AlpVision Logo
About Us News Newsletter Blog Contact Us
INDUSTRIES
  Pharmaceuticals
  Tobacco
  Government
  Footwear
  Wine & Spirits
  Watch
  Other Industries
SOLUTIONS
  Brand Protection
  Document Security
  Custom Solutions
PRODUCTS
  Product Philosophy
  Cryptoglyph®
  Fingerprint
  Krypsos™ Platform
  FAQs
COMPANY
  About Us
  Blog
  Background
  Awards & Certifications
  Jobs
  Find Us
PARTNERSHIPS
  Partners
  Memberships
NEWSROOM
  News
 
  Events
  Videos
Swiss Headquarters
 T : +41 21 948 6464
        
 AlpVision North America
 T : +1 312 283 8260
        
 AlpVision China
 T : +86 21 2076 5516
        
AlpVision WebEx
Online Chat

AlpVision Anti-Counterfeiting BlogBloggers Fred & Martin

Should Product Authentication Be at the Consumer’s Fingertips?

Thursday, 3 August 2017, Fred Jordan

European CommissionAccording to a recent white paper by Authentix, an authentication and information services company, brand owners should not delegate nor should they rely on consumers to authenticate products.

Authentix first argues that consumers do not want to scan QR codes. The company draws on a 2016 case study conducted by Simpson Carpenter, a market research company, that found that “only 11% of consumers have used a QR code in the past.”I This first claim is based on the assumption that consumer authentication can only be accomplished through a barcode and excludes any other form of visible security feature, such as holograms, micro printing, or special inks.

Authentix then cites the potential negative impact a ‘false positive’ (the reader recognizes the fake as an authentic medicine) or a ‘false negative’ (the reader fails to recognize an authentic medicine) would have on a company’s reputation, let alone consumer health. According to Authentix, consumers should only be the “last line of defense”II, letting inspectors instead perform additional analysis before moving the questionable medicine farther down the supply chain.

For Authentix, the solution lies not in equipping consumers with authentication tools, rather in preventing counterfeit products to reach them in the first place. How so? With “more sampling and testing completed of the products before they get to the shelves.”III This is done by adopting a real-time, multi-layered approach to security, combining covert and forensic features that are only detectable via authorized inspectors equipped with a specific and proprietary reading device. By collecting results more frequently and in real time, experts in the field can take action faster.

Authentix concludes that brand owners must commit to protecting their products with the right people, resources, and technologies.

In 2012, we made similar claims in a white paper titled, “Identifying Counterfeit Medicines with Industry-Suitable Technologies”.IV We questioned, in our case, the patient’s responsibility in determining the authenticity of medicines. We took the example of using text messaging to authenticate drugs to match numeric codes. We argued that the patient could either get an authentic reading, suggesting that the number was never sent before (positive) or left intentionally unchecked (false positive), or conversely, get a fake reading, suggesting that the number had already been used (negative) or left intentionally checked (false negative). Given these risks, we concluded, like Authentix, that consumers should not be responsible for product authentication.

Like Authentix, we also believe that covert security features provide a higher level of security, because they are very difficult to identify and replicate, and are typically only shared with a limited number of trustworthy persons. Unlike Authentix, however, we believe that these features do not necessarily require specialized technology to produce or be detected.

Today, it is possible to print invisible security features using low-cost and regular visible inkV, for example. It is also possible to detect them using everyday consumer electronics, like smartphones.VI While brand owners should oversee and manage product authentication for now, advancements in technology lead us to believe that a robust brand protection solution does not have to be intrusive or costly to implement. Future developments in consumer technology might also accelerate the need to develop a suitable, easy-to-use, and reliable product authentication solution at the consumer level.

ISee Reference 4, p. 4

IISee Reference 4, p. 4

IIISee Reference 4, p. 6

IV Jordan, F., Kutter, M. Identifying Counterfeit Medicines with Industry-Suitable Technologies,Pharmaceutical Engineering, The Official Magazine of ISPE, May/June 2012, Vol. 32 No 3, pp. 1-7

VAlpVision Cryptoglyph, http://alpvision.com/cryptoglyph-covert-marking.html

VIAlpVision Product Philosophy, http://alpvision.com/product-philosophy.html

Why Mass Serialization is Failing

Friday, 21 April 2017, Martin Kutter

European CommissionAccording to the World Health Organization, over 920 Substandard, spurious, falsely labelled, falsified and counterfeit (SSFFC) medical products have so far been reported.I These products are manufactured in all regions of the world. In response, regulation in many different countries has led to the adoption of serialization as a means to track and trace pharmaceutical packaging through the supply chain from manufacturing to the point of dispense. The Falsified Medicines Directive (FMD) in Europe and Title II of the Drug Quality Security Act (DQSA), known as the Drug Supply Chain Security Act (DSCSA), are two examples of a required serialized program.

Traditionally, serialization has been used to “…improve the accuracy and efficiency of internal and/or business to-business (B2B) transactions.”II This use was by no means intended to secure or help authenticate the products being bought or sold. However, because most large-scale pharmaceutical companies already used this tool to store and transfer product data, creating item-level identification or mass serialization was viewed as a solution to securing, then tracking those items through the supply chain. .

This process is generally accomplished through radio-frequency identification (RFID) or a two-dimensional (2D) barcode. This means that serialization is not only used to transfer and inventory goods, but also to verify their authenticity in order to remedy product integrity issues and protect patient safety.

This technology is also being increasingly used to foster consumer engagement. In this respect, the unique, serialized identifier on pharmaceutical packaging allows brand owners to not only verify the authenticity of pharmaceutical packaging, but also to interact with consumers to drive brand loyalty.

According to a recent whitepaper, “…there are now over forty countries that have issued guidelines for the pharmaceutical industry whereby a serialized barcode is either currently mandated or soon will be on individual medicinal products.”III But some industry experts have voiced concerns over the promises and potential of this system.

Tim Marsh of Supply Chain Security Partners questions the security of the data and data carrier (RFID, 2D barcode) on the individual item. Because the transaction of information requires using “open and globally interoperable standards,”IV that exchange runs the risk of falling in unauthorized hands or being improperly disclosed. Moreover, because the data carrier is visible, it is also inevitably more vulnerable to forging and hacking.

Marsh also raises questions about the reliability of the verification database as it is often in proprietary hands and therefore susceptible to HaaS, or Hacking as a Service. In this scenario, anyone with a computer and the right skills could potentially break into the system.

By contrast, Marsh views serialization as a “component” of the anti-counterfeiting strategy, not a cure-all. He takes on a more layered approach to security, preferring combining multiple anti-counterfeiting measures to preserve packaging integrity and patient safety.

For Avi Chaudhuri and Jim Lee of Systech International, serialization is “failing” in the consumer products sector specifically for five reasons. To start, there are issues with implementation.V Adding an additional visual element to product packaging impacts design work, the printing process, and cost.

Another issue raised is that of adoptionVI, the difficulty of educating consumers about the presence of the code, then getting them to interact with it. This issue leads to a larger question of whether or not consumers should in fact authenticate products, as this type of interaction “leads brand owners into unknown waters.”VII

If the serialized program is adopted, who then owns the consumer engagement?VIII Does the technology company responsible for the serialization also drive the digital marketing campaign? This duality may lead to role conflict, if these tasks are not executed by two separate vendors.

The most common issue raised however is that of security. Like Marsh, Chaudhuri and Lee find that serialized barcodes can easily be replicated or take consumers to fake websites, which represent “an unacceptable risk.”IX

The risks outlined above therefore far outweigh the benefits of mass serialization. The valueX of deploying serialized products is simply not high enough to justify enabling item-level serialization, the additional cost, and the potential risk to the consumer.

I Substandard, spurious, falsely labelled, falsified and counterfeit (SSFFC) medical products, World Health Organization, Retrieved 10 April 2017

IIMarsh, Tim (25 September 2015). Product serialization: The ease of falsifying serialized codes,,SecuringIndustry.com, Retrieved 5 March 2017

IIIChaudhuri, Avi; Lee, Jim (2016). Serialization Reality Check: Where are all the numbers?Systech International, Retrieved 5 March 2017, p. 3

IVSee Reference 2

VSee Reference 3, p. 4

VISee Reference 3, p. 5

VII Inspector-Led Authentication is Here to Stay (and Better Than Ever), Authentix, 2017, p. 4

VIIISee Reference 3, p. 6

IXSee Reference 3, p. 8

XSee Reference 3, p. 8

Serialization vs. Aggregation: A DSCSA Progress Update

Monday, 13 February 2017, Fred Jordan

European CommissionIn April 2016, we reported on Title II of the Drug Quality and Security Act (DQSA), known as the Drug Supply Chain Security Act or DSCSA. Enacted in 2013 by the U.S. Food and Drug Administration, the DSCSA requires a unique federal traceability solution for prescription medicines across all 50 states at the product level.

According to the FDA, the Act will enable better verification of the legitimacy of prescription drugs and swifter action when illegitimate ones are identified and need to be removed from the drug supply chain.I Manufacturers, repackagers and wholesale distributors have until November 27, 2017 to comply. Full interoperability is expected by 2023.

So with less than a year to go before U.S. pharmaceutical companies must have each packaging item uniquely marked, we wanted to take a look at steps taken by the FDA to support the implementation of national identifiers at the item level and assess readiness for change.

The FDA has held several public meetings and workshops to get input from stakeholders and assess progress towards implementing the product identification requirements of the DSCSA. In addition, the Healthcare Distribution Alliance (HDA) Research Foundation conducted a readiness surveyII to measure the level of preparedness of manufacturers and distributors for product serialization and data sharing.

The results from the survey found that 89 percent of manufacturers would be sending serialized products to wholesale distributors before the November 27 deadline, but that 40 percent had concerns with the DSCSA’s requirements, particularly with contract manufacturing organizations (CMOs) readiness and the lack of FDA guidance. Of particular interest, only 36 percent of manufacturers said they were planning to send corresponding aggregated data with products by the November 27, 2017 deadline, 33 percent between November 2017 and 2023, and 26 percent were unsure if they would be able to do so at all.III Based on these findings, the HDA Research Foundation concluded that “100 percent of product will not be serialized by November 27, 2017.”IV

While aggregation is not specifically required by the DSCSA, the process of creating a single federal serialization platform “…may include the use of aggregation and inference as necessary,” particularly if data is to be “exchanged in a secure, interoperable, electronic manner.”V

Aggregation “…is the process of building a relationship between unique identifiers assigned to packaging containers”, to “… associate ‘child’ items with their bundle or case ‘parent’”.VI Put simply, aggregation allows experts working along the drug supply chain to determine the contents of a case without having to open it up and scan every item.

So what does this mean for U.S. pharmaceutical companies? According to the DSCSA timeline, stakeholders were given a two-year timeframe to serialize product, a process which, on average, takes around 34 weeks per product line according to SecuringIndustry.com.VII Given that the planned stakeholder implementation period for an interoperable electronic tracing of product at the package level is expected to start in late 2021 through late 2023, data aggregation will have to be run as a separate project, adding complexity, time, and added costs to the process.

The FDA continues to seek public comment and suggestions on draft guidance documents addressing questions and clarifying expectations raised by prescription drug manufacturers and distributors in hopes to help them meet their first November milestone.

I Drug Supply Chain Security Act

II Manufacturer Serialization Readiness Survey Executive Summary

IIISee Reference 2, p. 1

IVSee Reference 2, p. 3

V Drug Supply Chain Security Act

VI Aggregation 101: What it is, who requires it, and what it means for the supply chain

VII Just starting out on DSCSA compliance? Forget aggregation!

Cigarettes Top the List of Detained Articles in the EU in 2015

Friday, 23 December 2016, Martin Kutter

European CommissionThe European Commission recently published the 2015 Report on EU Customs Enforcement of Intellectual Property Rights.I While the number of cases (a ‘case’ refers to a detention that may contain one or more articles) dipped slightly in 2015 (95,194 in 2014 vs. 81,098 in 2015), the number of articles infringing an IPR continues to increase, with 43,7 million detained articles in 2015. That represents a 15 per cent increase on the number of items seized in 2014, a total value of over 640 million euros.

Cigarettes top the list of detained articles, accounting for 27% of the overall goods suspected of infringement, followed by other goods (e.g. batteries, glue, design articles, manuals, etc.), toys, and foodstuff. Interestingly, labels, tags and stickers joined the top 5 last year.

