Jeffrey Gren, Director

1
  U.S. Asian Business Council
Anti-Counterfeiting Medicine Conference Week of
January 15 19, 2007 Indonesia, Philippines and
Thailand Topic International Trade Issues
Related to Counterfeit Medicines and the Need
for Global Cooperation

• Jeffrey Gren, Director
• Office of Health and Consumer Goods
• U.S. Department of Commerce
• January 15 - 19, 2007

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Outline

• Definitions of Counterfeit Medicines
• Why an International Trade Problem
• Industry Trends Impacting the Counterfeit
  Medicine Problem
• Solutions
• Summary and Conclusions

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Definitions

• The World Health Organization (WHO) defines
  counterfeit drug as a drug that is deliberately
  and fraudulently mislabeled with respect to
  identity and/or source

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Definitions (continued)

• Counterfeit drugs may include products with the
  correct ingredients, or with the wrong
  ingredients, without active ingredients, with
  insufficient active ingredients, or with fake
  packaging
• Counterfeit drugs apply to both patented and
  generic drugs

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 Definitions (continued)

• What sets a counterfeit drug apart from a
  substandard drug is that the counterfeit drug is
  deliberately and fraudulently mislabeled with
  respect to identity and source
• Some countries, such as China, use the term
  fake drugs, implying that the problem is
  limited to counterfeit drugs that do not work

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Definitions (continued)

• However, our view at DOC is that all drugs
  deliberately and fraudulently mislabeled with
  respect of identity and source are counterfeit
  and unsafe
• Even if a counterfeit drug has the correct
  combination of active pharmaceutical ingredients
  (APIs) and excipients, it is still unsafe, since
  it may contain containments such as heavy metals,
  pesticides, etc., due to lack of cGMP
  manufacturing

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Definitions (continued)

• Substandard drugs are also a significant global
  problem however, the focus of this presentation
  stopping the global spread of counterfeit drugs
• The causes and solutions for substandard drug
  problems are entirely different than the causes
  and solutions for the counterfeit medicine
  problem

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Why an international trade problem?

• Violates Intellectual Property Rights (IPR)
• Manufacturers lose revenue. The Centre for
  Medicines in the Public Interest in the United
  States predicts that counterfeit drug sales will
  reach 75 billion globally in 2010. The WHO
  notes that this is an increase of more than 90
  per cent from 2005.
• Violates WTO Accession Agreements and Free Trade
  Agreements

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Why an international trade problem? (contd)

• The use of counterfeit medicines has become an
  enormous global problem causing significant death
  and injury
• Counterfeit medicines also contribute to the
  development of drug resistance if a pathogen is
  repeatedly exposed to a lower amount of the
  active pharmaceutical ingredient the
  parasite/bacteria/virus can adapt and become
  resistant to treatment
• Counterfeit medicines can also cause a loss of
  trust in the public health system by patients and
  a loss of confidence in brand names

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Why an international trade problem? (contd)

• Combating Counterfeit Drugs, Drug counterfeiters
  not only defraud customers, they also deny ill
  patients the therapies that can alleviate
  suffering and save lives
• According to the U.S. Food and Drug
  Administration February 2004 report, there are
  numerous documented, heart wrenching stories of
  human suffering and death due to counterfeit
  medicines

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Why an International Trade Problem (contd)

• There are no reliable statistics to measure the
  full global impact on the global counterfeit
  medicines problem
• 10-20 years ago most counterfeit drugs did not
  have any active pharmaceutical ingredients (APIs)
• Now more and more drugs have real APIs
• Although there are counterfeit APIs, many
  counterfeits drugs are made with real APIs
• In developing markets and emerging countries in
  Africa, Asia, Eastern Europe, Russia, and Latin
  America citizens regularly encounter counterfeit
  drugs

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Why an international trade problem - Lack of
Statistics (Contd)

• In developed countries, the extent of counterfeit
  drugs within the drug supply chain is currently
  small, but the risk is increasing, and internet
  sales account for the majority of the counterfeit
  drugs on the market
• Most statistics under estimated the problem and
  the impact
• According to a recent PhRMA study, the five
  countries of highest counterfeit medicines impact
  are China, India, Mexico, Russia, and Brazil

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Why an international trade problem (Contd)

• Definitions
• Illegal Diversion When a genuine pharmaceutical
  product is approved and intended for sale in one
  country, but is then illegally intercepted and
  sold in another country. This is often done with
  false statements or declarations. Sometimes the
  drugs sold in the other country is not approved
  by the regulatory authorities.

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Why an international trade problem - (Contd)

• Definitions (contd)
• Pharmaceutical Theft Theft of finished dosage
  form medicines any where in the distribution
  chain, such as at the site of production, freight
  forward distribution center, warehouses,
  pharmacies, or hospitals
• Incident A discreet event triggered by
  discovery of counterfeit, illegally diverted or
  stolen pharmaceutical

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Why an international trade problem The
Counterfeit Medicines Problem is Growing
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Top 10 countries by Reported Incidence 2005
(Contd)
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Incidence of Fake Antimalarial Drugs in Five
Southeast Asian Countries 2002-2003
Source A.M. Dondorp, Tropical Medicine and
International Health, Dec. 2004.
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Why an international trade problem - Who are the
drug counterfeiters?

