The Dangerous World of Counterfeit Prescription Drugs
Perhaps the best way to describe the motivation behind counterfeiting is offered by security chief Jackson of Novartis: “Pretend that you graduated from the ‘University of Crime’ and you are considering two career options. Which path you would follow? First, you can manufacture
and sell cocaine, and if you get caught, you may spend 20 years or more in jail. Your second option is to manufacture and sell counterfeit pharmaceuticals. If you get caught, in many jurisdictions, you’ll be sentenced to prison for two years and may be back on the street in six months.”
This analogy highlights a major problem: Despite creating a global health issue, pharmaceutical counterfeiters aren’t given the same attention as other criminals. “It’s a challenge to get governments to respond to what we see as a very pressing and important issue,” Jackson says. “It wouldn’t be too much of an exaggeration to assert that those criminals who engage in counterfeiting are almost engaging in premeditated murder. They know that people will get the drugs.”
The WHO also cites easy money as a main driver for counterfeiters. “Manufacturing costs are very low if no quality and safety standards are respected,” it says. A new survey from Consumer Reports found that with rising medical costs and a recessionary economy, U.S. consumers are taking more risks with their prescription medications. With high demand for pharmaceutical products, there is considerable opportunity for unregulated producers to attract customers on price alone.
An unfortunate consequence is that the therapeutic ingredient in a pharmaceutical is often the most expensive, leading counterfeiters to find replacements or to avoid using these substances at all. “When a drug ingredient depends on raw materials that are particularly expensive, criminals may have extra incentive to find a cheaper alternative to the expensive ingredient,” said Margaret Hamburg, commissioner of the FDA, in a speech last year. As a result, the FDA has ranked more than 1,000 active pharmaceutical ingredients according to their risk of economically motivated corruption. The list guides officials at the U.S. border to sample and test drugs that are susceptible to counterfeiting. The list was not made available to CNBC.com by the FDA.
Counterfeit drugs' connection to organized crime and express mail
How Do They Get Into the US?
Unlike other illicit substances smuggled into the U.S., counterfeit pharmaceuticals most often find their way into the country through more “common” means. According to U.S. Immigration and Customs Enforcement, the most frequent method for importing counterfeit pharmaceuticals is through express mail services, such as FedEx, UPS, the U.S. mail, and Chinese-based express mail services.
This method makes the task for enforcement more difficult, says William Ross, unit chief at ICE’s National Intellectual Property Rights Coordination Center. Express mail shipments make
detection more involved and the process more time-consuming, compared to items shipped in large containers, he says.
Of the 19,959 intellectual property rights seizures recorded by U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement in 2010, there were 433 seizures of counterfeit pharmaceuticals, with a domestic value of more than $5.6 million, although ICE maintains this value is far lower than the manufacturer’s suggested retail prices. However, international cooperation is also essential to combat counterfeit pharmaceuticals, says ICE. For example, in October 2010, ICE’s Homeland Security Investigations participated in Operation Pangea III, along with the World Customs Organization, INTERPOL, private pharmaceuticals companies, and others to conduct actions that led to the suspension of 297 websites and domain names that sold drugs to consumers without prescriptions. Internationally, over 11,000 packages were seized, containing move than 2.3 million counterfeit pills worth nearly $7 million. The operation led to 80 arrests around the globe.
Who Makes Counterfeit Drugs?
There have been numerous cases of counterfeit drug labs operating with complex international frameworks — experts often link the production of counterfeit pharmaceuticals to organized crime. In one case that led to an investigation and seizures, counterfeit drugs produced in China were transported by road to Hong Kong, sent by air to Dubai, passing through London Heathrow on the way to the Bahamas, where the organization kept a warehouse fulfillment center. From there, the drugs were sent to another organization in the U.K., which eventually sent the packages to the U.S. “This is not exactly a mom-and-pop operation,” says corporate security chief Jackson of Novartis, “it’s organized crime.”
Groups that have been associated with counterfeit drugs or online pharmacies include the Russian Mafia, the Chinese triads, the Japanese Yakuza, and the Neapolitan Camorra, among others, who also engage in a range of counterfeiting activities, according to the U.N.
The complex web of transactions for fake drugs can also follow paths that seem more legitimate, but are just as dangerous to public health. A feature on The New York Times website shows an example of counterfeit pharmacological products originating in China that eventually made it to Panama through a web of seemingly legitimate international transactions.
There have been instances of U.S. citizens producing counterfeit drugs, although the practice is less rampant than in other parts of the world because of the secure and well-regulated nature of the U.S. pharmaceutical system.
Examples of these activities include cases out of New York in which individuals were making over-the-counter products; FBI investigations followed individuals from New Jersey selling counterfeit prescription drugs made in India, a Canadian national selling counterfeit cancer medications in Phoenix; and a California man selling counterfeit Viagra from China.