Counterfeiting of drugs is a worldwide problem, but it is particularly acute in developing countries where there tends to be weak border controls, lax regulations, and often corruption in government and police. In many third-world countries counterfeit medicines provide high profits at low risk to the criminals, and very few are imprisoned for dealing in counterfeit drugs.
The problem is particularly rife in Africa, India, Southeast Asia and South America, especially among poor people living in remote or rural areas, who have limited access to health care facilities. In many areas people seek treatment in private clinics or small pharmacies in or near their villages, but village vendors have neither the resources nor the experience to be able to distinguish counterfeits from the genuine article.
Counterfeit medicines are also increasingly a problem in China, where around 192,000 patients died in 2001 from using fake drugs. As a result the Chinese authorities closed 1300 factories and investigated 480,000 cases.
Counterfeit drugs in the US
In the US the situation is not so dire because the US pharmaceutical industry is one of the most secure in the world. But even here counterfeit drugs are entering the supply chain at increasing rates. Counterfeits identified at local retail pharmacies in the US and Canada included growth hormone, atorvastatin, filgrastim, erythropoietin, paclitaxel, and gemcitabine. The US pharmaceutical industry loses billions of dollars in annual revenues because of counterfeiting.
The main points of entry for counterfeits in the US are unregulated sites on the Internet, and the so-called “gray market”, a term that includes the approximately 7,000 secondary wholesalers and drug diverters. The vast majority of drugs handled are genuine, but the massive network is hard to police. Manufacturers put security measures in place such as holograms, batch numbers and tamper resistant seals, but when the drugs are repackaged into smaller packages the seals have to be destroyed, which gives criminals the opportunity to replace the real drugs with counterfeits. Many counterfeits in the US originate in Mexico, with the FDA estimating up to 40% of drugs made there are counterfeit.
It can be difficult to accurately gauge the extent of the problem in the US because pharmaceutical companies tend to keep information about counterfeiting secret, to avoid leaks to the media that could result in a loss of faith in their genuine products. They also seek to avoid the possibility of competing drug companies taking advantage of a company that is victim to counterfeiting. This is changing in recent years, but reporting of pharmaceutical counterfeiting in the US is still voluntary.
There is a constant desire in Congress to allow re-importation as a way to force U.S. prices to fall. But there are safety concerns. Some of this desire was addressed by the Medicare Part D program instituted in the mid 2000s. The FDA, DEA, and Dept of Homeland Security have all opposed importation of prescription drugs due to safety concerns.