Socio-economic Solutions » 

The WHO advocates that Drug Regulatory Authorities (DRAs) and government-established institutions should be the sentinels for public health vis-à-vis the global problem of counterfeit medication.¹ Implicit in the function of such agencies is the development and execution of policies to counter the influx of counterfeit medication.² Let's look at a case study of strategies used by a developing nation that do not focus on the use of technology.

• Stepped-up Enforcement
• Training and Education
• Multi-Agency Bureaus, Hotlines and Bulletins
• Franchising and Bulk Purchasing
• Leveraging Trade Groups
• Effective Legal Prosecutions
• Interventions against Discriminatory Regulation

---

Stepped-up Enforcement » 

It is now not uncommon to find a national drug regulatory agency in a developing nation. Some DRAs have even been armed with sizeable legal ammunition to fight counterfeit drugs. In such cases, it remains to empower and motivate staff to carry out the organization’s functions effectively. Nigeria provides a first-rate example of the benefits and associated risks of the stepped-up approach in a developing nation. Prior to hiring Prof. Dora Akunyili, a dedicated director general of high standards in 2001, corruption crippled the Nigerian DRA.^{3, 4} During her tenure as director general of Nigeria's National Agency for Drug and Food Administration (NAFDAC):⁵

• Counterfeit drugs in circulation, as measured by NAFDAC, dropped from an average of over 41% in 2001 to 16.7% in 2006.
• Drugs not registered by the DRA stood at 19% in 2006 as against 68% recorded in 2001.

How was this achieved? Despite receiving death threats, having her son kidnapped, house burgled, offices and labs firebombed and surviving an assassination attempt in 2003, NAFDAC’s work continues to make Nigeria an unsafe harbor for drug counterfeiters. NAFDAC increased pharmacovigilance and instituted strict drug importation guidelines, among other measures discussed on this page.

---

Inspections and Raids » 

NAFDAC’s remarkable enforcement achievements can be linked to the agency’s dedicated and reasonably well-resourced staff. In collaboration with law enforcement, NAFDAC is said to have performed 13,897 raids on fake drug manufacturing locations between 2001 and 2002.⁶ One of such dawn raids involved as many as 150 soldiers, 350 police and 150 NAFDAC staff. Compared to Argentina, Nigeria carried out within that short period over half of the raids that occurred in Argentina over 9 years, as indicated in the table below:

Yearly record of inspections, legal proceedings and total counterfeit groups dismantled in Argentina over a 9-year period.

Year	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006
Insp.	736	2626	3781	3520	3249	2809	2936	2582	2178	2601
Legal	7	62	43	33	43	64	63	58	66	110
Dism.	1	5	7	1	4	4	3	4	5	6

However, the efficiency of stepped up enforcement measured by the number of raids that resulted follow-up action can be quite low, as exhibited in the case for Argentina. Only 2% of the 27,018 inspections resulted in legal action, with less than 0.2% resulting in the dismantling of a counterfeit operation. (This could also imply a high pass rate for inspected manufacturers.) Of the cases that do go to court, less than 8% result in the dismantling of a counterfeit group. Despite NAFDAC’s in-field success with 121 destruction exercises in 7 years, leading to US $190 million in counterfeit goods destroyed, there have only been 45 convictions with 60 cases pending in courts.⁵

The WHO advocates for inspections along the entire drug supply chain – manufacturing, distribution and sales. In response to a case of death due to fake blood protein in China, the WHO China representative indicated that:⁷

In this vein, NAFDAC sends independent analysts to inspect manufacturers in China and India before drugs are licensed for import. This has led to an import ban imposed on 30 Indian and Chinese companies, for failure to meet NAFDAC’s standards.⁵

Local inspections have also improved in Nigeria. With the appropriate legal authorization, NAFDAC has managed to mete out compliance-inducing penalties via policies such as:

• Landlords are liable for counterfeit products stored in their properties.
• Pharmacists who issue fake receipts could lose their entire shop’s contents upon the discovery of a single fake drug.
• Banks require evidence of NAFDAC clearance prior to processing transactions for drug imports.

