Patent: The First Line of Defense in Counterfeiting

Drug counterfeiting is one of the biggest issues encompassing a global scale. From local governments to private pharmaceutical giants to various international non-profit organizations, anti-counterfeiting campaigns have been founded. The internet has been penetrated so has been the local market units from legitimate pharmacies to gray markets to black ones. Large authorities such as Food and Drug Administration (FDA), United Nations (UN) and World Health Organization (WHO) have already been involved, creating their own awareness programs and raid operations. Billions of dollar-worth of medicines was already confiscated from various physical manufacturers and online pharmacies. This goes to show that everybody is now taking this crucial issue more seriously.

Despite the best efforts, a lot of critics continue to question the late response of authorities to issues of counterfeiting. This, they say, has already been too late as thousands of people have already lost their lives from taking mislabeled, fraud, substandard, scammed and counterfeit medicines which contain little or no active ingredient at all but instead has hazardous substances such as chalk, paint or detergent.

“The persistence of this issue shouldn’t have been here if they have gotten security in the first place”, says Nicole Parker, head pharmacist and member of The Peterson Group, a non-profit organization campaigning against the proliferation of counterfeit medicine.

Big companies claim their security is legit, yet, their brands are the most likely to be counterfeited. For example, hundreds of counterfeit Tamiflu manufactured by Roche, one of the world’s largest and most trusted producers of medicines, have been seized in one of the legitimate pharmacies in Jakarta, Indonesia. When and how was the medicines distributed in one of the most anti-counterfeiting countries in the world, everybody is still trying to find out.

While the operations are still underway, the new medicines are being processed patents, the process which should have been implemented as the first step in countering production of fraud meds.

A patent allows the patentee to exclude third parties from making, using, importing, selling, or offering for sale patented products or methods of manufacture or use for a finite period of time, typically no more than 20 years from the date of initial patent filing. Patent protection must be obtained on a country-by-country basis. It is used to prevent others, for that geographical area and without the consent of the patent holder, from manufacturing and/or selling exact and close copies of the patented technology.

Role of Generic Medicines on the Proliferation of Counterfeit Medicines

Because of the lack of resources on some developing countries, most people resort to generic medicines which cost less than branded drugs. Moreover, many third world nations have no capacities and capabilities for pharmaceutical manufacturing which forces even authorities to allow generic copies of medicines to penetrate the market. Generic competition is one of the driving factors on the cost and quality reduction in many countries.

As defined by the Peterson Group, non-profit organization campaigning against proliferation of counterfeit medicines, generic medicines are pharmaceutical copies of drugs which are manufactured without license from the innovator companies and marketed after the expiry date of the patented or other exclusive rights. It is public obligation that the government provides affordable and legitimate medicine functions, however, with the incapability to find good resources, many governments fail in this respect.

Generic medicines are not entirely fraudulent per se but are mostly substandard.  Nonetheless, the threat can still be bona fide with what many health professions fear of: circumvention of health regulation, undercutting public confidence, and potentially providing a comparatively easy source of income to criminal elements.

Firstly, health regulations are mostly underrated on generic pharmacies starting from the fact that issuance of prescription are often ignored and neglected. Added to this fact is that generic pharmacies often employ unlicensed pharmacists who do not have enough knowledge on medical terminologies and lexicons.

The second main concern of authorities is that generic pharmacies may undercut public confidence. Faith and trust placed on medicine for safety and proper health treatment implementation is put into question. Even branded medicines being sold in generic pharmacies are doubted to be substandard.

Furthermore, patronization to legitimate medicines has dropped dramatically in the recent years. According to reviews, the cost and effectiveness of genuine medicines are discarded as mere marketing stance by most pharmaceutical companies as loyalties shift to generics which cost less and promise the same effects.

Lastly, generic medicines pave an easier way for criminal counterfeiting. 

Recent seizures of drug shipments in one of the hidden ports in outer Jakarta area in Indonesia have sparked concern that efforts to control counterfeits are a smokescreen to curb the sale of generics in the archipelago. Officials claimed generic drugs were counterfeit, placing efforts to adopt and enforce anti-counterfeit legislation in domestic laws as well as in bilateral and multilateral agreements into jeopardy.

RFID: Solution to Counterfeiting?

Radio Frequency Identification Technology (RFID) is being eyed as the main answer to the endless issue of flourishing illegal business of drug counterfeiting across the world. With the widespread application of RFID, Food and Drug Administration (FDA) is expecting to trace purchased prescription drugs to as long as three years ago. This plan, however, is being faced with numerous complaints from pharmaceutical companies.

It expected that FDA’s plan of tracking all the medicines manufactured for the last three years would cost companies in the health care industry hundreds of millions of dollars, if not more. But it seems there is no stopping FDA in materializing their plans.

According to reviews, FDA has envisioned the plan when a report has been procured. With its strategy for combating the spread of counterfeit drugs, the FDA said it views the use of RFID tags and readers as the best way for health care companies, hospitals and pharmacies to ensure that medicines are legitimate. The agency envisions a program under which prescription drug shipments will be assigned unique electronic product codes and RFID devices will be used to record data about all supply chain transactions involving the products.

