Over the last decade, the profits to be made in the $150 billion pharmaceutical market have inspired a new form of forgery: drugs that are not what they seem. The names are familiar. They include Zantac, the world’s best-selling ulcer drug; Selokeen, a hospital-administered cardiac beta-blocker; Adriamicin, for leukemia victims; Fansidar, used against malaria. The counterfeits look like the real thing, right down to the labels, manufacturers’ pamphlets and purity seals.
In Africa, fakery is epidemic: Nigerian pharmacists estimate that more than a quarter of the roughly 4,000 different medicines on the market are phony. One lot, sold as an antibiotic, was “nothing but talcum powder–perfume and all,” says Nigerian Health Minister Olikoye Ransome Kuti. The estimated cost to legitimate manufacturers: $1.9 billion a year in theft of the “intellectual property” of U.S. firms worldwide; $16.2 million in America alone from counterfeiting. The human cost is incalculable. “Hundreds if not thousands of people have died,” says Susan Foster, a health economist at the London School of Hygiene and Tropical Medicine. “This is a really nasty business.”
Who are the counterfeiters? They range from bathtub chemists in Southeast Asia to high-tech manufacturers in countries like Argentina and Greece. The chemicals they need are freely available on the open market (chart). Often the point of origin is a nation that does not recognize international drug patents–India, for example, or Thailand. From there a finished drug or its basic chemical components may be shipped anywhere through a series of cut-rate brokers who function as middlemen. “The trail for a drug found in Britain may be Brazil, Chile, Argentina, Spain, Italy,” said Paul Carratu, whose London investigative firm currently has 60 counterfeiting cases. “The brokers have never checked the goods. Let’s say they don’t want to know.”
The problem is one the multinational drug companies are reluctant to acknowledge. It’s “like asking someone how his wife is in bed,” says an attorney for a big U.S. drug firm. The companies spend millions fighting the counterfeiters. But nearly all the big manufacturers deny that it’s even an issue. “We would not dream of saying we have a counterfeiting problem; otherwise nobody would buy our product,” says Jeffrey Foote, an attorney who recently retired from Britain’s Wellcome Foundation, a leading drug manufacturer.
Drug piracy has hit the poorest nations like a plague. “If [the counterfeiters] would confine themselves to fake diarrhea pills or cough syrup, that would be one thing,” says Foster. “But it’s fake antibiotics, antivirals, insulin–and these are drugs the lack of which can mean life or death, especially for young children.” In the case of the 109 deaths in Nigeria, a wholesale pharmacist simply bought an unmarked drum supposedly containing the preservative propylene glycol, a chemical used in paracetamal syrup. In fact it held diethylene glycol–used in antifreeze. The pharmacist bottled the poison, affixed a phony label and sold it to unwitting hospitals.
Contaminated water: Most developing countries are ill equipped to fight back. “These governments have a hard enough time monitoring the legitimate laboratories, so how are they going to keep an eye on the underground stuff?” says Arturo Lomeli, director of the Mexican Association for Consumer Defense. Fake antibiotics seem to be nearly as prevalent as the bootleg burn remedies confiscated in 1988, Lomeli says. Authorities discovered one lab in Hidalgo state, north of the capital, that was diluting a bootleg drug with contaminated water, packaging it and selling it as Lincocin, an antibiotic marketed by Upjohn of Mexico.
Huge potential profits have made Europe and the United States targets, too. Patent protection allows drug manufacturers to set their own prices, which necessarily reflect big development costs. Add marketing expenses, a sizable profit, and the result can be a gap of almost 2,000 percent between the cost of counterfeiting a pill and the legitimate drug’s price at the pharmacy.
Counterfeiting has been uncovered throughout Europe. In the Netherlands, officials recently discovered counterfeits of Selokeen, Adriamicin and Zantac. In the Dutch Zantac case, the Amsterdam distributor Pharmacis bought the bogus pills through a Swiss drug-brokerage firm called Rodion, which said it bought the Zantac from a reputable Greek wholesaler. But the pills were pressed by a Greek counterfeiter, who had bought the raw materials from Turkey or Singapore. Chemically, the fakes were almost perfect. The counterfeit Selokeen followed a similar route, according to the Swedish manufacturer, Astra. It discovered the fake when the company surveyed its products in the Dutch market and an Astra chemist noticed that the trademark imprint on some tablets looked odd. Some of the pills, it turned out, were only half strength. Again, Pharmacis bought the pills from Rodion, which got them from a factory near Milan. Dutch authorities are investigating the deal. “We have been drawn into bad situations beyond our control.” Rodion director Mikail Segui told NEWSWEEK.
In France, a judge is investigating allegations that a French firm counterfeited the leukemia drug Adriamicin and marketed it in France, Belgium and the Netherlands. A U.S. importer spotted the fake. Germany reported finding counterfeit Euglucon, an antidiabetic pill. A consignment of Ventolin, an anti-asthma inhaler, was intercepted at London’s Heathrow Airport last year. Britain’s Glaxo, one of the world’s largest drug manufacturers, has discovered four counterfeits of its products in the last 18 months. “In all honesty, I just cannot tell you if the next time we pick up a packet [of Zantac] from the pharmacy down the road, it will contain nothing, something potentially very serious to someone with a recurring ulcer, or if it will contain arsenic,” said Glaxo managing director Michael Bailey.
Records sealed: Italy may be the world headquarters of pill piracy. Carratu said 80 percent of the fake drugs his company has investigated came from Italy, which before 1978 did not honor international drug patents. In 1987, a reporter from the Sunday Times of London posed as a pharmaceutical dealer to investigate an Italian firm which he said specialized in “producing copies of well-known drugs for Third World countries.” The Times tested one drug and found it contained only half the stated amount of the active ingredient. But Italian officials say they found nothing to prosecute. The tablets were being exported in bulk and packaged abroad, so the importer was responsible if the tablets were mislabeled, says Romano Capasso of the Italian Ministry of Health’s pharmaceutical division. Prosecution has proven difficult. For one thing, many drug companies settle cases against counterfeiters out of court– then get the court records sealed–in order to avoid publicity. And among Italian officials, “there just doesn’t seem to be any drive to prosecute people with fraud,” said Eric Ellen, head of the International Chamber of Commerce.
What to do? British manufacturers want mandatory batch testing of imports and strict licensing requirements for dealers. Carratu once surveyed 100 drug-brokerage houses to see how many would sell to a firm with an impressive letterhead but no license; 20 agreed. But importers say testing is too expensive. Glaxo’s Dutch and British subsidiaries have begun selling Zantac with a harder-to-copy hologram on the packet. Hoffmann-LaRoche brings out new pills in unusual shapes–oblongs or V’s–to discourage counterfeiters.
In the Third World, prospects are bleak. The World Health Organization is strengthening its reporting requirements. National regulatory agencies must certify that the source of a drug being exported is a legitimate, licensed firm. But the certificates are often faked. WHO has warned governments about the problem and issued dockside testing manuals for customs officials that can help them tell whether a drug contains any active ingredients. Governments are concerned that “the counterfeit situation is getting completely out of hand,” says John Dunne, WHO’s director of drug management. Recognizing the problem is at least a first step.
A recently discovered batch of counterfeit Zantac, the world’s best-selling ulcer drug, followed a typical trail: (1) The raw ingredients probably came from either Turkey or Singapore, according to Zantac’s manufacturer. (2) In Greece, a counterfeit pressed the tablets, packed them with fake labels and through a wholesaler (3) sold them to a Swiss pharmaceuticals brokerage. (4) The Swiss firm then sold the fake Zantac to an Amsterdam distributor called Pharmasis.