In total, 11,239,956 cigarettes were detained, a retail value of 38,803,257 euros. A departure from previous years, a very large part of the detained cigarettes originated from Montenegro (73.55%), compared with China (91.08%) in 2014. In the former Yugoslavia, Montenegro was known for being a haven for cigarette smuggling into Italy, but today, cigarettes from Montenegro and Croatia are smuggled across the border into Bosnia and Herzegovina for local consumption or for sale in Europe.II

Another major difference between 2014 and 2015 is the important increase in counterfeit or pirated labels and other packaging materials. In total, 3,319,198 labels, tags and stickers were detained in 2015 compared with 936,624 in 2014 (254% difference). These articles came primarily from China (67.20%) and are valued at 6,980,515 euros. The increase is mostly due to the fact that China continues to be the main manufacturer of fake goods bearing fake trademarks (41.08% overall in 2015).

By contrast, medicines experienced a significant decrease in product detention, with 895,324 articles detained in 2015 compared to 2,804,569 in 2014 (103% difference). The decrease is most marked in China, who accounted for 88,62% of the share of detained medicinal products in 2014 compared to 18,06% in 2015. Instead, India was in the lead for medicines with 56.80% of the overall amount of products seized.

The overall reduction in fake medicines may be due to both increased attempts by the Chinese government to tackle the production of counterfeit goods in their country,III particularly of their own brands, and continued efforts by European law enforcement agencies, regulatory bodies, public and private sector organizations, and anti-counterfeiting groups to decrease the number of goods infringing an IPR.

As with previous years, the detention of these goods by EU customs resulted in either their destruction (75%) or legal recourse by the right-holder to establish the IPR infringement.

In a press release, Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “I’ve witnessed first-hand the excellent work of customs officials across the EU in dealing with counterfeit and sometimes dangerous goods. But the criminal activity which swamps our internal market with fake and illegal products shows no sign of abating. The Commission will continue to work with customs authorities, international partners and industry to ensure a high level of protection for intellectual property rights in the EU.” IV

I ec.europa.eu

II occrp.org

III euipo.europa.eu

IV europa.eu

Counterfeit Medicines in Asia: Damage Suffered by Japanese Pharmaceutical Companies Abroad

Friday, 30 September 2016, Fred Jordan

European CommissionAlthough counterfeit medicines affect every region of the world, many drug-counterfeiting rings originate in Southeast Asian countries, such as Cambodia, Thailand, Laos, Vietnam, and China.I Many factors tend to bolster this situation, including weak enforcement, lack of education and training, poverty, and little to no budget to enact regulations or conduct regular inspections.II In addition to counterfeit “lifestyle drugs,” infectious diseases affect these countries, favoring the production of counterfeit “life saving drugs”, such as anti-infectives.III As a result, not only do counterfeit drugs harm public health, some even causing the loss of life, they also damage businessesIV and nations.V

While Asia dominates the production and sale of fake medicinesVI, some developed Asian countries, like Japan, haven’t typically needed to take drastic measures to crack down on counterfeit medicines domestically or abroad. In recent years, however, Japan has expanded trade with other Asian countries, including China,VII where counterfeiters often produce mass quantities of drugs inexpensively. In 2014, the Japanese government also started allowing the sale and distribution of over-the-counter medicines online, increasing the number of onlineVIII pharmacies offering fake drugs.

Counterfeiting of Japanese brand goods has also been on the rise. In 2005, the Japanese Patent Office reported 13,467 cases of goods infringing intellectual property, a 47.3% increase over 2004.IXA majority of these goods are accessories, such as bags, key holders, and clothingX produced in Asia, particularly in China, Taiwan, and South Korea.XIA survey of 8,000 groups, including Japanese companies, also reveals that medicines and cosmetics account for 3.4% from damages from counterfeiting abroadXII , a third of the products seized by Japanese Customs at the border. Results from that survey also show that Japanese branded medical machinesXIII suffer damage from counterfeiting, not only compromising the people handling the equipment, but also products manufactured using it.

In light of this growing problem, both the Japanese government and Japanese pharmaceutical companies have taken action against counterfeit medical products. For example, the Pharmaceutical Affairs Law of Japan prohibits the sale of counterfeit medicines, committing violators to imprisonment or monetary penalty.XIV International cooperation, with Cambodia for example, has also resulted in measures against counterfeit medicines.XV The Japanese government has also been more vigilant about the increasing number of foreign websites selling fake drugs to Japanese buyers.XVI Finally, Japan has focused energy on raising public awareness, education and outreach on counterfeit drugs.XVII

The pharmaceutical industry has also taken independent steps to fight counterfeits. While typically kept secret for fear of putting useful knowledge into the wrong hands, some of the countermeasures are made known. For example, Takeda, the largest pharmaceutical company in Japan and Asia, formulated a three-year plan for anti-counterfeit measures to raise awareness of counterfeit drugs and illicit trade, establish and implement supply chain security countermeasures, and investigate and expose criminal organizations that manufacture and sell counterfeit drugs.XVIII In addition, Takeda introduced a track-and-trace tamper-evident security seal called the Takeda Security Label.XIX Takeda has also implemented various other measures, including methods for authenticating genuine products from fake ones.XX So whether in developed or developing Asian countries, “counterfeit problems are becoming borderless.” Japan is no exception.

I World Health Professions Alliance (WHPA), Background Document on Counterfeit Medicines in Asia, 1 July 2011, Retrieved 3 September 2016 from whpa.org p.4

IISee Reference 1, p. 6

IIISee Reference 1, p. 7

IVJapan Patent Office, Countermeasures to Counterfeiting Problems, 2007, Retrieved 3 September 2016 from training-jpo.go.jp,p. 2

VSee Reference 4, p. 3

VIPharmaceutical Security Institute, Counterfeit Situation CY 2015, Geographic Distribution, Retrieved 25 September 2016 from psi-inc.org

VIISee Reference 4, p. 1

VIIIThe Japan Daily Press, Japanese health ministry to monitor overseas websites selling fake medications by John Hofilena, 2 January 2014, Retrieved 28 July 2016 from japandailypress.com

IXSee Reference 4, p. 5

XSee Reference 4, p. 5

XISee Reference 4, p. 15

XIISee Reference 4, p. 16

XIIISee Reference 4, p. 15

XIVSee Reference 1, p. 21/p>

XVSee Reference 1, p. 21

XVISee Reference 8

XVIIYakugaku Zasshi, Counterfeit medicines – Japan and the world, National Center for Biotechnology Information, 2014, Retrieved 26 September 2016 from ncbi.nlm.nih.gov

XVIIITakeda CSR Data Book 2012, Consumer Issues, Anti-Counterfeit Measures, 2012, Retrieved 26 September 2016 from takeda.com

p.66

XIXSee Reference 17, p. 67

XXSee Reference 17, p. 67

Mapping Out the Tobacco Products Directive

Friday, 24 June 2016, Martin Kutter

European CommissionDated June 6, 2016, a “Roadmap” was published on June 9th on the EU Transparency Register covering implementing measures and delegated acts under Articles 15(11), 15(12) and 16(2) of the Tobacco Products Directive (TPD) 2014/40/EU.I

In E.U. terms, “roadmaps” are designed to describe a Commission initiative and the objectives to be achieved. They also show the different stages of the initiative and their impact on stakeholders. Finally, they help plan for and organize public consultation.II

Accordingly, the TPD Roadmap provides context for the initiative, describes the size of the problem (e.g. penetration of illicitly traded tobacco products estimated at 13%), reviews the safety requirements mandated in Articles 15 (tracking and tracing) and 16 (tamper proof security feature composed of visible and invisible elements), and their desired objectives (to reduce illicit trade and protect public health).

Of particular interest, the TPD Roadmap maps out, in a matrix-like table, a range of possible solutions regarding the traceability system and the security features. The main choices for tracking and tracing are organized by governance model (industry-operated solution vs. a solution operated by a third party), data storage location (centralized vs. decentralized), data carrier (single vs. multiple), and reporting time (real-time vs. daily). The table also shows various methods of adding the security features (affixing vs. printing or integrating). In each case, a third, hybrid option is proposed (e.g. weekly reports instead of real-time or daily). According to the TPD Roadmap, all combinations are possible to produce the ideal solution.

The TPD Roadmap also weighs the pros and cons of each option. For example, who governs the traceability system will ultimately need to put additional control measures in place and bear added implementation costs. Another example is while a centralized data storage location preserves compatibility between data storage features, it can simultaneously create delays in accessing the data. The TPD Roadmap doesn’t provide the optimal combination of solutions, but makes it easier for stakeholders to compare and rank the different options against each other in order to “obtain the necessary level of security in a cost-efficient manner.”III

The TPD Roadmap also goes into detail on how stakeholders will be impacted in both the deployment and operational phases, as well as approached for feedback. For example, the TPD Roadmap estimates costs related to implementing these measures between EUR 291 and 347 million per year, expenses mostly borne by the manufacturers.

Regarding the consultation approach, the TPD Roadmap describes three stages. Stage one will consider the data gathered during the Feasibility Study published in May 2015. The second stage will present the best possible solution given the options for the traceability system and the security features, followed by a final stage, developing the technical standards for further implementation work.

According to the Roadmap, the impact of Articles 15 and 16 of the TPD could reduce illicit trade by 30%. This reduction could have significant positive outcomes on both the tobacco industry and tobacco control, including an increase in the legal sales of tobacco products, leading to tax gains, as well as a decrease in the overall consumption of tobacco products, leading to improved public health.

The TPD Roadmap is therefore a first step in achieving these objectives. The follow-up Implementation Study, if successful, will then promote the uptake of these findings into routine practice, but not before May 20, 2019.

I Implementing and delegated acts under Articles 15(11), 15(12) and 16(2) of the Tobacco Products Directive 2014/40/EU, Retrieved on 10 June 2016 from europa.eu

II""Roadmaps" – European Commission". ec.europa.eu. Retrieved on 19 June 2016 from europa.eu

IIISee Reference 1, p. 13

What Do Pharma Safety Regulations Look Like in the U.S.?

Tuesday, 26 April 2016, Fred Jordan

European CommissionOn February 9, 2016, the countdown to implementing the safety measures mandated by the Falsified Medicines Directive (FMD) Delegated Act started. This Act, which will come into force in early 2019, imposes item-level serialization and tamper evidence on pharmaceutical products in all European Union Member States.

Across the pond, the Drug Quality and Security Act (DQSA) was signed into law by President Barack Obama on November 27, 2013. Among other provisions, Title II of DQSA, the Drug Supply Chain Security Act (DSCSA), requires that brand owners take steps to serialize their products at the item level. The end goal is for government officials and other stakeholders to be able to exchange “…transaction information, transaction history, and transaction statements”I in a secure, interoperable and electronic manner, about the location of a pharmaceutical product in the supply chain by 2023.

Manufacturers, repackagers, and wholesale distributors were required to phase in these product-tracing requirements beginning on January 1, 2015, whereas dispensers, primarily smaller, independent pharmacies and health systems, were given until March 1, 2016 to comply with the new policyII. These measures include:

Product identifier: Manufacturers and repackagers must “affix or imprint a product identifier to each package and homogenous product intended to be introduced in a transaction into commerce.III

Product tracing: Manufacturers, repackagers, wholesale distributors, and dispensers are required to capture and “…provide the subsequent owner with transaction history, transaction information, and a transaction statement in a paper or electronic format.IV

Product verification and notification: Manufacturers, repackagers, wholesale distributors, and dispensers need to have human sensory perception-based or machine-based processes in place to verify whether or not a product is authentic, suspect, or illegitimate. If, after investigation, the product is confirmed to be illegitimate, the current owner will quarantine the drug and notify the Food and Drug Administration (FDA) and his or her trading partners within 24 hoursV.

The Act stipulates that the Secretary of Health and Human Services, via the FDA, will develop standards VI, issue guidance documents VII, hold public meetings VIII, and establish pilot projects IXto implement these new requirements over a ten-year period. A summary of the planned implementation timeframe is available here: fda.gov .

Accordingly, the FDA held the first in a series of public workshops on April 5-6, 2016 on its campus in New Hampshire. This sold-out event convened key members of the supply chain to discuss and evaluate the technical capabilities necessary to adding a product identifier to pharmaceutical products in the packaging line, among other issues. Notes from the meeting were not yet published at the time of this article.

Now more than ever, manufacturers of pharmaceutical products and other stakeholders in the supply chain across the globe must take product identification and authentication seriously, as more than 80 per cent of all drugs sold in the worldX will be required by law to be uniquely identified, authenticated, and located from production, though distribution, and finally to the patient.

