According to the WHO (World Health Organization):"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."^[1]

Impact of Counterfeit Products

From horse burgers to Aston Martin recalls, to false active pharmaceutical ingredients (API's), the issue of counterfeit products is becoming an epidemic in industry in today's world. Counterfeit goods are extremely prevalent throughout a huge range of industries, from clothing and fashion, food and drink, technology and electronics to healthcare, pharmaceuticals, medical devices, dental products and personal care products.

According to the European Commission, EU Customs detained almost 40 million counterfeit products in 2012. 31% of these counterfeit goods were cigarettes while 10% consisted of counterfeit packaging materials.^[2]

Counterfeit Pharmaceuticals & Healthcare Products

According to the World Health Organization (WHO) they estimate that more than 50 percent of medication and pharmaceuticals purchased online is counterfeit.^[3]

The impact of these products varies in severity and causes numerous issues with regard to brand identity, brand reputation, product quality, consumer trust, and loss of revenues for the true brand owners.

More importantly, with regard to counterfeit pharmaceuticals, medical devices, dental devices and other personal care and cosmetic goods, these counterfeit products can cause grave health problems, from various extreme injuries and allergic reactions to serious illness and in the most severe cases the use/consumption of these products can result in death or multiple deaths.

According to the International Criminal Policing Association (Interpol), up to 30 percent of drugs sold worldwide are counterfeit.^[4] 

Pharmaceutical Product Traceability

Due to the lack of traceability capabilities, particularly in the Pharmaceutical Industry, it is very difficult to establish where a specific counterfeit drug has come from.

Currently, there is inadequate batch tracking, serialization and per item level traceability in the Pharmaceutical Supply Chain. This makes recalling individual products or product batches extremely challenging for everyone involved in the Pharmaceutical Supply Chain and often results in a mass recall of all of the possible products affected.

Product Recalls

Mass recalling products presents its own set of problems. Firstly, not all of the recalled products can be traced therefore; they may ultimately remain available in the Healthcare Supply Chain. Secondly, the cost of a mass recall, and the legal consequences that may result, can reach millions depending on the drug being recalled.

For example, the Pharmaceutical Company Merck & Co is still dealing with the consequences of the recall of their Vioxx^[5] product in 2004, after a study found that it posed an increased risk of heart attacks and strokes.^[6]Most recently, in April 2012, they were ordered to pay a $321 million fine for its improper marketing of the product, having already paid substantial fines settling previous lawsuits.^[7]

Finally, the impact on the reputation of the company recalling the product(s) can be severely affected and can lead to a huge loss of consumer trust and a substantial loss of revenue.

Traceability Legislation

The issue of counterfeit pharmaceuticals and other healthcare products has lead to a move towards increased legislation in an effort to stop the number of counterfeit goods making their way into the legitimate supply chain.

This legislation includes The Falsified Medicines Directive^[8]in the European Union and the Drug Quality and Security Act (DQSA)^[9]in the United States.

The next in this series of blog posts looks at both the recent and upcoming legislation that has and will continue to have a significant impact on all of the stakeholders in the Pharmaceutical and Healthcare Industries.