Contents:

Executive Summary 10 The scale of drug counterfeiting 10 Secure business practices 11 Security technology strategies 12 Cooperation with national & international agencies 13 Chapter 1 The scale of drug counterfeiting 16 Summary 16 Introduction 17 Defining counterfeit drugs 17 Fake drugs 19 Fake labels 20 Scale and economic cost of counterfeiting 20 Estimates of counterfeiting 20 Global 20 Developed countries 22 Developing countries 24 Increase in counterfeiting 24 Health cost of counterfeiting 27 Asia 28 South America 29 Africa 29 Drugs at risk of counterfeiting 30 Current assessment 30 Industrialized nations 30 Developing countries 32 Future assessment 33 Drivers and enablers of counterfeiting 33 Mechanism of counterfeiting 35 iv US 36 EU 38 Internet pharmacies and spam email 40 Anti-counterfeiting strategies 43 Chapter 2 Secure business practices 47 Summary 47 Introduction 48 Risk assessment 48 Current trends in anti-counterfeiting company organization 49 Setting up an anti-counterfeiting project team 51 Overall responsibilities 52 Individual function responsibilities 53 Legal 53 Regulatory 53 Supply chain management and security 53 Product development 54 Production and packaging design 54 Sales and marketing 54 Public relations 54 Finance 54 Supply and distribution control 55 Case study: Johnson & Johnson introduces new contracts for distributors 56 Responding to reports of counterfeiting 57 Case study: Pfizer legal action and consumer education 57 Illegal online pharmacies 57 Patient education 60 Chapter 3 Security technology strategies 64 Summary 64 Introduction 65 Anti-counterfeiting technologies 65 Preventative technologies 65 Unit-of-use packaging 66 Tamper-evident packaging 66 Authentication technologies 66 Overt technologies 66 Covert technologies 67 v Forensic technologies 67 Cost to manufacturers 67 Cost to wholesalers and retailers 68 Track & trace technologies 69 Barcodes 69 Radio frequency identification technology 70 EPC 71 RFID 72 RFID and unit-of-use packaging 76 Should you adopt RFID now? 76 Companies required to comply 77 Companies not required to comply 77 Drugs for developing countries 79 RFID ROI example analysis 80 Industry-wide pilot RFID project 81 Tracking throughout the supply chain 81 Case study: CSV Corp’s ROI through adoption of RFID technology 84 Beyond the pilot projects 85 Case study: Purdue Pharma introduces RFID technology for OxyContin 85 Chapter 4 Cooperation with national & international agencies 88 Summary 88 Introduction 89 Improved legislation 89 International legislation 91 WHO 91 UNICEF 93 Interpol 93 US legislation 94 Domestic drug distribution 94 Internet pharmacies 96 Drug importation 96 European legislation 97 Parallel importation 98 Online pharmacies 99 Legislation in developing countries 100 India 101 China 103 Case study: Pfizer partnership with Shanghai Municipal Food and Drug Administration 106 Opinion on government/regulatory agency response 107 Industry organizations 109 vi PSI 109 IFPMA 109 Appendix 112 Primary research 112 References 113 Index 116 vii List of Figures Figure 1.1: Breakdown of type of counterfeit drug, 2000-01 19 Figure 1.2: Estimates of the scale of drug counterfeiting, 2005 22 Figure 1.3: Susceptibility of developed countries to drug counterfeiting 23 Figure 1.4: Increase in counterfeit drug cases, US, 1997-2003 25 Figure 1.5: Opinions on the changing level of counterfeiting, 2000-2010 26 Figure 1.6: Most common types of drugs counterfeited in industrialized and developing countries 30 Figure 1.7: Drivers and enablers of counterfeiting 35 Figure 1.8: Traditional drug distribution channels, US 36 Figure 1.9: Generalized distribution chain for parallel traded pharmaceuticals in Europe 40 Figure 1.10: Top 15 drugs named explicitly in spam email, February 2005 41 Figure 1.11: Countries hosting drug spammer websites, January 2005 42 Figure 1.12: Anti-counterfeiting strategies for pharmaceutical companies 43 Figure 2.13: How are pharmaceutical companies organized to deal with the counterfeiting threat?, 2005 50 Figure 2.14: Typical pharmaceutical anti-counterfeiting team structure 51 Figure 3.15: Cost analysis of authentication technologies 68 Figure 3.16: Frequency of use of anti-counterfeiting measures, 2005 70 Figure 3.17: How the EPC works 71 Figure 3.18: Frequency of use of anti-counterfeiting measures, 2005 75 Figure 4.19: The most effective measures to combat counterfeiting, 2005-2010 90 Figure 4.20: Proportion of 191 WHO members with adequate drug regulation, 2004 92 Figure 4.21: Organization of drug regulatory authorities in China, 2005 105 Figure 4.22: Has the response of government and regulatory agencies in the US, EU, and developing countries been adequate? 108 Figure 4.23: Survey respondents split by company type 112 List of Tables Table 1.1: Defining counterfeit drugs 18 Table 1.2: National specified list of susceptible products, 2004 32 Table 2.3: Lawsuits against online pharmacies selling illegal Viagra, 2004 58 Table 3.4: Benefits, costs and unresolved issues with RFID, 2004 73 Table 3.5: Example of real-life brand protection program using security labels (company name withheld) 80 Table 4.6: Share of parallel imports in total pharmaceutical sales, 2001 98