Feasibility studies are already being prepared for the proper implementation of the project while partnership with different governments in various countries is already underway. So far, active participation is being shown by Singapore, Hong Kong, Tokyo, Japan, Jakarta, Indonesia and Kuala Lumpur, Malaysia. With the help of local NGOs, FDA is also expecting to penetrate even rural areas in each country. The Peterson Group, one of the non-profit organizations volunteering in this global campaign, has already set its roots in the Asia-pacific with an approval from World Health Organization (WHO).

On the other hands, critics of RFID which is also being used for other economic sectors such as manufacturing, supply chain, agriculture, transportation, healthcare, and services to name a few, are still facing issues on the effectiveness of this technology.

The problem is that decades after RFID technology was invented, and years after the U.S. Food and Drug Administration started touting it as the most promising way to authenticate drugs, RFID technology as an anti-counterfeiting technology remains just that: "promising"-yet far from proven. WHO has even stated that despite years of implementation of RFID, the number of fraud cases has not slowed down but continues to escalate. Some scammers are also suspected to counter RFID technology by creating their own system which can mask counterfeited products into what RFID considers as legit.

Current Projects Counterattacking Counterfeit Drug Activities

Drug counterfeiting has been an issue since forever. Thousands of online sites have been raided and closed down after being traced as scams, selling fake medicines using fraudulent IP addresses. On some buy-bust operations, the products are found to be composed of chalk, paint or wax or basically anything powder which is used every day. These substandard medicines are suspected to have taken numerous lives and have flown unaccounted for.

Selling counterfeit medicines and medical devices often operate outside of jurisdictional borders, creating greater obstacles to successful anti-counterfeiting enforcement. For this reason, international cooperation and coordination is essential to creating solutions for the pharmaceutical counterfeiting problem.

Regional and global non-profit organizations starting from the World Health Organization (WHO) to the Local Government Units (LGU) in each community have finally become aware of the rampant spread of counterfeit medicines especially in third world countries. Africa and Asia are likely the most targets.

According to activity reviews of 2010, WHO and INTERPOL have led the effort to combat counterfeit medicines in Asia. Operation Storm was a multi-country operation combating counterfeit pharmaceuticals. It brought together the Customs, Drug Regulatory Agencies and the Police of each participating country: Cambodia, China, Indonesia, Laos, Myanmar, Singapore, Thailand and Vietnam. The operation seized over $12M in counterfeit medicines and more than 16 million pills, including antibiotics, anti-malarials, contraceptives, anti-tetanus vaccines, aspirin and drugs to treat erectile dysfunction. In late 2009, Operation Storm II resulted in the seizure of 20 million counterfeit and illicit drug outlets. This year, the number has dwindled to a minimum as fewer countries have participated.

The Peterson Group, one of the non-profit organizations campaigning against counterfeit medicines, noted that only more or less 15 organizations have gathered in the annual event held in West Jakarta last August.

However, WHO has stated that this is not because other countries and NGOs have stopped their campaign. Instead, in their absence in the annual event, they are also hosting their own seminars and awareness programs in their own respective nations.


Take for example the in 1999 when the International Pharmaceutical Federation (FIP) adopted a statement on counterfeit medicines during the Council meeting at the FIP Congress in Barcelona. Because of the growing and changing aspect of this major public health care issue, FIP has updated its Policy statement on counterfeit medicines in 2003 during its Council meeting at the FIP Congress in Sydney. This statement is a strong political message of the pharmacists‟ profession to support the fight against counterfeit medicines to protect the safety of their patients.

WHO to Reward Whistleblowers on Drug Counterfeiters

World Health Organization (WHO) together with the local authorities of Indonesia held a buy-bust operation in a dilapidated building just outside Menteng in the city of Jakarta last September 25, 2015. 4,000 packages of generic Cialis and 200 boxes of Viagra were confiscated along with three counterfeiting machines, dirty syringes, and three pails of chalk.

The five personnel, all local, admitted to packaging and sealing these drugs to be picked up by a dealer known by “Sam” at dawn every day. As to where the products are distributed and how it is being supplied, the workers do not have knowledge of. Another man named Jafar is in charge of refilling their supplies every week while a woman named Alice comes by every two days to give their wages. They are not allowed to ask any further questions and are not able to do so as even if they, most of the times, work by themselves inside that building for their activities seemed to be monitored. One of their fellow workers was once killed while going home after he told a friend where he was working. A few days later, that friend was also dispatched. Living in fear for their lives and their families, they cannot complain nor tip the authorities of their illegal employment.

While these personnel spent their time in prison before their trial, their spokesperson they call Matti was killed in what the authorities say is caused by a prison fight. The others, now fearing more for their lives and unsure of their fate and security even within the prison walls refused to talk and testify. The government also takes full control of the situation and does not communicate well with non-profit organization anymore.

