Fake Drugs
Causes, Consequences, and Possible Solutions

Thank you for inviting me to speak on this tragic and most interesting subject. I'll explore the subject based on some of the work I've been doing and then we can discuss the issue more broadly.

I started my university life studying biochemistry, and although I didn't have the Sitzfliesch to do bench science, I've always focused on public policy issues which involved science, particularly biochemistry.

And so it was with substandard and counterfeit drugs. I first came across the problem in 2003 in southern Africa. Doctors were already worried about drug resistance to HIV and malaria drugs, but they started to be concerned about clinical failure in areas where no resistance existed before--substandard, probably counterfeit, drugs were suspected.

Although it's easy to buy fake drugs over the Internet, focusing on the dangers is not helpful. We should be helping people know which sites sell good drugs.

Since 2005 the subject has become my main research topic and I've covered many aspects of it--observing the trade first hand, seeing the trade disrupted by going on a raid with investigators. And from a distance monitoring packaging and distribution locations. Then with colleagues in India and Africa (and increasingly globally) collecting samples and undertaking basic screening, assessment of quality, buying drugs over the internet and deploying the latest field technologies. I've assessed Government and corporate interventions in the field and most recently begun economic analysis of the broader phenomenon.

Yet it is that classic paradox--the more I learn the more I realize how much I don't fully understand.

Faking an Indian Brand

Look at the product on the right, it is an antibiotic, produced by VS International of Mumbai, under the brand name Fidson. It was bought at a pharmacy in Lagos, Nigeria, by a colleague. The product on the left was bought at the same pharmacy, it contains no antibiotic (VS International produce both package sizes I didn't have comparable ones on hand to photograph). The product on the left is a fake drug, essentially confirmed by correspondence with the legitimate company who viewed pictures of the fake. In the next slide the fake product (now on right) one can see that it copies everything from the legitimate product's packaging (except the hologram--although holograms are no defense against counterfeiters and often have been faked, notably antimalarials in China and along the Mekong Delta). It has the same NAFDAC number as the original--NAFDAC is the Nigerian Government anti-counterfeit agency. You can see that the packaging quality is good, and we have no idea whether it was made in India, China, Nigeria or elsewhere. This is a trademark violation and obviously a potentially lethal product as well.

So if it doesn't have antibiotic in it, what is it made of?

We did not undertake detailed analysis of the product, but we analyzed in the field with a hand-held Raman spectrometer. In this slide one can see the Raman spectra of real ciprofloxacin (in red) and the run of the fake cipro (in black)--they are offset for ease of viewing. The key peaks in the real product are not replicated at all in the fake--indicating it probably has no cipro in it at all. When we run the spectrometer in its discovery mode it runs the spectra against the library of substances for comparison. It closely matches talcum (baby) powder, and powder accounts for roughly two thirds of the spectral signal (this does not mean that two thirds of the pill by weight is powder). The other spectra indicate that glass and another substance are present, but probably at only about 2% of spectra. Such screening is rapid and useful, and spectrometers are being used by the Nigerian Government, but it does not measure for anything complicated such as trace impurities, and obviously doesn't allow for other measures related to bioavailability, such as dissolution--so when measuring drugs which are close to the real thing one needs more sophisticated technologies for that (High Performance Liquid Chromatography (HPLC), Tandem Mass Spectrometry (TMS) etc.).

As we've seen above most counterfeiters are most interested in the packaging--the product must look the part (whether it's a Louis Vutton purse, a Rolex watch or an antibiotic). Here are some fake Benadryl stickers from a raid in Agra last year; it would take someone from the company to tell these stickers apart from the real thing, I couldn't do so. Here are the stickers on the correct bottle type, making them look very real, but you wouldn't want your children drinking this if they had a cough and sore throat.

Some fake drugs are hardly fake in a quality sense at all, being made in very good conditions, often midnight runs in an otherwise legitimate organization. Indeed, some obviously try to make great copies since they want repeat business. But often they're really unhygienic, even if they're made with the correct ingredients. Take these pictures, from a raid in 2008 outside of Delhi--the pink tinge is the API for a painkiller, and in the second picture you can see it more clearly in this industrial cement mixer. Needless to say this is not GMP! ( I should stress it probably appears that I'm picking on India, this is only because it's relatively easy to investigate there without fearing for one's life--that is not the case in China or Russia, where the counterfeiting problem may be worse).

