The consequences of drug counterfeiting are far-reaching and worldwide. According to a review report by United Nations Office on Drugs and Crime, it’s estimated that the black market for counterfeiting exceeds $250 billion. Such a huge supply of illicit medications in the supply chain harms the public, causing the deaths of patients in the worst-case scenarios. This problem is persistent as counterfeiters have many avenues to ply their criminal trade online.


Studies by United Nations show that the pharmaceutical industry saw one of the largest growth in online purchases due to COVID.  Consumer behavior has shifted forever and they are continuing to purchase products online, even after the pandemic. With this rise in online purchases, counterfeiters are easily able to find their way into the supply chain.


To save consumers from purchasing fake medication, pharmaceutical brands need to protect their drugs and other products with the right ecosystem of anti-counterfeit safeguards. The challenge is determining which risk factors warrant an advanced technological solution as medications remain in circulation online. Manufacturers and distributors have a part to play in securing the global supply chain, but applying the optimal solution requires a thorough understanding of the risks of drug counterfeiting.

Why are drugs counterfeited and falsified?

Drug counterfeiting is highly lucrative for counterfeiters. In fact, counterfeiting is more lucrative than narcotics trafficking. According to a report by United Nations Office on Drugs and Crime (UNODC), counterfeiters profit more than narcotics traffickers. This profit margin, clubbed by the ease of sale online today, makes it easy for counterfeiters to choose to counterfeit drugs.


Sometimes the frauds intertwine where dealers add illegal substances to medications to mimic the active ingredients. Ultimately, the consumers are unaware of the danger before it’s too late since they believe the medicines they’re receiving via pharmacies are safe.


The penalties and regulatory system against producing and distributing counterfeit pharmaceuticals are comparatively not as strict as illicit drug dealing statutes. For example, in the United States, a conviction for counterfeiting products can lead to a 10-year prison sentence while distributing narcotics can lead to longer sentencing of several decades.


Complicating the issue further, the legal landscape varies worldwide – and counterfeiters exploit the inconsistencies of these regulatory laws across countries.


Not only that, but drug counterfeiting also has a larger market than narcotics as more people use medications than illegal drugs. The U.S. Drug Enforcement Agency recently identified 9.5 million counterfeit medicines from April 2020 to April 2021. That figure alone was double the previous two years. Today, drug counterfeiting is a multi-billion dollar market and will likely remain until pharmaceutical brands bolster security because lives hang in the balance.

Why are counterfeit drugs a global problem?

Contrary to popular belief, drug counterfeiting isn’t a problem in only developing and low-income countries. This is an international issue, encompassing developed countries as well. However, it’s more pronounced in low income countries, with an estimated 10% of all drugs being substandard or falsified.


As counterfeit drugs are low in quality, often missing important ingredients, they aren’t able to properly treat the diseases. Some substandard drugs might contain real active ingredients like antibiotic, but the dosage is subpar. This makes the drugs a public health risk.


The World Health Organization (WHO) estimates that counterfeit, falsified, and substandard drugs are responsible for over 1 million deaths yearly. A study by WHO also reveals there are 72,000 deaths of children from pneumonia if the antibiotics are substandard. In the case of falsified or fake drugs, the deaths could be up to 169,000.


The size and scope of the crime are only part of the issue. The high prices for life-saving medications increase the risk that people will settle for questionable websites promising cheaper, more affordable alternatives. Also, if the remedy is a controlled substance like opioid drugs, consumers require a prescription, so buying cheap pharmaceuticals via the internet circumvents the restriction.


Additionally, not all drugs are available in all countries. Online consumers purchase medicines where they are available when people can’t find the drugs locally. They risk their health to save money on medicine they can’t afford on their own. The unfortunate outcome is that some people will die as a result of trusting internet pharmacies, which have no oversight whatsoever.


The good news is that brands can combat counterfeit medicines and other medical products.

How can brands combat drug counterfeiting?

The first lines of defense starts at the manufacturing and distributing levels when importing pharmaceuticals, but law enforcement also plays a significant role. The Food and Drug Administration (FDA) works actively to stop illicit websites peddling potentially dangerous fraudulent medicines. Despite the efforts of the FDA, there are thousands of websites on the internet offering counterfeit medicines.


As a safeguard, doctors recommend their patients only acquire medicine through authorized pharmacies to ensure safety. Most consumers fill a prescription at trusted pharmacies, yet some choose to find alternatives online on the internet at a lower price, dramatically increasing health risks.