• Manufacturing counterfeit drugs has become
  extremely profitable
• As a result, organized crime has moved from
  narcotics into counterfeiting
• Of course, some producers of counterfeit drugs
  are not from organized crime, but they are still
  criminals
• The penalty for producing counterfeit drugs is
  far less than the penalties for illegal narcotics

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Industry Trends Impacting the Problem Active
Pharmaceutical Ingredients Global Overview
2003
2008
Source SRI Consulting Active Pharmaceutical
Ingredients 2004
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Industry Trends Impacting the Problem Global
API Manufacturing - 2004
Total Global Number of API Manufacturers Sites
nearly 2,000
Source Newport Horizon Sourcing, October 2004
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Industry Trends Impacting the Problem APIs

• European API manufacturers primarily serve the
  patented pharmaceutical market
• The fastest growing countries for API production
  is China and India
• Many experts predict that in 20 years 80 of all
  APIs will come from India and China

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Industry Trends Impacting the Problem APIs
(Contd)

• According to IMS for the next 20 years India will
  be dominant for API production, and over the next
  50 years China will become more dominant for API
  production
• Currently most API manufacturing in India and
  China is for the generic drug market, but this
  will change over time due to
• lower developmental costs
• complex synthesis capabilities
• shifting pharmaceutical drug production
• regulatory compliance and adherence to GMP and
  GCP

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Industry Trends Impacting the Problem The
Generic Trend

• Generic production is growing at a faster rate
  than innovative drugs
• We are also seeing a shift in the global
  production of generic drugs countries/regions
  with significant growth of generic production
  include India, China, Southeast Asia, Brazil,
  Middle East, Russia

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Industry Trends Impacting the Problem The
Generic Trend (contd)

• The shift in generic production away from the
  developed markets U.S., Europe and Japan adds to
  the problem of counterfeit drugs, since the
  regulatory regimes and standards established by
  pharmacopeias, are much weaker away from the
  U.S., Europe, and Japan

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Industry Trends Impacting the Problem Growth in
Pharmaceutical Segments
Source IMS Health MIDAS - 2005
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Industry Trends Impacting the Problem Global
Pharmaceutical Manufacturing
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Solutions

• Protecting the integrity of the supply chain
• Need for global cooperation to stop counterfeit
  medicines and catch the counterfeits
• Cooperation health officials, customs, law
  enforcement and industry

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Solutions Protecting the integrity of the drug
supply chain

• Part of the solution is to make sure that a
  countrys drug supply chain is adequate to
  prevent distribution of counterfeit medicines
• The counterfeit medicine problem varies greatly
  among countries
• Countries with weak regulatory regimes, and lack
  of pharmaceutical standards enforcement are
  impacted most severely

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Solutions Protecting the integrity of the drug
supply chain (contd)

• Some countries, primarily developing countries,
  have an extremely high incidence of counterfeit
  medicines that are often found within the
  medicine supply chain
• Other countries, primarily developed economies,
  have a counterfeit medicine problem that is not
  as severe and generally no significant presence
  of counterfeit medicines in the medicine supply
  chain

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Solutions Protecting the integrity of the drug
supply chain (contd)

• According to the FDA 2004 report, in some
  countries the counterfeiting of drugs is endemic
  with some patients having a better chance of
  getting a fake medication than a real one
• According to the WTO 2004 Report on Safety of
  Medicines, in wealthier countries, new expensive
  medicines are frequently counterfeited, such as
  hormones, corticosteroid, cancer drugs, and
  antiretroviral
• In developing countries, the most frequent
  medicines counterfeited are drugs to treat
  life-threatening conditions such as malaria,
  tuberculosis, and HIV/AIDS

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Solutions Protecting the integrity of the drug
supply chain (contd)

• Counterfeit medicines can be kept out of the
  medicine supply chain through verification
  programs, reliance on standards, monographs,
  tracking and tracing (RFID) technologies, and
  authentication technologies
• Establishment of global harmonized standards for
  ppharmaceutical ingredients (APIs and
  excipients), based upon ongoing work of the
  Pharmacopeia Discussion Group/PDG of the
  pharmaceutical International Conference on
  Harmonization - ICH), can also help

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Solutions Protecting the integrity of the drug
supply chain (contd)

• There are a number of technologies that can
  assist government and industry in tracking and
  identifying counterfeit medicines
• Radio frequency identification (RFID) tagging of
  products by manufacturers, wholesalers and
  retailers is a reliable product tracking and
  tracing technology
• Authentication technologies include measures such
  as color shifting inks, holograms, fingerprints,
  taggants, and chemical markers embedded in a drug
  or its label