I Drug Supply Chain Security Act, Title II of the Drug Quality and Security Act, Section 582, Subsection (a)(2)(A), Retrieved 4 April 2016 at fda.gov

IIDSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised), October 2015, Retrieved 12 April 2016 at fda.gov

IIISee Reference 1, Section 582, Subsection (a)(3)(C)

IVSee Reference 1, Section 582, Subsection (b)(1)(A)(i)

VSee Reference 1, Section 582, Subsection (b)(4)

VISee Reference 1, Section 582, Subsection (a)(2)(A)

VIISee Reference 1, Section 203, Subsection (h)

VIIISee Reference 1, Section 203, Subsection (i)

IXSee Reference 1, Section 203, Subsection (j)

XChristoph Krähenbühl, 2016: The year to take serialisation seriously, 18 January 2016, Retrieved 13 April 2016 from securingindustry.com

FMD Delegated Regulation (EU) 2016/161 Published

Wednesday, 9 March 2016, Martin Kutter

European CommissionThe publication of the Delegated Regulation (EU) 2016/161I supplementing the Falsified Medicines Directive (FMD) 2001/83/EC and its amendment 2011/62/EU was finally published in the Official Journal of the European Union on February 9, 2016. This date marks the three-year window in which manufacturers of pharmaceutical products in the European Union will need to comply with the requirements of the FMD, namely “…the placing of safety features consisting of a unique identifier and an anti-tampering device on the packaging […] for the purposes of allowing their identification and authentication.”II

The Regulation prescribes an “end-to-end”III verification system of medicine, from the point of manufacture through to its distribution to patients. The unique identifier takes the form of a two-dimensional barcode or matrix code that is machine-readable and consists of the product identity (name, dosage form, pack size and type, etc.), serial number, national reimbursement number, batch number, and expiry date.IV In addition, the Regulation mandates item-level serialization, meaning that the unique identifier “…should be unique to a given pack of medicinal product”.V The result is a randomly generated printed code that is less than 50 characters long and unique in the world.

Wholesalers throughout the supply chain will be able to verify the authenticity of a medicinal product by connecting to a “repositories system”VI. This system will contain the data elements of the safety features necessary for its identification or decommissioning. An individual Member State will connect to its own “national repositories”VII, whereas a group of Member States will connect to a “supranational repositories”VIII. In either case, a central ‘hub’ run by the European Medicines Verification Organisation or EMVO, a nonprofit organization located in Luxemburg, will eventually manage all data processing. Finally, brand owners will have to carry the costs of the verification system. (See Blog Article “New Developments in the Fight Against Falsified Medicines” for more information on the EMVO.)

The verification of the safety features boils down to a two-step verification process: one, the authenticity of the unique identifier and two, the integrity of the anti-tampering device.IX If either verification fails, regulatory authorities responsible for human medicine in the E.U. must notify the Commission and “…on the basis of casualties or hospitalizations of citizens of the Union due to exposure to falsified medicinal products, […] rapid action is required to protect public health […] at the latest within 45 days”X.

While the Regulation is the culmination of over 15 years of work, the many stakeholders involved in the legitimate supply chain, starting with the manufacturer all the way down to the patient, will undoubtedly feel the ramifications, both technological and financial of these measures. However, this work is also a remarked effort by the Union and the industry alike to harmonize product safety and in turn protect public health. The verdict on the success of this herculean effort is still out and won’t be known until February 9, 2019.

I Commission Delegated Regulation (EU) 2016/161, Official Journal of the European Union, 2 February 2016, retrieved on 29 February 2016 from europa.eu

IISee Reference 1,L 32/1,(1)

IIISee Reference 1, L 32/1, (4)

IVSee Reference 1,L 32/7,Chapter II,Article4

VSee Reference 1,L 32/2,(5)

VISee Reference 1,L 32/15,Chapter VII, Article 31

VIISee Reference 1,L 32/15,Chapter VII, Article 1 (b)

VIIISee Reference 1,L 32/15,Chapter VII, Article 1 (b)

IXSee Reference 1,L 32/10,Chapter III, Article 10

XSee Reference 1, L 32/22, Chapter X, Article 47

A Deeper Look at the Financial Impact of the FMD Delegated Act

Friday, 22 January 2016, Fred Jordan

European Commission

 

Our previous blog article (Cost-Benefit Analysis of a ‘European Hub’ for Medicine Authentication) analyzed the cost-benefit of creating a European hub – the European Medicines Verification Organization or EMVO – to link national verification systems throughout Europe and facilitate the creation of a central database to comply with the Falsified Medicines Directive (FMD) safety feature requirements.

 

 

We used FMD Project Manager Johan Verhaeghe’s presentation given at the Anti-Counterfeiting & Brand Safety World Summit London on October 1, 2015, to explore the strengths and weaknesses of this model. According to Verhaeghe, the combined cost to run the EU ‘hub’ (a shared cost), link the national verification system(s), and operate the data repository system would range between €5000 and €19000 per marketing authorization holder (MAH) – the company or other legal entity that has the authorization to market a medicine in one, several or all European Union Member States – per country per year.

There is no doubting the accuracy of these numbers. However, there is a problem on the horizon. What this model fails to account for are the profound implementation implications of adding the tamper proof feature and unique identifier (UI) to pharmaceutical packaging. According to a 2002 master thesis titled, The new Falsified Medicines Directive 2011/62/EU and its requirements for stakeholders, submitted to the German Society for Regulatory Affairs, the cost to the manufacturer is estimated at € 0.06 per pack or € 1.07 billion annually for tamper-proof features EU-wide. For database setup and adaptation of packaging lines to the unique identifier, the financial impact to the manufacturer is expected to be € 371 million per year. I

Of course, these numbers could vary depending on the breadth of the manufacturer’s portfolio and the safety technique(s) chosen. However, modifying pharmaceutical packaging for tamper proof evidence, as well as design for the unique identifier is not insignificant. Tim Marsh, managing director of Supply Chain Security Partners, LLC, recently highlighted this point by referring to the “prohibition issue.” II According to Marsh, the text of the FMD Delegated Act allows manufacturers to apply the UI (in this case, a 2D barcode or matrix code) on individual medicinal packs only “…once there is an operational repository where the relevant identification data can be uploaded,” III not retroactively.

Marsh’s contention with the Commission stems from the fact that a unique identifier can only work if there is a reliable repository system in place. In light of this correlation, the prohibition not only forces manufacturers to opt for the EMVO model by default, annulling any efforts made to ‘serialize’ their products up to now, but also to comply with this approach within a three-year window, which, according to Marsh, would be challenging and costly.

In response to Marsh’s letter, Graham Smith, director and chief sales officer of Aegate Ltd., contends that the Commission established the prohibition to expedite the creation of a central repository system and help rather than “…impede the work of pharmaceutical manufacturers and the wider supply chain as they progress towards meeting the requirements of the new legislation.” IV In his opinion, resources should not be wasted debating the pros and cons of such a system, but rather push ahead with the proposed approach for the better protection of patient and consumer safety alike.

Right or wrong, the publication of the FMD Delegated Act in the Official Journal of the European Union in early 2016 will certainly bring more clarity to this debate.

I Sonja Seeberger, Master Thesis: The new Falsified Medicines Directive 2011/62/EU and its requirements for stakeholders, 2002, Retrieved 13 January 2016 from DGRA.de

II Tim Marsh, Prohibition on proactive serialization for the EU FMD, 4 December 2015, Retrieved 13 January 2016 from SecuringIndustry.com

III See Reference 2

IV Graham Smith, FMD Delegated Act – the letter of the law or the spirit?, 16 December 2015, Retrieved 13 January 2016 from SecuringIndustry.com

Cost-Benefit Analysis of a ‘European Hub’ for Medicine Authentication

Wednesday, 18 November 2015, Martin Kutter

European Commission As described in our previous blog (New Developments in the Fight Against Falsified Medicines), the European Medicines Verification Organisation or EMVO was founded in February 2015 as a means to help EU Member States implement the requirements set out by the Falsified Medicines Directive (2011/62/EU).

 

Among other measures, the FMD mandates that Member States place a ‘Unique Identifier’ (UI) on individual medicinal packs for authentication. According to the draft Delegated Act published in August 2015, describing the technical characteristics of the safety features, the UI takes the form of a 2D barcode or matrix code containing a unique serial number, a product code, an expiration date, a batch number, and a national health number (where necessary). In addition, this code must be verifiable at the point of dispensing to the patient.

The EMVO therefore stems from the need to create a central ‘European Hub’ that would ensure interoperability between existing national systems, while reducing complexity and costs of doing so. Indeed, Member States would not only benefit from the opportunity to join an existing product verification infrastructure designed by the EMVO, but also to share the economic advantages of implementing a collective system.

Thanks to the establishment of the EMVO, countries are expected to comply with the FMD and be fully operational roughly by the end of 2018.

According to Johan Verhaeghe, FMD Project Manager, the cost of centralizing national verification systems through the EMVO is based on a flat fee model. I This model accounts for the cost of running the EU ‘hub’ (a shared cost), that of the national verification system(s) (proportional to the number and size of systems in place), and that of the data repository system operated by the IT service provider. In light of this breakdown, Dr. Verhaeghe estimates the flat fee to be between €5000 and €19000 per marketing authorization holder (MAH) – the company or other legal entity that has the authorization to market a medicine in one, several or all European Union Member States – per country per year.II Adoption of EMVO’s national verification system could therefore come with a hefty price tag given the long list of MAHs in Europe. III

One advantage of this flat-rate pricing model is that countries and marketing authorization holders or MAHs will be more likely to lean on the EMVO to build and deliver a national and interoperable verification system in a shorter amount of time. Another advantage of this model is that it is transparent and easy for Member States and MAHs to understand, therefore increasing the likelihood of adoption.

However, while flat-fee pricing is a clear motivation to “get the job done”, it may also lead the EMVO to poor work quality, given the lack of financial incentives. Another potential disadvantage is that any obstacle that gets in the way of building a verification system may amount to more work and unexpected costs on the part of the EMVO, potentially leading to financial trouble.

Regardless of the pricing method adopted by the EMVO, the cost of implementing a standard national verification system that aims to meet the safety feature requirements of the FMD will undoubtedly generate added costs to the many stakeholders involved in the legitimate supply chain, from manufacturer to patient.

I Johan Verhaeghe, FMD compliance: the National Blueprint Approach, presentation given at the Anti-Counterfeiting & Brand Safety World Summit London, 1 October 2015, slide 36

II See Reference 1, slide 39

III Full list of Marketing Authorisation Holders and Sponsors, ec.europa.eu

New Developments in the Fight Against Falsified Medicines

Tuesday, 7 October 2015, Fred Jordan

European Commission In addition to the recent publication of a draft delegated act laying down the technical specifications of the safety features, two other major developments have taken place since the EU Falsified Medicines Directive (2011/62/EU) came into effect in January 2013.

The European Medicines Verification Organisation (EMVO)

 

According to a European Federation of Pharmaceutical Industries and Associations (EFPIA) press release I, the European Medicines Verification Organisation or EMVO was founded in February 2015 as a “hub” to link national verification systems throughout Europe. Established as a nonprofit organization and located in Luxemburg, the EMVO will play a key role in promoting the European Stakeholder Model (ESM) – “a point-of-dispensing verification system that allows pharmacists to check a unique identification code on each individual pack when it is dispensed to the patient.II

Not unlike the WCO’s global anti-counterfeiting platform known as IPM III, the idea is that the EMVO will build and provide EU Member States with a database of legitimate pharmaceutical products that can be used to identify fake ones.

Because the FMD requires that “…the costs of the repositories system shall be borne by the manufacturing authorisation holders of medicinal products bearing the safety features” IV, the EMVO also signed agreements with three partners in June 2015: Aegate – a global drug authentication service, Arvato Systems – a systems integrator, and Solidsoft Reply – a Microsoft gold certified partner that will help provide a delivery platform using Microsoft AzureV.

Finally, the EMVO appointed Sonia Ruiz Moran as its new president on June 19, 2015 VI, replacing John Chave, former secretary general of Pharmaceutical Group of the European Union (PGEU). Moran brings a wealth of experience in EU regulatory affairs, having led the European Public Affairs at the General Pharmaceutical Council of Spain, since 2008.

Although a partial solution to implementing the requirements of the FMD, the EMVO is well on its way to providing a mechanism to ensure the safe delivery of medicines in the pharmaceutical supply chain.

The EU Common Logo

In addition to the obligatory application of safety features for the identification and authentication of medicinal products, the FMD also requires the establishment of a “common logo” to help identify websites which sell medicinal products legally.VII

To that end, the European Commission adopted a new common logo on June 24, 2014.VIII The Commission then gave Member States one year to implement this provision. As of July 2015, pharmacies or retailers selling medicines over the Internet in the EU must display the logo.

According to the specifications laid out in the “Common EU logo for online pharmacies/retailers” technical paper IX, the elements of the logo include a white cross with four green lines, the national flag of the specific EU Member State, and text encouraging visitors to click on the logo to verify that the online seller is operating legally.

