Counterfeit Drugs In The Virtual World: Real World Problem

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Counterfeit Drugs In The Virtual World Real
World Problem

• APEC LSIF Singapore Jan 2008

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Genuine / Counterfeit Box
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South American Seizure
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South American Seizure
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The Problem

• Counterfeit drugs are a threat to the well-being
  of patients everywhere.
• Complex problem requiring various stakeholders to
  work together.
• Multiple distribution systems for delivery of
  counterfeits to patients.
• All types of counterfeit drugs are available.

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The Problem

• Counterfeit drugs are a threat to the well-being
  of patients everywhere.
• Cancer
• High cholesterol
• Heart disease
• Schizophrenia, depression, etc
• Weight-loss
• Erectile dysfunction
• Nearly every therapeutic family of drugs is
  counterfeited

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Globalization Of Counterfeit Drugs

• The Ancient World
• Distribution based on brick and mortar shops
  serviced by contacts, sometimes along ethnic
  lines. Limited reach.
• Virtual World
• Distribution facilitated by the internet.
• B2B websites
• Distribution worldwide.
• Operations masked by various means including
  discreet servers.

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Key Points

• Counterfeit drugs will flow in the direction of
  demand. And by any means.
• Retail sales via internet pharmacy.
• Retail sales via brick and mortar pharmacy.
• Wholesale sales into illegitimate distribution.
• Wholesale sales into legitimate distribution.

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The Business

• Counterfeit drugs move in all directions.
• Flow predicated on price and availability.
• Agility is the key term.
• Nationality and ethnicity are not relevant to the
  counterfeiters. Business is business.
• Counterfeit drugs move via multiple avenues.
• Internet pharmacies.
• Wholesalers using the internet to communicate.
  (B2b sites.)

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Global Counterfeit Distribution Route
North America
China
Pakistan
India
South America
SEA
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Common Misconception

• Manufacturers producing counterfeit medicines
  determine the market share (of counterfeit).
  Manufacturers drive the market.
• Manufacturing is driven by low and mid-level
  distributors. They are attuned to the demand in
  the marketplace.
• Just in time production is also a fundamental
  concept. They will only manufacture if orders
  have been placed or are anticipated. Makes no
  business sense to maintain inventory without
  anticipated sales.

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Just In Time Metrics

• Summer 2007 China 250,000 counterfeit tablets
  for cancer were seized during a factory raid.
  This branded products major markets are the EU
  and the US.
• Late Spring 2007 UK MHRA recall of several
  counterfeit blockbuster drugs that were
  manufactured in China and had found their way
  into the secondary market. Intelligence
  suggested that the manufacturer was contracted to
  supply 10,000 cartons of each drug.
• January 2007 HK arrest by HK Customs and
  Excise.

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Hong Kong Raid HK Customs Jan 2007
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Common Misconception

• Manufacturers make the lions share of the
  profits in counterfeit.
• Most of the profit is made by distributors. And
  usually outside country of manufacturing.
• Sourced drugs are no different than other
  commodities manufactured in China, India or other
  locations.

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Enforcement Issues

• Virtual perpetrators whose whereabouts are in
  another country or is unknown.
• Follow the money.
• The difficulty in identifying the counterfeiters
  hiding behind the internet.
• Face to face meetings.
• Coordination/cooperation between countries.
• Can be difficult.

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Solutions?

• Industry partnership with governments.
• G2G initiatives.
• Regional associations.
• Harmonization of laws?

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Rome Declaration

• February 18, 2006
• Combating counterfeit medicines requires
  coordinated effort of private and public
  stakeholders.
• Development of national regional and
  international strategies based on agreed
  criteria.
• The WHO spearheaded the creation of the
  International Medical Products Task Force
  (IMPACT) of governmental, non-governmental and
  international institutions.

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Questions?
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Contact Information

• Raymond H. Velez
• Regional Manager, South Asia Pacific, Global
  Product Protection, Eli Lilly Asia
• Mobile telephone number 66 81 9089570
• Email rayvelez_at_lilly.com