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WHO just exacerbated the counterfeit drug problem

WHO just exacerbated the counterfeit drug problem
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In late November, the World Health Organization (WHO) published a landmark report on the global counterfeit drug epidemic. The report outlined the frightening scope of the problem in great detail, explaining how the epidemic has spread across Africa, South America, Asia, Europe and North America.  

It was a tremendous opportunity to highlight specific policy proposals and hold countries accountable for their own roles in the crisis. Unfortunately, the WHO glossed over a major cause of the crisis — instability in the European Union’s drug supply chain — and actually gave the European Union cover by applauding its deeply flawed approach to combating counterfeit drugs. We need a better strategy to win the war on counterfeit drugs.

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To be clear, the WHO’s report accomplished some important things. In addition to highlighting the scope of the problem and the different causal factors, the WHO also emphasized that the threat is coming from very dangerous actors: criminal syndicates who are switching from distributing illicit drugs to distributing counterfeit prescription drugs because the profits are still high and it is easier to get away with the crime. 

 

But the WHO missed the mark in recommending solutions to the problem. The report failed to highlight the fact that a significant part of the counterfeit drug epidemic is being fueled by weaknesses in the EU’s prescription drug wholesaling networks.  

Although many assume that prescription drugs in the EU are tightly regulated, drug wholesalers actually operate across dozens of EU member states with very little oversight due to the structure of the EU, which authorizes “parallel trade,” or cross-border trade among member states.  

As a result, any weaknesses in the regulatory structure of any member state give criminals a point-of-entry into the EU drug supply chain and from there, the global drug supply chain. 

The consequences of parallel trade in prescription drug wholesaling networks have been disastrous. In the past year alone, we’ve heard an endless stream of reports about counterfeit drugs appearing throughout the EU.

In February, a counterfeit cancer drug (Votrient) was discovered in Germany. In July, a counterfeit version of a different cancer drug (Avastin) was discovered in Cyprus.

The same month, counterfeit human growth hormone (Omnitrope) was discovered in France and Denmark, while a counterfeit schizophrenia drug (Xeplion) was discovered in Germany. In August, yet another counterfeit cancer drug (Velcade) was discovered in Germany

The problem radiates outward from Europe. In 2011-2012, counterfeit cancer drugs were distributed in the United States from the EU drug supply chain. In 2016, a counterfeit version of the blockbuster hepatitis drug Harvoni was distributed in Israel by a wholesaler based in Switzerland.  

Europe is seen as a highly regulated area of the world, and there is an assumption of quality that attaches to prescription drugs that circulate throughout European countries. The reality is far more complex. 

Instead of casting a spotlight on this issue and calling for the EU to clean up its wholesaling networks, the WHO applauded the EU for its efforts in developing something known as the MEDICRIME Convention, which is a proposed anti-counterfeiting legal framework drafted by the Council of Europe in 2011.  

The MEDICRIME Convention calls for stiffer penalties against people who intentionally produce and distribute counterfeit drugs. However, even if every country in Europe adopted this approach (and many haven’t), it would not do much to help. The proposed penalties don’t reflect the reality of what is happening. 

Most of these incidents follow the same pattern. Counterfeits are discovered, the wholesalers insist that they were duped, and they are not sanctioned because they usually have just enough plausible deniability to skate by.

Even if they purchased the drugs from questionable sources in another country, the local authorities cannot prove that they intended to distribute counterfeits, and then the wholesalers keep operating as if nothing happened.  

Meanwhile, it is difficult to identify the individuals that intentionally produced and sold the counterfeit drugs because the cross-border wholesaling networks are convoluted, and they often wind their way into countries where it is difficult to continue the investigation, like Turkey or India.   

We need to dramatically shift the enforcement landscape in the EU’s wholesaling networks. Things are spinning out of control because wholesalers can say “oops” and go back to business as usual. Countries in the EU should establish a strict liability standard for the purchase, sale or distribution of counterfeit drugs.  

Strict liability would mean that intent is not relevant. “Oops” would not be a defense. If a company purchases, sells or distributes counterfeit drugs, they are penalized.

There are many different ways to structure the penalties, but one option would be to set an escalating series of sanctions, moving through the spectrum of civil monetary penalties, licensure suspension and criminal prosecution, depending on the adequacy of the company’s due diligence procedures and how many counterfeit incidents the wholesaler has been involved in.  

Because the strict liability system would make wholesalers reluctant to report counterfeit incidents, countries would also need to establish criminal penalties for failing to report an incident. 

This would have the practical effect of forcing wholesalers at every point in the supply chain to undertake more intensive due diligence of their business partners. They would be much less willing to take chances and counterfeiters would have a harder time landing their products in wholesaling networks.  

It would also drive wholesalers out of the industry who are not willing to take more responsibility for their business relationships. That consolidation would be a good thing. 

It is a tough system, but the EU’s current approach clearly isn’t working. There is not enough accountability in the system and the status quo is facilitating the problem. As long as the EU drug wholesaling networks remain in their current state, the counterfeiters have room to maneuver.  

Sadly, the WHO report allows countries that have ratified the MEDICRIME Convention to celebrate their actions, rather than question whether they are really doing enough. That is how you cement the status quo and lose the war against counterfeit drugs. Something has to change. 

Peter Leininger is a member of the FDA & life sciences practice with law firm King & Spalding and a former enforcement attorney with the FDA’s Office of Chief Counsel.