As with the launch of the EMVO, the introduction of a common logo represents one of several measures to implement the provisions mandated by the FMD. Both developments will likely be closely monitored to assess the impact they have on curbing the availability and sale of counterfeit medicines in the pharmaceutical supply chain and protecting patient and consumer safety in the EU.

I efpia.eu

II European Stakeholder Model ESM Publication, pgeu.eu June 2012, p. 6

III wcoipm.org

IV Directive 2011/62/EU of the European Parliament and of the Council of 8 June 2011 amending Directive 2001/83/EC on the Community code relating to medicinal products for human use, as regards the prevention of the entry into the legal supply chain of falsified medicinal products, from eur-lex.europa.eu p. 8

V thepharmaletter.com

VI efpia.eu

VII Directive 2011/62/EU of the European Parliament and of the Council of 8 June 2011 amending Directive 2001/83/EC on the Community code relating to medicinal products for human use, as regards the prevention of the entry into the legal supply chain of falsified medicinal products, from ur-lex.europa.eu p. 3

VIII ec.europa.eu

IX ec.europa.eu

Draft EU Falsified Medicines Directive Delegated Act Published

Monday, 14 September 2015, Martin Kutter

European CommissionThe Falsified Medicines Directive (2011/62/EU) adopted in June 2011 and put into force in January 2013, calls on the European Commission to prepare and adopt delegated acts that will lay down the technical specifications of the safety featuresI, determine the methods for the verification of the security elementsII, and institute a repository system to store and manage themIII. A draft of the EU delegated act was recently published on August 12, 2015. Although the European Parliament and Council still need to review the document, the European Commission is set to publish it in Q4 2015IV. Once published, pharmaceutical companies will have exactly three years to comply with the EU-FMD, roughly by the end of Q4 2018.

The text begins with the introduction of a 2D barcodeV containing data such as product, serial and batch numbers. Authentication is then described as an “end-to-end verification system”VI enabling the control of the authenticity of medicinal products at the point of dispense. Finally, the repository system should be established and managed by relevant stakeholdersVII, in other words manufacturers, distributors, and providers. As for tamper-evidence, “the choice […] is left to the manufacturerVIII.”

A 2D barcode or matrix code as a traceability solution is a valid one, as it can encode large amounts of data, such as batch number, expiry date, and national reimbursement number. It can also provide, with a single scan, detailed information on the current and past locations of a medicinal product. Finally, this system is noticeably cheaper than other technologies, such as RFID systems, as the only cost involved is the ink.

There are many authentication technologies available to brand owners and manufacturers today. Invisible printing, for example, is often achieved through the use of special inks that only appear under ultraviolet (UV) or infrared (IR) lights. Invisible markings can also be printed using regular visible ink or varnish and standard printing processes, like our Cryptoglyph technology. Security graphics, such as microtext and latent images, may also be applied as background or in an obscure area of the packaging design. Highly sophisticated, DNA taggants can also be printed onto packaging and labeling and, through laboratory testing, provide forensic evidence of the authenticity of a pharmaceutical item.

Coupled with a 2D barcode, these authentication systems offer pharmaceutical companies as much of an effective way to authenticate products as an additional layer of security against counterfeiting.

ISee Reference 3, p.7

IISee Reference 3, p.8

IIISee Reference 3, p.8

IV 74th meeting of the Pharmaceutical Committee, 17 March 2015, p. 3

V Draft Commission Delegated Regulation, supplementing Directive 2001/83/EC of the European Parliament and of the Council by laying down detailed rules for the safety features appearing on the outer packaging of medicinal products for human use, p. 3

VISee Reference 6, p.3

VIISee Reference 7, p.3

VIII European Commission, Health and Consumers Directorate-General,Delegated act of the detailed rules for a unique identifier for medicinal products for human use, and its verification, Concept paper submitted for public consultation, 18 November 2011, p. 4

AlpVision Response to Feasibility Assessment of Covert Security Features in EU Tobacco Control

Friday, 17 July 2015, Fred Jordan

European CommissionOn May 7, 2015, the European Commission published an analysis and feasibility study on the existing traceability and authentication solutions applicable to the tobacco industry.

The report was successful in parsing the “marketing fluff” from the “real stuff” and emphasizing the need for both track and trace and security features, meaning that “… authorities, supply chain actors, and consumers need, in addition to traceability provided by track and trace, a method to authenticate that the product and / or markings are genuine.”I

However, we believe the report was less successful in properly ranking the covert security features available on the market today. Here’s why.

The authors present their findings of the assessment of the covert security feature technologies on page 136. The different solutions are analyzed and rated against imitation, affordability, ease of training, prevalence of authentication device, and industry suitability.

According to the results, latent images are rated fairly (50%) against imitation. Latent images require patterns and filters that are always well larger than 20 um. As a result, defense against imitation is very low. Best-case scenario, latent images should not exceed the percentage attributed to polarizing inks (25%) in the same table.

Similarly, digital watermarks are rated highly against imitation (75%). Digital watermarking describes methods and technologies that hide information, for example a number or text, in digital media, such as images, video or audio. A standard printed digital watermark is robust, meaning that the watermark will resist manipulations of the media and therefore copy flawlessly, compromising any level of security. Digital watermark’s defense against imitation should therefore be on par with similarly vulnerable features, such as fluorescent, thermochromic, photochromic or conductive inks rated poorly (25%) in the same table.

Covert symbology, while ranked third, is strangely unknown in the field of brand protection. According to the solution provider (Pagemark), the technology is based on a standard 2D barcode with an added covert secondary layer of data detectable using Pagemark's proprietary mobile or PC software. Practically speaking, we contend that this technology has the same security against imitation as a traditional QR-Code, which is set at 0% in the same table.

The authors also rank each feature against prevalence of device and give latent images, microparticles, metameric ink, polarizing ink, thermochromic ink, and RFID technology top scores (100%). By definition, this means that the authors rank a lens or a filter as more readily available than smartphones, for examples. If the objective is to provide “authorities [and] consumers [with] a mechanism to authenticate that tobacco products available for purchase are legitimate” (p. 17), it then seems fair to say that security features requiring readily available consumer electronics should be rated higher (e.g. Cryptoglyph) than those requiring specialized equipment.

Finally, AlpVision’s Cryptoglyph technology is rated highly (75%) against affordability. This said, Cryptoglyph requires no additional consumables or machinery, no special reading devices, and no production changes. We content that Cryptoglyph’s affordability should be given a top score of 100%.

In light of the above comments, we appreciate the opportunity to submit the following modified table for the authors’ review:

Security Feature

Defense against Imitation

Affordability

Ease of Training

Suitability for Enforcement
Prevalence of Device

Overall

Cryptoglyph 50% 100% 75% 50% 75% 70%
Latent Image 25% 100% 50% 75% 75% 65%
Digital Watermark 25% 100% 75% 50% 75% 65%
Metamerik Ink 50% 75% 50% 50% 100% 65%
Covert Symbology 0% 75% 75% 75% 75% 60%
Microparticles 75% 50% 50% 50% 75% 60%
NanoText 50% 50% 50% 75% 75% 60%
Hologram 75% 50% 25% 50% 75% 55%
Laser Taggants 75% 50% 75% 50% 25% 55%
Magnetic Ink 25% 75% 50% 50% 75% 55%
Polarising Ink 25% 25% 50% 50% 100% 50%

AlpVision will be submitting its response in full to the European Commission for consultation by the July 31st deadline.

I European Commission, Directorate-General for Health and Food Safety, Analysis and Feasibility Assessment Regarding EU systems for Tracking and Tracing of Tobacco Products and for Security Features, Final Report, 2015, Retrieved on 7 June 2015 from ec.europa.eu p. 70

Feasibility Report on EU’s Traceability and Authentication of Tobacco Products: A Look at Covert Security Features

Thursday, 18 June 2015, Martin Kutter

European Commission In response to Articles 15 (Traceability) and 16 (Security feature) of the second Tobacco Products Directive 2014/40/EU, the European Commission published on May 7, 2015, an analysis and feasibility report defining the technical standards for traceability and authentication of tobacco products.

274 solution providers were identified and contacted. The organization representatives who provided “real” facts and who were successful in conducting and completing a survey were retained. Of the 44 organizations that completed the survey process, 32 were providers of a track and trace solution and 38 of a security feature suitable for the tobacco industry.

As with the Directive, the report reinforces the fact that tracking and tracing alone does not provide sufficient protection against attempts to counterfeit or manipulate tobacco products. Instead, “Combining authentication and traceability provides a robust mechanism to combat counterfeiting, detect smuggled goods not authorized for an internal market, and guard against goods movement frauds […] within and between EU Member States.” I

In addition, the report makes the case for “security layering” II which involves combining multiple security features (overt, covert, forensic) to mitigate the risk of counterfeiting, tampering, and diversion.

Because AlpVision is a leading provider of covert security features for anti-counterfeiting and product authentication, including tobacco products, the remainder of this article will focus on the range of security features identified and reviewed by the authors of the report, paying particular attention to invisible ones.

Providers of security feature technologies were organized in three groups III :

  1. Niche security feature providers, who offer a specialized, yet partial security feature solution package
  2. Digital security feature providers, who offer an alphanumeric code-based solution as an overt security feature for authentication
  3. Full service security feature providers, who offer solutions with overt, covert and forensic elements

Next, the report analyzes and rates each security feature technology against imitation, affordability, ease of training, prevalence of authentication device, and industry suitability. Among the covert security features, AlpVision’s Cryptoglyph technology ranks in the top ten. IV

As a reminder, AlpVision Cryptoglyph is a digital invisible marking that can be applied to tobacco and cigarette packaging using standard printing processes and regular visible ink or overprint varnish. A commercially available smartphone can be used to authenticate the covert security feature.

In addition to reviewing the security feature elements, the report also considers the method of application. Ways in which security features can be applied include:

  1. As part of the production of the packaging material itself
  2. In a specific element of the packaging
  3. Printed directly onto the product
  4. Self-contained (e.g. label, film or stamp)
  5. Fingerprinting of unique material properties of the package

AlpVision’s Cryptoglyph technology corresponds to the third method of application. According to the report, there are several advantages and disadvantages to applying the security feature during the printing process.

Because the security feature is printed onto the packaging material itself, the element is irremovable. This method also allows to quantify the volume of products protected based on the amount of ink or varnish used in the process. It is also ideal for large volumes, high-speed printing processes.

According to the report, however, direct printing of the security feature also comes with a number of limitations. For example, this method may constrain the design, color, size and position of the security feature on the packaging. Authentication may also only be available on a product volume base, rather than at an item level. Furthermore, this process may not be appropriate for small production volumes and non-automated printing processes. Finally, adding the security feature during the printing process may be intrusive and require on-going maintenance.

These disadvantages may be true for certain covert security features, but not always for AlpVision Cryptoglyph. Because Cryptoglyph is a digital invisible marking that is applied to packaging and labels using regular visible ink or varnish and standard printing processes, it is non-intrusive and totally invisible. Because it is invisible to the naked eye, it is not limited by packaging design, color or size. It is also fully compatible with a layered approach to security. Finally, because it is commercialized under license agreements as an entirely customizable turnkey computerized system, Cryptoglyph deployment requires little to no training and maintenance. Finally, it is detectable using a standard smartphone, making it as readily available to enforcement officials as to consumers alike.

As a consequence, while AlpVision Cryptoglyph may not, by itself, provide a “full service” security feature package, it can happily co-exist with other overt and forensic security elements, as well as track and trace solutions, while providing defense in depth.

While the report proves to be a first good step in recognizing the importance of security features in protecting tobacco products from illicit trade, AlpVision disagrees with some of the recommendations made, particularly those pertaining to applying security features by means of a label. AlpVision will be providing input to the further implementation work on a future EU system for traceability and security features during the consultation period open until July 31st.

I European Commission, Directorate-General for Health and Food Safety, Analysis and Feasibility Assessment Regarding EU systems for Tracking and Tracing of Tobacco Products and for Security Features, Final Report, 2015, Retrieved on 7 June 2015 from ec.europa.eu p. 71

IISee Reference 1, p. 70

IIISee Reference 1, p. 22

IVSee Reference 1, p. 136

World No Tobacco Day 2015 Calls For an End to Illicit Trade

Monday, 26 May 2015, Fred Jordan
European Commission

The World Health Organization’s (WHO) World No Tobacco Day 2015 is coming up this month, on May 31. In addition to promoting healthier tobacco-free lifestyles, this year’s campaign calls on the international community to put an end to the illicit trade of tobacco products.




