By Charles Clift

Counterfeiting has a long history. For most commodities it is simply the theft of brand owners' intellectual property, a trademark violation. But fake medicines can also kill. Political wrangling over language, and confusion over how to deal with the public health and private property aspects of counterfeiting, is hampering international action.

Counterfeit, falsified and substandard medicines pose a considerable threat to health. Although detailed knowledge of their prevalence and impact on human well-being is limited, they can fail to cure, promote antimicrobial resistance, and ultimately kill. The threat from these medicines is probably growing, particularly in poorer countries with weak regulation and poorly monitored distribution networks.

Counterfeiting can be very profitable, and those who do it are becoming increasingly sophisticated, which makes patients in developing countries, who usually have to buy medicines from their own resources, particularly vulnerable.

Deception of one kind or another has been practised for millennia. Counterfeiting of money is its oldest form and has been around almost since coins were invented. The United States Secret Service was established in 1865 for the express purpose of suppressing fake currency and this remains one of its major functions. For a long time, money counterfeiting was predominant. However, in the modern age, it is most often associated with the imitation of major brand name consumer goods.

Traditionally counterfeiting is defined by the Oxford English Dictionary as: 'made in exact imitation of something valuable with the intention to deceive or defraud others.' In intellectual property law it refers more specifically to certain kinds of trademark violation. However, it is often used much more loosely to refer to any product which seeks to deceive the consumer into believing it is something it is not.

For many goods, such as clothing or accessories, the effect of counterfeiting is principally financial and economic. Employment and income may be diverted from brand name manufacturers to counterfeiters, and consumers may benefit from lower prices, or lose from poor quality imitations. Essentially, income is redistributed between brand owners, counterfeiters and consumers. The extent to which economic losses fall on the brand owner are disputed, because counterfeiting may also expand the market for a brand.

In the case of food, medicines, cosmetics and some other goods, counterfeiting can also pose a serious threat to human health because products are likely to be either substandard or contain positively dangerous components or ingredients. This kind of counterfeiting is thus qualitatively different from, for example, a fake Rolex watch.

Fighting Counterfeits

Numerous industry groups combat counterfeiting, principally by lobbying for strengthened intellectual property rights globally and for stronger enforcement. For instance the International Anti-Counterfeiting Coalition (IACC) formed in 1979 was behind a proposal to the Tokyo round of the General Agreement on Tariffs and Trade (GATT) by the United States and the European Economic Community to 'discourage importation of counterfeit goods'. This proposal prompted negotiations in the successor Uruguay GATT round which produced the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) fifteen years later, covering much more than counterfeiting.

Such groups principally represent mainstream consumer and other goods particularly prone to counterfeiting, with the motive of protecting their business interests. For example, the current IACC executive committee includes representatives from Rolex, Chanel, Calvin Klein and Nike. Some pharmaceutical companies are members but certainly not all.

Doubts About Drugs

Pharmaceutical products are a rather special case for several reasons. Typically it is more difficult to decide whether a product is counterfeit or not, not least because the consumer or prescriber cannot know the contents of the medicine. Before they can be legally marketed, medical products are, at least in principle, subject to much stronger regulation concerning their safety and quality than other items. Bodies such as the Food and Drug Administration in the US are responsible, so counterfeit products will also contravene drug safety, as well as intellectual property, laws.

The general war on counterfeits is principally about protecting markets and private intellectual property rights, but in the case of pharmaceuticals this self-interested motive is overlaid by a concern to protect public health. The combination of self-interested and altruistic motives can be confusing to observers, and suspicious to some.

Pharmaceutical companies can be very guarded about the issue. Publicising particular cases can lead to diminished sales because patients or doctors lose confidence in the quality of the brand. In addition, it is legal to market generic medicines that are essentially identical to the brand name product where there is no patent or the patent has expired. This can lead to confusion between legally marketed identical copies - which must be differently branded - and illegal counterfeit products, which imitate the brand.

Because of these sensitivities the main industry-supported anti-counterfeiting pharmaceutical body, the Pharmaceutical Security Institute, publishes aggregate statistics on recorded counterfeit seizures, illegal diversions and thefts, but does not provide details.

For example, last year it recorded 978 counterfeit seizures out of 2,003 incidents, including diversions and theft, of which 48 percent were on a commercial scale. Beyond that there are some very general statistics on geographical distribution of incidents and arrests, and the broad therapeutic areas affected by incidents: cardiovascular and alimentary.

Similarly, the national and international bodies involved in combating counterfeit medicines - police, customs, regulatory authorities - are reluctant to detail their activities, not least because of the information they might provide to counterfeiters about their methods.

INTERPOL, the World Customs Organization, the Permanent Forum on International Pharmaceutical Crime and World Health Organization's International Medical Products Anti-Counterfeiting Taskforce (IMPACT) are prominent in the fight against counterfeit medicines. INTERPOL periodically spearheads global and regional coordinated operations with names such as Operation Storm and Operation Pangea.

Thus the circumstances of medicines counterfeiting means that reliable data on its true extent, and in particular the harm it does to human health, is particularly scarce. Estimates of deaths from counterfeits, such as the 700,000 deaths annually from fake malaria and tuberculosis drugs alone, claimed by one study last year are to be treated with extreme scepticism. Nevertheless, counterfeits are certainly everywhere and a serious threat to public health.

Conflict of Interests

However, the issue of counterfeit medicines has recently become extremely controversial. The definition that the World Health Organization (WHO) first developed in 1992 has generated continuing controversy by conflating the concept of counterfeiting - which has a specific meaning in relation to intellectual property - with issues concerned with the quality, safety and efficacy of medicines.

Thus, counterfeits become inextricably confused with medicines that are falsified in some other way - for example by concealing their true identity and source - and medicines that are simply substandard: not containing ingredients to the specifications required by regulatory authorities.

Some countries strongly contend that counterfeiting is principally an issue of intellectual property, and expressed their concern that WHO, by using the term counterfeit and providing the secretariat for IMPACT, was becoming involved in the enforcement of privately owned intellectual property rights without the endorsement of all its member states. Rather they argued that WHO's role should be to combat substandard drugs - of whatever origin - as part of its mandate to protect public health.

In addition, concerns have been raised that anti-counterfeiting measures might lead to threats to the legitimate trade in generic drugs. These concerns were made worse by the detention in the European Union (EU) in 2008 of generic versions of brand name drugs in transit from India to other developing country markets on the grounds they were infringing European patents.

India and Brazil have taken these concerns to the WTO dispute settlement process which may lead to the establishment of a dispute settlement panel to decide whether EU rules and procedures contravene the GATT and TRIPS agreements.

There are also suspicions over the possible impact of the Anti-Counterfeiting Trade Agreement (ACTA) being negotiated between developed countries and some emerging economies to establish higher international standards for intellectual property rights enforcement, as well as the bilateral free trade agreements between developed and developing countries, which frequently seek to include a similar strengthening of intellectual property rules and enforcement beyond the minimum standards laid down in TRIPS.

Undoubtedly, no one supports the work of the counterfeiters, with the harm they can do to sick people. The controversies are a reflection, in part, of perceived conflicts of economic interest between countries with brand name and generic pharmaceutical industries in the means used to tackle counterfeiting, as well as substandard medicines in general. Overcoming these perceptions of conflicting interest, including ensuring that definitions and rules and procedures do not discriminate between generic and brand name products, will be the key to more effective anticounterfeiting measures.


Charles Clift is in the Centre on Global Health Security at Chatham House, which is investigating this issue.


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