Counterfeit Drugs: Why Take Preventative Medicine Now

Those firms that start with detailed strategic analysis and business planning will be best positioned to not only survive but thrive


During the first quarter of each year, businesses, analysts, journalists and other would-be pundits make their annual predictions.  Most are relatively obvious products of trend watching or investment predictions. Very few consider predictions that are more serious in nature, like the ones we'll start to see if Congress doesn't start to implement nation-wide security practices within the pharmaceutical industry.

More than one year after the blood thinner drug Heparin was recalled due to the presence of a tainted ingredient, my prediction is that we will see another incident like this before the year 2010.  The FDA has estimated that at least 81 Americans died and hundreds more became sick from severe allergic reactions to the tainted ingredient, which came to light in the early months of 2008.  However, we have not seen the last of that scare – in November (nearly one year after the recall) federal marshals had to enter and seize 11 lots of recalled Heparin from Celsus Laboratories, which distributes heparin to drug and medical-device manufacturers both in the United States and internationally. 

Furthermore, little attention has been turned to the root of the problem, which in this case was that the manufacturers in China intentionally changed the ingredients within the drug in order to cut costs. As economic stresses mount, the frequency of incidents such as these should be expected to rise as the industry comes under increasing pressure to cut costs. Add to this the fact that counterfeiters of legitimate pharmaceuticals enjoy greater profits and face lower risks that do traffickers of illegal drugs and you have an environment where paranoia begets reality – the entire pharmaceutical supply chain can be considered at risk.

While the United States' finished dose drug supply is one of the safest in the world, it is not immune to these concerns, particularly when one includes in the analysis the global drug manufacturing and material sourcing ecosystem. Left unaddressed in a systematic way, product security concerns will lead to a continuance of the patchwork of regulatory mandates that we have today. The result will be an environment that neither provides the level of safety desired nor supports the market access and supply chain efficiencies required to keep drug costs down. It is important for pharmaceutical supply chain participants to take matters into their own hands, analyze the diverse threats they face and build a go-forward plan that not only mitigates product risk but also lays the foundation for better business performance.

The Drug Supply Chain: Global and Under Attack

Global pharmaceutical supply chain control is a challenge without track-and-trace technologies in place. Visibility to one's immediate suppliers and customers is good, yet vision across the entire supply network is nebulous. Once a drug or active ingredient leaves its manufacturer it is left wide open to be adulterated, completely faked, diluted, relabeled, and repackaged or manufactured without authorization. These counterfeit drugs are often physically indistinguishable from the genuine product, but most of the time the counterfeit does not provide the intended therapeutic value. In addition, "legal" drugs manufactured for one market may not meet the efficacy or cGMP quality standards required for distribution in another market.

The lack of visibility and supply chain collaboration leaves the entire legal drug distribution network wide open to the introduction of illegal products, which can occur through the following methods: 

  • a company illegally participating in drug distribution,
  • a seller misrepresenting the true origin of the product, or
  • a buyer not verifying the true identity and origin of the product or licensure of the seller.

Together, these form a "drug diversion network."

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