According to the World Customs Organization’s 2013 Illicit Trade Report, this phenomenon could touch as much as one in every ten cigarettes smoked worldwide.I In terms of counterfeit cigarette seizures alone, the report indicates that Belgium ranks first (34,604,000 pieces seized in 2013), followed by Italy and Spain. Brand-wise, “Marlboro” (56%) remains the most counterfeited tobacco product in the world, followed by “Palace” and “Richman.” II

In light of this alarming trend, the WHO’s World No Tobacco Day 2015 key public messages include raising awareness of the aggravated health risks associated with smoking illicit cigarettes, showing how the illicit tobacco trade threatens the effectiveness of safety measures and features (e.g. pictorial health warnings), and demonstrating how the tobacco industry has been involved with the illicit market, among others.III

The campaign’s end goal is to encourage countries to sign, ratify or accede to the WHO’s Protocol to Eliminate Illicit Trade in Tobacco Products. This treaty, concluded in Seoul in 2012, has been signed by 54 states, but so far has only been formalized in eight states: Austria, Republic of the Congo, Gabon, Mongolia, Nicaragua, Spain, Turkmenistan, and Uruguay.

By adopting the Protocol, countries must take a number of measures to help control the supply chain of tobacco products, including adopting a “global tracking and tracing regime.” IV To make such a system possible, the treaty requires that “…unique, secure and non-removable identification markings, such as codes or stamps, are affixed to or form part of all unit packets and packages and any outside packaging of cigarettes within a period of five years… of entry into force of [the] Protocol for that Party.” V

As we have argued in the past (see post dated October 24, 2014), a tracking and tracing system can be very handy as it not only provides information about a product’s movement, but also its point of diversion. However, implementing that kind of technology on a global scale, as called for by the Protocol, comes with a number of important challenges.

First, this process requires additional machinery in the physical supply chain, disrupting the flow of production and creating new operational constraints. Adopting a global system also requires complete interoperability across manufacturing facilities and distribution centers often in different regions of the globe, which can be a challenge due to inexistent or differing standards. Furthermore, because track-and-trace solutions are code-based, they are also inevitably more vulnerable to forging and hacking. Lastly, adding an item-level identifier to each unit packet of tobacco increases product deployment time and incurs new and ongoing maintenance costs.

Given these challenges, countries may be reticent to adopt the Protocol, lest it be government mandated. The European Commission’s second Tobacco Products Directive (2014/40/EU), for example, not only requires traceability measures, but also security features. However, the Directive also tasks the Commission to determine the technical standards for these elements in order to ensure compatibility across the Union. VI

While leveraging World No Tobacco Day to raise awareness of the Protocol provisions is a valiant effort towards shedding light on the illicit trade of tobacco products, it also makes it clear that the international community needs to discuss technical matters in more detail.

I World Customs Organization, Illicit Trade Report 2013, Retrieved 18 May 2015 from wcoomd.org

IISee Reference 1, p. 82

III World Health Organization, World No Tobacco Day 2015: Stop illicit trade of tobacco products, Retrieved May 18 2015 from who.int

IV World Health Organization, Protocol to Eliminate Illicit Trade in Tobacco Products, 2012, Retrieved 18 May 2015 from who.int p. 23, Article 8, 1.

V See Reference 4, p. 23, Article 8, 3.

VI Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Retrieved 29 October 2014 from eur-lex.europa.eu p. 23.

New Report: Understanding the U.S. Illicit Tobacco Market

Monday, 5 May 2015, Martin Kutter
European Commission

In February 2015, the National Research Council and the Institute of Medicine released a joint report on Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences. This new report describes the nature of and participants in the illicit tobacco market, measures the size of the market, reviews existing and possible interventions from a policy, legal, and international perspective, and compares and contrasts the United States to other countries.

According to the study, the main source of illegal cigarette trade is “bootlegging.” Bootlegging, also known as small-scale smuggling, refers to “…the legal purchase of cigarettes in one jurisdiction and their consumption or resale in another jurisdiction without the payment of applicable taxes or duties.”I Historically, this form of illegal business applied to alcohol and was used to avoid taxation and prohibition. Similarly, today, cigarette bootlegging is “…largely a result of different tax rates across U.S. jurisdictions”II This activity is therefore common in low-tax states, such as Virginia, North and South Carolina, as well as in Native American tribal reservations. Nationwide, illegal trafficking in cigarettes amounts to 1.24 billion packs, or 8.5 percent of national tax-paid sales. III

According to the report, other forms of illegal cigarette trade, such as large-scale smuggling IV (diversion of untaxed, in-transit cigarettes to the illegal market), “illicit whites” V (legally manufactured cigarettes sold in the illegal market) or illegal production VI (unlicensed or underreported production of cigarettes or production of counterfeit cigarettes), do not represent a serious threat to the economy or public health. Reasons vary: strong border control, consumer preference for domestic brands, and compared to smuggling, more complex and largely unprofitable.

That said, the United States remains a “destination country” for illegal cigarettes from abroadVII , primarily from China, North Korea and Paraguay.VIII In 2011, the U.S. Customs and Border Protection (CBP) intercepted and seized a shipment of 4.4 million counterfeit Marlboro cigarettes from China estimated at $1.1 million retail price. IX As to both counter the massive cigarette bootlegging business and prevent the entry and sell of foreign contraband tobacco products in the U.S., the report describes and proposes a number of possible measures to control the supply chain, ranging from licensing to public education campaigns.

In terms of packaging security, the authors cover tax stamps, track-and-trace systems and product design. Every state requires the application of tax stamps on cigarettes, with the exception of North Carolina, North Dakota, and South Carolina.X Today, most states use high-tech tax stamps that include both visible and invisible security features, but only two have adopted digital tax stamps with encrypted information: California and Michigan. As we have previously argued (The use of tax stamps to verify the authenticity of tobacco products, 9 October 2014), digital tax stamps doubling as an identification or authentication system may fill more roles than is realistically possible or even secure. Another factor is cost. The price of digital tax stamps can vary up to $8.00 per 1,000 stamps XI, which is a 1,500 percent increase from their heat-applied decal counterparts.

As of this date, a nationwide tracking and tracing technology does not exist in the United States, because of issues of governance (nation vs. state), geography (domestic vs. international production of illicit cigarettes), impact (low-tax states would be unlikely to adopt it), and possibly cost.

Finally, as with the E.U.’s revised Tobacco Products Directive (2014/40/EU), the U.S. Food and Drug Administration (FDA) prohibits the use and promotion of words, such as “light”, “mild” or “low” XII, but has not yet been able to impose health warnings on individual packs, because they “…violate First Amendment free speech rights.”XIII

I Peter Reuter and Malay Majmundar, Editors; Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences, 2015, Ch. 2, p. 3

IISee Reference 1, Ch. 2, p. 3

IIISee Reference 1, Ch. 4, p. 13

IV See Reference 1, Ch. 2, p. 4

V See Reference 1, Ch. 2, p. 6

VI See Reference 1, Ch. 2, p. 7

VII See Reference 1, Ch. 2, p. 5

VIII See Reference 1, Ch. 2, p. 8

IX Over 4.4 Million Counterfeit Marlboro Cigarettes Seized, January 12, 2011, Retrieved 28 April 2015 from cbp.gov

X Peter Reuter and Malay Majmundar, Editors; Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences, 2015, Ch. 5, p. 4

XI See Reference 1, Ch. 5, p. 9

XII See Reference 1, Ch. 8, p. 10

XIII See Reference 1, Ch. 8, p. 11

Plain Packaging for Cigarettes Signed into Law in Ireland and the UK

Monday, 13 April 2015, Fred Jordan
European Commission



Plain cigarette packaging prohibits the use of any branding, including corporate logos and trademarks, and standardizes colors, imagery, messaging and even the size, shape and material used to package tobacco products.


Plain packaging regulations are recommended under the World Health Organization’s Framework Convention on Tobacco Control (FCTC) guidelines.I While the second Tobacco Products Directive (2014/40/EU) does not require plain cigarette packaging, it does make it possible for Member States to “…introduce further requirements […] in relation to the standardization of the packaging of tobacco products.”II

Until last month, Australia was the first and only country in the world to require that cigarettes be sold in a mark-free, dark brown rectangular cardboard carton. However, on March 10 and March 16, 2015 respectively, Ireland and the United Kingdom became the second and third countries to do so.

In the case of Ireland, the Standardised Packaging of Tobacco Bill 2014 that was passed into law requires that tobacco manufacturers remove all forms of branding, “…except for the brand and variant names”III , and regulates the appearance of cigarette packaging, cigarettes, and other related products. Along with improving overall public health, Ireland hopes that this legislation will move the country toward a tobacco free society.

In terms of security, Subsection 5 provides that “…a bar-code or other similar identification mark may be printed once on a cigarette packet in a form and manner prescribed by the Minister.”IV However, this mark cannot convey any information to the consumer, emit any sound or scent, or contain any feature that changes the appearance of the package after sale, including color-changing and invisible inks, scratch-off coatings, and removable adhesives, among others.V

Similarly, the United Kingdom’s Standardised Packaging of Tobacco Products Regulations 2015 requires that cigarettes be sold in a Pantone 448 C (dark brown – the same color chosen by the Australian government) cuboid carton package with a matt finish. VI While the legislation does not specify the introduction of security features, it does prohibit the use of elements that would change after retail sale. VII As with Ireland, the UK hopes that this legislation will lower the number of smokers in children and youth.

As a result of these new regulations, some government members have voiced their concerns, particularly in relation to tobacco security. The disapproval focuses specifically on a security and traceability system commonly used in tobacco control called Codentify. As described in our October 9, 2014 article, Codentify is a visible, all in one “electronic tax verification, production volume control and authentication solution” VIII encrypting a 12-digit alphanumeric code. Under the current law, the Codentify technology would have to be removed from major tobacco manufacturing operations, including Imperial Tobacco, Philip Morris International, and British American Tobacco, which would, according to Ian Paisley, a Member of Parliament for North Antrim in Ireland, increase illicit trade. IX

While there are very few large-scale, covert security features deployed in the tobacco industry today, one solution uses the existing varnish coating printed on most tobacco packaging and labeling (Cryptoglyph). This process adds a pseudo-random pattern of invisible micro-holes (60 microns) into the overprint varnish. Non-intrusive and totally invisible, these micro-holes cover the entire surface of the packaging without changing its design. Unlike most covert anti-counterfeit technologies available on the market today, this invisible security feature can also be detected with a smartphone. This solution would therefore be a viable alternative to protecting cigarette packs from illicit trade, while helping Ireland and the UK transpose the new plain packaging legislation.

I Guidelines for implementation of Article 11 of the WHO Framework Convention on Tobacco Control (Packaging and labelling of tobacco products), Retrieved on 6 April 2015 from who.int , p.8

IISee Reference I, p. 30

III Public Health (Standardised Packaging of Tobacco) Bill 2014, Retrieved on 6 April 2015 from health.gov.ie, p.1

IV See Reference 3, p.3

V See Reference 3, p.7

VI The Standardised Packaging of Tobacco Products Regulations 2015, Retrieved 6 April 2015 from legislation.gov.uk

VII The Standardised Packaging of Tobacco Products Regulations 2015, Retrieved 6 April 2015 from legislation.gov.uk

VIII The Standardised Packaging of Tobacco Products Regulations 2015, Retrieved 6 April 2015 from Codentify_E_Brochure

IX The Standardised Packaging of Tobacco Products Regulations 2015, Retrieved 6 April 2015 from thegrocer.co.uk

Push against the second Tobacco Products Directive (2014/40/EU) picks up

Wednesday, 18 March 2015, Martin Kutter

Background European Commission
The European Parliament adopted a second Tobacco Products Directive (2014/40/EU) on April 3, 2014, regulating ingredients, labeling and packaging, including traceability and security features, cross-border distance sales, e-cigarettes, and herbal products for smoking. While implementation is under way to meet the May 20, 2016 deadline, the Directive has received pushback from the tobacco industry and the community alike.

Republic of Poland v European Parliament and Council of the European Union
On July 22, 2014, the Republic of Poland brought Case C-358/14 to the European Parliament and Council of the European Union. The applicant opposes the EU’s ban on promoting or selling tobacco products with a ‘characterising flavour’, particularly that of menthol cigarettes, and orders the European Parliament and the Council to pay the costs related to the inevitable economic loss. I

The Republic of Poland contests that the prohibition of menthol cigarettes would not improve the smooth functioning of the internal market, but rather disrupt it. The promotion and sale of flavored cigarettes should also be dealt with at a national level, rather than at a Union level. According to the Republic of Poland, the social and economic impact of the ban does not, as a result, appropriately meet the Directive’s objectives.

