Misrepresentation in the pharmaceutical industry is nothing new of course, likely as old as the industry itself. Historical anecdotes abound of snake oil charlatans and magic elixir peddlers. What distinguishes the current trend of marketplace fraud and counterfeiting, however, is its apparent swelling ubiquity.
Rama Lakshmi in the Washington Post
reports that India, which has grown into the world's largest manufacturer of generic pharmaceutical drugs, has also become a thriving center for counterfeit and substandard medicine. Slickly packaged and often labeled with the names of legitimate multinational drug companies, the fake drugs are passed off as the real thing to Indian consumers and even sold abroad in several developing nations. Fraudulent tactics include using lesser amounts of the medicinal ingredients as noted on the packaging, filling vials of supposed liquid medicine with water, and recycling expired medicine by simply pasting new expiry date labels onto the box.
The practice is becoming so widespread in India that some estimates peg the amount of counterfeit and substandard drugs as high as a quarter of the entire industry. This is in stark contrast, however, to the Indian government's own conservative estimate around half a percent, an obvious attempt to downplay the severity of the issue. In any case, officials in the country are noting that the shady black market industry is tarnishing the reputation of India's budding pharmaceutical industry which, in addition to production for domestic use, also seeks wider export markets in Latin America and Africa. Within the last year, both Nigeria and Sri Lanka have had to deal with issues arising from fake or substandard Indian medicine. The Nigerian incident was a strange one, involving Chinese manufacturers slapping 'Made in India' labels onto the shipment.
The Indian government, however, is not sitting entirely idle on the situation. Lakshmi reports that the country's health ministry has recently launched a whistle-blower program with a reward of $55,000 to anyone who provides information on fake-drug manufacturers. Measures are also being undertaken to strengthen laws and speed up prosecutions. Arrests have increased over the past four years, but only marginally. In spite of the tough talk, what is disturbing is the lack of enforcement. Lakshmi's article indicates that only a measly $6.5 million of bad medicine was seized during this period.
Legitimate drug companies themselves have resorted to using holograms or embossed logos on their products, only to find that these are eventually replicated as well. One company, MSN Labs, is experimenting with a strategy whereby consumers can verify the authenticity of their purchase through text messaging.
The counterfeit drug industry, however, is not limited to India or the developing world for that matter. Worldwide, the clandestine industry is estimated to be worth about $90 billion, causing the deaths of almost 1 million people a year. Governments and big business are of course reluctant to discuss the severity and complexity of a problem that has no quick fix or quantifiable extent. Most of the data on counterfeit drugs is kept secret by the pharmaceutical industry and by governmental agencies. Drug companies employ investigators to track down and facilitate the shutting down of counterfeit industries, but this occurs very much in private, according to a 2005 Public Library of Science report
. The report states that an agreement between the FDA and US drug companies to report counterfeit cases is not mandatory.
Big Pharma companies operating in the West are not immune either from their own fair share of fraudulent activity. The line between counterfeiting and misrepresenting ineffective product appears to be growing less distinct. On October 27, 2010, Gardiner Harris and Duff Wilson of The New York Times
reported that GlaxoSmithKline, the drug behemoth from the UK, settled a number of civil and criminal actions to the tune of $750 million alleging that the company knowingly sold over twenty drugs with questionable safety standards including contaminated infant ointment and a completely ineffective antidepressant. This was kept from public scrutiny until a former quality manager from the company came forward to blow the whistle on their dubious practices in one of their most productive facilities.
Whistle-blower cases against Big Pharma have become so widespread, it is reported, that Wall Street barely bats an eyelid when another such development is announced. What makes this case against Glaxo, however, so precedent-setting is that it is the first of its kind to imply that a “drug maker knowingly sold contaminated products.”
In spite of the size of Glaxo's settlement, it is by far, not the largest in history. That dubious honour goes to Pfizer in its September 2009 settlement for peddling bad drugs like bextra, geodon, and zyvox among others.
The New York Times article goes on to note that, “In a rising wave, recent lawsuits have asserted that drug makers misled patients and defrauded federal and state governments that, through Medicare and Medicaid, pay for much of health care...federal prosecutors are not only demanding record fines but are hinting at more severe actions”.
Whether or not Wall Street is paying much attention is beside the point. It is clear that Main Street, however, is still very much in the dark about the implications of such a trend, which largely remains hidden and under-reported by most mass media. “The [law]suits, all filed under seal, have for years been rising in size and scope, but the collective threat to the industry has been largely unnoticed because the growing mountain is obscured by a wall of judicial secrecy. Each successful claim begets more suits, with more being filed almost every week.”
Just the cost of doing business perhaps...