Okay, we'll come back to more photos later, for now let's move onto the harm of the products made in such place--and there are myriad dangers. I'd break down the categories into three, direct, indirect and long run impacts. Drugs can kill directly, if they have heavy metal, bacterial, fungal or other contamination (oversulfated chondroitin sulfate contaminated heparin was the cause of a hundred US deaths two years ago). Drugs without active ingredients (such as the fake cipro we saw before) allow people to die from otherwise treatable infections (this kills the most people, tens of thousands, even hundreds of thousands in poor nations). And drugs with some active ingredient may accelerate the process of natural selection of more robust microbes to previously effective drugs.

But what you may be less aware of is that the few counterfeiters I've spoken with, think nothing of making Rifampicin with 25% or 40% active ingredient to pass simple dye tests (they will quote prices to you based on API concentrations), and given Rifampicin's BCS classification and its problems of solubility--anything less than good manufacture will probably encourage resistance, possibly contributing to MDR-TB.

Such traders are indeed involved in an odious business. So why is it that such traders can flourish? The economics is quite simple, the demand for drugs runs into hundreds of billions of dollars globally, and the returns to fakery can be vast. Take Viagra. It costs $60/kg to buy in China or India, and one kg on prescription in 25 mg tablets in US would sell for up to $200,000. That is a vast mark up and to some it's worth the risks. The markups are far smaller in non-western countries but still significant, even on cheap products, like the generic antibiotic we saw earlier, and it is far easier to penetrate poorer nations markets than it is US or Europe. From the counterfeiters point of view what is faked and in which markets will be some function of access to markets, expected gains and likely costs. Penetrating markets with multiple wholesalers and retailers is easier than simpler supply chains (in US there are only three major wholesalers).

But not all fake products and markets are the same; obviously passing off talcum powder as cipro is wrong but what about a perfect copy of cipro breaching the trademark of that Indian firm? Or what about a perfectly good cipro product that has been stored so badly that it no longer works, or a product that has expired and should have been destroyed. . . . Do we treat all these drugs, and the people selling them, the same way? Surely faking requires jail, poor manufacture may do too, if it's negligent, but most won't. The same is true of storage problems along the distribution chain--some are negligent others just ignorant of good practice, some unable to do anything (e.g. electricity being cut preventing refrigeration).

Counterfeiting's immediate etymology comes from the French contrefait, to imitate, and it is largely a legal definition, not one derived for public health. Although there is no universally agreed upon definition, the WHO's is the most widely cited. And it is largely a matter of labeling, and the faking of a label (often but not always a trademark) that defines a product as counterfeit. Some countries, such as China, require demonstration of harm from the product for a charge of counterfeiting to stick.

But let's take a look at these sets--substandard drugs involve no willful effort to mislead, whereas counterfeit products someone is intending to mislead. The area just in blue is in principle products that are bioequivalent but illegally labeled--most people in western pharma companies will tell you that this area is vanishingly small--and that is a logical interpretation, why would someone make a great product and pass it off as something else. Except that Indian producers will tell you they want repeat business and so they make high quality copies of drugs like Viagra.

But what of the substandard drugs which are not faked? How big a problem is this? Well, it's probably small in western countries, but it maybe significant in poorer locations.

What do the countries themselves say? These data are interesting but not necessarily anything more than guestimates. From the limited data published by authorities in India and China, most of the drugs which fail quality tests in China and India may not be fake. I do have significant reservations about the Indian data because of the methodology used, I can't really comment on the Chinese data. Poor API production or other production problems, rather than criminal action, may be the main reason for poor quality. From my own assessment of Indian cities the majority of products that fail basic quality tests are probably not counterfeit (although I did no forensic analysis of products so cannot be sure).

The consequences are stark if these data are true--going after criminals might be the best policy action for importers into the rich world, but may not address the major problems in mid-income and poorer nations.