Totally Wicked Legal Challenge
On October 6, 2014, Totally Wicked, one of the founding companies of the electronic cigarette market, won the right to challenge Article 20 of the newly adopted Tobacco Products Directive controlling electronic cigarettes on the basis that the same laws that govern regular tobacco products should not govern e-cigarettes. II

Fundamentally, Totally Wicked contends that as opposed to traditional cigarettes, e-cigarettes are neither a medicinal product nor do they contain any tobacco. Consumers should also have the freedom to choose alternative forms of smoking. Finally, the EU’s interference with the private market does not, in their eyes, bode well for agile product governance and compliance.

Tobacco Industry
On November 3, 2014, Philip Morris International and British American Tobacco, in separate claims, were granted the right to challenge the Directive’s validity before the Court of Justice of the European Union (CJEU). III In addition, Japan Tobacco International and Imperial Tobacco are considered “interested parties.”IV

As with Case C-358/14, Philip Morris and its subsidiaries claim that measures banning menthol cigarettes or encouraging the adoption of “plain packaging” for example do not improve the smooth functioning of the internal market, but rather “…create obvious incentives for illegal trade.” V In addition, regulating packaging and labeling is at odds with “…the fundamental rights of consumers to information about the products they are choosing.” VI Because many of the technical aspects of implementing the Directive have been delegated to the Commission or independent third parties, Philip Morris and its subsidiaries also question the Directive’s overall constitutionality.

What’s next?
The case will now move to the CJEU seated in Luxembourg and a judgment should be issued within two years.

I Action brought on 22 July 2014 — Republic of Poland v European Parliament and Council of the European Union (Case C-358/14), Retrieved on 11 March 2015 from eur-lex.europa.eu

IITotally Wicked Legal Challenge, Retrieved on 11 March 2015 from article20legalchallenge.com

III Philip Morris International Granted Right to Challenge EU’s Tobacco Products Directive Before the Court of Justice of the European Union, November 3, 2014, Retrieved on 11 March 2015 from businesswire.com

IV Brick Court Chambers News, Administrative Court asks the Court of Justice of the European Union to rule on the validity of the Tobacco Products Directive, Retrieved on 11 March 2015 from brickcourt.co.uk

V See Reference 4

VI See Reference 4

New Evidence Brief on Plain Packaging Measures in Europe

Tuesday, 17 February 2015, Fred Jordan

In 2003, the European Union’s Tobacco Advertising Directive (2003/33/EC) put a stop to the advertising of tobacco products in the press and other printed materials, with the exception of trade magazines, on the radio, and at events.I Packaging alone has therefore been the only branding medium for cigarette manufacturers.

While the newly adopted Tobacco Products Directive (2014/40/EU) does not require the removal of all branding, it does make it possible for Member States to “…introduce further requirements […] in relation to the standardization of the packaging of tobacco products.” II

In light of this eventuality, a new evidence brief by the World Health Organization — Plain packaging of tobacco products: measures to decrease smoking initiation and increase cessation III — provides direct and concrete evidence of the effectiveness of plain packaging and responds to concerns expressed by the tobacco industry.

Based on scientific literature, survey results and case studies in Australia, Canada, France, New Zealand, the United Kingdom, and the United States, the WHO reports the following findings:

  • Plain packaging reduces the attractiveness of the product, particularly to young people and women. This finding is based on the fact that “…plain packaging is found to be dull and to increase negative feelings about smoking.” IV
  • Plain packaging combined with large pictorial warnings increases awareness of the risks related to tobacco consumption, because “…they are more noticeable, easier to see and easier to remember...” V
  • Plain-packaging measures encourage more people to quit and fewer to start. Because the package is as much a form of personal branding, as it is corporate, the “…consumer is expressing how he wants to be seen”VI and may choose not to be associated with an unbranded and highly graphic cigarette pack.

According to the WHO, plain packaging does not violate intellectual property law either, because it does not make unauthorized use of the brand owners’ trademarks, but “…merely [regulates] the use of logos or colors for the purposes of public interest and public health…” VII

In response to criticism drawn from the tobacco industry about the potential increase in counterfeiting, the WHO counteracts with the introduction of safety features, including the use of invisible ink and chips. The fear that plain packaging will also make the cost per unit lower could be compensated for with increased taxes. Finally, the WHO responds to concerns that plain-packaging measures would be lengthy and difficult to implement by arguing that they are actually easier to carry out by design.

I Directive 2003/33/EC of the European Parliament and of the Council of 26 May 2003 on the approximation of the laws, regulations and administrative provisions of the Member States relating to the advertising and sponsorship of tobacco products, Retrieved 1 February 2015 from eur-lex.europa.eu

II Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Retrieved 31 January 2015 from ec.europa.eu

III World Health Organization (WHO), 2014, Evidence brief – Plain packaging of tobacco products: measures to decrease smoking initiation and increase cessation, Retrieved 10 February 2015 from euro.who.int

IV See Reference 3, p. 2.

V See Reference 3, p. 3.

VI See Reference 3, p. 4.

VII See Reference 3, p. 5.

Tobacco Products Directive (2014/40/EU): A Look Back

Monday, 19 January 2015, Martin Kutter

As we begin the New Year, we take a look back at the introduction of the revised Tobacco Products Directive (2014/40/EU), at the rules governing the manufacture, presentation and sale of tobacco products, specifically those controlling packaging and labeling, and at the tobacco industry’s response.

The first Tobacco Products Directive (2001/37/EC) was adopted more than 10 years ago. To align the decade-old Directive with “market, scientific and international developments in the tobacco sector”I, the European Commission proposed a revision that would “facilitate the smooth functioning of the internal market for tobacco and related products”II, while providing a “high level of health protection”III for European citizens, particularly for young people.

Adopted by the Council on March 14, 2014 and brought into force on May 19, 2014, the revised Tobacco Products Directive (2014/40/EU):

  • Sets maximum emission levels and requires manufacturers to report the list of ingredients used in tobacco products to the Member States
  • Prohibits tobacco products with a “characterizing flavour”IV
  • Mandates that each unit packet of tobacco product and any outside packaging carry a combined health warning (text and color photograph) that covers 65% of the packaging surface (front and back)
  • Bans any element or feature that promotes or encourages tobacco consumptionMilk
  • Requires that all unit packets of tobacco be marked with a unique identifier for tracking and tracing purposes, as well as a tamper proof security feature, composed of visible and invisible elements, to combat illicit trade
  • Gives Members States the right to prohibit cross-border distance sales of tobacco products
  • And requires manufacturers to inform Member States of any new tobacco products before introducing them to the market

In light of these requirements, manufacturers of tobacco products will be forced to reduce the number of brand elements traditionally included on cigarette packaging or even remove them all together. In addition, they will have to find clever ways to add the unique identifier and security feature imposed by the Directive, or any other element required by national legislation (e.g. tax stamps, national identification marks, price marks, etc.), given the restricted packaging surface.

As we have previously argued (see August 22, 2014 post), manufacturers would therefore be well advised to select an invisible security feature that would not only comply with the Directive, but also free up any design and branding surface left.

In our September 1, 2014 post, we contended that, while commonly used in tobacco control, taggants and invisible inks were sometimes unreliable, often dependent, and most importantly costly. An alternative authentication technology uses the overprint varnishes that are applied to tobacco packaging for quality and appearance (Cryptoglyph). This last process adds a pseudo-random pattern of invisible micro-holes (60 microns) into the standard coating. Non-intrusive and totally invisible, these micro-holes cover the entire surface of the packaging without changing its design. Unlike most covert anti-counterfeit technologies available on the market today, this invisible security feature can also be detected with a smartphone.

To date, a number of tobacco manufacturers has voiced their discontent by asking for more clarity on the Directive’s provisionsV and has even been granted the right to challenge it before the Court of Justice of the European Union.VI But as previously shown (see September 16, 2014 post), the packaging and labeling specifications described in the newly updated Directive seem to be in line with global tobacco packaging and labeling trends. So while the current provisions and their effectiveness are being disputed, it is clear that these new requirements will play an important role in the future of tobacco advertising and promotion, as well as in brand protection and authentication.

I Retrieved on January 12, 2015 from ec.europa.eu

II Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, p. 4

III See Reference 2, p. 4

IV See Reference 2, p. 14

V JTI calls for clarity on TPD provisions, April 30, 2014, Retrieved on January 13, 2015 from tobaccoreporter.com

VI Philip Morris International Granted Right to Challenge EU’s Tobacco Products Directive Before the Court of Justice of the European Union, November 3, 2014, Retrieved on January 13, 2015 from businesswire.com

Offline vs. Online Authentication Solutions for the Tobacco Industry

Monday, 22 December 2014, Fred Jordan

The Tobacco Products Directive (2014/40/EU), replacing Directive (2001/37/EC), introduces requirements for traceability and product authentication.

For traceability purposes, the Directive mandates that Member States add a “unique identifier”I to each unit packet, allowing them to track, trace and accurately record the current and past locations of tobacco products sold on the European Union market. While the technical standards for the tracking and tracing system have not yet been defined, the Directive recommends that this technology be developed and operable at Union levelII. In order to ensure transparency, the Directive also strongly advises that data processing and storage occur independently of manufacturers of tobacco productsIII.

To “facilitate the verification of whether or not tobacco products are authentic,”IV the Directive also requires that all unit packets of tobacco products carry a “tamper proof security feature, composed of visible and invisible elements.”V As with the traceability requirement, the European Commission is set out to define the technical standards for the security feature to ensure uniform implementation across the EU.

As we have previously arguedVI, the need for a security feature to verify the authenticity of tobacco products is no longer merely an option, but a requirement. As important as it is to adopt a security feature, it is even more critical to decide on an authentication process.

Based on the nature of the feature, this process can operate in offline or connected mode. For example, taggants and invisible inks are two common anti-counterfeiting technologies used in the tobacco industry. A taggant detector, such as a laser pen, UV light, or microscope, operates offline. Likewise, invisible ink marks can be made visible without the use of a network, through heat, UV illumination or infrared light. While these tobacco product authentication solutions require specially engineered equipment to be detected, they are also generally highly reliable.

Conversely, digital tax stamps doubling as authentication systems, such as Philip Morris International’s Codentify technology, require a network to be verified (e.g. phone call, SMS, dedicated mobile app or website)VII. For example, the user scans the electronic tax stamp with their mobile device. After receiving the code verification request, the central information system in turn sends a notification of the authenticity of the code to the userVIII. While this system allows users to verify the authenticity of tobacco products anywhere, at any time, it also requires access to a network to run and is therefore less reliable and secure.

Today, it is possible to build a hybrid mobile application to allow instant verification of tobacco products without network access, yet with remote synchronization capabilities for reporting. One solution leverages the standard varnish layer printed on most tobacco packaging and labeling to add a glossy finish (Cryptoglyph). A digital image file containing encrypted information is integrated during the prepress process. When it’s time to print, the file embeds a pseudo-random pattern of micro-holes (40 to 80 microns) into the coating.

A smartphone application specifically developed for this technology enables users to confirm authenticity without a network connection. Entirely automated, the application generally takes less than three seconds to verify the authenticity of the tobacco product, including time to pick up the item and position the smartphone over it. If desired, the user can also connect to a wired or wireless network to send and receive authentication statistics, offering the best of both worlds.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Retrieved 13 December 2014 from eur-lex.europa.eu, p. 22.

II See reference I , page 6.

III See reference I , page 6.

IV See reference I , page 5.

V See reference I , page 24.

VI Kutter, M. October 20, 2014. Traceability and Authentication of Tobacco Products. AlpVision Blog. Retrieved December 13, 2014 from VII Philip Morris International, Codentify, 2012, Retrieved 3 September 2014 from pmi.com, p. 6.

VIII See reference VII , page 14.

What can the newly updated Tobacco Products Directive (2014/40/EU) learn from the Falsified Medicines Directive (2011/62/EU)?

Monday, 24 November 2014, Martin Kutter

European CommissionThe adoption by the European Parliament of a revised Tobacco Products Directive (2014/40/EU) earlier this year has sent shock waves across the tobacco industry. Citing the necessity to improve the functioning of the internal market, while assuring a high level of public health, the Directive calls for mandatory health warnings, bans promotional or misleading elements on cigarette packs, and introduces traceability and authentication measures, among other actions.

