Pharmaceutical companies make huge investments in new drugs before they know if a product will ever reach the market. Add to that the high costs associated with introducing the new drug to the market and you can see why pharmaceutical companies are extremely interested in protecting their intellectual property. According to the Pharmaceutical Research and Manufacturers of America, only five out of 5,000 experimental compounds ever reach clinical trial and only one of those will eventually gain U.S. Food and Drug Administration approval. At an average cost of more than $1.2 billion, only two out of every 10 medicines will recoup the money spent on their development.
One way to cut down on costs and time-to-market would be to find a way to fast-track development. In the UK, for example, the government has begun an effort to speed up the time it takes to get a drug to market. David Willetts, the UK Minister of State for Universities and Science, recently told The Daily Telegraph: “The Government has decided that we will change the Patent Act to exempt clinical and field trials from patent infringements.”
Although global pharma sales continue to rise, the large number of drugs losing patent protection has challenged overall industry revenues. The Economist reported that during 2012, $70 billion worth of drugs lost patent protection and in 2013, that number is expected to drop to $29 billion. Generic drugs now represent 10% of global prescription sales.
Another challenge facing the industry is worldwide drug counterfeiting (sometimes called “pharmapiracy”), which was worth an estimated $75 billion in 2010, according to the Center for Medicine in the Public Interest. Counterfeit sales are increasing at twice the rate of legitimate drug sales. A World Health Organization (WHO) report found that medicine purchased over the Internet from illegal sites was counterfeit 50% of the time. What may look like a drug you’ve taken before may not actually contain all, or any, of the ingredients you expect. Although counterfeit drugs may contain nearly exact chemical replicas of the original drug, they might also contain glue, chalk, or sugar.
Unlike other counterfeit products, like fake designer handbags and jeans, counterfeit drugs can pose a serious public health risk. WHO estimates one-quarter of drugs in poor countries around the world are either counterfeit or substandard. In the United States, because of tighter controls, the number of counterfeit drugs is significantly lower —estimated at only 1-2% by the National Association of Boards of Pharmacy. In his book, Phake: The Deadly World of Falsified and Substandard Medicines, author Roger Bate estimates that more than 100,000 people die each year as a result of taking counterfeit drugs. Some of the more harmful contaminants found in counterfeit drugs have included arsenic, nickel, and leaded road paint.
This year’s flu season saw an outbreak of counterfeit flu medicine in the United States. Drugs sold as Tamiflu were found to contain only acetaminophen or derivatives of penicillin, both of which could cause serious problems for some patients. In the last two years, 20 U.S. clinics were found to have given patients counterfeit versions of the cancer drug Avastin, which costs $2,500 per vial. In one case, the counterfeit contained absolutely no trace of the actual drug; in another, the fake was labeled Altuzan, a Turkish brand.
A recent study published in the International Journal of Tuberculosis and Lung Disease found that fake and low quality antibiotics are widely used to treat tuberculosis. In 17 countries, the research team found that one of every 10 pills failed to meet basic quality standards. In Africa, the ratio climbed to one in every six pills.
Protection
What protection do pharmaceutical companies and consumers have against counterfeit drugs? There are many initiatives currently in progress around the world — here’s an overview of a few of them.
The Council of Europe launched the MEDICRIME Convention in 2011, a binding legal instrument to fight counterfeit medical products and crimes related to public health issues. It now has 21 signatories. Also in Europe, the European Federation of Pharmaceutical industries and Associations, the European Licensed Parallel Distribution Industry, Groupement International de la Répartition Pharmaceutique, and Pharmaceutical Group of the European Union initiated the European Stakeholder Model (ESM), aimed at implementing a system to verify pharmaceutical products in the European Union. The World Health Organization, whose work against counterfeit drugs began back in 1985, continues to work toward strengthening national medicine regulatory authorities around the world.
The United Nations is also playing a role in the fight against organized crime’s involvement in counterfeit drug trafficking. The UN Office on Drugs and Crime refers to counterfeit drugs as “fraudulent” — the result of a debate surrounding the issue of whether “counterfeit” is limited only to products whose packaging violate trademarks, regardless of the contents. And, in the United States, U.S. Customs and Border Protection (CBP) stopped $16.8 million worth of counterfeit pharmaceuticals from entering the country in 2011. Pharmaceuticals were the sixth most seized item by the CBP.
The National Association of Boards of Pharmacy (NABP) has applied to ICANN to own and operate a new .pharmacy gTLD. The organization intends to establish .pharmacy as a place where consumers can be assured that they are buying medication from a trusted, secure website.
In addition to the anti-counterfeiting efforts discussed above, technology innovations are beginning to deliver new tools that may help monitor the distribution of medications worldwide. New digital security features on packaging will enable automated authentication and tracking of pharmaceuticals throughout the supply chain. Drugs will not only be trackable in the supply chain, they’ll also be followed within the human body. New digestible embedded microchips, activated by a person’s stomach acid, will be able to relay information about what drug was taken and when. In the new future, in the words of The Economist: “The pills have eyes.”
This article was prepared for distribution at the Pharmaceutical Trade Marks Group Conference held in Hamburg, Germany (March 18-19, 2013). A PDF version of this article is available here.
