American Journal of Law & Medicine

Fake pharmaceuticals: how they and relevant legislation or lack thereof contribute to consistently high and increasing drug prices.

I.INTRODUCTION

The use of pharmaceutical products in the United States has increased more than the use of any other health resource from 1960 to 1990. (1) in excess of 9,600 drugs were on the market in 1984, and the Food and Drug Administration ("FDA") approves approximately 30 new drugs and countless new applications for alterations of already existing drugs each year. (2) In 2001, the $300 billion pharmaceutical industry sold $154 billion worth of prescription drugs in the United States alone, nearly doubling its $78.9 billion in sales in 1997. (3) With such a rapid increase in market domination and expenditures, the U.S. government and many hospitals have focused their attention on the sales and pricing practices of pharmaceutical companies, as well as other potential factors contributing to these escalating prices. (4) One such cause of the steadily increasing prices of brand name pharmaceuticals is the sale of fake or counterfeit pharmaceuticals (also called "look-alike" drugs). (5)

Fake pharmaceuticals are drugs sold as pharmaceutical company brand name drugs, yet at a much lower price. (6) These counterfeits appear in several different forms. They either contain a lesser amount of the real drug's active ingredient, or they contain no active ingredient and are, instead, composed of substances varying from talcum power to aspirin to poison. (7) Fake pharmaceuticals generally look like the real drug, inclusive of the manufacturer's labels, pamphlets, and purity seals. (8) Because counterfeits are manufactured at a lower cost and have market prices well below name brand drugs, they damage pharmaceutical companies through lost sales and by fostering public association of the brand name drugs with these substandard and dangerous products. (9)

Not only do counterfeiters manufacture and market fake brand name drugs, but they also assemble and sell fake generic drugs in the same fashion. Authentic generics are low-cost drugs which are the bioequivalent of an already FDA-approved drug. (10) Generics have the same active ingredient, same dosage form, and strength as the approved drug. (11) Because generics do not go through the long development and approval steps, which are necessary for the approval of brand name pharmaceuticals, they are created for substantially less money. (12) Therefore, they serve as a cheaper alternative to the brand name products. (13) Even so, counterfeiters' production and sale of fake generics is a substantially lucrative venture.

In an effort to lower prices and save consumer and government funds, Congress has made several attempts during the past decade to remedy problems in the area of fake pharmaceuticals. (14) In addition to state statutes, the Agreement on Trade-Related Aspects of Intellectual Property Rights, the International Anti-Counterfeiting Coalition, and Pharmaceutical Research and Manufacturers of America each aid in enforcing international intellectual property agreements and monitoring service mark, trademark, and patent infringement. (15) However, these so-called remedies possess many loopholes which render their intended efficacious nature impotent.

Part II further describes these fake pharmaceuticals and their geographic origins. After additional explication of fake pharmaceuticals and generics and their effects on the pharmaceutical industry in Part III, Part IV describes procedures pharmaceutical companies employ to combat fakes. Part V discusses regulatory inadequacies and the negative, unpredicted repercussions of seemingly useful legislation and possible remedies.

II. FAKE PHARMACEUTICALS

A. WHAT ARE FAKE PHARMACEUTICALS AND WHO DO THEY AFFECT?.

Fake pharmaceuticals are referred to as "look-alike" drugs because they have the same appearance as the brand name and generic drugs they mimic. (16) They are generally indistinguishable in their outward packaging, and pill color, shape, size, and markings; they even have electronic bar codes, which pharmacists scan to verify drug authenticity. (17) If fortunate, the trained and alert pharmacist may question the authenticity of the counterfeit drugs if he notices the occasional, misshapen trademark imprint. (18) Additionally, due to the counterfeits' composition of diluted active ingredients, or, in many cases, of harmful additives, a pharmacist may note the wrong odor emanating from the medication. (19) Sometimes the counterfeit drugs are chemically identical to the real product, making them counterfeit generics; however, most fakes contain inactive or harmful ingredients. (20)

