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Confronting counterfeits
SS Biradar, Baburao Shegunshi, ST Bhagavati & J S Mulla | Thursday, March 16, 2006, 08:00 Hrs  [IST]

Pharmaceutical packaging remains a complex area with a wide array of technologies and materials to meet the requirements of pharmaceutical companies. It is heavily dependent on the drug's form, the route of its administration (e.g. oral, pulmonary, nasal, transdermal) and the targeted market.

Pharmaceutical companies often look to add an important level of protection to their drug that can survive the patent of the drug itself, thus ensuring valuable reprieve before generics move into the market. The added protection can come from intellectual property (IP) with regard to the packaging or simply through the cost involved for generics

However, the traditional attitude towards packaging is still relatively conservative since there is little incentive to increase the cost of the packaging with no added protection.

In prescription drug packaging, the key driver for change remains the actions of regulatory authorities. Governments are driving a rapidly developing generics market. Likeness to the original drug and cost are the most important criteria.

The shifting of social landscapes and advances in technology are constantly creating opportunities for brand owners and packaging producers to find new ways to satisfy consumer needs. It is important that consumer packaging adds value throughout the supply chain. Consumer packaging must not only look appealing on a supermarket shelf, but also has to protect the contents and make distribution to and handling by the consumer as efficient as possible.

The Anti-Counterfeiting Group (ACG) defines counterfeiting as "a deliberate attempt to deceive consumers by copying and marketing goods bearing well known trade marks, generally together with packaging and product configuration, so that they look like they are made by a reputable manufacturer when they are, in fact, inferior copies". However, the spread of digital technologies has not only made copying faster and cheaper but also radically improved its quality, with the result that modern imitations are more and more difficult to distinguish from the genuine articles.

So, the likelihood for someone to be confronted with the fake is very high. It is estimated that counterfeiting represents up to 9% of world trade and is omnipresent throughout industries and countries. Although this offence is not new - faking valuables has been known from ancient times - the situation over the past twenty or thirty years has changed radically. Technological advances and the increasing delocalisation of manufacturing into poorer countries with low labour cost but often inadequate protection for intellectual property since the 1970s have transformed once marginal counterfeiting activities into well organised, highly productive and profitable 'parallel' businesses.

Companies thus end up competing not only with visible rivals but also have to face unfair competition from 'unofficial' contenders. They gradually lose sales, market share, revenue and, to a certain degree, money spent in research and product development; their brand risks losing value (by being seen as less exclusive or of poor quality due to confusion with counterfeit copies) and even company reputation may suffer. In addition, companies may have to bear the cost of anti-counterfeiting measures or legal liability. Small businesses are particularly vulnerable.

The year 2005 was a pivotal one for pharmaceutical companies as far as anti-counterfeiting initiatives and more specifically, radio-frequency identification (RFID). The World Health Organization (WHO) estimates that as much as 10% of the half-trillion-dollar pharmaceutical market is counterfeit and the FBI estimates the impact on US companies is $200-$250 billion a year. The awareness and concern about counterfeit drugs in the pharmaceutical supply chain reached its peak in 2004. According to an FDA report, the number of drug counterfeiting cases had increased dramatically in 2004 (58 cases up from 30 in 2003). The increased attention on drug counterfeiting may have led to the decline to 32 cases in 2005. Regardless, those in the pharma industry and public health officials see the recent cases as substantiating a growing problem in this interdependent global economy. The high drug prices in some markets making it more tempting for anti-counterfeiters. And the ounterfeiting techniques have become more sophisticated.

There is no single "magic bullet" against the growing number of sophisticated counterfeiters. Rather, a multi-pronged strategy to secure the drug supply could be much more difficult for counterfeiters to overcome than any single method. It could also be less costly, because a 'one-size-fits-all' approach is unlikely to work for all parts of the complex prescription drug supply system. Although drug counterfeiters today are more sophisticated and better organized than ever before, there are many new technologies and approaches that have the potential to prevent and contain counterfeit drug threats.

At the same time, the growing popularity and rocketing value of brands enable - through smart marketing - to convert a rather simple and cheaply produced designer item into an expensive object of desire. The value-added by a brand-name is nowadays so significant that it becomes a golden opportunity for imitators to exploit consumers' wishes without having to pay a high price. Moreover, with the advent of the 'knowledge economy', intellectual property is becoming a major company asset.

Regulations

There are many entities involved in the US drug distribution system. The task force heard that the state requirements for licensure of wholesale distributors need to be updated and that the business practices among the entities involved in the US drug distribution chain are insufficient and do not adequately protect the distribution system from the modern threat of counterfeit drugs. Options for establishing new and enhancing currently established secure business practices and regulatory requirements to affect the ability to deter and detect counterfeit drugs include:

· developing a set of "best business practices" that would be voluntarily adopted by all manufacturers, wholesalers, repackagers and pharmacies as appropriate
· designating, by all entities such as manufacturers, wholesalers, repackagers and pharmacies, an individual or team to coordinate security and anti-counterfeiting activities;
· timely sharing with FDA, by all manufacturers, of market tracking and trending data and the analysis of these data for use as a means of identifying counterfeit or diverted product in the marketplace, and
· continuing work with private and public sector partners, including the National Association of Boards of Pharmacy (NABP), to update model rules for licensure of wholesale distributors

Role of companies

While waiting for stronger laws and enforcement mechanisms at European level, companies should continue to take measures to better protect their products. These include:
(a) more active information sharing among industry players, public authorities, enforcement agencies, law making bodies and consumer associations
(b) research on, and implementation of, technical anti-counterfeiting solutions (for instance, optical and electronic security devices, micro-engravings, watermarks, holograms and 'smart packaging')
(c) improved management systems to prevent 'strategic information leaks' and 'back-door shipping' (tougher rules may be needed with regard to licensed partners and company staff need to be coached on confidentiality principles and data protection); the same holds for detecting and reporting suspicious goods (e.g. via customer hotlines), means to monitor the flow of goods on the market, and methods to pursue offenders.

Public awareness

Recently, US FDA has come out with a report suggesting there is a significant need to increase awareness and education of stakeholders, including the public, concerning counterfeit drugs. The following options are included in the interim report:
· increasing the efforts of the FDA, other governmental agencies and appropriate private sector partners to educate consumers and health care professionals on how to reduce the risk of obtaining counterfeit drugs before an event occurs
· educating consumers and healthcare professionals on how to identify counterfeit drugs (including how to recognize anti-counterfeiting technologies on packaging and labeling and what to do if they believe they have encountered suspect product)
· exploring ways of improving and coordinating agency and industry messages and efforts to address and contain a counterfeit event

RFID: Moving forward

RFID is emerging as a key anti-counterfeiting ally in the pharmaceutical industry. Companies are no longer just talking about RFID technology; they are implementing it and their vendors have made immeasurable contributions to pilot programmes as well. In the past year, products with RFID tags have successfully been shipped. RFID incorporates the use of small radio frequency tags on product packaging that can be electronically scanned to authenticate and track products through the distribution system. The technology is difficult to replicate and-with widespread adoption-will help protect the pharmaceutical supply chain, and ultimately consumers. Also, standards are in the process of being developed, the technology is accelerating and the cost of RFID tags is coming down.

(The author is lecturer, Dept of Pharmaceutics, KLES College of Pharmacy, Vidyanagar Hubli -31, Karanataka. Email:biradarappu4u@rediffmail.com)

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