Ensuring the Safety of the US Drug Supply

My work focuses primarily on emerging markets, but having been contacted by whistleblowers of companies selling products into the US, and also having sampled from 70 web pharmacies selling into US, I will venture into the prime territory of this conference.

Probably most of the falsified products found in OECD nations, including the US, are fakes of innovator brands. But most of the fakes I see are falsified versions of generic products, sometimes with no trademark violation at all.

There are numerous examples of this show that fake drugs of key antimalarials and antibiotics contain no active ingredient. But so far we have little appreciation of the size of the market. I'm working on trying to estimate it, since appreciating the size and type of the problem is important so that the right policies are in place. I would say that given the obvious safety of the vast majority of drugs in OECD nations that the value of the market is considerably less than the oft-quoted (indeed quoted again Sunday night in the 60- Minutes segment) $75 billion. I'd say market is closer to $10bn, (of course the costs to businesses maybe considerably higher), but while I'd downplay the value, the danger is acute. Maybe these drugs kill several hundred thousand people a year (many will already be sick and may have died, but the bad drugs pushed them to a too early grave).

But it's not all bad news, developing nations are not helpless. One developing country, Nigeria, has taken a lead and from my colleagues samplings we've seen a significant reduction in drug's failing quality control.

We need other countries to do more and for that we need to help them.

But what of the places that export to US, as we've already heard China in particular has had its problems and its exports of intermediary and finished products have caused problems here. So do drugs imported often via the internet from India.

The Internet as a source of drugs intrigued me, so we decided to investigate. From the end of 2008 we designed a project to see what dangers the public were running. My expectation was that we'd find trouble everywhere, but I was wrong.

We identified 5 popularly bought web pharmacy drugs that appeared to be quite widely available. Assessed baseline spectra for these drugs for the comparisons we would do. We wanted innovator products still under patent since each spectra is specific to each brand (and four of the five products are still under patent in US).

Worked with a physician and ordered with varying prescriptions the drugs from a stratified sample of pharmacies. 31 sites were credentialed either by the National Association of the Boards of Pharmacy, or by Pharmacychecker. The foreign pharmacies credentialed by PC, sold products that we estimated that on average to be about 30% cheaper on these sites, than those based in US ones. This is a critical reason why people buy from them.

Last we chose a selection of sites that were not recommended by NABP or PC, and were either deemed rogue sites for some reason or other, and in a few instances we responded to spam emails.

The NABP sites sent no drugs that failed, one generic substitution for Zoloft. The PC credentialed sites sent more generic substitutions, but no failures either.

Far more generic substitutions came from the other not recommended sites, and of many drugs still under patent in US. But again most of the products passed the tests. From these sites we did have five failures (11%) out of the 48 samples. All failures were of "Viagra" and all the fakes seemed to come from or via China.

The most interesting example came from Austria, with Chinese packaging and the funds went to Panama.

The World Helaht Organization claims that that web sites without a physical address often sent fake drugs, and this was supported by our study. But credentialed sites, both US and a limited selection of foreign ones, all the products were authentic. We published this research (with the then available data) in the peer review literature last year see http://www.plosone.org/article/info:doi/10.1371/journal.pone.0012199

Based on our limited sample, and until I see data which challenges this I'm pretty firm in this assessment-the public does run a risk from buying drugs over the web, but a very low one if they bought from a credentialed site. Additionally, for the poor and underinsured buying from cheaper web pharmacies segmented the market further (I am against wholesale importation for the same market segmentation reasons). Internal market segmentation for the poor is equitable and efficient and that the FDA was right not to enforce the law on personal importation. But FDA should focus its efforts on shutting down pharmacies selling dangerous products, not just cheaper ones which were legitimate products, but were imported.

Of course I firmly believe FDA/ICE/DEA/INTERPOL are right to fight every avenue of fake drugs entering the main supply and distribution chains. But shutting down web pharmacies is a largely pointless exercise. I am not against it, the rogues should be punished, but there maybe 10,000 web pharmacies of which maybe 200 always sell good products. Unless FDA wants President Obama to pull a Mubarak and shut down the internet we will never stop bogus sites. What we should be doing is helping people buy from good ones. But I fear pushing the people who desperately want cheap drugs, only to US-based pharmacies will fail. They go online for a cheap deal and they will find cheaper prices elsewhere.

And this leads me to my conclusions about priorities. US/EU companies protecting their brands protects our lives. I've seen in India and elsewhere the work of industry in this regard. FDA doing its job and protects us too, but it isn't enough. I recall then HHS Secretary Michael Leavitt saying we couldn't regulate our way to safety, and he was right.

We need other countries to do more and for that we need to help them.

I've proposed a counterfeit drug treaty, but this can only work if we listen to what Brazil, India and maybe China are saying. In April at the Graduate Institute in Geneva on the 4th various experts will discuss the idea of a counterfeit drug convention.

With greater support we can slowly move countries to improve domestic laws, improve their MRAs, and their products. Western companies need to license more products. I think Gilead's work with Indian producers of its tenofovir HIV drug is a good example, transferring technology to a company that can produce the drug for segmented poorer markets (these Indian companies now make 3 to 4 times the number of treatments that Gilead makes of tenofovir).

My final remarks are about the Pew "After Heparin document". Most of the suggestions seem great, but they could be very costly, increasing the price of drugs and driving more patients to bogus web pharmacies. I hope a thorough economic analysis could be done of the proposals to estimate the impact on price and hence access.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI

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