One can interpret the positions of MSF, Oxfam and Indian officials for example in this way. Both say we should focus on the medical regulatory authorities to improve quality more generally than worry so much about illegal actors.

And in this interpretation, they have a strong case. One of the problems in Africa in particular is that it is very difficult for a customs agent, or policeman, to know what is legitimate and what isn't. Take Kenya. In 2007-2008 the WHO and Nairobi University analyzed the antimalarial drugs on sale across the country. They found over 180 brands, of which fewer than 50% were even registered in the country. Are those non-registered products counterfeits? Solving lack of registered products is important.

A less positive interpretation of the MSF and Oxfam position is that both groups tend not to want to identify ANY substandard drug production, particularly ignoring the failings of some Indian producers, and promoting local drug production in African nations, with no thought to the economic viability of such producers or indeed the quality of their production lines--many have started trying to produce ARVs.

So while western actors appear to focus too much on criminal activity and the attendant poor drug quality of their products, Indian and pressure groups perhaps ignore poor quality too much.

Back to Kenya

Kenya is also bringing in an anticounterfeit law, which is generally pretty good, but has a clause in it which conflates trademark violations with possible patent infractions, and could limit generic drug sales into Kenya. This interpretation is turning into a mess. India is lobbying hard against it and appears to be winning, which is good news. But India and others also use the general antagonistic environment to prevent discussing changes to WHO's definition which were supposed to be discussed at the WHA, last year.

One possible set of new definitions is based around whether the products are registered, which makes sense. In the Kenyan case where most drugs are not registered, there would be basic agreed rules of how the police and customs would deal with such products. Of course such changes need to be able to be discussed. But I'm doubtful they will be any time soon.

The six party talks over North Korea this isn't, but progress is slow.

What of the Good News?

USP's DQI ad PQM is very good indeed. Its recent study of antimalarial quality in Africa, the QAMSA report, and its training of MRAs and others is extremely valuable and some of the best $35m the USG has ever spent. Amongst other things, funding MRAs would increase the speed of good product registration, which helps all legitimate players. MeTA is also apparently good (I'm investigating that next month so can't tell you first hand).

WHO/IMPACT started a lot of the work, but WHO is hamstrung by being a country membership organization and can push through very little when opposition to unanimity occurs. IMPACT has gone through many ups and downs, and it is perhaps inevitable that western interests have driven its actions--and its focus on criminal activity. After all western interests were the only major funders to begin with--western pharma in particular actively cared about the problem before others seemed to.

I've spoken at a US Commerce APEC meeting in Singapore where the Chinese were heavily involved and USG/APEC are working hard on trying to help Chinese officials inculcate GMP into production there (short courses for existing staff and masters courses to improve production ethos).

The Federal Governments in Delhi and Beijing are on the whole pushing hard to stop bad drugs, new laws in both should help.

NAFDAC has done a great job. As the authority in charge of combating fakes in Nigeria it has probably overseen a reduction in fakes in the past few years from maybe 40% to far less than 20%. (My own sampling using visual identification, TLC and disintegration, showed failure rates of 32% in 2007, 16% in 2009 and just now I think about 8-10%--but the counterfeiters may be coming more sophisticated and adding enough API to fool simple tests, such as assays with thin layer chromatography--but there is little doubt quality improvements have occurred across Nigeria thanks to NAFDAC).

Western pharma companies have done a great job of protecting their trademarks and hence cleaning up a lot of bad producers around the world. And as mentioned the companies really pushed a lot of action at global level, providing funding and expertise.

But not all is rosy.

Europe's IP laws allow, at the discretion of the individual countries, the right to seize generic products with possible IP infractions, including arguably products which would be against patent laws in EU if they were to remain there, but can be stopped even if in transit. About 20 Indian generic drug shipments were stopped in the past two years for this reason. It is inflammatory, encourages the kind of fights which help no one really--not even the patent holder since the drugs were on route to Africa and Brazil. India and Brazil are bringing a complaint at WTO.

But while India and Brazil are acting justifiably over patent-based seizures, I'm confused about opposition to the rest of the seizures going on in EU--maybe someone here can explain it to me. After all 93% of EU seizures are stopped for non-patent violations, which are presumably trademark violations. Although EU is being rather opaque about the actual cause.

