Pharmaceutical
counterfeiting

what are
the actual risks

The globalized pharmaceutical supply chains are threatened by the global scourge of pharmaceutical counterfeiting, especially in a COVID-19 scenario. The solution is efficient anti-counterfeiting solutions, with a proven success, based on unbreakable technologies, easy to deploy.

 

PHARMACEUTICAL MARKET AND SUPPLY CHAIN CHALLENGES

CURRENT SCENARIO AND NEW TRENDS

Around 10% of the global pharma drug supply is counterfeit, which costs up to $200 billion annually. Interpol calculates that this volume of counterfeit drugs takes a toll of 1 million people every year. (WHO, 2018).
The immediate decline in revenue after the patent expiration of an innovating drug, the so called “patent cliff”, is one of the major issues facing the pharmaceutical industry, especially for blockbuster drugs producers. When the patent protection expires, generic manufacturers enter the market with drugs that are equivalent to the innovator’s drug, at a significantly lower price.
The average life expectancy is increasing in OECD countries and the most interesting new trend in pharmaceuticals is that of Precision and Personalized Medicine, expected to strongly increase in the next years, especially as regards the preventive medicine (DNA sequencing of genes) (Deloitte LLP, 2017).

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DIFFERENT TYPES OF PHARMACEUTICAL FORMULATIONS

Pharmaceuticals can be categorized by traditional dosage/delivery forms (oral, ophthalmic, etc.) or by physical dosage form (solid, semi-solid, etc.). Finished pharmaceutical products (prescription drugs, over-the-counter medicines, generics) contain compounds produced by chemical synthesis or plant-based compounds. The new frontier is about Biopharmaceuticals that are based on biology and harness cellular and biomolecular processes, including:

  • Vaccines
  • Blood, blood components and plasma derivatives
  • Recombinant therapeutic proteins (including Monoclonal antibodies)
  • Genomics-based precision medicine
  • Biomarkers (for reducing treatment overheads)
  • Nanotechnology-based drugs and carriers

The complexity and diversity of new pharmaceutical products is increasing the importance of optimizing and globalizing the pharmaceutical supply chains.

PHARMACEUTICAL SUPPLY CHAINS

A supply chain is the means by which a company transfers its products from development to the marketplace in order to sell them and generate a profit. It includes all the organizational, operational and value-adding activities needed to manufacture those products and get them to the customer. So, for a pharma company, it covers everything from new product development through to delivery to the hospital, retail pharmacy or patient.

Biopharmaceuticals industry adds up some peculiar complexity to its supply chain in terms of:

  • cold chain transports
  • cell culturing
  • cryopreservation
  • intensive Quality Control (estimated 70% of elapsed time) (Deloitte LLC, 2020)

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Track & Trace / Serialization

A peculiarity of pharmaceutical supply chains is the serialization and the Track and trace concept. Over the last 20 years, the pharmaceutical industry has been working to secure the supply chain, through the development and implementation of serialization standards in many different markets. Pharmaceutical products are implementing unique identifiers in an attempt to secure the legitimate supply chain from infiltration of counterfeit, diverted, and adulterated products. This is the Serialization, where a unique serial number is assigned to each saleable unit of a product which can help in identifying the information of a product’s origin, batch number and expiration date. Markets have enacted regulations, whether it is applying serial numbers to certain packaging levels or reporting batch data to national agencies, that enforce the use of unique identifiers. Serialization is mandatory in many countries (Europe, USA), but also totally absent on others, including in many regions in Africa.

 

AGGREGATION

Aggregation is the concept of adding codes to the outside of cases and pallets to identify the individual pack-level products inside. In other words, aggregation builds parent-child relationships from pallet to case to individual pack-level products.

Product serialization enables track and trace and a record of the complete end-to-end lifecycle for every product (and indirectly all its components, raw materials, etc.). It tracks the journey of the product within the supply chain.