Just as the EU is imposing new rules on the tobacco industry today, so did it on pharmaceutical companies a few years ago. The Falsified Medicines Directive (2011/62/EU) adopted in July 2011 and put into place from January 2013, strives to achieve a very similar objective, namely to “…safeguard the functioning of the internal market for medicinal products, whilst ensuring a high level of protection of public health against falsified medicinal products.”I

Because the phenomenon of falsified medicines – any medicinal product with a false representation of its identity, source or historyII – is on the rise, the Falsified Medicines Directive calls for the obligatory application and harmonization of safety features to reduce the sale of falsified medicines in the legal supply chain, particularly via the Internet. The scope of the safety features is twofold: one, “verify the authenticity of the medicinal product,” and two, “identify individual packs.”III

While the technical specifications for the safety features are still unclear, the measures begin with the introduction of barcodes and tamper-evident security solutions.IV The barcode will identify the date, name of the product, quantity purchased or sold, supplier’s name and address, and batch number.V As for tamper-evidence, “the choice […] is left to the manufacturer.”VI

The barcode as a traceability solution is a valid one, as it can provide, with a single scan, detailed information on the current and past locations of the medicinal product in question. However, what this technology fails to do is verify the authenticity of medicines. Indeed, authentication, as defined by the International Standard 12931, is the “act of establishing whether a material good is genuine or not.”VII So whereas identification is the process of making claims about the characteristics of a product, authentication is the process of actually confirming the validity of those claims. Compliance with the Directive therefore seems compromised.

As seen in the Falsified Medicines Directive, the Tobacco Products Directive introduces this vital distinction as well. Article 15 mandates that all unit packets of tobacco products include a “unique identifier.”VIII The marker must allow any agent involved in the cigarette industry’s supply chain to determine the time and place of manufacturing all the way down to the purchaser’s invoice payment records. Article 16, on the other hand, requires that each Member State add a “…tamper proof security feature, composed of visible and invisible elements.”IX The purpose of the security feature is to “facilitate the verification of whether or not tobacco products are authentic.”X

While the technical standards for the security feature have not yet been defined, the pharmaceutical industry’s seemingly inadequate attempt to comply with the Falsified Medicines Directive safety feature requirement should be a clear signal to expend as much effort into product authentication as in traceability in order to successfully control the supply chain of tobacco products now and in the future.

I Directive 2011/62/EU of the European Parliament and of the Council of 8 June 2011 amending Directive 2001/83/EC on the Community code relating to medicinal products for human use, as regards the prevention of the entry into the legal supply chain of falsified medicinal products, from eur-lex.europa.eu p. 4.

II See reference I , page 5.

III See reference I , page 7.

IV Falsified medicines, European Medicines Agency, Retrieved 14 November 2014 from ema.europa.eu.

V See reference I, page 9.

VI Delegated act of the detailed rules for a unique identifier for medicinal products for human use, and its verification, from ec.europa.eu page 4.

VII International Standard ISO 12931, International Organization for Standardization, 2012, p. 2.

VII Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products from ensp.org, page 22.

IX See reference VII , page 24.

X See reference VII , page 5.

Will the provisions for packaging and labeling imposed by the newly revised Tobacco Products Directive (2014/40/EU) make cigarette packs easier to counterfeit?

Tuesday, 4 November 2014, Fred Jordan

European CommissionThe newly updated Tobacco Products Directive (2014/40/EU) introduces a number of technical specifications for the “layout, design and shape of tobacco packaging.”I These provisions require that each unit packet and any outside packaging carry a specific health warning, combined with a color photograph, which must cover 65% of both front and back sides of the packaging. In addition, tobacco packaging can no longer include elements or features that help promote tobacco products or their consumption. Lastly, each packet must be made of carton or other soft material and have a cuboid shape.

The Directive also includes requirements for traceability and product authentication. For traceability purposes, the Directive mandates that Member States add a “unique identifier”II to each unit packet, allowing them to track, trace and accurately record the current and past locations of tobacco products sold on the European Union market. To “facilitate the verification of whether or not tobacco products are authentic,”III the Directive also requires that all unit packets of tobacco products carry a “tamper proof security feature, composed of visible and invisible elements.”IV

The overall purpose of these measures is to standardize the appearance of all tobacco packs in order to reduce the number of youth smokers, improve public health and curb the trade of fake cigarettes.

Historically, standardized cigarette packaging has been recommended in a number of countries, including New Zealand in 1989V, Canada in the 1990sV, and most recently in Ireland5 and in FranceVI, respectively in June and September of this year. With the enactment of the Tobacco Plain Packaging Act 2011VII however, Australia became the first and only country in the world to require generic packaging. The tobacco companies operating in Australia now sell their cigarettes in a mark-free, dark brown rectangular cardboard carton.

Evidence of the effectiveness of homogeneous cigarette packaging is mixed. While a recent study conducted by KPMG LLP for British American Tobacco Australia, Imperial Tobacco Australia Limited and Philip Morris Limited found that both consumption and illicit use of tobacco in Australia grew in 2013VIII, the Australian government found that “tobacco clearances (including excise and customs duty) fell by 3.4% in 2013 relative to 2012 when tobacco plain packaging was introduced.”IX

Concern that standardized packaging for tobacco will increase the sale of counterfeit cigarettes has also been raised. In a 2012 Huffington Post blog, Roy Ramm, former Commander of Specialist Operations at New Scotland Yard, claims that “…by introducing plain-packaging legislation, […] the ordinary consumer [would no longer be able] to tell whether their cigarettes are counterfeit or not.”X He argues that plain packaging will not only be inherently easier to forge, but will also boost production of both cheaper and fake cigarettes.

Conversely, a recent study conducted by the Centre for Behavioural Research in Cancer on the unintended consequences of standardized packaging of tobacco products in Australia found “…no indication of any increase over time in the percentage of smokers reporting use of unbranded illicit tobacco.”XI

While evidence of the effectiveness of the current Directive will not be available before 2021, it seems clear that placing restrictions on advertising of tobacco products will not help the declining tobacco industry. In addition, manufacturers may be more reticent to add anti-counterfeiting and product authentication features, if the law already limits their design and branding privileges.

This unintentional outcome may have unfortunate consequences on tobacco control efforts, unless manufacturers opt for invisible anti-counterfeiting solutions. Indeed, covert features, such as our own Cryptoglyph technology, can be simple and low-cost to implement, easily added or modified, and applied in-house, without any regulatory approval. As a consequence, invisible anti-counterfeiting solutions would not only offer manufacturers a high level of security, but would also free up any packaging surface area left for design and branding elements.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Retrieved 29 October 2014 from eur-lex.europa.eu p. 8.

II See reference I , page 22.

III See reference I , page 5.

IV See reference I , page 24.

V Plain cigarette packaging, Wikipedia, Retrieved 29 October 2014 from en.wikipedia.org

VI France to introduce plain cigarette packaging, 25 September 2014, Retrieved 29 October 2014 from from bbc.com

VII Tobacco Plain Packaging Act 2011 of the Parliament of Australia of 1 December 2011, from comlaw.gov.au

VIII Illicit Tobacco in Australia, KPMG LLP, 3 April 2014, Retrieved August 2014 from PMI.

IX Tobacco key facts and figures, Australian Government, Department of Health, 19 June 2014, Retrieved 29 October 2014 from health.gov.au

X Ramm, R, Government Plans for Plain Packaging Will Boost Illicit Trade, Huffington Post UK, 1 July 2012, Retrieved 29 October 2014 from huffingtonpost.co.uk

XI Scollo, M; Zacher, M; Durkin, S; Wakefield, M, Early evidence about the predicted unintended consequences of standardised packaging of tobacco products in Australia: a cross-sectional study of the place of purchase, regular brands and use of illicit tobacco, British Medical Journal, 18 July 2014, Retrieved 29 October 2014 from bmjopen.bmj.com

Traceability and Authentication of Tobacco Products

Monday, 20 October 2014, Martin Kutter

European CommissionThe Tobacco Products Directive (2001/37/EC), adopted more than ten years ago by the European Commission, imposed maximum limits for tar, nicotine and carbon monoxide yields, standardized health warnings, and established a framework for authorized ingredients in order to provide a high level of health protection to European citizens. Perhaps because illicit cigarette trade was not as prevalent as it is today, the text merely glossed over the concept of “traceability”I as a means to determine the identity, time and place of manufacture of tobacco products.

According to Euromonitor estimates, the trade of illegal cigarettes is estimated to reach 27.1 billion in government revenue loss by 2015II. In light of this alarming trend, the European Commission’s newly updated Tobacco Products Directive (2014/40/EU) calls for stronger legislative action at Union level, imposing not only the implementation of a tracking and tracing system, but also the introduction of a security feature.

Indeed, Article 15 mandates that all unit packets of tobacco products include a “unique identifier”III. The marker must allow any agent involved in the cigarette industry’s supply chain to determine the time and place of manufacturing all the way down to the purchaser’s invoice payment records.

Article 16, on the other hand, requires that each Member State add a “…tamper proof security feature, composed of visible and invisible elements ”IV. The purpose of the security feature is to “facilitate the verification of whether or not tobacco products are authentic”5.

As a result, whereas the track-and-trace technology will concern a process of establishing the current and past locations of tobacco products, the security feature will enable Member States to authenticate them, in other words to “…[establish] whether a material good is genuine or not ”VI.

This distinction may be obvious to some, but traceability and authentication have more often than not been considered to fulfill the same purpose – security – and achieve the same result – identification. Since the adoption of the World Health Organization’s Framework Convention for Tobacco Control in 2003, recommending that tobacco manufacturers develop “a practical tracking and tracing regime that would further secure the distribution system and assist in the investigation of illicit trade”VII, the push for an international track-and-trace system has been made industry wide.

And rightly so! Composed of a unique code, a detection process or device, and a data serverVIII, a tracking and tracing system not only provides information about a product’s movement, but also its point of diversion. However, because track-and-trace solutions are code-based, they are also inevitably more vulnerable to forging and hacking.

As outlined in the revised Tobacco Products Directive (2014/40/EU), the need for a security feature to verify the authenticity of tobacco products is no longer merely an option, but a requirement. As a result, the challenge for tobacco manufacturers will not be deciding between traceability and authentication, but opting for a combination of the two.

I Directive 2001/37/EC of the European Parliament and of the Council of 5 June 2001 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco products, from www.ensp.org, p. 6.

IIThe Express Tribune, How illicit cigarette trade dents the socio-economic fabric, 1 September 2013, Retrieved 12 October 2014 from tribune.com.pk.

IIIDirective 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC from eur-lex.europa.eu, p. 22.

IVSee reference III , page 24.

V See reference III , page 5.

VI International Standard ISO 12931, International Organization for Standardization, 2012, p. 2.

VIIWHO Framework Convention on Tobacco Control, 2003, Retrieved 12 October 2014 from whqlibdoc.who.int, p. 21.

VIII Framework Convention Alliance. (n.d.) The use of technology to combat the illicit tobacco trade, Retrieved 12 October 2014 from www.fctc.org, p. 12.

The use of tax stamps to verify the authenticity of tobacco products

Thursday, 9 October 2014, Fred Jordan

European CommissionArticle 16 of the revised Tobacco Products Directive (2014/40/EU) - EUTPD - introduces requirements for visible and invisible security features in order to “facilitate the verification of whether or not tobacco products are authentic.”I Placed on each unit packet of tobacco products, these elements must be “irremovably printed or affixed, indelible and not hidden or interrupted in any form.”II

While the technical standards for the security feature have not yet been defined, common authentication systems used in tobacco control include taggants and invisible inks. (For more information, see related blog entry from September 1st)

Another popular authentication tool is the use of digital tax stamps. Typically in paper form and used to collect tobacco tax revenue, this new generation of tax stamps has been used to track and detect counterfeit tobacco products.III

The State of California was at the vanguard of this movement. In 2005, the California State Legislature passed Senate Bill 1701, requiring that the traditional paper tax stamp be replaced with a “…stamp or meter impression that can be read by a scanning or similar device, and encrypted with specified information.”IV In 2007, the California Bureau of Equalization – California’s tax collection agency – reported that tobacco tax evasion had fallen by 37% compared with 2003.V Today, the California tax stamp “…uses layered security printed on the stamp and combines overt and covert counterfeit-resistant features in the printed design.”VI Following California’s success, digital tax stamps are now being used in Massachusetts, Canada, Turkey, and Brazil.VII

On the industry front, Philip Morris International (PMI) offers their very own electronic tax stamp called Codentify®. Codentify® is an all-in-one “electronic tax verification, production volume control and authentication solution that uses the latest digital technology [to] provide the assurance governments need.”VIII How does it work? A manufacturer installs a code generator on each individual production line within a manufacturing facility.IX The generator in turn applies an overt and encrypted 12-digit code onto product packaging.X According to PMI, any agent in the supply chain – from manufacturer to consumer – can then authenticate the tobacco product over a phone call, smart phone scan, SMS or a dedicated website.XI

In light of these two examples, using digital tax stamps as a means to verify the authenticity of tobacco products has several clear advantages. Many countries already mandate that tobacco be taxed, eliminating the need to research an alternative authentication system. Printed, digital tax stamps do not require any additional materials to be affixed and, by contrast with paper-based stamps, are fully integrated into the packaging material, making them less costly to produce. Often comprising encrypted information or other covert features, digital tax stamps also seem more secure than their paper counterparts. In the case of the Codentify® technology, there is finally no need for dedicated reading devices, making the verification process seemingly easier and more cost-effective.