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Solutions Need for global cooperation to stop
counterfeit medicines an catch the counterfeiters

• The production of counterfeit drugs has grown at
  a high rate in recent years, however, data is
  difficult to obtain since the extent of
  counterfeit drugs is hard to measure
• Counterfeit drugs are a global problem that
  requires global cooperation to regulate and track
  the flow of pharmaceutical substances

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Solutions Need for global cooperation to stop
counterfeit medicines and catch the
counterfeiters (contd)

• There are two aspects to this problem
• First counterfeits within a countrys borders
• Stopping counterfeit medicines within a countrys
  borders requires cooperation between regulators,
  customs, law enforcement, and justice
  governmental units, at both the national and
  local (state or provincial) levels
• Also it is critical to regulate the use of APIs
  since APIs often are used in the production of
  counterfeit medicines

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Solutions Need for global cooperation to stop
counterfeit medicines and catch the
counterfeiters (contd)

• Second aspect is bulk APIs shipped from one
  country to another country for the purpose of
  producing counterfeit drugs
• To control this movement of pharmaceutical
  substances (APIs and excipients) for the illegal
  purpose of producing counterfeit drugs requires
  health, customs, law enforcement, and industry
  from various countries to work together

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Solution Need for global cooperation to stop
counterfeit medicines and catch the
counterfeiters (contd)

• For example, if an API, such as sildenafil
  citrate, that may be used to produce a
  counterfeit viagra is shipped from China to
  Thailand, China customs should inform Thailand
  customs
• In turn, Thailand customs could work with
  Thailand law enforcement to track down the
  shipping location of the sildenafil citrate, and
  investigate if this is a legitimate production,
  or an illegal counterfeit operation
• If it is an illegal counterfeit operation, then
  Thailand authorities could shut down the plant
  and arrest the counterfeiters

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Solutions DOC International Activities

• India U.S.-India High Technology Government
  Cooperation Group and the India Business Council
• China U.S.-China Joint Commission on Commerce
  and Trade (JCCT) and bulk API activities
• DOC is working with U.S. FDA, other U.S.
  Government Agencies, and the Singapore Health
  Science Authority to Organize Asia APEC Funded
  Capacity Building Seminars to Stop the Spread of
  Counterfeit Health Products.
• STOP! Strategy Targeting Organized Piracy -
• 1-866-999-HALT or www.stopfakes.gov

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Solutions DOC International Activities

• WHO IMPACT
• (International Medical Products
  Anti-Counterfeiting Task Force)

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Solutions DOC International Activities(contd)

• A global taskforce was made up of WHO Member
  States, which includes
• More than 20 major stakeholders, the World
  Customs Associations, patients and medical
  organizations, the World Bank, the World Trade
  Organization and the International Federation of
  Pharmaceutical Manufacturers Associations

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Solutions DOC International Activities (contd)

• WHO IMPACT (International Medical Products
  Anti-Counterfeiting Task Force)
• In November, the World Health Organization (WHO)
  and partners officially launched the first ever
  International Medical Products Anti-counterfeiting
  (IMPACT) meeting in Bonn, Germany
• During this meeting, 1) a pilot program was
  launched in three countries, and 2) a tool was
  presented to help strengthen countries
  legislative capacity to deal with counterfeiting

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Solutions DOC International Activities (contd)

• WHO IMPACT
• IMPACT is focused on five action areas
• Legislative and regulatory infrastructure
• Regulatory implementation
• Enforcement
• Technology, and
• Risk communication

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Solutions DOC International Activities (contd)

• WHO IMPACT
• Counterfeit medicines must be tackled not only
  through global efforts but also by a truly
  collaborative, cross-cutting approach involving
  medicine regulatory authorities, health
  professionals, enforcement officials, law-makers
  and industry
• Dr. Howard Zucker, WHO Assistant Director-General
  for Health Technology Pharmaceuticals

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Summary and Conclusions

• During my presentation I have discussed the
  international trade issues related to the global
  counterfeit drug problem
• After covering definitions of counterfeit drugs,
  I outlined why counterfeit drugs are considered a
  trade problem
• I discussed who are the counterfeiters and
  methods to protect in integrity of the drug
  supply chain

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Summary and Conclusions

• I also outlined global shifts in the production
  of pharmaceutical substances and generic drugs
  and why this adds to the global counterfeit drug
  problem
• I also outlined U.S. DOC programs and activities
  related to counterfeit drugs

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Summary and Conclusions (contd)

• In conclusion, the only way the rapid growth of
  counterfeit medicines will be stopped is through
  global cooperation among health, customs, law
  enforcement officials, and industry
  representatives from major countries of the world
  to catch and arrest counterfeiters
• Progress is being made, but a focused global
  approach is needed

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Thank You!

• Jeffrey Gren, Director
• Office of Health and Consumer Goods
• U.S. Department of Commerce
• Phone [phone]
• Email Jeffrey.Gren_at_mail.doc.gov
• Website www.export.gov/health