Counterfeit Counterpunch

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  • 03/08/2006

As a former member of the FDA’s Counterfeit Drugs Taskforce I am pleased to report that the agency continues to tell it like it is. And it’s serious — despite what some members of Congress may think.

Speech before
Parenteral Drug Association’s Pharmaceutical Counterfeiting Conference

Remarks by
Scott Gottlieb, MD
Deputy Commissioner for Medical and Scientific Affairs

March 3, 2006

I want to thank you all for coming today to share your ideas and views on how we can do as effective a job as possible of keeping the American drug supply safe and secure. The United States has a very safe prescription drug supply, and FDA is working hard to keep it that way.

This is not something that we can take for granted. If you look around the world, in many countries a quarter or even a half or more of the prescription drugs that people take are not legitimate products. They may not work as intended, and that’s a real public health concern.

Studies by the World Health Organization estimates counterfeit drugs to be a $32 billion-a-year business. Counterfeit drugs have found their way into developed and developing countries alike.

In developed countries, counterfeiters target brand name drugs that are used in high volume and are high priced. In developing countries, the counterfeiters also target generic drugs that are used in high volume for widespread diseases that plague the public health in those countries.

It has been estimated in the press that 8 to 10 percent of the global medicine supply chain is counterfeit — a figure that rises to 25 percent or higher in some countries. Quantifying the problem is difficult because the counterfeiters do such a good job copying the genuine product and hiding their tracks, that it is hard to identify what is real and what is fake.

Here in The U.S., counterfeiting of drugs is much less common. Part of that stems from our closed drug supply system, which makes our borders less porous to the counterfeit medicines.

Our high confidence that we and the American public have about the integrity of the distribution system for U.S. drug products also stems from an intricate web of federal and state laws that protect our drug supply.

But despite our confidence, FDA has been concerned that the drug supply is under increasing threat of attack from more sophisticated and well financed counterfeiters. We know that there have been increased efforts to introduce counterfeit drugs into the U.S. market.

The Agency has also witnessed an increase in counterfeiting activities and a greater capacity to introduce finished dosage form counterfeits into legitimate drug distribution channels. Illicit wholesale drug diverters and others in the supply chain provide the window through which most counterfeit drugs have historically entered legitimate distribution channels.

To deal with these concerns, we have been engaged in an increasing number of anti-counterfeiting activities here in the U.S. and at FDA. The number of newly initiated counterfeit drug cases has risen sharply from just a few years ago, although still preliminary data from fiscal year 2005 suggest a decline relative to the peak reported for fiscal year 2004.

In fiscal year 2004, for example, FDA’s Office of Criminal Investigations initiated 58 counterfeit drug cases, a significant increase from the 30 cases initiated in fiscal year 2003 and up sharply from an average of less than 10 in the four years before 2001. Even more worrisome, we are seeing an increase in the sophistication, the cleverness, and the technical capabilities of counterfeiters that are trying to get drugs into the U.S. distribution system.

Let me stress that these are estimates of the number of newly initiated counterfeit drug cases being investigated. And since these are ongoing cases, we have no estimate of the volume of counterfeit drugs involved in each case — it could vary from dozens to thousands.

The increasing number of cases we’re involved in is a poor proxy to suggest that more counterfeit drugs are actually making it into the U.S. market. We believe that the unusually high number of cases in 2004 is in part due to an increased awareness and vigilance at all levels of the drug distribution chain. Moreover, we believe that one factor contributing to this increased awareness and vigilance is the Counterfeit Drug Report that FDA issued in February 2004. A second is increased referrals from, and coordination with other state and federal law-enforcement agencies, such as the DEA and the FBI, and communications with drug manufacturers.

And fortunately, most of the counterfeit drugs at issue did not reach consumers because we focused our resources and developed proactive investigations. We believe that this strategy enabled us to identify components of counterfeit products and interdict finished counterfeit drug products before they entered retail distribution.

But make no mistake — the prevalence of drug counterfeiters around the world presents a real public health threat, and the rising number of cases weç©©e getting involved in should be taken as an unmistakable sign of our resolve in the face of that threat. As we have seen from the counterfeit cases that we’ve already encountered and in many cases that we’ve solved and where we have put people in jail, counterfeit drug products may contain only inactive ingredients, they may contain incorrect ingredients, improper dosages, sub-potent or super-potent ingredients, or they may be contaminated.

The result is risks to patients’ health — either risk to their safety directly if the products are dangerous, or risks from people suffering from complications from the many diseases that prescription drugs can treat today. So this is a serious concern at FDA and it is a serious public health threat.

