, together with the pharma’s drug branding and sealed labels will ensure the authenticity and integrity of a drug unit and protect it from tampering, so ensuring its traceability and safeguarding consumers.  Similarly, in the US, the FDA is working towards an electronic pedigree (ePedigree) system to track drugs from factory to pharmacy.

Online pharmacy selling is another route to market. In Europe it is estimated that each day more than 2 million patients consult a drug-selling website for advice or to purchase drugs[7]. With the cost of drugs being a driving force for many patients, more work needs to be done to raise awareness of the possible dangers of counterfeits.

Pharma companies are trying to address the issue, conducting research into patient awareness in order to assess the extent of the problem. But it appears that awareness is low. In a 2014 and 2015 study conducted by Sanofi across the US, EU and Asia, only 15% of consumers made an association between counterfeiting and medicine[6]. Today INTERPOL, the world's largest police organization, is partnering with 29 of the world's largest pharmaceutical companies to create an enhanced pharmaceutical crime program to combat counterfeit medicines. There is no easy solution, particularly in today’s connected world. Pharma companies will need to work together with patients, government and internet providers to try to stop the ever increasing trade in a growing and dangerous counterfeit market.

[1] World Economic Forum. Global Risks 2011, 6th Edition
[2] Redpath, Shirley. "Trade in illegal medicine hits pharmaceutical sector", April 20 (2012)
[3] Counterfeiting threat looms over drug industry. CBS NEWS.  May 11, 2011
[4] Julie Zaugg, “la suisse leader des faux medicaments” L’Hebdo, May 29 (2008)
[6] Happycurious study conducted for Sanofi across Asia, US and EU. July 2015
[7] European Association of Mail Service Pharmacies

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