Serialization was introduced by governments (see Legislative requirements) as a mechanism to fight counterfeiting and secure the supply chain but it has proved to be insufficient to fight adequately counterfeiters for disparate reasons:

  • Consumers deliberately go outside the legitimate supply-chain. The great growth in online pharmacies, is an example
  • Serialized barcodes are easy to copy
  • Many countries are not subject to serialization requirements. In fact, the highly regulated countries are the ones with a minor impact of counterfeiting
  • Too many markets, formats regulations and guidelines have made serialization more a compliance exercise than a real and efficient anti-counterfeiting strategy
  • Serialization systems are not integrated
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Risks raised by globalization and digitalization

Explosive growth in pharmaceutical spending has coincided with the globalization of the drug supply chain. This process of globalization has introduced suites of new players in different international markets including contract-based suppliers, manufacturers, suppliers of raw materials, and trading partners resulting in a ‘diversification’ of supply networks. Medicines constantly change hands and undergo multiple transactions between production and dispensing to the end-user patient, with each transaction increasing the risk for falsified and substandard products infiltrating the supply chain. A certain percentage of medicines traverse through the largely unregulated ‘gray market’, populated by secondary wholesalers, traders, and resellers, where the possibility of sourcing improperly stored, diverted, contaminated, counterfeit or falsified medicines substantially increases.
Globalization of consumer markets coupled with the rise of e-commerce platforms has also resulted in new channels that fake medicines can penetrate, including purchase and delivery via the Internet with online “pharmacies” selling prescription drugs directly to the consumer. The globalization of e-commerce has enabled the creation of a digital pharmaceutical gray market completely separate from the legitimate supply chain.

pharmaceutical supply chain players

Supply chains are more and more globally integrated and complex, involving (if we exclude the early phases of Discovery, Research and Development) a huge number of players:

  • Suppliers
  • Manufacturer and contract manufacturers
  • Regulators (FDA, MHRA, etc.)
  • Pharmacy benefit managers (PBMs)
  • Healthcare group purchasing
    organization (GPOs)
  • Health Insurance companies
  • Wholesaler distributors
  • Integrated Delivery Networks
  • Hospitals
  • Retailers/Pharmacies
  • Patients

As a sidenote, COVID-19 pandemic is the black swan event that may force some of the above actors to rethink and transform their global supply chain model. The world was taken by complete surprise and even if the situation is still in progress there are already some takeaways.

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Post-Covid19 lessons learned

  • There is an over-reliance on few sources of supply/drug shortages: western countries still lead drug discovery and development, but are no longer in the forefront of drug manufacturing, especially for active pharmaceutical ingredients (APIs)
  • Security of supply has become a matter of national security: it is crucial to have more data available (even about volumes and quantities) on offshore API manufacturers (FDA, 2019)
  • Were greatly increased/will greatly increase problems with diversion, theft and counterfeiting of critical products such as test kits, vaccines and antivirals (IDC, 2020)
  • Supply chain resilience means more complexity: regulations such as the Drug Supply Chain Security Act (DSCSA) added level of stress on how companies work with partners, distributors and logistics providers. Resilience is required to meet track and trace, monitoring and licensing requirements: to achieve it, pharmaceutical companies need to deliver full digitization to every part of their supply chain operations
  • End-to-end visibility across production and supply is essential. This includes real-time production monitoring systems and advanced planning and scheduling tools in manufacturing, as well as the ability to track and trace product – from materials to final product – as it passes along the supply chain
  • Business agility: The supply chain should transform from Reactive Supply to patient-centric demand. A supply chain purely reactive relying on inventory buffers results in a poor overall performance, while visibility and agility allow companies to be proactively demand driven and patient centric. Wholesalers and third parties were the most concerned about the lack of supply chain and product provenance security, leading to counterfeiting, diversion and theft (IDC, 2020)

The answer to above listed challenges for the pharmaceutical supply chains can be given by new trends in their orchestration.