At FDA, we recently re-convened the Counterfeit Drug Task Force. This internal task force originally assembled to explore the use of modern technologies and other measures such as stronger enforcement to make it more difficult for counterfeit drugs to get distributed with — or deliberately substituted for — safe and effective drugs.

More than three years ago, when we first convened this task force, it culminated in a report that laid out a number of goals for making the drug supply more secure.

One of our proposed remedies was to strengthen our system for tracking drugs from the assembly line to the dispenser, by replacing the paperwork that now certifies who has had the drug at all times with an electronic track and trace system that cannot be easily forged or forgotten.

Electronic track and trace technology can include tiny chips that go on the individual drug packages, also known as radio-frequency identification (RFID), or it can include certain types of barcodes. New technology would allow for less costly compliance, and better controls.

We gave manufacturers time to deploy this kind of technology, and put a stay on a rule that would effectively require some kinds of tracking measures in order to give people opportunities to move from paper pedigrees which would not provide the same kinds of protections to electronic pedigrees, which would.

I was at FDA, working as a senior advisor to then Commissioner Mark McClellan, when that first report was issued, and I think it is fair to say that since that first report was released, the progress that has been made toward the implementation of an electronic pedigree has been disappointing. It has certainly been far slower than many envisioned when we set out on this original course.

I know there are many complicated reasons for this. For one thing, there is still no agreement about who would pay for what parts of the new RFID system, and who would own the data and provide it to other parties under what circumstances. And practical realities, including the diversity and sheer number of establishments involved in handling drugs as they move through the supply chain, as well as the cost of deploying new systems for electronically tracking medicines, have all remained factors.

But I think time is short to get such a system in place. The original pedigree rule is written broadly enough so that electronic track and trace could be used in place of paper pedigree. We plan to make a decision soon on this stay, which is in place until December 2006, and we could reach a decision well before that.

The bottom line is this: To continue to ensure the safety of the U.S. drug supply in the face of the mounting threats I talked about here today and the increasingly sophisticated criminals, we must pursue these new measures. This must be a public health priority for all of us.

To these ends, FDA held a two day workshop and vendor display in February 2006 solely dedicated to the use of radio-frequency identification (RFID) to combat counterfeit drugs. More than 400 registrants were in attendance to hear both Acting Commissioner Dr. von Eschenbach and Assistant Secretary for Health, Dr. Agwunobi discuss RFID as a way of fighting counterfeit drugs.

There were three main goals of this meeting:

The first was to identify incentives and obstacles for widespread adoption of RFID throughout the U.S. drug supply chain, as well as to discuss ways of overcoming any impediments to the adoption of these tools.

The second was to solicit comment on the implementation of the pedigree requirements of the Prescription Drug Marketing Act. The current provisions of that law were written largely with a paper pedigree, but I think we’d all agree, we need to be moving toward the adoption of a fully electronic, e-pedigree.

And the third was to learn about the state of technology development related to electronic “track and trace” and e-pedigree technology solutions.

During the public meeting we heard that vendors, wholesalers, and some manufacturers agree that the RFID pilot projects conducted to date showed that providing real-time electronic pedigrees is already feasible in a production environment with single wholesalers. But no pilot projects were presented that provided a pedigree for a drug product sold by one wholesaler to another before being sold to a retail pharmacy.

As our colleagues at other agencies who are also experts on counterfeiting technology have told us, there is no single magic bullet. Instead, we need layers of technology, much like paper money has many different technologies embedded in it to thwart counterfeiting.

Our money supply, just the paper money, has more than 20 embedded technologies, both overt and covert and some that are only known to the Treasury Department. We need multiple layers like that to build more safety and security in prescription drugs as well, and we’re going to be working to bring forward proven technologies, and to develop the proof for these other technologies. RFID is the most promising, and most advanced of these technologies, but we still need to continue to pursue other remedies.

To these ends, we also heard some vendors describe hybrid technologies, such as two-dimensional bar codes combined with RFID that might provide both identification and electronic pedigrees even without RFID being universally adopted.

We have also seen new applications of bar code labeling, new approaches to doing track and trace technology so that we can reliably — in ways that cannot easily be fraudulently faked — identify whether a product really is a legitimate one, whether it comes from a legitimate source and has not been tampered with along the supply chain.