I'm frankly bemused as to why there is any opposition to trademark enforcement. Can one really trust a drug which is lying about its provenance--I think not. Customs officials cannot cheaply test drugs crossing borders, but they can inspect packaging and if the product breaches a trademark it should, to my mind, be stopped. Many bad products are stopped this way.

I've mentioned the Kenyan law, which is another legitimate cause for complaint by India, and again is creating tension from agreeing usable definitions on drug quality to help developing nations.

Corporations do a good job to defend their brands and this does help in improving quality, but they are woeful at releasing that information and make it hard to know where faking is taking place. Company lawyers prevent powerpoint presentations and other information from being used by others to improve knowledge and scholarship in this area. The Pharmaceutical Security Institute, comprised of big pharma, almost certainly has the best data on fake drugs but unless you're a pharma member you can't access it.

Also when it comes to the internet, companies induce fear about buying drugs from overseas--and while most web pharmacies sell fakes, maybe 200 worldwide registered pharmacies sell good drugs over the web--pharma doesn't want backdoor importation into US so exaggerates the risks of buying from non-US pharmacies--again creating tensions.

Probably the single biggest problem in the developing world is the lack of State support for good federal laws in China and India. Drug manufacturing is regulated by the states in both countries and the federal agents can do nothing if state agents do not wish to enforce the laws properly. It is far easier to enact laws than it is to enforce them. (Indian generics firms have complained about awful protection of counterfeiters and poor standard enforcement in Uttar Pradesh and Haryana--this probably explains why fake drug data, including my own is worse for Delhi than elsewhere in India). This situation is made even worse in China because the PLA are implicated in much fakery, including probably drug production. PLA own hotels and hospitals and trade in substandard products. Beijing can do little about this, at least not yet.

Ultimately poverty prevents more effective action. If one can't read one can't assess packaging trademarks. One of the more controversial areas is in supporting MRAs in extremely corrupt settings . . . will it help? Maybe not.

Supporting MRAs in corrupt settings may increase power of the corrupt, with MRAs registering only products of producers who pay backhanders, even preventing good products being registered at all. But we should increase budgets for helping customs and MRAs, as long as that budget support is applied only to countries that seem to want to work with USG, or we could end up with a worse problem.

Increasing penalties is easy politically, a stroke of the pen, and it is important to treat counterfeiters severely, but death sentences or life in prison can be counterproductive. If you corner someone who is expecting to be executed if caught they will fight back--often lethally. Yes to strong but not lethal sanction against counterfeiters.

Illiteracy and poor education are a major problem, and not just for patients, and specific programs to expand intermediaries handling of products would help.

India is going to reward whistleblowers and I think this is a good plan, I was approached by one from Ranbaxy in 2004, normally a very good firm, who was scared for his families' life--the data he gave me in 2004 and 2005, which I forwarded to FDA and WHO, probably led to FDA and DOJ action of 2008 against two plants in India.

It is also important to assess supply chains more rigorously, particularly overseeing API quality, which according to Pat Lukulay of USP is the main problem for drug quality failures in poorer nations.

I'll close by discussing fakes closer to home. Buying drugs from US bricks and mortar pharmacies is by and large a very safe practice, but the internet is renowned as a location for fakes. I did a study on internet pharmacies last year looking at five popular brands, again using a raman spectrometer, and came across some bad products (although on the whole the quality is very good).

Here is a classic example of a fake product and the packaging it came in. Have a look yourself at how good the packaging is. This fake does have some sildenafil and Titanium Oxide (respectively the API and blue color of Viagra) in it, you can see from some of the peaks (at 650, 1250 and 1600) but it also has some other products (peak around 1000), and it may not have the right concentrations of ingredients, and it may have been made in unhygienic conditions, and so would be very risky to take.

But although it's easy to buy fake drugs over the internet, focusing on the dangers is not helpful. We should be helping people know which sites sell good drugs, and all the sites approved by pharmacychecker.com passed the tests. Unfortunately Google is not allowing approved foreign sites to advertise, which limits information for those wanting to buy over the web.

Roger Bate is the Legatum Fellow in Global Prosperity at AEI.

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