1 Globalization of the Drug Supply: Counterfeit Drugs and Safety Challenges Bryan A. Liang, MD, PhD, JD San Diego Center for Patient Safety, Department of Anesthesiology, University of California San Diego School of Medicine Institute of Health Law Studies, California Western School of Law UCSD Osher Institute January 30, 2012 Globalization • All facets of raw and finished goods flow across geopolitical borders, “parallel trade”. • Includes pharmaceutical industry. • Creates problems for patients and producers: – Patients get the wrong drugs; and – Producers make the wrong drugs.
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Globalization of the Drug Supply: Counterfeit Drugs and Safety
Challenges Bryan A. Liang, MD, PhD, JD
San Diego Center for Patient Safety, Department of Anesthesiology, University of California San Diego School of Medicine
Institute of Health Law Studies, California Western School of Law UCSD Osher Institute
January 30, 2012
Globalization
• All facets of raw and finished goods flow across geopolitical borders, “parallel trade”.
• Includes pharmaceutical industry. • Creates problems for patients and
producers: – Patients get the wrong drugs; and – Producers make the wrong drugs.
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Parallel Trade • Applies to pharmaceuticals. • Parallel trade allows sellers to take
advantage of price differentials.
So What’s the Problem? • Bad guys. • Parallel trade holes allow creatures to introduce
fake/tainted drugs into supply chain. • WHO 2006 estimate: $40 billion annually—that’s
$132 million/DAY. • Increase up to $75 billion annually by end of past
year [2010]—that’s $205 million/DAY.
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Just A Developing Country Problem?
• Nope. • Every continent has experienced
parallel trade problems with pharmaceuticals.
• Except Antarctica [yet].
Longstanding Parallel Trade: The EU
• Treaty on the Functioning of the European Union, Free Movement of Goods and Services.
• Expressly allows parallel trade for pharmaceuticals.
• Prohibits use of intellectual property rights to block free movement across country lines.
• Note: repackaging is legal.
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Problems? • Yup. • Dozens of hands touch drugs allowing fakes to be introduced.
– “Pharming”—Legitimate drug en route completely replaced with fakes using legitimate packaging.
– “Salting”—A few legitimate drugs (or illegally diverted drugs) mixed into counterfeits/substandard forms to fool testers.
– “Ps & Ps”—Total fakes (“pills and packaging”). • Wide array of sources—biggies: China, India; plus Accession
Countries, Latin America, and USA. • Bad guys highly sophisticated in mimicking labels, packaging, and
pedigree.
[Criminal] Artists at Work
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And Some Not So Good
Sobering Stats • In the past three years:
– UK: • 14 Class I recalls for fake drugs. • Discovery of counterfeit manufacturer and supplier producing 500,000
fakes/day; products verified entering other countries through parallel trade [cialis, reductil, lipitor, zyprexa, plavix, casodex].
• 2008: estimated 8 million fake pills in UK NHS alone (400% increase over 2 years).
– Netherlands: • parallel trade wholesalers duped into buying and supplying counterfeits.
– Italy: • licensed pharmaceutical dealer found to be inadvertently distributing
counterfeit GI drugs. – France:
• French customs agents discovered and seized 542,000 fake medications. – Spain:
• Spanish authorities raided 6 labs producing >20,000 fake doses/HOUR in fake steroids, hormones, and cancer drugs; products verified entering into Italy, France, and Portugal through parallel trade.
– EU 2010: 35 million fakes in EU in first quarter.
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How Easy? – UK TV Programme “Tonight with
Trevor McDonald: Is Your Medicine Fake?”
– Reporter able to: • Create fake parallel trade wholesaler
using empty boxes and assurances; • Secure supply from criminal source of
counterfeit drugs; and • Secure contracts to supply health
authorities.
Penalties[?]
• A joke. • EU, Asia, South America: <6 months
incarceration for most; often only a fine for many.
• Based on trademark violations, NOT threat/injury to public health.
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Parallel Trade
USA Parallel Trade
• Licit: Gray market. • Illicit: Internet.
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Gray Market
• ~90% of US distribution through simple system:
Manufacturer → “Big 3” Wholesaler(s) → Retailers
Gray Market • But ~10% of US drugs sold in “gray market” before
final pharmacy and patient. – 2º wholesale market where drug resale occurs.
• Resale between Big 3, ~6000 secondary wholesalers, providers, others. – Some good reasons: shed excess supplies, arbitrage
prices, address cash flow, deal with impending expirations. • Note: US allows repackaging of drugs.
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Problems? • Yup. • Dozens of hands touch drugs allowing fakes to be introduced.
– “Pharming”. – “Salting”. – “Ps & Ps”.
• Wide array of sources—biggies: China, India; plus Accession Countries, Latin America, and USA.
• Bad guys highly sophisticated in mimicking labels, packaging, and pedigree • It’s déjà vu all over again!
Risks: Gray Market
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Internet • “Personal importation.” • $1 billion in sales
annually. • Imported drugs illegal
under Food, Drug and Cosmetic Act as well as other federal laws.
• Buying and selling w/o a prescription also pretty illegal.
Out of Reach • Internet: fake/Substandard Drugs 50+%
(WHO), 90+% (NABP), criminal enterprises.
• Offshore criminals hard to track and prosecute.
• Sources include countries notorious for fakes, e.g., China, India.
• Materials passing through a country not earmarked for domestic use NOT subject to that country’s safety laws.
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No Accountability • Search engines make huge profits off online drug
advertisements. • Google settles for $500 million • Still happening out there.