All parties have a stake in protecting consumers, and manufacturers apply anti-counterfeit technologies to packaging or on products, verifiable via a smartphone app. Nevertheless, the pharmaceutical industry and other associations created global initiatives to strengthen protections, such as Pharmaledger and the WCO Initiative. The current solutions are:

1. Secure global supply chain with blockchain technology

Platforms like Pharmaledger allow companies to utilize blockchain technology to create an ever-lasting “ledger” of data and foster an ecosystem of solutions. The project’s goals are far-reaching, but Pharmaledger aims to develop a scalable blockchain-based platform that ensures more data privacy without sacrificing security. The system will make validating drugs and other products in the supply chain easier while also evoking a compliance framework.


While this is important for pharmaceutical companies in the backend, this alone can’t be a foolproof counterfeit solution as a vast majority of consumers are not familiar with the new technology. This becomes especially complicated for developing countries where technical knowledge isn’t as widespread. The implementation of this technology will also take time and there’s no immediate resolution.

2. WCO Initiative

The World Customs Organization launched an initiative in 2021 to thwart drug counterfeiting, particularly illicit vaccines, in the wake of the COVID-19 pandemic. The project aims to strengthen the customs control chain to ensure that criminals don’t exploit public health and safety concerns for their own ends. Using technology, this type of coordinated, cross-border customs control lowers the likelihood of fake COVID-19 medications and vaccines entering the supply chain.


This, however, doesn’t provide a 360-degree solution to brands as this is only applicable to exported and imported medication. Counterfeit drugs can circulate within the country itself, and counterfeiters can always find ways to get around customs.

3. Serialization of the products

Serialization in pharmaceuticals refers to the unique code assigned to a product for its identification. While serialization is useful in supply chain tracking, it can’t stop the counterfeiting products to enter the market as scammers can easily replicate the codes. If a fake drug is identified before the genuine one, the serialization becomes useless.

Serialization doesn’t serve as counterfeit protection, even after helping with the track-and-trace.

4. Holograms and QR codes on the packaging

Pharmaceutical brands currently use holograms and QR codes on the product packaging as an authenticity sign. This type of security is also called “overt” protection as they’re visible to the naked eye.


But the problem remains: counterfeiters have access to advanced technology today and can easily replicate the holograms and the QR codes.

5. Raise awareness among consumers

Spreading information to aware consumers is a non-negotiable measure. However, educating end-consumers is a long and ongoing process. The results aren’t immediate and it can take decades to reach a successful end goal.


Despite having informed consumers, brands still need to implement solutions that can be used as an authenticity mark.

What kind of technologies can foolproof drug counterfeiting?

Pharmaceutical brands can combat drug counterfeiting, but some protections are outdated, as described above. For instance, overt technologies like holograms are easier to replicate. It’s easier for the consumer to verify a medication at a glance, yet a sophisticated fraudster can copy overt anti-counterfeit measures.


On the other hand, covert technologies make it more difficult to counterfeit items, if not impossible. The benefit of covert defenses is that the protection isn’t easily detectable. But even some covert securities are vulnerable as counterfeiters actively and persistently try to outwit consumers, law enforcement, and international distributors.


As such, brands would do well to implement an anti-counterfeit system that’s never been successfully copied like AlpVision technologies. Our solutions are compatible with both Pharmaledger and the WCO initiative, adding value to implementation. Con artists don’t have access to the underlying technology, and thus, it’s significantly more challenging for them to detect covert measures and even more difficult to make facsimiles.


AlpVision Fingerprint – Physical Products Protection

AlpVision Fingerprint is our state-of-the-art anti-counterfeit system, which can protect authentic pharmaceutical products. The technology works by pinpointing the intrinsic microscopic defects in the plastic part molds, which in this case would be a medicine bottle or the packaging.


The software uses reference images of the defects to determine if the item is genuine. The product is authentic if the same markings and imperfections are present.


The random processes used to create plastic molds like electro-erosion are extraordinarily challenging to mimic with any semblance of accuracy, thus giving brands a clear advantage over counterfeiters. AlpVision Fingerprint is a powerful solution, but we can also implement our packaging and label protection software Cryptoglyph.

Cryptoglyph – Packaging and Label Protection

Cryptoglyph excels at securing packaging and labeling with digital verification. The technology works by punching thousands of microscopic holes in the package’s varnish layer, or it can be applied to certificates of authenticity. Criminals simply don’t have access to the underlying technology because it’s a patented technology.


The solution works with a smartphone app for fast scanning and packaging verification, including packaging with reflective surfaces.


Cryptoglyph is a powerful solution that counterfeiters won’t anticipate, but you can enable a more robust ecosystem of protections if you combine protections. The question is: which AlpVision systems would work best for your organization?


If you’d like to read more about our anti-counterfeit software, DOWNLOAD OUR WHITEPAPER to learn how AlpVision’s solutions can improve your security posture.


Download our Whitepaper



Eager to learn more?

Our team would be pleased to help you


      Quick Info Request