IN THE SPOTLIGHT: BAKER & McKENZIE
Only an internationally co-ordinated strategy can seriously disrupt the widespread counterfeit medicine production and distribution network: a purely reactive or piecemeal approach is doomed. It is critical to identify the essential issues and options based on intelligence, data collection, research and analysis; to set clear priorities with backing from the top; and to take action on a highly selective basis, in co-operation with government agencies and other brand owners. Such strategies must combine specific local knowledge and advice with closely co-ordinated action across borders in an iterative process, sharing intelligence and results in real time.
Common problems
Te availability and provenance of counterfeit medicines varies quite markedly from country to country, though the continuing growth of the problem is ubiquitous.
In Brazil, for instance, about 20 percent of drugs are counterfeit, typically originating in Asia and transiting through Paraguay and Uruguay. At the other end of the scale, in Canada, Italy, Switzerland, Spain, the UK and Australia less than one percent of available drugs are counterfeit. Te key differences are more consistently affluent populations and well-regulated public health and reimbursement systems, which make it harder for counterfeits to penetrate the market in any significant way.
In Australia, for instance, most prescription medications are imported and distributed under the Pharmaceutical Benefits Scheme, a centralised system under which the government purchases drugs directly from pharmaceutical companies, imports them into Australia and provides them to patients on a subsidised basis. As the supply chain is tightly controlled, it is more difficult for counterfeit medicines to infiltrate. Standard consistent packaging for each product in Australia also makes it easier for pharmacists to identify anomalies in the appearance or packaging of drugs, which could indicate that they are counterfeit.
Counterfeit pharmaceutical activities in the US comprise not only counterfeiters importing fake drugs into the US market, but also US citizens carrying counterfeit drugs from the US-Canadian and US-Mexican borders. Tis is due, in part, to the high cost of pharmaceuticals in the US compared to its neighbours.
Tat said, all countries face a growing threat from products sold over the Internet. Most famously, this applies to discretionary lifestyle drugs, such as those used to combat erectile dysfunction or weight loss. Not everyone with
such problems wants to visit a doctor for a prescription, particularly when it seems so easy to buy them anonymously over the Internet. Online purchasers are probably not thinking about the WHO estimates that 50 percent of medicines available from sites that conceal their physical address are counterfeit. In Spain, for example, police recently dismantled three online pharmacies that specialised in selling fake erectile dysfunction products.
More recently, there has been a worrying trend towards sales of counterfeit life-saving medicines such as cancer and heart drugs into healthcare systems of developed countries, where the potential profits are significant. For instance, there is evidence that sophisticated counterfeit medicine gangs are increasingly targeting Britain’s network of high-street chemists, hospitals and GP surgeries. A fake consignment of Zyprexa, an anti-psychotic treatment prescribed for schizophrenia, first infiltrated Britain’s healthcare system in 2007. Since then, there have been eight recalls of counterfeit medicines in the UK, which had reached pharmacy and patient levels. A further five cases were discovered at wholesale level before they reached the market. Australia experienced similar problems during the height of the global swine flu crisis, when there were several instances of Australians purchasing counterfeit Tamiflu over the Internet.
Te health and safety concerns are readily apparent as there is no quality control: counterfeit drugs are typically manufactured in non-sterile if not outright unhygienic environments, with no screening for toxic impurities and no assurance as to there being any relevant active ingredient. Te traditional concerns of trademark owners
36 World Intellectual Property Review November/December 2010
regarding the damage caused by counterfeits to brand values, equity and reputation appear rather pale against that background, but they are nonetheless real and entirely justified.
China
Alongside India, China is a global hotspot for the production, transportation and sale of counterfeit drugs. Estimates vary by city and region, but they are thought to account for between 10 and 30 percent of the market, exceeding 40 percent in some cities. According to testimony by Peter Pitts, president of the US-based Center for Medicine in the Public Interest, an estimated 200,000 to 300,000 Chinese die each year due to counterfeit or substandard medicine.
Te infrastructure and political will to tackle such problems in China are developing in the right direction. Criminal sanctions can be severe: anyone caught producing or selling counterfeit pharmaceuticals that harm human health can be sentenced to a fixed term of imprisonment of not more than three years; and if they seriously harm human health, this is raised to 10 years. If fake drugs result in loss of life, or cause exceptionally serious harm to human health, the available sentences are at least 10 years in jail, life imprisonment or death.
China’s State Food and Drug Administration has released several administrative notices and measures that raise standards for the manufacture of pharmaceutical products by requiring factory certification, as well as barcodes on products to facilitate tracking. In 2007, the SFDA created the Market Supervision Office to focus on the counterfeit pharmaceutical market and illegal drug-related advertisements. IP rights owners
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