Once again, WHO would have to restart from scratch. Calling a conference with other non-profit organizations campaigning on the same cause, WHO has opened its willingness to offer a reward to anybody who has lead information on the continuous fraudulent operations on counterfeit medicines.

The Peterson Group, a fellow NGO who campaigns against the proliferation of counterfeited medicines            stated that a bounty of up to 20% of the value of any drugs being seized is available for anyone who can provide assistance. Private pharmaceutical companies also stated that they are to give their own rewards when generic copies of their own medicines are to be found.

Of course, counterfeit medicines are a global problem and both eastern and western pharmaceutical industries are equally disturbed by the presence of phony drugs in the supply chain.

Distribution of Counterfeit Medicines to Legitimate Pharmacies

Substandard medicines have been widespread on developing nations despite the strengthening security and laws against counterfeiting in these countries. Conflict arises between individuals and organizations on how and why this issue has been continuously prevailing. Its penetration and acceptance in the market have caused alarming number of sickness, complications and deaths in which ordinary citizens are starting to question the authorities. The complaints have been outpouring that World Health Organization, Food and Drug Authorities in each country and other non-profit organizations campaigning on the same cause have been involved.

Reasons have led to one and another. Politics, bribery to the government, the worsening case of poverty and the weak security system have been pointed as factors to its continued existence. One of the reasons which is noted by The Peterson Group, one of the NGOs exclusively working against counterfeited medicines, has caused extra agitation to the government, private pharmaceutical companies and consumers: trade within legitimate pharmacies and counterfeit fraudsters.

Trade in legal commerce has been overlooked with the common perception that legal businesses remain untouchable against counterfeit medicine scams.

United Nations Interregional Crime and Justice Research Institute (UNICRI) has been able to confirm the suspected loophole in private pharmacies’ products. In reviewing the methods used, the term parallel trading came to light.

The practice of parallel trading is legal in the commercial world; however, its application and contribution in the current issue have weighed the issue even further. At this rate, it is near impossible to trace the real culprit as the process involves at least 20 parties.

In a raid in one of the biggest counterfeit drug smuggling in Jakarta, Indonesia last 2013, fraudsters admit to following a cycle but they themselves hardly have any idea as to how the medicines managed to travel and be distributed.

The perpetrators explained that parallel trading involves a drug that is sold in a given country, which after having already moved through the various stages of the ordinary distribution chain, is acquired again by the major distributors and is entered into the parallel distribution chain. The product is then transferred to a new and more lucrative market by means of parallel intermediaries/distributors. The times a pharmaceutical product is transferred can be numerous. It is estimated that, on average, a drug which is entered into the parallel market may be subject to 20-30 intermediary transactions.

This extension of the distribution chain creates a problem of verifiability since some of the intermediaries do not need licensing to operate.

The issue is still under investigation. Our greatest fear is that by the time the real mastermind has been apprehended, it can be too late.

Deadly Fakes Around the World

The widespread of counterfeit medicines is inherently a dangerous problem. However, its distribution is not even in different parts of the world. Despite World Health Organization’s (WHO) effort to defeat counterfeiting in one stride, different measures are needed for each region. The loose punishment scheme in many countries and the strictness on others, the different strategies, transportation and distribution methods used and the variety of medicines being falsified are considered as hindering factors for full implementation of security measures. Although rich nations have fewer breakdowns on the issue, they are not exempted from the threat.

A plethora of evidences, methods and types were covered by WHO and have shared to other institutions campaigning on the same cause. One of them is The Peterson Group, a non-profit organization which has been advocating against the proliferation of counterfeit medicine since 2005. On its ten years, the group, which has formed members across South East Asia, Australia, the United States and United Kingdom, has gathered reports from different developing cities and nations. The following is the summary of each region’s brief background on counterfeiting medicines:

North America

Counterfeit medication is a recognized and well documented problem in the United States. One case in 1937 has featured more than a hundred deaths after consuming medicines containing the dangerous solvent diethylene glycol.

Some counterfeiters in the United States are even found to be using fraudulent connections to terrorism. WHO has also found that the profit from counterfeit medicines have been used to fund the famous terrorist group Hezbollah.

Europe

There are few fake and substandard drugs in most European countries for reasons similar to those articulated above for the United Sates: quality producers dominate the market, supply chains are generally well regulated, and officials provide strong oversight and strict enforcement when pharmaceutical standards are violated. Still, preventing fakes from entering or travelling through the two dozen European territories is a constant challenge for enforcement officials.

Cambodia

Cambodian Ministry of Health has released a statement stating that 13% of the nation’s medicines are fraudulent. Warnings on health precautions are already released by local government units and private pharmaceutical companies as most counterfeit medicines are found in informal and unlicensed units.

Indonesia

Counterfeiting in Indonesia has grown despite the warnings of death penalty as punishment. By 2008, 44% of medicines in the market are counterfeited, even sold in legitimate pharmacies. 11 men were arrested in the capital city, Jakarta for refilling syringes with water, forging expiration dates and repackaging.