This said, there are also strong arguments against the use of digital tax stamps for product authentication. Tax stamps, whether in paper or digital form, are controlled by individual governments. This, in turn, not only restricts the number and kind of agents involved in producing, supplying and verifying the stamps, but also prohibits their global use. Generating digital tax stamps also requires added machinery, disrupting the printing process and subsequently increasing production costs. While digital tax stamps can include encrypted information or other covert elements, they are nonetheless printed overtly, making them easier to forge. Finally, because digital tax stamps now have up to three functions – revenue collection, track and trace, and authentication – they may fill more roles than is realistically possible or even secure.

An alternative authentication technology eliminating the need for the government middleman or that of complex machinery, yet combining the many advantages of digital tax stamps, is called Cryptoglyph. This solution embeds a pattern of invisible micro-holes in the fabric of the packaging material using standard overprint varnish and printing processes (offset, flexography, rotogravure). When it’s time to authenticate a tobacco product, the user launches an app, positions a smartphone over the item and if the pattern is present, receives a positive authentication message within seconds. Automated, this system eliminates interpretation and training, significantly reducing human error. Stand-alone, it also decreases chances of phone or code hacking. Most notably, this solution does not require any additional consumables, allowing brand owners to maintain the same costs of production while increasing product security.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Directive 2014/40/EU, p. 5.

II Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, Directive 2014/40/EU, p. 23.

III The use of technology to combat the illicit tobacco trade. Framework Convention Alliance, October 6, 2008, Retrieved 3 September 2014 from Framework Convention Alliance , p. 7.

IV Senate Bill 1701 (Stats. 2002, Ch. 881) of the California State Legislature amending, repealing, and adding Section 30162 of the Revenue and Taxation Code, relating to taxation, Senate Bill 1701 (Stats. 2002, Ch. 881) , p. 1.

VMcIntosh, A, Tobacco Tax Cheating Falls, Sacramento Bee, 27 June 2007, Retrieved 15 September 2014 from TMCNET.COM.

VI California Board of Equalization, New California Counterfeit-Resistant Cigarette Tax Stamp, Retrieved 15 September 2014 from www.boe.ca.gov, p. 2.

VIIBoonn, Anne, The case for high-tech cigarette tax stamps, Campaign for Tobacco Free Kids, January 3 2013, Retrieved 15 September 2014 from TOBACCOFREEKIDS.COM.

VIII Philip Morris International, Codentify, 2012, Retrieved 3 September 2014 from Codentify E Brochure, p. 6.

IX See reference VIII , page 10.

X See reference VIII , page 8.

XI See reference VIII , page 14.

How do international tobacco packaging and labeling norms compare with those put forward by the updated Tobacco Products Directive (2014/40/EU)I?

Tuesday, 16 September 2014, Martin Kutter

European CommissionIn order to “facilitate the smooth functioning of the internal market for tobacco and related products” (p. 4), while providing a “high level of health protection” (p. 4) for European citizens, particularly for young people, the newly updated Tobacco Products Directive (2014/40/EU) devotes an entire chapter to “labelling and packaging” (p. 17).

In terms of labeling, the section regulates the format, layout, design, and proportions of health warning messages and pictures for tobacco and related smoking products, as well as bans any false advertising or consumption promotion. In terms of packaging, the Directive controls the material and shape of the cigarette packet. The chapter also includes requirements concerning anti-counterfeiting and authentication packaging and labeling technologies. The overall purpose of these provisions is to standardize the appearance of all tobacco packs in order to reduce the number of youth smokers, improve public health and curb the trade of fake cigarettes.

While evidence of the effectiveness of the Directive will not be available before 2021, historical precedents exist. According to Wikipedia, tobacco health warning labels have been imposed in over 30 non-European countries for many years, generally emphasizing the same message, that smoking is detrimental to one’s healthII. While a 2009 review found that “There is clear evidence that tobacco package health warnings increase consumers’ knowledge about the health consequences of tobacco use and contribute to changing consumer’s attitudes towards tobacco use as well as changing consumers’ behaviour,”III health warning messages on cigarette packs have also been heavily criticized because there are potentially more effective ways to quit smoking, starting with major changes in behavior.IV

In terms of packaging, standardized or “plain cigarette packaging”V has been implemented in Australia. With the enactment of the Tobacco Plain Packaging Act 2011VI, manufacturers have had to sell their cigarettes in a mark-free, dark brown rectangular cardboard carton since December 1, 2012. As with health warning labels, evidence of the effectiveness of homogeneous cigarette packaging is mixed. While the Australian government found that “tobacco clearances (including excise and customs duty) fell by 3.4% in 2013 relative to 2012 when tobacco plain packaging was introduced”VII , a recent study conducted by KPMG LLP for British American Tobacco Australia, Imperial Tobacco Australia Limited and Philip Morris Limited found that both consumption and illicit use of tobacco in Australia grew in 2013.VIII

While Australia is the only country in the world to require that the appearance of cigarette packs be uniform, many countries outside of the European Union are also actively considering plain packaging measures, including Canada, Norway, India, New Zealand, and Turkey.V

As a consequence, the packaging and labeling specifications described in the newly updated Tobacco Products Directive (2014/40/EU) seem to be in line with global tobacco packaging and labeling trends. And while the current evidence on the effectiveness of standardized packaging is disputed, it is clear that these new provisions will have serious ramifications on certain aspects of tobacco packaging and labeling, including traceability and security features.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, download Download PDF from Europa.eu

II Tobacco packaging warning messages. Retrieved August 20, 2014 from WIKIPEDIA

III A review of the science base to support the development of health warnings for tobacco packages (Report). Sambrook Research International. May 18, 2009. Retrieved August 2014 from EUROPA.EU, p 3.

IV Why is it so hard to quit smoking?, American Cancer Society.Retrieved August 20, 2014 from CANCER.ORG

V Plain cigarette packaging. Retrieved August 20, 2014 from WIKIPEDIA.ORG

VI Tobacco Plain Packaging Act 2011of the Parliament of Australia of 1 December 2011. More on COMLAW.GOV.AU.

VII Tobacco key facts and figures, Department of Health, 19 June 2014. Retrieved August 20, 2014 from ARCHIVE.ORG

VIII Illicit Tobacco in Australia, KPMG LLP, 3 April 2014. Retrieved August 2014 from PMI.COM

What viable solutions are there to verify the authenticity of tobacco packaging?

Monday, 1 September 2014, Fred Jordan
Spacer

European CommissionIn order to combat the illicit trade of tobacco products, the newly published Tobacco Products Directive (2014/40/EU) I requires that all unit packets of tobacco products carry a “tamper proof security feature, composed of visible and invisible elements.” (p. 24) The purpose of the security feature is to “facilitate the verification of whether or not tobacco products are authentic.” (p. 5) In light of this requirement, what solutions are commonly used to verify the authenticity of tobacco packaging, and which ones are viable?

Visual inspection – A visual inspection of tobacco packaging by the human eye is an either-or situation: either the replica is so poorly made (e.g. fake brand name, spelling mistakes, omission of a visible security feature, etc.) that there is no need to access the packaging information to verify its authenticity; or, the replica is virtually indistinguishable from its original counterpart, making it extremely difficult, if not impossible, to determine whether the product is genuine or fake. As a consequence, customs authorities frequently rely on industry experts to authenticate smoking-related products, making this process time-consuming and most importantly unreliable.

Taggant – When applied as a chemical marker, taggants can be used to authenticate tobacco products. Taggants are integrated into the material of the packaging itself. Once integrated, they can only be verified with dedicated reading devices. While invisible to the naked eye and generally irremovable and irreversible, taggants are uniquely encoded into the packaging and require specifically engineered equipment to be detected. This technology therefore disrupts the smooth functioning of the printing process and substantially increases production costs.

Invisible ink – Similar to taggants, invisible ink can also be used for authentication purposes. According to the World Health Organization’s Framework Convention on Tobacco Control or FCTC, digital tax stamps using invisible ink are printed on tobacco products in California, Brazil, Turkey and seemingly Canada2. While invisible ink is inherently secure, it also requires specifically designed devices to be read.

While commonly used in tobacco control, these systems are sometimes unreliable, often dependent, and most importantly costly. The need for a more secure, self-sufficient, and cost-effective authentication technology is therefore clear. One process for authentication of tobacco packaging is called Cryptoglyph and involves embedding an invisible marking on the packet or on any outside packaging, without changing the packaging design or flow of production. Unlike the cost and complexity of taggants or invisible inks, this technology is digitally encoded within the artwork and can therefore be easily integrated into any existing packaging or label printing process at zero production cost. In contrast to the unreliability of the visual inspection, Cryptoglyph can also be detected using everyday electronic devices, such as a flatbed scanner, a smartphone, or a standard USB microscope connected to a regular PC operating system. The Cryptoglyph technology is therefore ideal for the production of high-quality, high-speed and high-security printed tobacco cartons.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, download Download PDF from Europa.eu

II Framework Convention Alliance. (n.d.) The use of technology to combat the illicit tobacco trade, Retrieved August 2014 from FCTC, p. 4.

What does the updated Tobacco Products Directive (2014/40/EU)1 require for packaging design?

Friday, 22 August 2014, Martin Kutter

European CommissionOn April 3, 2014, the European Commission published an updated version of the Tobacco Products Directive (2014/40/EU) I, effectively repealing 2001/37/EC. The new measures cover ingredients, labeling and packaging, including traceability and security features, cross-border distance sales, e-cigarettes, and herbal products for smoking. The purpose of the revision is to “facilitate the smooth functioning of the internal market for tobacco and related products” (p. 4), while providing a “high level of health protection” (p. 4) for European citizens, particularly for young people.

To that end, the Directive introduces a number of technical specifications for the “layout, design and shape of tobacco packaging.” (p. 8) These provisions require that each unit packet and any outside packaging carry a specific health warning, combined with a color photograph, which must cover 65% of both front and back sides of the packaging. In addition, tobacco packaging shall not include elements or features that help promote tobacco products or their consumption. Lastly, each packet shall be made of carton or other soft material and have a cuboid shape.

For traceability purposes, the Directive furthermore mandates that Member States add a “unique identifier” (p. 22) to each unit packet. This marking shall allow Member States, manufacturers of tobacco products and any person involved in the supply chain of tobacco products to track, trace and accurately record the current and past locations of the tobacco products sold on the European Union market.

To combat the illicit trade of tobacco products, the Directive finally requires that all unit packets of tobacco products carry a “tamper proof security feature, composed of visible and invisible elements.” (p. 24) The purpose of the security feature is to “facilitate the verification of whether or not tobacco products are authentic.” (p. 5)

While the European Union hopes that these requirements will improve overall public health and curb the trade of fake cigarettes, it is fair to say that manufacturers of tobacco products are left with very little leeway in terms of packaging design and branding (e.g. colors, imagery, corporate logos and trademarks). In addition, they have extremely limited packaging surface to include the unique identifier and security feature imposed by the Directive, or any other element required by national legislation (e.g. tax stamps, national identification marks, price marks, etc.).

While design specifications and traceability measures would be difficult and almost impossible to change or manipulate, the choice of security feature is broader. Indeed, the Directive states that the security feature may be “composed of visible and invisible elements.” (p. 24) It would therefore be in the manufacturer’s best interest to select an invisible security feature that would not only increase the amount of design and branding surface, but also comply with the Directive in helping to determine the authenticity of tobacco products.

One approach that would not only comply with the security requirement, but also be invisible, is the Cryptoglyph technology. Cryptoglyph is a digital invisible marking that is applied to tobacco and cigarette packaging using regular overprint varnish and standard printing processes (offset, rotogravure, flexo, laser, inkjet, etc.). Integrated with prepress, the Cryptoglyph adds a pseudo-random pattern of invisible micro-holes (60 microns) into the standard varnish layer. Non-intrusive and totally invisible, these micro-holes cover the entire surface of the packaging or label without changing its design and are detectable using everyday electronics. Ideal for large volumes, high-speed printing processes, and multi-plant deployment, the Crytptoglyph technology has been successfully implemented in the tobacco industry for the past ten years.

I Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC, download Download PDF from Europa.eu

Home About AlpVision Brand
Protection
Document
Security
Custom
Solutions
News Events Support Online Chat Contact Us
Cryptoglyph and AlpVision are registered trademarks of AlpVision SA. Krypsos is a trademark of AlpVision SA.
© 2001-2017 AlpVision. All Rights Reserved