Recently, China has also exhibited higher levels of regulatory enforcement, possibly as a reaction to the growing counterfeit trade reportedly involving the Asian continent. According to the WHO, 440 counterfeiting operations in China were shut down in 2006. In a drastic move by their government, a former head of the Chinese DRA was sentenced to death in 2007 and subsequently executed for taking US $850,000 in bribes. The nation also announced plans for its first product recall.⁸ Figures from the Pharmaceutical Security Institute also reflects an increase in Asian regulatory enforcement, indicating that the Asian continent led the world in 2007 with an increase of 39% in apprehensions compared to 2006.⁹

---

Training and Education » 

Good training is essential in the war against fake drugs. This can be achieved in part by providing relevant literature (manuals) and logistics for regional training courses on information sharing for enforcers, and public service announcements for consumers. The WHO has produced some templates and guidelines in this regard.^{2, 10} The WHO also recommends educating the entire group of stakeholders: law enforcers, health professionals and consumers. Law enforcers and DRA agents should be knowledgeable on identifying fake drugs, their distribution models and Standard Operating Procedures (SOP) upon apprehension to minimize legal snags.

Health professionals must know about their nation’s Good Distribution Practices (GDP), Good Pharmacy Practices (GPP), Good Manufacturing Practices (GMAP), Total Quality Management (TQM) and Continual Process Improvement (CPI) techniques. Health policy makers must ensure that such guidelines exist and are accessible.¹¹

National pharmacovigilance policies need to stay abreast of global trends by developing SOPs for product sampling for tests of counterfeiting, issuing merchandise warnings and administering product recalls. Governments are encouraged to adopt measures to shift from informal trade, especially in pharmaceuticals.¹²

Consumers must be made aware of the inherent risks in purchasing drugs from non-reputable sources, especially those that indicate “goods sold cannot be returned”, as such declarations tend to violate basic consumer rights in several countries. The increasing popularity of internet-sourced drugs has prompted the development of basic consumer guidelines. For instance, the U.S. National Crime Prevention Council offers consumers these tips for purchasing drugs:¹³

1. Never purchase prescription drugs without your doctor’s prescription.
2. Be familiar with the medications you take (physical properties, taste and side effects).
3. Check for package tampering.
4. Only buy from a licensed pharmacy, online or offline.
5. Do not purchase drugs from a foreign website.
6. Use common sense.
7. Report websites that you think may be illegal.

In addition to the recommended measures above, NAFDAC has implemented high-school anti-counterfeit programs at state, zonal and national levels, with rewarding essay competitions, publicity and equipment packages for winning schools. NAFDAC also supports consumer safety clubs in Nigerian high schools.⁵ Since teenagers often run errands for the elderly in such regions, it pays to provide them with adequate knowledge on the risks associated with purchasing counterfeit medication.

---

Multi-Agency Bureaus, Hotlines and Bulletins » 

A number of DRAs have seen merit in setting up hotlines for acquiring tip-offs and registering complaints from the general public. As noted by the UK’s Medicines and Healthcare products Regulatory Agency (MHRA):¹⁴

Thus, such hotlines could extend regulatory tentacles, covering ground in ways not possible with government staff alone. Combined with electronic bulletins and public service announcements, regulators can now react rapidly to fake drug and medical device incidents.

In line with the call from the WHO to increase inter-agency collaboration, there is a new trend of forming multi-agency bureaus comprised of point-persons from existing regulatory, health and law enforcement agencies to focus on problems tied to counterfeiting.² This Single Points of Contact (SPOC) model, combined with on- or off-line means of communications provides information on safety alerts, product recalls and key changes in packaging. A few of such bureaus hotlines are already functioning around the world:^{5, 15, 16, 17, 18, 19, 20, 21}

The European Union’s Rapid Alert System (RAS): a bulletin for dispatching information on medicine quality in the E.U. while monitoring actions taken by member states.

The United Kingdom’s Defective Medicines Report Centre (DMRC): a hotline and internet portal for U.K. anti-counterfeit activities.

The WHO’s Rapid Alert System: a hotline, fax and email-capable system for two-way reporting on counterfeit activity in the Western Pacific Region

Ghana’s business Coalition against Counterfeit and Illicit Trade (CACIT): a collaborative information sharing network between key business affected by counterfeiting and government agencies that can help solve the problem, modeled after the WHO SPOC concept.

The U.S. Chamber of Commerce’s Coalition Against Counterfeiting and Piracy (CACP): an anti-counterfeit advocacy group of over 566 members (businesses and associations) that frequently interacts with representatives from customs and border protection, senate judiciary, house of representatives, U.S. immigration and other enforcement agencies. CACP provides a platform for information exchange on policy and legal updates in favor of safeguards countering counterfeiting.

The PSI Counterfeiting Incident System (CIS): a U.S. and European global counterfeiting incident aggregator and information sharing bureau, currently backed by twenty-six large pharmaceutical companies. The non-profit PSI also initiates enforcement actions via authorities.

