The insidious problem of counterfeiting in healthcare

Counterfeiting is a major problem for many industries, but in healthcare it can be a matter of life and death. While counterfeiters might be nimble, the industry is also finding new ways of tackling the issue

For holders of intellectual property (IP), counterfeiting presents an insidious problem. The manufacture and sale of falsified products erodes revenue and profits, damages brand confidence and reputation, and burdens consumers with substandard goods. 

In the case of healthcare products, the results can be even more dangerous. Counterfeited healthcare can pose serious health risks that, in the most serious of cases, could prove to be life threatening. 

For the producers of healthcare products, IP is an especially critical means of protecting scientific innovation and supporting business strategies. Yet according to the World Health Organization (WHO), two billion people worldwide lack access to necessary healthcare products, presenting significant opportunities for counterfeiters. Growth of ecommerce has only exacerbated the problem. 

Trade in counterfeit medicines, which have had their identity, source or composition misrepresented, reached $4.4 billion in 2016, the Organisation for Economic Co-operation and Development-European Union Intellectual Property Office Trade in Counterfeit Pharmaceutical Products report revealed in March 2020. Criminality in the field covers a wide variety of activities including theft, tampering and illegal diversion, with counterfeiting producing the highest volumes of incidents. 

The scope of trade in counterfeit medical devices, which covers a wide field from tweezers to advanced surgical instruments, is less well understood. 

“Unlike information on counterfeit medicines, medical device counterfeiting is still often regarded as classified in the healthcare world and as a result we don’t have consistent data on it,” says Phil Lewis, director general of the UK-based Anti-Counterfeiting Group. 

“The figures produced by WHO ten years ago revealed 8 per cent of medical devices at the time were known to be fake. The numbers are now likely to be much higher.” 

Criminal activity in healthcare has also intensified with the coronavirus pandemic. Under Interpol’s Operation Pangea XIII, conducted last March, police, customs and health authorities in 90 countries seized counterfeit face masks, self-testing kits, anti-viral medication and other products worth more than $14 million, leading to 121 arrests and the closure of 2,500 weblinks and websites. 

National and regional regulation, and the work of healthcare producers and law enforcement agencies including the police and customs officials, all provide the front-line defence against healthcare counterfeiting. Healthcare producers use a plethora of measures to combat the problem, notably barcodes, holograms and anti-tampering devices as well as a range of fieldwork. 

In addition to mandatory features required by regulators for packaging, including serialisation, pharmaceuticals giant Novartis uses overt and covert security features so country verifiers can identify falsified products. Mobile laboratories are used by its forensic teams to analyse suspected samples in the field. A new cloud-based, mobile-enabled solution, which will accelerate the testing, detecting and reporting of false medicines to national authorities and WHO, is now being piloted. 

Technology is a critical enabler in the fight against pharmaceutical crime, says Stanislas Barro, Novartis global head of anti-counterfeiting. “Detecting falsified medicines requires state-of-the-art technology to test packaging and products in the field. We use online monitoring, like webcrawlers with customised parameters, to monitor the internet 24/7 to detect illicit sales of suspected falsified medicines using our brands,” he says.

The company has also built a data analytics and visualisation dashboard to support its risk-analysis effort, he adds. 

Although counterfeiters are prosecuted by law enforcement agencies, the actions of IP holders remain vital. 

“We file trademarks to clearly identify our products and record our IP rights with customs authorities globally to empower them to identify suspected falsified goods,” says Myrtha Hurtado Rivas, Novartis global head of legal brand protection. 

“But companies like ours cannot fully shift responsibility to reduce patient risk to national law enforcers. Taking action based on IP rights is necessary, for instance to ensure rogue online pharmacies are taken down swiftly. In the majority of legal actions, having an IP right increases the chances of success against counterfeiters.”

Legitimate pharmaceutical companies also have a duty to report confirmed incidents of falsified versions of their products to local health authorities, Novartis points out, and it has voluntarily committed to reporting these to WHO within seven days of discovery following WHO’s recommendations. 

Ewan Grist, partner in the IP practice of international law firm Bird & Bird, concurs that IP remains the bedrock on which actions against counterfeiters are based. 

“The two IP rights most likely to be infringed in healthcare cases are patents and trademarks,” he says. “On the basis of IP infringements, IP owners can file take-down notifications with ecommerce platforms and they can take direct civil action against counterfeiters where it is possible and practical. Often the IP infringement enables the intervention of law enforcement agencies and supports prosecutions.”

While organisations such as hospitals are diligent in ensuring the authenticity of their medical supplies, smaller organisations and private consumers can be more susceptible to counterfeiting. 

“Developing countries are particularly vulnerable as counterfeiters target areas where corruption is more rife and law enforcement weaker,” says Lewis at the Anti-Counterfeiting Group 

Some 90 per cent of fake products originate in China, according to Bob Barchiesi, president of the International AntiCounterfeiting Coalition. 

“In the last decade, the Chinese government has made marked improvements in addressing the issue, but more could be done. One particular problem is the propensity of Chinese authorities to seize counterfeit goods, but not prosecute producers. A significant issue remains the number of people employed in production of counterfeit goods,” he explains. 

But counterfeiters are nimble too and the fight against them requires the continued and concerted efforts of all stakeholders. “Collective action is the cornerstone of our strategy to combat falsified medicines,” says Barro.