The Flip Side of Economic Growth: The Pharamcuiticals Counterfeit Case

Few years ago, when I was getting ready to go to China, the most common advise I got was “don’t bring with you too many belongings, it is so much cheaper there, practically a shoppers paradise”. And so it was. Among my best finds was designer brand coat, that I am quite sure was an original.

My story might be one of a victimless crime, a matter that do not deserve a second thought. Unless, the second thought is given to other counterfeit articles such as electronics, toys and even pharmaceuticals.

According to Jeremy Douglas, United Nations Drugs Control (UNODC) regional representative for Southeast Asia and the Pacific, illicit trade is growing rapidly, “As globalization occurs, and you have the integration of economies, you also have the integration of criminal economies.”

UNODC program regards product counterfeiting as a consumer fraud: “a product is sold, purporting to be something that it is not. This is different from the crime of copyright violation, which involves the unauthorized transfer of licensed material, such as the sharing of music or video files electronically”.

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I would like to dedicate the following overview to pharmaceuticals counterfeit, as they not only pose economical threat, but also endanger the lives of hundreds of thousands of people around the world. Especially those who live in the developing countries where, according to the World Health Organization (WHO), about 30% of the supplied medicine is actually counterfeit.

The counterfeit business is booming in South-East Asia, India, Africa and Latin America. In developing countries, corruption among government officials and police officers, along with weak border controls, allow counterfeiters to freely operate.

Nicholas White, a malaria expert at Mahidol University in Bangkok, Thailand, says the counterfeiting “Is a very, very serious criminal act. You’re killing people. It’s premeditated, coldblooded murder. And yet we don’t think of it like that.”

I believe it will be best to look at the production and distribution of legal pharmaceuticals, to better understand that of the counterfeits.

Production

The production of counterfeit pharmaceuticals done many times by licensed pharmaceuticals companies, that produce the licit medicine by day, and knock-offs by night. This type of counterfeit is especially hard to trace and uncover.

According to the Commonwealth Business Council Working Group on Healthcare, the vast majority of counterfeit medicines are currently thought to be produced in China, India and the Russian Federation. Smaller manufacturers in developing countries seek to meet the growing needs of the poorer population, but some may have difficulties in meeting international quality standards. In some cases, cheaper, but lesser quality, medication is better than nothing; in other cases, it clearly is not. The contents of the counterfeit medicines may be inert, dilute, inappropriate or even poisonous.

For example, one of the most commonly counterfeited drugs is an antimalarial medicine widely used in South-East Asia and Africa. Of the 25 outlets inspected in one of the African countries, 22 sold counterfeit antimalarial medicine; 4 of the fakes contained detectable amounts of the active ingredient, which is not enough to help treat the disease, but may encourage malaria resistance.

Distribution & Trafficking

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The counterfeit producers often use licit channels of commerce to distribute their products. There are number of ways in which the counterfeit distributors find clients around the world. In some instances, counterfeit producers are provided with a sample of the original drug to be copied. Then, the client will place an order, and provide all the needed documentation, as if this is a legitimate shipment. At other times, the counterfeit medications will be sold to a local wholesaler, and from there will be distributed around the world. Smaller amounts, such as those associated with Internet sales, can be dispatched by international courier services.

Catching offenders has become more difficult because of the increasingly complex nature of the supply chains used by manufacturers. Jeremy Douglas, of UNODC, notes that the illegal distributors expand their operation, just like any legitimate business, and they don’t have to deal with any regulatory red tape.

Corrupted officials, local legitimate producers, wholesalers and distributors, all play an important role in introducing counterfeits into the supply chain. Some export operations have agents overseas in both transit and destination countries. Many of the key agents have important political connections.

Conclusion:

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Counterfeit should be addressed at the source, nevertheless, in our increasingly globalized world, it becomes increasingly difficult to locate. Additional difficulty is presented at the end of the production and supply process. For the poorest consumers, the choice may be between questionable medicine and no medicine at all.

Public awareness campaigns may help reduce demand, but only if members of the public can tell the genuine product from a counterfeit. Part of the solution is technological, making use of packaging and other markers that are increasingly difficult to imitate. Part is educational, assuring that consumers are aware of these markers and the possible consequences of ignoring them.

UNODC refers to pharmaceutical counterfeit as an opportunistic crime, emerging where regulatory capacity is low, not where profits would be highest. The pharmaceutical counterfeit industry depriving the poorest of lifesaving medicine, leading to countless deaths, for a relatively small return. Beyond the direct impact on the victims, substandard medicines can fuel microbial resistance. Each under-medicated patient becomes an evolutionary vector though which “superbugs” can develop, posing a global threat to public health.

References

https://www.unodc.org/documents/data-and-analysis/tocta/8.Counterfeit_products.pdf

http://www.smithsonianmag.com/people-places/the-fatal-consequences-of-counterfeit-drugs-139422027/?no-ist

http://online.wsj.com/articles/SB10001424127887324030704578425741496756154

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