This paper examines the growing problem of counterfeit pharmaceuticals in the United States and globally, tracing the rise in FDA investigations from the 1990s to the early 2000s. It discusses how online sales and cross-border drug imports complicate authenticity verification, and reviews real-world cases involving counterfeit versions of Zocor, Procrit, and Lipitor. The paper outlines the pharmaceutical industry's multi-tiered responses, including three-level packaging security systems, electronic drug pedigrees, and the FDA Counterfeit Drug Task Force's seven-point action plan. Special attention is given to radio frequency identification (RFID) technology as a promising tool for tracking drugs from manufacturer to consumer.
As if pharmaceutical companies and pharmacists did not already have enough to worry about, drug counterfeiting has emerged as a serious new concern. While this problem remains relatively rare in the United States, the number of investigations is rising sharply. According to the Food and Drug Administration (FDA), the number of counterfeit drug investigations rose from an average of five per year in the 1990s to more than twenty per year since 2000 (Genuario, 2004, p. 54). Anyone entering the pharmaceutical industry today will encounter a great deal of discussion on this topic in the years ahead.
This problem becomes even more complicated when online sales of prescription products are introduced. How can consumers be sure that an authentic product is being purchased at the correct quantity and price? Cross-border purchasing adds another layer of risk. In July 2004, according to a report issued by the FDA, counterfeit versions of Merck's cholesterol medication Zocor (simvastatin), as well as carisoprodol, a generic muscle relaxer, were imported from Mexico by Americans seeking cheap prescription drugs. Tests on the drugs, however, showed that the counterfeit Zocor contained no active ingredients, and the counterfeit carisoprodol differed in potency compared with the authentic product (Kirsche, p. 6).
"Counterfeiting is a huge problem for the pharmaceutical industry as it relates to direct liability. Drug companies annually lose billions of dollars to very clever counterfeiters. From a cost standpoint, if they could reduce the amount of counterfeit drugs in the marketplace, that would help their bottom line," said Bob Piefke, business development manager for Appleton.
Federal officials have tracked counterfeit versions of Procrit, a drug that helps people with cancer and AIDS combat anemia. In addition, there was a major recall of 150,000 bottles of Lipitor — a cholesterol-reducing drug — due to tampering, according to an article in Medical Devices & Surgical Technology Week (2004).
When considering the vast number of pharmaceuticals that move through distribution channels every day, the scale is staggering. Drug Store News (2004) illustrates this by describing McKesson Corporation's distribution operation, which stocks and supplies approximately 40,000 pharmaceutical, over-the-counter, and front-end products from 30 large facilities throughout the United States. The company delivers those products to 21,000 or more locations daily by truck, courier, and air — while maintaining an order-picking accuracy rate of 99.96 percent across all distribution channels each day.
Within the pharmaceutical industry, some companies are adopting a security triangle — a three-tiered approach to security measures in packaging.
Level one consists of overt features such as holograms. This is the most critical level because so many tampering and counterfeiting problems are first discovered by consumers. Levels two and three include covert elements: the second level may feature deterrents similar to those on currency, such as pen-reactive inks, while the third level moves into the arena of forensic technology (Genuario, 2004, p. 55).
According to Obesity, Fitness & Wellness Week (2004), one of the more innovative approaches to establishing authenticity is the Verified Electronic Pedigree (VEP) system, recently developed by FFF Enterprises. Drug pedigrees consist of documentation tracking who has handled a particular unit of a drug as it travels through the supply chain. However, the FDA has postponed implementation of federal drug pedigree rules three times since first calling for them in the 1987 Prescription Drug Marketing Act (PDMA). While several states have passed pedigree legislation or are considering it, approaches vary widely, and verification of pedigrees has not yet been successfully addressed.
Over the past several years, the FDA has been developing a detailed plan to combat counterfeiting and tampering. The FDA's Counterfeit Drug Task Force issued a report highlighting critical elements that will help keep the U.S. drug supply safe and secure. According to FDA Consumer (2004, p. 13), the plan included the following measures:
New technologies. The FDA believes radio frequency identification (RFID) tagging of products, feasible by 2007, could be an effective way to track and trace drugs from the point of manufacturing to the point of dispensing. RFID places electromagnetic chips and tags containing a unique serial number onto cartons and individual drug products.
Stricter licensing requirements. The FDA and the National Association of Boards of Pharmacy are revising state rules for the licensure of wholesale drug distributors to make it more difficult for illegitimate wholesalers to enter the market.
Tougher penalties. The task force found that penalties for counterfeiting drugs are substantially lower than for other types of counterfeiting, such as that involving registered trademarks. Counterfeiting a prescription drug label bearing a registered trademark is punishable by up to ten years in prison, while counterfeiting the drug itself carries a three-year penalty.
More secure business practices. Effective protection requires everyone in the drug supply chain to adopt safe practices and refuse to do business with unknown parties. The FDA also intends to increase inspections of repackagers whose procedures place them at elevated risk for the introduction of counterfeit drugs.
Increased education. The FDA will expand counterfeiting education for consumers and health professionals, developing educational materials, partnering with organizations, and delivering public service announcements.
International collaboration. Because the FDA does not have legal authority to ensure the safety of drugs sourced internationally, it intends to work with organizations such as the World Health Organization and Interpol on global anti-counterfeiting strategies.
Improved reporting systems. Procedures should quickly alert the public to problem drugs. The pharmaceutical industry agreed to notify the FDA's Office of Criminal Investigations of suspected counterfeiting within five working days. The FDA also created a Counterfeit Alert Network to facilitate rapid communication.
"RFID chips tracking drugs from manufacturer to consumer"
Although RFID technology for pharmaceuticals is still primarily in the testing stages, the program is progressing more smoothly than expected. One of the firms manufacturing chips for drug companies can currently assemble two million chips per month. By the end of 2004, a second-generation production line was expected to be capable of assembling two billion chips per year. By 2006, the company planned to introduce two third-generation production lines, each capable of assembling ten billion chips per year. As counterfeiting threats continue to grow, the combination of stricter regulation, enhanced packaging security, drug pedigree systems, and RFID tracking represents the industry's best path forward in protecting patients and the integrity of the pharmaceutical supply chain.
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