The U.S. Food and Drugs Administration’s MedWatch: an on- and off-line reporting portal and comprehensive electronic mailing service providing timely updates in conjunction with other agencies: the U.S. Department of Agriculture (USDA) Food Safety and Inspection Service, National Institutes of Health (NIH), U.S. Department of Health and Human Services, Centers for Disease Control and Prevention (CDC), Agency of Healthcare Research and Quality, Centers for Medicare & Medicaid Services (CMS).

The West African Drug Regulatory Authorities Network (WADRAN): Formed by West African DRAs in 2005 as a platform for skill set exchange, particularly to learn from the Nigerian anti-counterfeit DRA experience. The goal is to avoid the creation of a counterfeiter’s safe haven in West Africa, due to regulatory impotence in member states.

The largest organized multi-national cooperation on countering fake drugs to date was setup by the WHO in 2006. IMPACT, the International Medical Products Anti-Counterfeit Taskforce, coordinates global action to protect public health. It includes all 193 WHO member states and well-recognized international stakeholders. IMPACT works with border control, prosecution, enforcement, media, manufacturers, product distributors and health professionals.²² So far, IMPACT successes include the creation of training guides and anti-counterfeit technology landscape surveys, a review of the definition of a counterfeit medical product and increased media attention to the scourge of counterfeiting.

---

Franchising and Bulk Purchasing » 

In theory, by constricting the sourcing of drugs inside a country to a well-regulated depot, one can streamline the supply chain and prevent unsuspecting pharmacists from purchasing counterfeit medication. Additional incentives like doorstep delivery, microcredit, management training, national health insurance integration and prices lower than traditional wholesale, operators of such franchising schemes hope to grow their supply base to help secure even greater discounts.

This model of franchising has been tried in Ghana, Kenya and Mexico both as for-profit and non-profit entities, with varying degrees of success.²³ In some cases, franchisees were selective in the sourcing of drugs, preferring to continue with old habits such as direct purchasing from cities. It is also difficult, even with large discounts, to compete with counterfeit drug prices. Lastly, without a legal mandate requiring a certain class of medication retailers to source solely from approved franchises, complicit pharmacists can still make above-average profits by sourcing fake drugs. In countries where drug retail agents are hardly regulated, the ethical backbone of such healthcare agents cannot be relied upon.

Nonetheless, franchising and secure bulk purchasing are being favored by foreign non-profit organizations, as a recent survey indicated that 80% of such organizations based in the E.U. believed pharmacists should not be permitted to freely choose their drug sources.²⁴ It remains to be seen if such influential views will translate to aid-driven policy shifts on drug delivery in Africa.

---

Interventions Against Discriminatory Regulation » 

Discriminatory regulation is the practice whereby a nation adopts two standards for drug quality: a typically higher standard for drugs produced for local consumption, and a lower standard for drugs marked “for export only”.⁵ Such schemes could be setup for a convenient execution of a compulsory license under the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement to provide emergency drug relief to a country with no pharmaceutical manufacturing industry. Even countries with a local industry but large demand stand to benefit – Nigeria, a country of over 140M, imports 60% of its drugs.⁵ However, given the difficulties in cross-national litigation, counterfeiters may have a lower risk of apprehension and prosecution when they bias their manufacturing practices against exports.

In response to this, NAFDAC banned the importation of all drugs marked “for export only”, and drugs cannot be imported to Nigeria without a Certificate of Free Sale. It also adopted a policy of boosting local manufacturing by setting a 10-year deadline for creating local versions of imported drugs where capacity exists. As a result, thirteen drugs that can now be produced locally can no longer be legally imported. This policy favors increased oversight over quality and decreased enforcement costs.⁵

---

Leveraging Trade Groups » 

Local and international trade and professional associations could prove invaluable in the fight against counterfeiting. The major successes in developing a global IP framework have resulted from negotiating trade agreements facilitated by the World Trade Organization (WTO). By utilizing such vehicles to coerce industry to move as a group, DRAs might be able to efficiently mandate GMP updates, training or certification requirements. Examples of prominent global trade groups include:

• European Generic Medicines Association (EGA)
• International Federation of Pharmaceutical Manufacturers & Associations (IFPMA)
• World Self-Medication Industry (WSMI)
• European Federation of Pharmaceutical Industries and Associations (EFPIA)
• European Association of Pharmaceutical Full-Line Wholesalers (GIRP)
• International Federation of Pharmaceutical Wholesalers (IFPW)

