Stephan Von Schilcher, global strategic account manager at Systech, discusses the repercussions of counterfeit drug epidemic on patients and what pharma companies must to combat the problem.
Key Highlights:
- According to the WHO, the drug diversion and counterfeiting industry generates €400 billion annually, presenting a significant risk to patient safety.
- Using tracking and tracing technology ensures pharmaceutical firms can follow a product journey throughout the supply chain.
- Serialisation enables brands to allocate unique identifiers to each item, allowing for real-time tracking and monitoring of products, making it difficult for diverted products to go unspotted.
Counterfeiting and diversion plague every industry, and no brand is immune to the health and livelihood risks posed. The international trade in counterfeit and pirated goods made up roughly 2.5 percent of world trade in 2019, while fake goods accounted for up to 5.8 percent of all imports into the European Union. These figures will undoubtedly increase in the coming years. This persistent threat affects manufacturers, retailers, and consumers across global markets.
Meanwhile, product diversion – the unauthorised distribution of products to unintended markets or unauthorised retailers – poses an equally widespread challenge across industries. Even if the product diverted was authentic, it is likely this was not handled with care and was somehow tainted or diluted.
Surge in counterfeit and diverted pharmaceuticals
Counterfeit pharmaceutical products can lead to severe injuries, disabilities and, in some extreme cases, death. These fakes not only endanger health but also erode brand integrity and customer trust, diverting sales and causing revenue loss.
According to the World Health Organization, the drug diversion and counterfeiting industry generates €400 billion annually. This presents a significant risk to patient safety, as individuals fail to receive the effective, life-saving medicines required. The repercussions include quality control issues, brand dilution and a decline in consumer loyalty.
This rise in counterfeit and diverted pharmaceuticals has been driven by the exponential growth in consumer willingness to buy products online, caused by an uptick in e-commerce and COVID-driven demand. With this extended appetite to purchase goods online, many are willing to take greater risks to secure a good deal.
According to the World Health Organization, the drug diversion and counterfeiting industry generates €400 billion annually."
This market trend has led to an increase in the number of fraudulent online pharmacies, meaning they are not selling products that move through a legitimate supply chain. For example, a customer in the United Kingdom purchasing products online from a German pharmacy is likely connecting somewhere in Thailand or the Middle East, receiving goods that were not what they originally purchased – whether it be counterfeit, expired, or mislabelled by bad actors to increase their profits in the e-commerce market.
We also see this issue with giant e-commerce platforms. For instance, while Amazon has its transparency programme – which is supposed to protect products – there are vast numbers of suppliers within Amazon selling counterfeit products. Despite selling the products, Amazon has no control over this, which opens channels for counterfeit and diverted products to enter the supply chain.
Moreover, the growth in counterfeit and diverted pharmaceuticals has been driven by low supply but high demand for various products. For instance, counterfeit versions of Ozempic are being produced at an alarming rate. The prescription drug’s popularity has surged in recent months due to its promotion as a means for quick weight loss for patients. This popularity has resulted in shortages, creating an opportunity for counterfeiters to introduce fake Ozempic into the market.
Not only do counterfeit and diverted drugs pose serious health risks to patients, but they also cause financial losses for manufacturers and damage brand credibility. However, by implementing a proactive approach, pharmaceutical companies can collectively address the extensive counterfeit and diversion issue to identify, trace and authenticate the right goods.
Combatting the problem
To overcome the counterfeit and diversion issues currently plaguing the pharmaceutical industry, it is imperative for organisations to implement a multi-solution profile as opposed to a one-size-fits-all solution. This strategy necessitates applying different tools in response to the problem. For instance, each product ought to be serialised in order to track it through the supply chain, ensuring it remains within legitimate channels. Serialisation enables brands to allocate unique identifiers to each item, allowing for real-time tracking and monitoring of products, making it difficult for diverted products to go unspotted.
Moreover, using tracking and tracing technology ensures pharmaceutical firms can follow a product journey throughout the supply chain. Manufacturers can monitor the movement of their goods, hyper-accelerating the identification process and empowering them to address and combat counterfeit products, diversion and unauthorised distribution.
Pharmaceutical organisations should also consider utilising next-generation solutions powered by artificial intelligence (AI) and machine learning (ML) to tackle drug diversion and counterfeits. Through ML, companies can upload a high-resolution model of the brand’s artwork to a system trained by AI to look for defects, differences, and anomalies. Once the entire model is trained, a consumer can take a picture of the product they are viewing and upload it to the system to compare that image against the approved, trained model so that any discrepancies are highlighted.
Nevertheless, the most important steps the pharmaceutical industry can take to tackle counterfeiting and diversion revolve around education and raising awareness. Brands ought to inform members of staff about the characteristics of counterfeit and diverted pharmaceuticals. Further, the onus is also on brands and healthcare professionals to educate patients. This education can include teaching patients the differences between genuine and counterfeit drugs, reminding them to buy medications from trusted sources only and advising them to be cautious when browsing online pharmacies. This education will further empower patients to recognise signs of counterfeits and encourage them to verify products before use.
To effectively combat diversion and counterfeiting, a programmatic approach is required, rather than just technology deployment. Combining people, processes, technology, and time is critical to ensure consumer safety and loyalty and protect brands and revenues. Importantly, companies must collaborate to accurately identify, trace, and authenticate the right products.