No Accountabilty
• Forensics a nightmare: – Web site claims to be Canadian, but:
• web address may be licensed in Russia; • the server is in China; • the company payee for the credit card
charge is in the UK; • the processing of payment in Australia;
and, in a coup de grace of avoiding detection ...
• the product is mailed from Chicago, using a return address of an unwitting customer of the website.
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US Penalities[?]
• Just like EU, Asia, South America: – Light and perverse:
• Up to 10 years in slammer for trademark violation;
• Only up to 3 years in slammer for faking licit drug, and often no time at all.
• Has attracted international organized crime, terrorists, former illicit drug dealers.
Implications
• Creates tremendous problem for pharmaceutical parallel trade.
• Makes it easy to exploit vulnerable patient populations around the world.
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Strategy: Education
• Education: Need to disseminate information to providers and patients. – WHO rapid alert system; FDA counterfeit alert network. – Safemedicines.org email alert system. – SAFE MEDS, LEADER, SAFE SOURCING checklists.
• Raise awareness!
Strategy: Public Health
• Use materials broadly.
• Public health campaign like International Nurses Day and others.
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Strategy: Wholesalers • Limit number of
authorized wholesale distributors/high risk drug [cf. UK]
• Treasury focus on prohibited transactions [e.g., like Internet gambling laws].
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Strategy: Access • Low cost/no cost drug
programs, e.g., PPARx. • Mandated participation
by both brand name and generic industries as condition for FDA review.
• Break chain of illicit access needs.
Strategy: Penalties • Penalties should be
strengthened. • Life imprisonment and
drug trafficking penalties appropriate.
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Technology to the Rescue? • Not ready for prime time. • Biggie example: RFID.
– Up to 27% read incorrectly by manufacturer. – Up to 21% read incorrectly at wholesaler level. – Costs for readers and devices. – Data standardization problem along distribution chain and between hemispheres. – Debate on ownership of information.
• And so what—RFID, DNA markers, laser etching, holograms, tamper-proof labels, embossing, thermo-reactive ink—all just track packaging not the product.
Current Application • FDA Current Shortage Drugs : FDA, AHA, ASHP: critical
problem. • 72 drugs in shortage. • Includes:
– ER drugs – Anesthesia drugs – Cancer drugs – Cardiac drugs – Chronic Disease drugs – Orphan Disease drugs – Vaccines – Etc.
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Dire Situation • Premier Healthcare Alliance: last 6 months of 2010,
drug shortages have been reported to cause: – 89% providers to make medication errors/patient safety
issues; – 80% providers to delay/cancel patient care intervention; – 98% providers experienced increase in costs.
Not Getting Any Better
• American Hospital Association: first 6 months 2011: – 99.5% all hospitals now reporting
drug shortages – 41% reporting >21 medicines in short
supply.
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Gray Market • The more things change … • Healthcare providers left gray market—but now they are back. • ISMP:
– Hospitals acknowledge now buying in gray market, despite risks. – 12% admitted purchasing there despite known counterfeiting,
diversion, and substandard drugs. – Estimates 15 deaths over 15 months due to drug shortage [known].
Gray Market
• Some experiences: – Up to 4500% markups, ave. 650%; diminishing
supplies. – Fakes detected in past: cancer, diabetes, HIV
drugs.
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Internet
• Issues in gray market driven both providers and patients to Internet.
• Unknown as to risks associated with FDA Current Shortage drugs.
Study • GHIRG threat analysis -- assessed characteristics of online
drug sellers of FDA Current Shortage drugs. • Using simple Google search for “buy [drug]” first 5 hits/pages:
– Who: online drug sellers; intermediaries (data aggregators; forum links; PPDLs; social media)
– VIPPS? – Suspect site [NABP Not Recommended Sites list; “international”
online pharmacy]
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Results
• 94% (68/72) FDA Current Shortage drugs were being marketed.
• Over 68 shortage drugs, 291 offers for sale. • 91 individually identified Online
“Pharmacies”, 17 Forum Link sources, 11 Data Aggregators, 16 PPDL sources, and 5 Flickr Links.
Results • Most offers (71%, N=207/291) by Online Pharmacies
selling shortage drugs direct to consumers. • Highly suspect vendors.
– 33% (N=30/91) Online Pharmacies dominated, selling multiple shortage drugs (72% of all Online Drug Seller marketing).
– 77% (N=21) Online Pharmacies on Not Recommended List. • Another 7% (N=6) with no info “international”. • Two sellers using fake VIPPS seal. • Only 4/72 drugs had any VIPPS-accredited sellers [far down
list/page].
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More Results • Highly suspect vendors. (cont.)
– For 58 shortage drugs with Online Pharmacy Seller: • 91% (N=53) had ≥1 NABP Not Recommended Site vendors; • 36% (N=21) had only NABP Not Recommended Site vendors.
• Intermediaries: – All data aggregator, forum links, PPDLs, and Flickr hits
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More Fun
Reform
• Onshore: Px/Provider Education; VIPPS; Public Health Campaigns; Identified Wholesalers; Low Cost/No Cost Drug Programs; Greater Penalties.
• Offshore: More inspectors, inspections, and investigations! – More aggressive cooperation, collaboration, and partnerships! – A safe medicines treaty?
• Currently, NO international agreement on drug fakes [cf. agreement on counterfeit money!]
• Model after Framework Convention on Tobacco Control? • Enforce using UN Office of Drugs and Crime? • Law, Data, and Pubs are needed!!