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New trends in supply chain orchestration

(Deloitte LLP, 2017) (David Alvaro, 2020)
Most pharma companies at the moment manufacture and distribute their own products but this reduces asset utilization rates and drives up distribution costs. Conversely, sharing manufacturing and distribution resources would be much more economical. One of the latest supply chain evolution is the transformation of logistics from 3PL (third-party logistics) to 4PL (fourth-party logistics). 4PLs are strategic service providers (aka LLP-Lead Logistics Partner) that manage the warehousing, inventory, fulfillment, transportation and logistics on behalf of its clients, often the entire supply chain from the production line to the point of final distribution.

There are some recent initiatives like the sharing of supplier data (once considered strategic, proprietary info) for sustainability purposes, between big players like GSK, Takeda, Teva, Boehringer Ingelheim and Amgen (cfr. the Responsible Health Initiative) (The EcoVadis Team, 2020).

Optimization of the supply chain is one of the main drivers of last years’ megamergers and acquisitions.
The adoption of the blockchain seems the most promising technology for securing and increasing the overall visibility on the whole supply chain.

There are many ongoing initiatives:

  • the PharmaLedger project
  • the MediLedger Network

For biopharma, the importance of supply chain integrity goes beyond counterfeit products, as key product types need chain of identity and chain of custody, particularly in personalized medicines and gene therapies. To tackle this, biopharma companies are investing in a combination of advanced technologies, like blockchain and AI, to ensure the integrity of the end-to-end supply chain.
(Deloitte LLC, 2020)
(IDC, 2020)

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THE GLOBAL SCOURGE OF COUNTERFEIT MEDICINES

Counterfeit pharmaceuticals are increasingly prevalent and profitable. Pharmaceutical counterfeiters can produce spurious versions of all types of medicines. These drugs may contain no active ingredient, harmful ingredients, the wrong drug, the wrong concentration, the wrong dose, or drugs past their expiry dates. All of these put patients at risk for treatment failure, harmful side effects, and dangerous drug interactions.

If the counterfeit pharmaceutical industry is worth as much as $200 billion annually, the illicit drug trade far exceeds that value. Successful marketing of counterfeits requires counterfeiters to penetrate supply chains which, for the most part, are closely monitored by producers and regulators. While the wholesalers that are responsible for distributing most pharmaceutical products are secure, there are thousands of second-tier distributors that are more vulnerable to penetration by counterfeiters. The ability of counterfeiters to package products in a way that mirrors genuine products is key to their success, as is their ability to make the products resemble the originals. The use of free trade zones has facilitated trade in counterfeit pharmaceuticals.

Challenges are particularly large in developing countries, where informal distribution is more widespread and less secure, but have increased in almost all countries with the development of rogue on-line pharmacies. Unfortunately, consumers have demonstrated a willingness to take risks buying products online, with all the negative potential consequences.

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BRAND PROTECTION IN THE PHARMA CONTEXT

Protecting consumers from fake and potentially harmful drugs is top priority, nonetheless pharmaceutical brands also need to safeguard themselves, in terms of their reputation, revenues, integrity and quality of products. Brand protection also includes legal aspect and elements related to intellectual property and trademarks. Pharmaceutical companies may be liable if consumers are harmed by counterfeit versions of their drugs.
Without an efficient brand protection strategy, consumers will not trust your products. Such strategy includes robust anti-counterfeiting solutions but not limited to.

It is also vital to:

  • monitor for the availability of relevant active pharmaceutical ingredients (APIs)
  • monitor the online distribution channels, particularly when linked to social media posts
  • work with third-party organizations and law enforcement to help with takedowns, evidence collection and prosecution
  • monitor specific geographic areas where historically the majority of unauthorized drugs originate from
  • monitor potential grey market activity in any regions where the drug achieves early approval.
 
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WHAT KIND OF COUNTERFEIT MEDICINES?