As outlets for special interests, it is not expected that such trade groups will always cooperate with DRAs. However, with a memorandum of understanding, such groups could be coerced into providing key feedback to DRAs on fake drug sources, while levying fines to members who fall below required manufacturing practice standards.¹

---

Effective Legal Prosecutions » 

Due to the extensive intellectual property (IP) protection sought by the pharmaceutical industry in the developed world, counterfeiting is often also a violation of IP rights. The push by developed nations for a harmonized IP treaty led to the World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995. TRIPS provides WTO nations with a framework for the basic minimum IP rights to be respected, and it covers issues such as the standard duration for IP protection (20 years) and the requirement for countries to grant and enforce pharmaceutical-based patents by 2006, but it provides individual countries the freedom to set their own patentability criteria. In extenuating circumstances, TRIPS allows compulsory licenses permitting individual countries to manufacture and internally consume drugs after negotiating a reasonable economic reward for the patent owner. On the other hand, since low income countries often have poor manufacturing capabilities, the WTO agreed on the Doha Declaration in 2001, lifting the requirement for local compulsory license production and extending the deadline for least developed countries to grant and respect pharmaceutical patents.²⁵

Thus, under a well-established national legal system in tune with relevant WTO and World Intellectual Property Organization (WIPO) agreements, genuine drug manufacturers have the right to pursue legal avenues seeking redress for losses due to fake drug manufacturers and merchants. By virtue of the TRIPS agreement and WIPO’s Berne Convention, many developing nations theoretically support global intellectual property rights. However, if the conventions are yet to be ratified, or execution of the law is not effective, counterfeiters can operate with a larger appetite for risk.

The WHO calls for “severe penalties” for perpetrators of drug counterfeiting.² Until recently, some notable countries had large discrepancies between deterrents for counterfeit commodities and counterfeit medical products. For instance, a first offense under the U.S. Federal Criminal Code (Trafficking in Counterfeit Goods or Services, 18 U.S.C. § 2320) carries a US $2 million maximum fine and 10-year jail term. This would apply to engaging in counterfeit garment sales. On the other hand, a first offense of the Federal Food Drug and Cosmetic Act (Counterfeit Drugs, 21 U.S.C. § 331(i)) carries 1-year jail term and fines up to US $250,000. This would apply to a fake drug.¹⁰ As recently as 2006, counterfeiting was a misdemeanor in the U.S. state of Florida.²⁶ In Nigeria, counterfeiters risk serving jail terms from 3 months to 5 years, or paying a fine ranging US $70 to US $3600.⁵

Difficulties in implementing legal updates are very evident. Noting that counterfeiting money had stiffer penalties than faking drugs,²⁷ U.S. Representative Michael Rogers of Michigan proposed H.R. 5156 [109th]: Counterfeit Drug Prevention Act of 2006, imposing criminal penalties for knowingly engaging in counterfeit drug activity (up to 20 years or life if activities result in a death). Though introduced in April 2006, the bill never became law.²⁸

Despite the difficulties, recent developments have sought to bring some equity in legal deterrents. In July 2008, the Indian cabinet raised counterfeiting fines by two orders of magnitude, to US $25,000, while doubling the jail term to 10 years.²⁹ The PRO IP Act of 2007, a new bill signed by U.S. President Bush in 2008:³⁰

Counterfeiters can now be sentenced to 20 years or life in jail and pay a fine in both cases if their activities impose “significant bodily harm” or death by fake drugs respectively.³¹ At least 25 U.S. states have passed legislature requiring pedigrees (paper trails) for prescription medicines – a move which should facilitate legal action.³² Outside the U.S., the new U.K. Medicines Act allows prosecutors to sentence counterfeiters to a jail term not exceeding two years and/or an “unlimited fine”.³³

---

Conclusion » 

Whereas a few success stories back the anti-counterfeit enforcement approach in developing nations, it largely remains a costly affair, demanding a large effort to sensitize entire regional blocks to act harmoniously against counterfeiting. Such efforts can take time, and disagreements based on sovereignty, trade agreements and political agenda can delay progress. Let's take a look at another approach: the use of technology to discern between genuine and fake products, facilitating the implementation of an efficient enforcement scheme. Technology appears to be an important part of the solution to fake drugs.

Want to learn more? See our resources page.

---

Note: All names, logos and trademarks belong to their respective rights holders. Sproxil, Inc., is not responsible for the views or opinions expressed or information provided on external websites.