Presentation made by Kristina M. Lybecker, The Colorado College‌ at the 3rd meeting of the OECD Task Force on Charting Illicit Trade - OECD, Paris, 30-31 March 2015‌ For more information see http://www.oecd.org/gov/risk/charting-illicit-trade-third-task-force-meeting.htm

1. Illicit Trade
in Counterfeit Medicine
Dr. Kristina M. Lybecker
Department of Economics & Business
The Colorado College
March 30, 2015

2. 2
Roadmap
 Motivation
 Definition
 Dimensions of the Problem
 Adverse Consequences
Health, Economic, Social, Environmental
 Policy Responses
 Links to Transnational Organized Crime
 Concluding Remarks
 Questions

3. 3
Motivation
 1985: first identified as a problem in
international commerce
 Increasingly prevalent & profitable
 Improved Partnerships & Cooperation
 Knowledge is Power
 Extent of the Problem & Possible Solutions

4. 4
Definition
“А counterfeit medicine is one which is deliberately
and fraudulently mislabeled with respect to identity
and/or source. Counterfeiting can apply to both branded
and generic products and counterfeit products may
include products with the correct ingredients or with
the wrong ingredients, without active ingredients, with
insufficient active ingredients or with fake packaging.”
(WHO 2015)

5. 5
Six Categories
 Without active ingredients, 32.1%;
 with incorrect quantities of active ingredients, 20.2%;
 with wrong ingredients, 21.4%,
 with correct quantities of active ingredients but with
fake packaging, 15.6%;
 copies of an original product, 1%;
 with high levels of impurities and contaminants,
8.5%.

6. 6
Terminology
 Branded
 Generic
 Falsified
 Substandard
 Patent Infringement is not the issue.

7. 7
Dimensions of the Problem
 “There are no data that allow anything more
than (badly) informed guesses as to the global
extent of the problem. . . the paucity of reliable
data means that it is difficult to know whether
the problem is getting better or worse, how the
epidemiology of substandard and falsified
medicines differ and whether interventions are
effective.”
Dr. Paul Newton, 2012

8. 8
Dimensions of the Problem
 INTERPOL: up to 30% worldwide
 WHO: 10% of the global market
 World Customs Organization
 USD200 billion
 2008: increase of 596%

9. 9
US FDA
Counterfeit Drug Cases

10. 10
Factors that Facilitate
Counterfeit Trade
Fragmented
Supply Chain
Parallel TradeTransshipments
Internet
Purchases
Mail-order
prescriptions
Inelastic
Demand

11. 11
Pharmaceutical Supply Chain

12. 12
Internet Sales
 European Alliance for Access to Safe Medicines
 60% counterfeit or substandard
 90% no prescription required
 National Association Boards of Pharmacy
 97% “outside the law”
 99% no prescription required
 40-50,000 active online drug sellers
 USD1 – 2.5 million / month

13. 13
Parallel Trade
 Buy low, Sell high
 20 – 30 intermediary transactions
 Problems of Verifiability
 Untraceable

14. 14
Global Phenomenon
 Production trail: dozens of countries
 May change hands 30 times
 Europe: 37% originated in Syria
 Top Five Origins (2010)
 China
 India
 Paraguay
 Pakistan
 U.K.

15. 15
Adverse Consequences
 Squandered Health Resources
 Financial Cost
 Diverts resources away from genuine treatment
 Endangers existing drug supply
 Second only to food
 Even the Global Fund

16. 16
Adverse Consequences
 To the Pharmaceutical Industry
 Lost Sales and Revenues
 Additional Security & Anti-counterfeiting technology
 Reputational Damage & Liability
 Diminished Innovation

17. 17
Adverse Consequences
 To the Government
 Regulation and Enforcement costs
 Loss of Confidence/Trust in Public Health Programs
 Decrease in Foreign Investment

18. 18
Adverse Consequences
 Patient Health & Safety
 Inconvenience, Unwanted Pregnancy, Fatality
 Prolonged Illness, disability, treatment failure
 Estimates
 INTERPOL: 1 million
 PLoS Medicine: 200,000 in China
 International Policy Network: 700,000 (malaria, TB)
 WHO: 200,000 (malaria)