We’ve seen new technologies for packaging, new color-based technologies that embed multiple different layers of protection. We’ve seen new anti-tampering technologies for drug packaging. Even the tops of injectable drugs that can help keep the product secure. And we’ve seen new technologies that can be used on the drugs themselves, from new color technologies to embedded bar codes embedded — not just unit-dose packaging but actually on the drug. And we have seen other “taggant” and chemical technologies that are not harmful for patients but that can make it very easy to determine whether a product is safe or not.

As a result of the information garnered from this workshop, as well as the information we gathered from comments placed in the workshop’s public docket, at FDA we’re in the process of preparing a summary report and we expect to have that publicly available in May 2006.

That report will address whether or not we issue another stay on implementation of the pedigree rule. But as I said, we have already waited a long time for this technology to come along, since the stay was issued at the time of our first task force report on drug counterfeiting. We believe that we can take steps, working with technology developers and all of those involved in the supply chain, to accelerate the development, the feasibility testing and the adoption of many of these technologies that are in development today. And as we are trying to do in other areas of FDA activities where there are new technologies that can be valuable, we want to bring them to benefit patients as soon as possible.

While some of these technologies do seem just a short time away from widespread application, others have not been fully developed yet and demonstrated to be feasible. We will continue to work with the private sector to foster advances in this field. Not only do many of these technologies need to go through some further developmental steps, counterfeiters are very sophisticated today, so this is a moving game.

Finally, it’s clear that despite the promise that these security technologies offer, electronic track and trace, including RFID, alone is not the solution to combating counterfeit drugs. A multi-layer approach, using other technologies to secure the product and packaging, increased vigilance and awareness, increased penalties and State efforts, just to name a few, are also important in this effort.

We constantly need to be finding ways to update our technologies. We constantly need to be thinking about whether we’ve got enough layers in place. We need to think simultaneously about a coordinated approach that involves tracking and tracing and product packaging and product-embedded technologies and others. In short, we need multiple layers to keep our drug supply safe.

One of the things that are evidenced to us in this work is that all of the participants in our drug distribution system, from manufacturers to wholesalers and distributors, to pharmacies, to patients, have a responsibility to help us prevent and detect the introduction of counterfeit drugs into our drug supply. In particular, the businesses that are involved in the pharmaceutical manufacturing and distribution industry can help by adopting and adhering to secure business practices.

We think from what we’ve seen so far that some of the business practices in existence today can be improved as a means of deterring and detecting counterfeit drugs.

We’ve heard from and we’ve gotten a lot of feedback out to wholesaler organizations, for example, that are moving forward with developing more secure business practice models as a standard for their industry. And we’re looking forward to working with all of the other stakeholders in the prescription drug distribution system to make sure that we have identified and are doing all we can to encourage the adoption of secure business practices to minimize vulnerabilities to counterfeit drugs.

It is also important that we rapidly receive and are able to disseminate information on counterfeit drug introductions when they do occur. As I said, the number of cases of counterfeiting is on the increase, and an important part of an effective anti-counterfeiting strategy is to be able to identify and limit the damage from counterfeit drug introductions when they do occur.

Our task force has recognized the need to strengthen the systems that are used for reporting suspected counterfeits and for alerting stakeholders and the public when these counterfeit drugs do enter the drug supply. We have partnered with health professional, trade, and consumer organizations to create FDA’s Counterfeit Alert Network. These partners agree to disseminate important information about confirmed counterfeit incidences in a timely manner and to disseminate educational messages about counterfeit drugs.

It is also essential for consumers, pharmacists, and other health care professionals to know how to identify counterfeit drugs and what to do when they believe that they’ve encountered a counterfeit drug. This includes recognizing knowing the warning signs for identifying suspect counterfeit drugs. We are working on tips for pharmacists and other health professionals on how to identify counterfeits, how to counsel patients who suspect that they have a counterfeit drug, and where to report if a counterfeit drug is suspected. FDA’s MedWatch system is the mechanism that should be used these reports.

Finally, counterfeit drugs are a global problem. We’re seeing an increasing number of cases that involve not just a few people manufacturing a fake product in their garage, but well-organized international criminal operations that are trying to make use of the latest technologies for making a product that looks like the real thing but isn’t. We work with international law enforcement, health and regulatory authorities, as well as private stakeholders internationally to help us address this problem effectively.

To those of you who are working on ways to combat the growing traffic in counterfeit drugs, at FDA we want to thank you for your contribution to dealing with this significant emerging public health threat. We’re confident that working together we can stay ahead of those who are out to make a fast buck at the expense of the health of Americans.

And we are sure that we will be able to work together to keep our drug supply safe and secure and the safest in the world if we do remain vigilant through steps like this.

Thank you all for your contributions.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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