Fake Pharma thrives on the Mekong
As China and India clamp down on rampant fake drug production, criminal gangs have moved to less regulated and cheaper Southeast Asia to sustain the multi-billion dollar trade
Fake pharmaceuticals are continuing to flood into clinics and hospitals across Asia despite crackdowns by global counterfeiting hubs China and India, with suppliers simply crossing the border to less-regulated Mekong countries.
The issue comes to light as global leaders descend on Vietnam for the Asia-Pacific Economic Cooperation trade promotion summit that starts in the city of Da Nang on November 10.
China announced in early November it would step up supervision of online sales of drugs and medical devices, and is also monitoring output of ingredients at legitimate factories to uncover illicit sales to criminals. India is conducting raids on suspected suppliers of fake drugs, though these are more sporadic.
Pakistan, now emerging as a secondary South Asian supplier of fake drugs, will require barcodes on all medicines from next month and adopt international standards for product authentication in a bid to track the origins of all pharmaceuticals.
How much difference these measures will make is uncertain, as enforcement operations detect only a fraction of the estimated US$75 billion of illegal and fake drugs sold annually, which cost legitimate firms up to US$200 billion in lost business. [The disparity in data is due to discounting by counterfeiters.]
One reason is the proliferation of online websites, usually unregulated, which sell directly to customers. In mid-September, policing agencies led by Interpol pulled down 3,584 websites and 3,000 online adverts for illicit pharmaceuticals in 123 countries as part of the annual Operation Pangea crackdown on fakes.
Raids unearthed a record 25 million illicit and counterfeit medicines worth more than US$51 million, including painkillers, erectile dysfunction pills, epilepsy and anti-psychotic medication, as well as dietary supplements and nutritional products. About 400 people were arrested in 1,000 operations globally.
Investigators seized 39,000 doses of illegal health products in Singapore and 1.2 tons of erectile dysfunction pills in Vietnam, though the biggest hauls were in European markets: 433,000 illicit health products and 1.4 tons of bulk health products were found in France and 200,000 illicit medicines in Ireland.
“The fact that we still see such strong outcomes after 10 years of Pangea operations demonstrates how the online sale of illicit medicines is an ongoing, and ever increasing, challenge for law enforcement and regulatory authorities,” admitted Tim Morris, Interpol’s executive director of police services.
Data on counterfeiting is incomplete, but the Pharmaceutical Security Institute revealed in its 2016 report that 1,100 “incidents” were reported in Asia in 2015, the most recent study. There were 779 in North America, 494 in Latin America, 358 in Europe, 265 in Eurasia, 244 in Africa and 135 in the Middle East.
Under the institute’s guidelines an incident occurs if a country is the origin, point of seizure, point of transit or destination of illegal pharmaceuticals. Asia has the biggest share of the global trade in fake medicines and is also the main source, according to the UN Office on Drugs and Crime.
China and India are the key production points, but organized crime syndicates have moved some manufacturing processes to Vietnam, Myanmar and Cambodia to avoid tighter enforcement measures and take advantage of cheaper costs.
Most counterfeit products in India are supplied by unlicensed manufacturers operating out of small factories in houses, but in China the culprits are legal chemical companies that produce pharmaceuticals as a sideline industry.
There are also registered pharmaceutical firms that produce both legal and illicit medicines in both countries, marketing them through legitimate supply chains.
Myanmar, Vietnam and Thailand are major transit points for fake medicines produced by gangs in both India and China. The illegal drugs are shipped to global markets from seaports in Singapore, Malaysia, Vietnam and Thailand. The World Customs Organization has found that 50-60% of illicit drugs go by sea.
Much of the trade is thought to be controlled by organized crime syndicates in Asia and Eastern Europe that also distribute other contraband. Their profits are laundered through banks in countries like St Kitts and Nevis and Panama.
A 2014 Interpol report said a gang with possible links to Chinese triads had sold fake pharmaceuticals through nightclubs and brothels in Malaysia. Its leader was identified as a triad boss working for a Chinese syndicate in Kuala Lumpur.
Another counterfeiting network detected in Cambodia was found to have links to the Japanese Yakuza. The gang distributed fake versions of medicines like Viagra through unlicensed pharmacies in Cambodia and websites in Japan.
It is believed about 15% of all pharmaceuticals sold globally are fake, but the ratio is as high as 30% in some Asia countries. More than 60% of anti-malarial drugs in Asia are probably counterfeit, contributing to the spread of the virus.
Most fake pharmaceuticals are effectively useless, with only limited quantities of the listed ingredients; some contain highly toxic mixes and have caused permanent medical conditions, disfigurement and even death. In other cases, the medicines are authentic but their user dates have already expired.
The World Health Organization has estimated one million people are killed by fake pharmaceuticals worldwide each year, including 100,000 children in Africa alone. Four people died and seven suffered brain damage in Singapore in 2015 after they took fake drugs that were supposed to treat erectile dysfunctions.
Policing agencies say counterfeiting will be contained once governments get serious about regulatory supervision of pharmaceuticals. Most countries do not even have laws that address pharmaceutical crime, according to Interpol: it is treated as a category of intellectual property crime or illegal narcotics crime.
Advanced countries have already proved that better enforcement is the right medicine. Only 1% of pharmaceuticals being sold in more regulated markets in North America, Western Europe and Australia are believed to be counterfeit.