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Counterfeit Drugs

Digital industries continue to wage an unwinnable war against the people and organisations that illicitly copy, share, and sell their products, whether DVD rips, DRM-free music files, or pirated software. But, while arguments about lost revenues, performing rights, and the rest of it rage, at least digital copyright theft is not usually a matter of life or death. Crime syndicate conspiracy theorists would probably beg to differ, but counterfeiting and piracy in another industry – the pharmaceutical industry – most certainly can be.

Many users of online file sharing systems and those who seek out the cheapest “generic” pharma products on the net, without regard to whether they are counterfeit or not, often cite the enormous profits made by the industries as some kind of excuse for not paying their own way.

Big businesses do make big profits (present credit crunch excepted, of course).

But, for the pharma industry those profits offset the initial 10-15 years of effort and expense that usually accompanies each drug brought to market and compensates for the thousands more failures that fall at various hurdles in the research and development process.

There are now vast markets for counterfeit medicinal drugs. They exist across the internet where consumers around the world seek the cheapest price for drugs they might not otherwise be able to afford and are often sold counterfeit products with doubtful chemical provenance.

In the developing world, there are additional socioeconomic problems around counterfeit and “generic” drugs produced despite patent limitations. And in China, a parallel industry exists to reverse engineer countless products and create facscimiles. It is not only the problem of intellectual property rights ignored and shareholders duped out of their dividends, it is a problem of health and safety and so-called pharmaco-vigilance.

The US Food & Drug Administration defines a counterfeit drug as:

A drug which, or the container or labelling of which, without authorisation, bears the trademark, trade name, or other identifying mark, imprint, or device, or any likeness thereof, of a drug manufacturer, processor, packer, or distributor other than the person or persons who in fact manufactured, processed, packed, or distributed such drug and which thereby falsely purports or is represented to be the product of, or to have been packed or distributed by, such other drug manufacturer, processor, packer, or distributor.

Now, writing in the aptly named International Journal of Intellectual Property Management, Derek Bosworth, at the University of Manchester and Senior Research Associate of the Oxford Intellectual Property Research Centre, argues that counterfeit pharmaceutical products bring with them several major risks.

The main risk is one of health for the individual appear, particularly in the developing world, and to people naively purchasing counterfeit drugs on the internet. There is also a risk to the legitimate manufacturers who may lose the confidence of the public and medical professionals as medical problems associated with the counterfeit product are reflected on the branded product. At least one company, Pfizer, is fighting back through transparency and product recall in the face of counterfeit versions of its products entering the market. Nevertheless, such detrimental image problems could stoke up anti-industry feeling and persuade patients away from genuine treatments into the hands of snake oil sellers.

“There can be little doubt that some forms of counterfeiting and piracy are associated with higher economic and welfare costs than others,” says Bosworth, “The costs associated with pharmaceutical and certain other products, such as aeroplane parts, are probably amongst the highest of all.” He points out that there are many cases of counterfeit pharmaceuticals leading to illness and even death. There are even strong links between the counterfeiters and other criminal activity and terrorism.

Bosworth adds that research is underway to tag and track pharmaceutical, and other products, although RFID technologies are still too expensive for most applications. More importantly, however, the legal penalties imposed on counterfeiters are too small in most countries, he points out, although in 2003 India proposed the death penalty for those who manufacture or sell counterfeit pharmaceuticals. Much still needs to be done to stop pharma piracy. If as much effort were focused on this serious issue as there seems to be in chasing after file sharers, it could be a battle fought and won.

Research Blogging IconDerek L Bosworth (2009). Counterfeiting in global pharmaceuticals sector: its consequences and management International Journal of Intellectual Property Management, 3 (4), 343-356 DOI: 10.1504/IJIPM.2009.026911

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