EFCG: Counterfeit Medicines More Profitable than Heroin

The European Fine Chemicals Group (EFCG) gave an update of some of its activities at a press conference held at CPhI Worldwide (Spain) last week and revealed some disturbing facts regarding counterfeit APIs, which the group is particularly concerned about. According to the press conference, an estimated 20–30% of off-patent medicines in European Union pharmacies are falsified at the API level.

Guy Villax, a member of the EFCG Board and CEO of Hovione (Loures, Portugal), said, "Falsified medicines is a business more profitable than heroin, and in most countries it is not legislated as a crime."

In investigating this, Villax found that in many countries, including Canada and most of the EU, counterfeit medicine crimes are only addressed in the context of trademark and patent infringements and, according to Villax, are "not considered a more serious crime than a fake designer t-shirt." Although France, Germany and the US consider counterfeit medicines a serious crime, their laws are not specific in addressing medicines made with falsified APIs-the only country that does this is the Philippines.

So what can be done to ensure that consumers are protected? Villax explained that three bills have been proposed: a directive of the European Parliament, a drug convention of the Council of Europe and, in the US, the Drug Safety Bill. In particular, Villax noted that the fact that regulators and agencies are beginning to talk to each other is a positive development as it has led to more consistent definitions across the various bills. He said, "In the EU, a falsified medicinal product is being falsified in relation to its identity, as well as its history or source, and may include substandard or falsified ingredients or excipients. We are starting to have the right kind of law in place to address not the companies with weak compliance, because they are doing their best and are still not there yet, but the people who use wrong compliance as a business strategy. These are the people we want to get out of the market."

However, although these bills may go some way to improving the situation, Villax added that they are by no means perfect. In particular, he talked about part of the European Directive that the EFCG thinks is not going to work. Villax said, "Europe is taking a view that 'we don't need to inspect everyone. If other countries have equivalent systems of enforcement requirements we'll live with that. We'll recognize those standards.'" This is what is called the list based on evaluation by the EU.

According to Villax, this may work for certain countries, such as European countries, the United States, and Japan, but may not be appropriate for all countries. "If, for political reasons, we have recognition of equivalent standards in areas that we think may be corrupt, we may start to look at these as trade barriers," said Villax.

The penalties need to be high
If the bills become law and are ratified nationally, Villax said there will be "major changes." "If the API is labelled with a different address to the true one, this will be a counterfeit crime. If anyone takes a certificate of analysis and changes the brand name or address or the expiry date, that is a counterfeit crime," said Villax. "The laws that are going to come into force will be pretty serious and involve putting people in jail," he said. "Finally we are starting to have legislation with sanctions that is in proportion with the kind of regulations out there designed to provide quality medicines."

Regulators are not the only ones taking action against counterfeiters; the pharmaceutical industry itself is also taking steps to improve the situation. "At Hovione, for instance, with our off-patent APIs, we've seen pharma companies auditing more frequently and also sharing audits," said Villax. "We've also seen more direct relationships between makers of APIs and users of APIs. There is a search for more transparency and less reliance on brokers and middlemen."

Villax also highlighted the Rx-360 consortium, which was developed by volunteers from the pharmaceutical and biotechnology industries, including suppliers, to improve the reliability and authenticity security of the pharmaceutical supply chain. Approximately 70 companies are involved in the group. "The first step the companies involved in this consortium will do is to share their audit reports," said Villax. "If each of these companies conducted 20 audits in the last year then you're going to have approximately 1000 audit reports."

The companies will also contract audits to be performed and the resulting audit report will be shared. According to Villax, this will dramatically reduce the costs and frequency of audits. "But the quality of the data that quality assurance and purchasing will have available will increase enormously," he added.

Rx-360 was launched in the US on June 5, 2009, and will be launched in the EU on Nov. 10, 2009. Villax believes that it could be particularly helpful for generics companies. He said, "This will not solve all their obligations in terms of supplier qualifications, but it will help them enormously to meet the requirements of the legislation."