19. 19
Anecdotal Evidence of Harm
 US Heparin: contained none of the active ingredient, is suspected
as the cause of as many as 81 deaths.
 Paracetamol: More than 500 children around the world died from
counterfeit cough syrup, tainted with ethylene glycol.
 Nigerian meningitis epidemic: more than 50,000 people were
vaccinated with counterfeit medicine, resulting in 2,500 deaths.
 Heart medication: 40,000 patients in Lahore, Pakistan. The drug
resulted in the rapid depletion of white blood cells and platelets
and led to the deaths of more than 100 patients.
 Norvasc: Eleven people died in Ontario, Canada in 2005 after
being prescribed a counterfeit version of the heart medication,
containing only talcum powder.

20. 20
Adverse Consequences
 Resistance
 Global microbial resistance, more virulent forms
of disease
 Undermining fight against infectious disease
 XDR-TB: confirmed in 49 countries
WHO: 5% of new TB infections, as high as 35%

21. 21
Increasing Incidence of MDR-TB

22. 22
Policy Response
“…there is no global system for the mandatory reporting,
assessment, and dissemination of information on
suspicious medicines. . . It is extraordinary that, in
2014, such systems are widely in place for suspicious
aircraft parts but not for suspicious medicines.”
Lancet, 2014

23. 23
Policy Response
 Great Successes
 Nigeria’s NAFDAC
 Operation Pangea
 Uganda’s Community Health Workers
 Product Verification Technology

24. 24
Policy Response
 Great Promise
 Medicrime Convention
 Wholesaler Behavior
 WHO’s Rapid Alert System
 Global Steering Committee
 .Pharmacy Domain
 Raising the Cost of Counterfeiting

25. 25
Raising the Costs of Counterfeiting
 Marginal Cost of Production
 Cost of Production & Distribution
 Probability of Detection & Monetary Penalty
 Examples
 India: penalty for counterfeiting to the death penalty.
 Cambodia: poster and radio education campaign has educated
patients to distinguish fake tablets
 Nigeria: high-school essay contests to publicize the dangers of
counterfeit drugs

26. 26
Links to Transnational
Organized Crime
 Wide Variety of Actors
 Traditionally structured hierarchical crime groups
 Highly organized, informal networks online
 Small Groups of 3-10 members

27. 27
Organized Crime: Regional Perspective
 Within North America and Europe: numerous investigations have
linked the Hell’s Angels to the production and distribution of
counterfeit medicines, in particular ED medications and steroids.
 Canadian authorities began an organized crime investigation of
counterfeit oxycontin. The counterfeit versions of oxycontin have
been traced to at least three deaths.
 In Mexico, most of the pharmacies located along the [US-Mexican]
border, are owned and operated by Mexican organized crime groups.
 In Eastern Europe, OCGs are seemingly increasingly involved in the
manufacture and supply of doping substances.
 The greatest OCG activity appears to be in Asia. OCG with likely
Triad connections distributed counterfeit ED medications, operating
primarily through local nightclubs and brothels in Malaysia.
 In India, some local drug manufactures make legitimate products
during the day and run a night shift to make counterfeits.

28. 28
Terrorism: Bottom Line
“there is no conclusive evidence of an established
connection between OCGs operating with in the
pharmaceutical crime area and terrorism”.
INTERPOL, 2014

29. 29
Conclusion:
Three Modest Recommendations
 Better Data
 Investment in mechanisms and methodologies
 More Extensive Information Sharing
 Greatest Victories, Largest Failures
 Development & Adoption of an
International Public Health Treaty

30. 30
“Counterfeit medicines are a greater
public health threat than AIDS or
malaria.”
- African Health Official1
1Statement of African health officials, as quoted by Harvey Bale, President of the International Federation of Pharmaceutical Manufacturers Associations (IFPMA) (Bale 2003).

31. 31
Thank you

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