How entrepreneurs are leading the fight against fake pharmaceuticals

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    Phake: The Deadly World of Falsified and Substandard Medicines
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Article Highlights

  • 80% of the ingredients in #US medicines come from overseas, where insufficient oversight can put you at risk.

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  • In late 2007 and early 2008, 149 #Americans died from heparin, a blood thinning drug, imported from #China.

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  • Even with advances in technology, dangerous products and fake drugs are still prevalent around the world.

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With fakes of the cancer drug Avastin popping up in U.S. clinics in the past few months, patients are naturally worried about whether their medicines are safe.  Considering eighty percent of the ingredients in U.S. medicines come from overseas – mostly from China and India because their products are generally good and cheap – consumers are right to worry that insufficient oversight in foreign markets puts them at risk.

The U.S. Food and Drug Administration, investigators at Customs, and the police play important roles in monitoring production facilities and prosecuting criminals. But as is so often the case in public policy, they are  “fighting the last war”.

In late 2007 and early 2008, 149 Americans died from heparin, a blood thinning drug, imported from China. The fake drug passed the test required by U.S. regulators because rogue suppliers to the Chinese trader used a dangerous and very cheap substitute that mimicked heparin and thus evaded detection. Subsequent changes in the required tests demanded by FDA means this type of problem is less likely to rear its head again. But that doesn’t make us safe. In reality, U.S. regulators have few resources, little influence and no jurisdiction over drug quality in other parts of the world. We must look elsewhere in the search for safety.

That’s where entrepreneurs come in.

A number of companies have developed innovative technologies and processes to keep us safe and fill in the gaps where regulators are unable to protect us. One such company is Ahura Scientific of Massachusetts (recently bought by ThermoFisher), which created the Truscan handheld spectrometer, a device that can identify a substance’s chemical components on the spot. The firm developed the device in the late 1990s, and it was first used by the U.S. military in Iraq and Afghanistan to spot dangerous chemical compounds in the field and save the lives of servicemen and civilians. Most major pharmaceutical firms now use these spectrometers to evaluate the ingredients they buy to ensure consistent product quality since inferior ingredients lead directly to dangerous drugs or indirectly to shortages.

The devices aren’t used solely by drug companies. Many developing countries have begun using them, too, to conduct random spot checks of drugs in pharmacies and at customs. Nigeria is a prime example where these devices have been used to successfully identify fakes and allowed the authorities to intercept them. In 2009, Nigeria bought four of these devices and Ahura donated two more. A consignment of over a million Chinese antimalarial pills was identified as bogus by agents using the spectrometer in early 2010, only weeks after it was first deployed.  Ahura’s spectrometer and other technologies like it have been useful in the developing world, but it is in China where adoption of U.S. technologies has paid the biggest dividends in improving the quality of products coming back into the United States.

Chinese regulators use hundreds of handheld spectrometers and other mobile laboratories to measure drug quality and most importantly the ingredients our companies buy. These technologies were all developed by western entrepreneurs and are now being used to track down those trading in fake and substandard products, leading to numerous arrests and even executions, and an improvement in quality assurance. In the late 1990s, a University of Beijing study found that 14 percent of products across the country failed quality control. More recently that figure was below 4 percent. My research team tested roughly one hundred samples from Beijing pharmacies, and we found only two fake samples in the lot. Obviously, significant problems remain, but the improvements are manifest; much of the credit goes to the technological advances.

Entrepreneurs have also made strides in helping drug companies track good products throughout the supply and distribution system.  Businesses design holograms, special inks, and high tech imaging to track good products. Most of these technologies are expensive and can only be deployed by wealthy companies. But some innovators are making headway here as well. I’ve seen two-dollar packs of Indian generic antibiotics on sale in Nigeria that contain simple holograms. Even when technologies like this are copied by fakers, holograms increase the cost to counterfeiters and give producers and police more information about fake production capabilities.

Like holograms, original track and trace technologies also help companies monitor the supply chain. Start-ups like Sproxil in Nigeria, mPedigree in Ghana, and Pharmasecure in India provide companies with bar codes or scratch pads that reveal a unique tracking number. The consumer then texts that number to the company providing the service to learn if his or her medicine is the real thing. India has now mandated that from next year on all exported products will require track and trace authentication systems, no doubt much of it provided by Pharmasecure.

Yet even with these technologies, dangerous products are still prevalent around the world and continue to slip into the U.S. But with the help of entrepreneurs, new solutions are likely to be developed so that dangerous medicines become a rare and tragic occurrence, rather than an ever-present threat.

Roger Bate is a resident scholar at the American Enterprise Institute. His book Phake: The Deadly World of Falsified and Substandard Medicines will be published next week.

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About the Author


  • Roger Bate is an economist who researches international health policy, with a particular focus on tropical disease and substandard and counterfeit medicines. He also writes on general development policy in Asia and Africa. He writes regularly for AEI's Health Policy Outlook.
  • Phone: 202-828-6029
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    Name: Katherine Earle
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