“The World Health Organization (WHO) established that approximately 50% of all drugs on the internet are likely to be counterfeit. Within some of the African markets as much as 20% to 30% of all products are counterfeit.”
Can you give an overview of how prevalent counterfeiting and diversion is within the pharmaceutical space?
The current counterfeit estimates for the drug market is over US$200 billion annually. Diverted pharmaceuticals are a significant part of the US$1.7 trillion number that is being thrown around for the gray market on a global commerce level. The World Health Organization (WHO) established that approximately 50% of all drugs on the internet are likely to be counterfeit. Within some of the African markets as much as 20% to 30% of all products are counterfeit. In the pharmaceutical segment the high value, high risk products are the ones that are mostly counterfeited and diverted. We see oncology products that are destined for hospitals in Africa being diverted into high value markets such as the US and Europe.
Can you elaborate on the dangers of counterfeiting and diversion for consumer safety and from a business perspective?
In the US there is the Drug Supply Chain Security Act (DSCSA), where the sole purpose is to keep products within the legitimate supply chain safe. The biggest issue with the DSCSA today is the timeline for implementation. What is implemented today is only serialization of items by manufacturers and sharing data with wholesalers. There is no mandated data integration and visibility throughout the entire pharmaceutical supply chain from manufacturing through to pharmacy. Because of the implementation timelines, it will not be until well after 2023 that we have an ‘interoperable’ supply chain in the US, with all levels sharing data.
The way the regulation was implemented is that by the end of 2019, all pharmaceutical manufacturers, by law had to be serializing products, as well as providing serialized data into the supply chain. The law then phases in the copackers, then the wholesalers and then the retailers. While we are working on making the supply chain safe, there are still holes where diverted and counterfeit products can slip in.
Taking into consideration the global nature of the supply chain, how do regulations specific to one country solve global issues?
The DSCSA is only focused on the US, as the FDA, who only has responsibility for the US market, controls it. The EU, China, Turkey all have their own regulations which are variants of the same type of policy where you serialize a product, you aggregate it, track it through the supply chain and share data with trading partners, but all have different implementations.
The scary part is that in the worst places in the world, where products are counterfeited 20% to 30%, there are no regulations and there will most likely not be any for a long time to come, as the cost of implementing regulations makes it prohibitive. These parts of the world include South East Asia, sub-Saharan Africa and some South American countries. Here there is a prevalent amount of illicit product and the drug cartels manage it now, because there is so much money in it and so little enforcement. It then becomes the responsibility of the brand to make sure their products are safe. Companies in these regions are starting to implement digital authentication methods, such as our fingerprint technology, which is much cheaper than serialization. This is a way in which brands deliver value and can engage with their customers.
How can Systech International’s product offerings help big pharmaceutical companies ensure their product quality at a global level?
We focus on three areas of solution offering to our customer base. One is compliance, the second area is the traceability of products, and we also handle expiration information, so if somebody scans a product and it is expired, we can alert them to it.
Systech International focusses on providing visibility from manufacturing all the way to the consumer’s hand. On top of serialization we will provide a unique digital fingerprint to products, which we can authenticate anywhere in the world. In doing this, we provide a layered anti-counterfeiting and diversion technology outside of the regulations. An important feature of the digital fingerprint is that it can be integrated into a product line without the use of additives.