Tuesday, June 22, 2004 | 10:49 a.m.
Counterfeit drugs are on the rise because of their hefty profit potential and weak penalties for violating federal and state laws.
"The problem of counterfeit drugs is arguably the most significant problem facing our industry today," said Jon Borschow, president of Borschow Hospital & Medical Supplies Inc. in Puerto Rico. "Right now, counterfeit drug penalties are less than those (for) counterfeit trademarks."
But there isn't one solution to combat the counterfeit problem, which can hurt manufacturers' profits, diminish public trust and kill patients, says a group of health care experts affected by counterfeit drugs.
Federal regulators, pharmaceutical manufacturers and wholesalers are in Las Vegas last week at the Healthcare Distribution Management Association conference to discuss ways to reduce the number of counterfeit drugs entering the market and other issues affecting the drug industry.
In 2003 there were 22 opened FDA cases associated with counterfeit drugs, compared with six in 1997, said Tom McGinnis, director of pharmacy affairs for the U.S. Food and Drug Administration.
Counterfeit drugs make up less than 1 percent of the overall U.S. drug supply, but several types of counterfeit drugs have entered the market and are getting more difficult to distinguish from real drugs, McGinnis said.
In some underdeveloped countries, more than 50 percent of the drug supply is made up of counterfeit drugs, which means they didn't originate from the manufacturers and can contain the wrong amount of active ingredients or harmful ingredients, he said.
"For the most part, counterfeiters don't care about the patients at all," McGinnis said. "They're just there for the profit."
For example, a group of Florida counterfeiters purchased 11,000 boxes of Epogen, which is used to boost red blood cells and treat anemia in people with chronic renal failure, for $2.5 million, McGinnis said. Then they altered the drug and repackaged it before selling it to wholesalers for nearly $49 million, which gave them a $46.5 million profit, he said.
Epogen is among 31 drugs that are likely to be adulterated or counterfeited in the market, the National Association of Boards of Pharmacy reported in February 2004. The association worked in partnership with the FDA and other regulators to create the list, which is available at www.nabp.net under the special items section.
Drugs most likely to be adulterated or counterfeit are those that are in high demand, expensive and have a couple years left on their patents, McGinnis said.
A Las Vegas pharmaceutical wholesaler was found guilty in January by the Nevada State Board of Pharmacy for selling counterfeit Serostim, which is a drug used to treat excessive weight loss in AIDS patients and is manufactured by Rockland, Mass.-based Serono Inc. Some of the fake Serostim ended up in patients' hands. Dutchess Business Services Inc. had its license revoked and was fined $1 million. The wholesaler is now appealing the decision in Clark County District Court.
One solution to reducing the number of counterfeit drugs is radio-frequency identification, which works similar to electronic coding used by shipping companies to track packages, McGinnis said. The FDA hopes to have traceable devices on all pallets and cases of drugs by 2005. The agency's goal is to have radio-frequency identification on each type of drug package by the end of 2007.
The FDA says other ways to deter people from counterfeiting drugs are stiffer penalties and for state boards of pharmacy to strengthen pharmaceutical licensing requirements, which would include background checks, posting a minimum bond of $100,000 and regular inspections of the wholesalers' premises. Those and other potential solutions were outlined in an FDA study released Feb. 18.
Nevada regulators are working to create more stringent guidelines but have not passed the new rules yet.
"The whole anti-counterfeiting approach has to be a collaborative approach for it to work," said Tom McPhillips, vice president of Pfizer Pharmaceuticals U.S. Trade Group within Pfizer Inc. "This issue is global and it's significant."
New York-based Pfizer Inc. and other manufacturers are helping to reduce the number of counterfeit drugs by posting the wholesalers they work with on their companies' Web sites.
Pfizer, like many drug manufacturers, has had several of its drugs counterfeited, including cholesterol-lowering Lipitor, as well as Viagra, which is used to treat erectile dysfunction.
In 2003, 1.8 million tablets of altered Lipitor were recalled and may have reached 600,000 patients through the Internet and retail pharmacies, McPhillips said.
Pfizer is combating counterfeit drugs by hiring a third-party company to audit wholesalers on a regular basis to make sure they don't possess counterfeit drugs, McPhillips said.
Also, wholesalers are allowed to purchase Pfizer drugs from only the manufacturer or authorized wholesalers, he said. The company added an employee to its staff to assist in tracing and tracking drugs once they leave Pfizer.
The company is also looking into radio-frequency identification, McPhillips said.
Stephen Perlowski, vice president of industry affairs for the National Association of Chain Drug Stores, said many of his group's more than 200 pharmacy members are revising trade agreements to minimize the risk of counterfeit drugs, and some are looking at tracking technology.
Currently, wholesalers are supposed to maintain a piece of paper, called a pedigree, that specifies who the drug was bought from and sold to once it leaves the manufacturer.
"It's a nightmare to try to attach a paper to a product and then store it for a period of time," Perlowski said. "If we can counterfeit a drug, we can counterfeit a piece of paper -- and probably easier. It's a nice try, but I'm not sure it gets us where we want to be."
He said cost is a concern for some members because implementing all of the suggested solutions, many of which include technology upgrades, could total a "staggering" amount of money.
Some people would argue that it's pharmacists' jobs to make sure that drugs are authentic before patients receive them, he said.
"We would argue pharmacists don't have time," Perlowski said.
With so many concerns about wholesalers obtaining counterfeit drugs, some conference attendees suggested wholesalers be cut out of the drug distribution process.
Wholesalers help pharmacies to maintain their inventories without needing huge storage areas, Perlowski said.
Also, wholesalers keep costs down for patients and people in the drug distribution system, Borschow said.
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