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David McKelvey, director of TM Eye, a detective company based in the United Kingdom, provides insight into the counterfeit pharmaceuticals business.
The counterfeit pharmaceuticals business is made up of networks of “affiliates,” which run illicit websites that sell the fake or substandard drugs.In many cases, the organized criminal gangs behind these networks appear to be based in Eastern Europe, but they operate globally, says David McKelvey, director of TM Eye, a detective company based in the United Kingdom that has been following these groups for years and recently launched successful sting operations in India with India’s drug regulatory authority.
As he explains, the operation is much like any franchise. The criminal gangs contact each prospective affiliate and carry out full due diligence on each applicant, all the while maintaining their own anonymity. Once they are convinced that the affiliate will be a good recruit, they send him or her templates to use for the web sites, instructing the affiliate to buy anonymized domains that have a link to medicines or drugs.
Once the affiliate has set up the anonymous domain, he or she uses the templates provided to develop the website. Each affiliate site links to an “anchor” site, run by the criminal gang. The operations are extremely sophisticated and completely anonymized, says McKelvey. “If taken down, the anchor sites automatically switch to another domain with a functioning website. The links to all affiliates are automatically transferred, in less than a minute,” he explains. Prospective online customers go through the affiliate site, and when they purchase anything, they are redirected, often without knowing it, to the anchor site. Once they click on the shopping cart icon to complete the transaction, they are taken to a completely different website (e.g., the site for a clothing factory in Singapore), where they pay by credit card. Many sites are using bitcoin to hide the money trail, says McKelvey.
Once the purchase is made, the order goes to the fulfillment house and the fake drugs are mailed to the customer in a plain brown envelope sent through the postal system.
As McKelvey explains, affiliates are paid a percentage of every sale in the form of a monthly commission. They never touch the drugs or the money from transactions, but function simply as gateways to anchor sites.
TM Eye worked for six months to break up one network, McKelvey says. So far, the work has resulted in over 7000 linked affiliate and anchor sites being taken down. In addition, a raid on one fulfillment house, Dada Impex, in India, recovered significant amounts of falsified medicines.
Vol. 41, No. 9
When referring to this article, please cite it as A. Shanley, “Counterfeit Pharmaceuticals: a Franchise Business,” Pharmaceutical Technology 41 (9) 2017.C