In 1998, the World Health Organization ("WHO") estimated that 5% of the world's drugs were counterfeit. (21) In 2002, WHO reported that fake drugs comprised 8 to 10% of the global pharmaceutical supply. (22) Between 50 and 76% of these counterfeit drugs contain no active ingredients or contain incorrect ingredients, and between 10 and 15% of all fake drugs contain contaminants. (23) Because of this contamination, fake drugs result in significant health risks for patients. The number of deaths due to counterfeit pharmaceuticals has steadily increased from the 1997 estimate of 500. (24) During the past decade, the United States has witnessed such maleffects through a surge of counterfeit anabolic steroids, Viagra pills, and a counterfeited leukemia drug, Andriamicin. (25) Additionally, fake arthritis pills, Tagamet, Naprosyn, and the antibiotic, Anspor, have plagued the American market. (26)

The sale of and adverse patient reactions to fake pharmaceuticals are not confined to the United States, but instead constitute an international problem. Like the United States, the Netherlands fell prey to fake Andriamicin, Selokeen, and Zantac. (27) In China, birth control pills filled with rice flour are prevalent, and antibiotics containing talcum powder result in continual patient deaths, as people are taking pills without the curative ingredient. (28) Additionally, Chinese hospitals continually dole out medications that are diluted or contain poisons. (29) Mexico, as well, is plagued with counterfeits, such as Upjohn's Lincocin and more than 15,000 fake burn remedies. These burn remedies are often comprised of dirt and sawdust, and exacerbate health problems by leading to rampant infections. (30) The lack of an active ingredient in counterfeit drugs is also prevalent in more than one-third of the anti-malarial compounds sold in Cambodia, Laos, Thailand, Vietnam, and Burma. (31)

Also common to both the United States and foreign markets are fake generics. (32) While these fakes are most prevalent in developing countries, they are increasingly found in the United States due to imports from abroad. (33) On average, 80% of generic drug ingredients are imported from overseas where they are subject to little quality control testing and regulation. (34) Gentamicin sulfate is just one example of a counterfeit generic antibiotic within the United States. (35) From 1991 through 2000, counterfeit gentamicin sulfate was imported without adequate oversight by the FDA and its use during a mere one year period, from 1999 to 2000, resulted in reports of at least 17 deaths and 254 occurrences of adverse events. (36)

B. WHERE ARE THESE FAKE PHARMACEUTICALS COMING FROM AND WHY?

A heavy concentration of these fake drugs exists in Third World or developing countries. The percentage of fake pharmaceuticals ranges from 25 to 70% of the entire pharmaceutical market in developing countries. (37) In Nigeria, an estimated 25% of the drugs on the market are fake. (38) China, with as high as 40% counterfeit drugs nationwide, and India are at the center of the fake pharmaceutical trade, with their products being used around the world. (39) One reason for the prevalence in developing countries is a relaxed attitude toward both domestic patent laws and poorly enforced legislation. (40) Protection of intellectual property rights in these countries is not given its due attention, since recognizing foreign interests would sharply increase drug prices, making them unaffordable in these impoverished countries. (41)

C. How Do FAKE PHARMACEUTICALS REACH INTERNATIONAL AND U.S. MARKETS?

In addition to the "bathtub" chemists in South Asian countries, high-tech synthesis of fake drugs occurs in countries participating in the multi-national chain of production and sale, such as Italy, Argentina, and Greece. (42) This chain is one manner by which the counterfeits reach the United States. The fake drugs generally begin their journey in countries that do not recognize or loosely enforce patent laws, and where they can be synthesized or their component parts bought. (43) After entities in another country, such as Mexico, Greece, or Argentina, purchase the ingredients from a country such as India or Thailand, they press the tablets or make the pills and affix them with counterfeit labels. (44) Many times the fake drugs continue their journey through several cut-rate brokers and eventually make their way to a pharmaceutical distributor. (45)

Another manner by which fake pharmaceuticals enter the American market is by people within the United States synthesizing them. Pharmacists or ex-pharmacists, using their chemistry and pharmacy training, synthesize the drugs and market them in the states. (46) Raw materials are relatively easy to attain and products are easily passed off as manufacturers' samples or overstock. (47) Additionally, raw materials are often provided by China and India, and shipped to countries such as Mexico where the counterfeits are produced. (48) Many of these Mexican counterfeits reach the United States because Americans, in effort to obtain less expensive drugs, purchase and then transport them across the border without realizing that they are counterfeit. (49) These fake drugs are also easily available in Mexico because their sale does not require a prescription. (50) Considering the fact that 25% of those pharmaceutical products sold in Mexico are counterfeit, and one-quarter of all Americans traveling to Mexico buy pharmaceuticals, the importation of fakes is inevitable. …

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