Counterfeit medicines and the diversion of legitimate
product are serious and growing global issues for the biotechnology and
pharmaceutical industries, governments and patients. Recent advances in
technology have allowed non-traditional procurement routes for pharmaceuticals
(e.g. repackaging, internet pharmacies) to emerge. These technologies and
routes have developed faster than the regulations can adapt to accommodate
them. In 2007, US customs seizures of counterfeit pharmaceuticals increased by
500% over 2006. Legitscript.com currently estimates that nearly 97% of
approximately 55,000 online pharmacies are illegitimate or do not have
appropriate registrations and information on their websites. The existing
historically weak laws and regulations are not suitable for protecting brand
owners or patients. Furthermore, the industry can not wait for legislation that
is currently being debated to take effect five or ten years from now. In this
article, we build upon the findings reported in Cambridge Consultants’
whitepaper “Phony Drugs, Real Solutions: Practical Anti-counterfeiting
Considerations” and examine the current state of regulations and the role of
technology to enable brand owners to protect themselves and the patients that
rely on their products.
Vulnerabilities With Current Regulatory Proposals
Currently, there is insufficient regulation of internet
pharmacies. In September 2010, a new bill in the United States Senate was
introduced that would enable the US Attorney General to lead investigations and,
if infringement is found, take action (in the form of a restraining order or
injunction) against both domestic and non-domestic domains used for
illegitimate or infringing activity. In December 2010, institutions in the EU
approved an agreement requiring any seller of medicines over the internet to
register with the authorities in his home country and further ensure that the
products being marketed are licensed for sale in the countries targeted for
export. These measures are complicated by net neutrality and freedom of
internet issues, which limit the ability of governments to enforce injunctions
against websites registered internationally or with Registrars or ISPs without
policies with respect to selling of illegal or counterfeit products.
Additionally, there are insufficient penalties for
counterfeiting. In some countries, counterfeit drugs are not illegal, or are a
violation of trademark laws. Often the punishment associated with
counterfeiting is a fine, which is small in comparison to the revenues
generated by the sale of counterfeit products, and not reflecting the potential
harm of counterfeit drugs. The regulations and punitive measures for
counterfeit drugs are light compared to those for narcotics. The Falsified
Medicines Directive in the EU is years away from having an effect. Thus, in the
absence of suitable regulations, the responsibility falls to the brand owners
to protect themselves and the patients who rely on their products.
Figure 1: Investing too much or too little in product protection can negatively affect bottom line figures. An optimal balance can be found without compromising patient safety or brand value.
A central part of plans to fight counterfeit medicines is to
introduce new traceability measures, in the form of serialization or track-and
trace. The technology solutions available to protect products are discussed in
the last section. First, however, it is important to consider the problem in
context to arrive at the optimal solution for a given product.
Managing Brand Protection
The strategic approach adopted by a number of businesses
combines both technology and business processes to present a system which any
potential counterfeiter or diverter has to defeat. This approach was recently
described by David Howard, Global Director of Product Protection at Johnson
& Johnson, in a paper at the Product Authentication & Security Summit
in Fall 2010.
Addressing the issue of counterfeit and diverted products is
a complex task, and development of successful brand protection strategies needs
participation from a range of internal and external stakeholders. Internal
stakeholders include materials management, product validation, quality and
audit, regulatory affairs, legal team, regional management and customer
service. In addition, close liaison with product and packaging development and
supply chain participants (raw material manufacturers, product manufacturers
and packaging suppliers) is also needed.
Figure 2: Different anti-counterfeiting technologies can be deployed
for different stakeholders—a layered approach is required for
comprehensive product protection
One of the fundamental aspects of this system-based approach
is to customize the protection for each product, such that the investment is
cost-effective and offers an appropriate level of protection for each target
market. This approach requires balancing the risk versus the threat to the
brand which requires an assessment of a number of factors:
• Product specific risk: likelihood and severity if a
specific product is counterfeited
• Counterfeiter capability: skill, opportunity and financial
• Strength of brand protection: How well the current or
proposed security features and processes deter activity as well as defeating
the capabilities of the adversary.
