Counterfeit Pharmaceuticals Increase Public Hazard Burden to Brands
Today, consumers around the world can purchase medicines from online rogue pharmacies, but many of those products are fake. Counterfeit pharmaceuticals harm consumers and companies in a variety of ways, but one of the main risks is that of public hazard. Consumers often launch lawsuits against legitimate companies for encountering counterfeits, and those companies take the heat for the damage the counterfeits cause. Besides this, brands face other risks like reduced revenue, damaged reputation, and increased legal costs. In this article, we’ll cover the downsides of fake pharmaceuticals and what companies can do to safeguard their reputations.
Background Information
Counterfeit pharmaceuticals can be found in every corner of the world, from the European Union to Asia and from New Zealand to South Africa. An OECD-EUIPO study in 2016 estimated the global value of fake pharmaceuticals to be USD 4.4 billion, and it has certainly grown since then. According to the Pharmaceutical Security Institute (PSI), pharmaceutical crime incidents increased by 15% from 2018 to 2019. The number of incidents has been growing steadily since 2015, as well.
PSI data also shows that drugs in every therapeutic category have been targeted by criminals. Whether it’s life-saving cancer drugs or erectile dysfunction drugs, no medicine is completely safe from drug counterfeiting.
Drug counterfeiters sell fakes on the gray and black market around the world. Developing countries tend to see more instances of fake antibiotics and antimalarials. These are the medicines with the most fakes, according to the World Health Organization (WHO). The organization estimates that one in ten medical products in low- and mid-income countries are counterfeit or substandard.
Developed nations aren’t immune to the problem of fake prescription drugs, either. While the U.S. has a tightly controlled pharmaceutical supply chain, counterfeit products still make it into the drug distribution system.
INTERPOL Pangea Operations
Organizations around the globe recognize the risk that counterfeits pose to the public. In 2008, INTERPOL began an operation called Pangea to reduce the trade of counterfeit drugs and medical equipment. Pangea also educates consumers on avoiding unregulated pharmacy websites. The operation is ongoing. Here are some stats from the past few years.
In 2018, INTERPOL sized over 500 metric tons of fake pharmaceuticals worldwide as part of its Operation Pangea XI. The operation spanned 116 countries and took down over 3,600 illicit website links. The many fake health products seized included:
- Anti-inflammatory medicine
- Painkillers
- Erectile dysfunction pills
- Sedatives
- Steroids
- Weight-loss pills
- HIV medicine
- Parkinson’s medicine
- Diabetes medication
- Syringes
- Contact lenses
- Hearing aids
- Surgical instruments
Each year, the Pangea operation had similar results. From 2008 to 2019, INTERPOL seized over 105 million units, shut down 82,000 websites, and made 3,000 arrests. INTERPOL found that at least 11% of all medical products sold online are fake.
In 2020, the INTERPOL Operation Pangea XIII focused on COVID-19 related scams and fake products. It seized over USD 14 million in fake medicines and health products, and it shut down over 2,500 websites. Seizures included unregulated antiviral medication, substandard hand sanitizer, and fake facemasks. People depend on these things to be effective particularly during a pandemic, so it’s a serious issue when products like this are fake and ineffective.
Spotlight on Fake Cancer Medications
The Pharmaceutical Research and Manufacturers of America (PhRMA) tell the story of how the FDA stopped a particular counterfeit cancer treatment from becoming a bigger problem in the United States.
Here’s what happened. A counterfeit producer in China sourced empty vials of cancer medication from the garbage outside of a hospital. Then they filled these used containers with a fake drug solution which did not include an active ingredient for cancer treatment.
Once the fake drugs were packaged, they made their way through one supplier in Egypt to another in Denmark. A distributor in the UK eventually bought the drugs and listed them on CanadaPharma.net, an online discount pharmacy.
A few bad doctors in the U.S. decided to pocket some extra cash by purchasing these discount cancer drugs, which were growing mold by this point. At least two patients in the U.S. received this fake drug.
Finally, some healthcare workers noticed the drugs didn’t contain the required FDA labels, since the original vials were distributed in China. They notified the FDA, and the FDA immediately warned hospitals across the country of the fake drug supply, saving hundreds of patients from receiving the drug.
This story almost sounds like the plot from a move, but stories like this are all too common in the real world, unfortunately.
Counterfeit Pharmaceuticals Create a Public Hazard Risk for Brands
While no type of counterfeit is good, fake drugs have to be among the worst. Counterfeit pharmaceuticals cause injury and even death in two ways: directly from the components of the unknown drug or indirectly by keeping patients from receiving the real treatment. Even though those consequences are the fault of counterfeiters, drug companies are often held liable to the damages cause to the public, without [pharmaceutical companies] consenting or even knowing about it.
Pharmaceutical companies can be sued by consumers who suffered damage from counterfeit medication. Since counterfeit drugs can cause so much destruction, lawyers battle for their clients who suffered and put the burden on the company by saying it should have done more to stop the fakes.
Litigation can cause a bad reputation, especially if the media is involved. But more often than that, settlements and verdicts can become an expensive burden on the brand. If a manufacturer is in breach of its duty to care, it can be found negligible and owe damages to the plaintiff. Nurses, doctors, pharmacists, ecommerce businesses, and drug manufacturers can all be sued for damages from counterfeit medications. In the end, the cost of counterfeits compounds as people file lawsuits against the manufacturer for failing to keep fakes off the market.
Other Consequences of Counterfeit Pharmaceuticals
Substandard drugs and counterfeit medicines pose a wide range of risks to consumers and businesses alike. Here are a few more examples.
Risks to Brand Reputation
Bad side effects and ineffective treatments can lead consumers to distrust the brand itself, even if they purchased a fake product. Customers may wonder if the brand cares that people can get hurt from counterfeit medicines. Not to mention, brands lose revenue from counterfeit medicine as well.
Revenue Loss
Counterfeit drugs can steal customers from pharmaceutical brands. In one example, annual sales in China for a particular company’s medication dropped to USD 242,000 when counterfeits entered the market. When those counterfeits were removed, the company’s sales increased to USD 1.2 million for that drug.
It’s also estimated that companies in the EU lose up to EUR 1.7 billion each year from the sale of counterfeit medications. Counterfeit medicine inflicts damage in many ways. In the interest of improving public health care, drug manufacturers can combat counterfeit drugs with advancements in technology to support efforts by law enforcement.
Stifling Innovation
According to OECD data, about 38% of all seized fake medicines involve stolen intellectual property owned by U.S. companies. Intellectual property theft undermines innovation and can decrease the incentive for a pharmaceutical company to invest the resources required for research and development. Companies invest massive resources over many years into creating new treatments, but counterfeits reduce the reward.
Health Risks to Consumers
Besides financial risks, consumers also risk their health when using counterfeit drugs. In the worst case scenario, a person with a serious illness can pass away from the illness after taking counterfeit drugs that don’t work. In this case, the person’s cause of death is recorded as the illness. A side consequence is that this makes tracking deaths from counterfeit drugs difficult.
The OECD estimates that up to 169,000 children die each year from pneumonia after receiving counterfeit medication. Fake antimalarial medication accounts for 116,000 deaths, as well.
Unauthorized sellers may also repackage expired legitimate drugs and sell them to consumers. The active ingredients in these medications may have simply lost potency. If that’s the case, they won’t work, and the consumer will still suffer from whatever ailment the medicine was meant to treat.
However, expired medications can also undergo a change in chemical composition or grow bacteria. Expired antibiotics are less potent and therefore cause the targeted disease to build up resistance to antibiotics. It’s also impossible to say what conditions the expired pharmaceuticals were kept in. Did they sit in the hot sun for months? Were they repeatedly frozen and thawed out? Who knows.
How to Stops Fake and Gray Market Drugs
Fake and gray market drugs pop up in all corners of the online market, from Amazon and eBay to TaoBao and Indiamart.com. Consumers will always look for cheap options, and that puts them at risk of purchasing a fake or substandard drug on accident.
If you suspect counterfeits of your products exist, there are some ways you can identify fake listings. First of all, anything outside of your sanctioned distribution network is suspicious. Take a look at the images, expiration date, and callback codes with each listing. Since individual sellers can be located around the world, it can be a challenge to find out who is selling what and to deal with different laws between countries. Taking down infringements takes a team or solution with legal expertise and a track record of removing fake pharmaceuticals.
Get Ahead of the Counterfeits with an Online Monitoring Solution
Much of the fight against counterfeit drugs is happening online. From e-commerce marketplaces to rogue pharmacy websites and social media phishing campaigns, counterfeiters make use of every avenue at their disposal.
A customer may be lured into an internet pharmacy by a low price point, or they may enter their credit card information on a phishing site they found through a social media impersonation page. An online monitoring system is the best way to detect these threats when they first appear and take action to remove them.
From brand reputation to legal consequences, there’s a lot on the line. That’s why major international pharmaceutical companies trust BrandShield to find and remove online threats. BrandShield uses technology like AI and machine learning to continuously search a variety of gray market pharmacy sites and counterfeiting hotspots online for rights holders' IP.
BrandShield protects pharmaceutical companies from damage by phishing sites, counterfeit sellers on e-commerce marketplaces, online pharmacies, and more. Click here to learn more about BrandShield’s pharmaceutical industry platform.