Understanding the implications of counterfeit and diverted
products is key, both at a business level, but also at an individual product
level. Thus, this assessment sets the business need for the measures that need
to be implemented for each product in a company’s portfolio.
How Is Technology Used To Address The Problem?
Technology is an integral part of a brand protection system.
In the case of medications, then three different types of technologies are
employed (anti-tamper, serialization and authentication) to provide a layered
protection system, and with different technologies intended to interact with
the different stakeholders (brand owner, patients, the supply chain and law
Anti-tamper, or tamper evident packaging, is the first step
in a protection strategy. This can be achieved through careful packaging design
with integral features such as perforated openings, or through the addition of
tamper evident seals.
Serialization is a second layer of protection, which relies
on the printing of a unique serial number on each package. This number is
recorded at manufacture on a database, and the package marked as being
dispensed at the Point of Dispense (PoD). Any subsequent packs with the same
serial number will be flagged as suspect if the number has already been
The majority of current proposals recommend the printing of
a serialization number, the unique product code, expiry date and batch number
on the package. This is typically in plain text but could also be implemented
using a 2D barcode or an RFID tag. Many survey respondents indicated that RFID
tags are less popular due to their cost, challenges with integrating with the
supply chain, potential interaction with non-solid dosage forms, and the
perception that they are a more complex solution than is warranted.
Track and trace uses the same basis; however, the serial
number is recorded at various points within the supply chain, either on a
central server, or in the case of RFID, on the product itself. This provides
the ability to trace where diverted or counterfeit product enters the supply chain,
as well as tracking its location at all times.
Authentication is the third level of protection and takes
many forms with a large number of different technologies employed. These
technologies can generally be classified as overt, covert or forensic.
Overt features are typically employed to allow patients and
medical professionals and others within the supply chain to verify that the
package is authentic by eye, or by touch. Typical features would be holograms
or Optically Variable Devices (OVDs), watermarks but also packaging materials.
These have the same drawbacks as anti-tamper features, in that the person needs
to know what a correct package looks like, and the counterfeiter can clearly
see what needs to be copied. It is currently estimated that safety measures
such as holograms and tamper-proof seals can be replicated by criminals within
six to 12 months. As such, overt solutions can not be solely relied upon for
protecting patients and must be supplemented by some form of traceability.
Covert features are invisible to the naked eye and are
typically employed to enable stakeholders within the supply chain to
authenticate items. These features require custom reader designs which can be
quite simple or complex depending on the covertness of the feature. Reader
development in itself has a number of complexities over and above a standard
product development. Typical covert features include taggants, inks, embedded
features within holograms, and Laser Surface Authentication (LSA).
Forensic features are employed to enable a brand to
determine categorically that a product is authentic, to enable the brand owner
to pursue litigation or for a law enforcement agency to prosecute. Typical
features included taggants or the combination of specific constituents within a
product. These features are normally, but not always, read under laboratory
In practice a number of techniques (overt, covert and
forensic authentication features) can be combined together in a single feature,
which may also support either anti-tamper or serialization.
The responsibility of the brand owners to protect themselves
and the patients who rely on their products will drive progress. This will be
based on successful management of the supply chain and understanding weaknesses
that may exist, along with an understanding of how counterfeiting and diversion
can be deterred. Deterrence will be based on product specific authentication
features, the selection of which will be influenced by the balance of risk
Despite a growing awareness of issues around counterfeit
drugs, until newer, stricter regulations can take effect, regulations will only
provide a minimum standard for compliance. Additionally, as the counterfeiter
and diverter will change their tactics over time in response to improved
protection of products and acquisition of new skills, the creation of ‘layered’
protection will be crucial to success. Existing technologies (e.g.
traceability) in combination with emerging covert authentication technologies
will effectively deter and detect counterfeiting.