There is a great variety of counterfeit medicines on the market.

The most popular are:

  • Counterfeit product
  • Counterfeit active pharmaceutical ingredients
  • Counterfeit packaging (primary, secondary or tertiary)
  • Mimic products – unapproved product with trademark violation
  • Undeclared API – product where active pharmaceutical ingredients are present by undeclared

When talking about counterfeiting it is important to have a common reference for classification (Nayyar, 2017):

  • Substandard
  • Falsified
  • Counterfeit
  • Diverted
  • Unregistered/unlicensed medical products
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SHORT AND LONG-TERM NEGATIVE CONSEQUENCES OF COUNTERFEITING

Counterfeiting is sufficiently prevalent throughout history that it has been called “the world’s second oldest profession”.

Counterfeiting has significant social and economic consequences. Most importantly, patients may not get safe or effective products and consequently may be at significant risk. On the economic side, legitimate manufacturers of pharmaceutical products suffer from patent and copyright infringement as counterfeiting, in reality, ‘hijacks’ the brand. Governments are affected through loss of taxation revenue and undermining of the national healthcare systems. Considerable resources are required to combat the practice of counterfeiting. In addition, health plans for the NHSs are being defrauded and compromised.

Counterfeit medicines are unlicensed and so they are not regulated or inspected as genuine medicines are. These products are also often made in unhygienic sites and without the rigorous testing and standards to which regulated medicines must adhere.

The World Health Organization has analyzed the socioeconomic and health impact of substandard and falsified medical products: (WHO, 2018).

Socioeconomic impact

  • Lost productivity costs to patients and households when seeking additional medical care
  • Lost income due to prolonged illness or death
  • Lack of social mobility and Increased poverty

Economic impact

  • Economic loss for patients, families, health systems and pharmas
  • Waste of human effort and financial outlay across the health system
  • Increased out-of-pocket spending

Public health impact

  • Increased mortality and morbidity (adverse effects)
  • Progression of antimicrobial resistance
  • Higher disease prevalence
  • loss of public confidence in medication and in health systems
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LEGISLATIVE REQUIREMENTS

There are two main legal frameworks related to anti-counterfeiting respectively for EU and US market. We resume here the most important regulations:

FOR EUROPE

These directives aim to prevent falsified medicines entering the legal supply chain and reaching patients, regulating the safety features required, the supply chain Good Distribution Practices, the quality and traceability of imported APIs and excipients and finally the Internet sales.
As of 9 February 2019, marketing authorized holders are obliged to place two safety features on the packaging of most prescription medicines and some over-the-counter medicines in the European Union: a unique identifier (a 2-dimension barcode) and an anti-tampering device.

FOR USA

This security act has similar requirements as the EU, with a deadline on 2023, for having an electronic system identifying and tracing certain prescription drugs as they are distributed in the United States.

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ANTI-COUNTERFEITING TECHNOLOGIES AND SOLUTIONS

The anticounterfeiting technologies may be used for basically three different purposes:

 

anti-counterfeiting technologies
can be characterized in the following way

  • Electronic technologies
  • Printing technologies
  • Marking/Engraving technologies
  • Technologies based on chemical-physical characteristics
  • Technologies based on mechanics
  • ID coding and serialization
  • Distributed ledger technologies

some of the most interesting types of 
anti-counterfeit technologies

Surface Fingerprint and Laser Surface Analysis

Invisible printing with standard inks

2D/3D Holograms (DOVIDs – Diffractive Optical Variable Image Devices)

Color-shift inks and more in general OVIs (Optical Variable Inks)

Micro/Nano encrypted printing

Blockchain technologies and crypto anchors

Optical authentication of PUF (Physical Unclonable Function) tags

Unfortunately, “technology” frequently rhymes with “cost”. High cost can derive from many aspects: complexity, learning curve, novelty, exotic materials etc.
See a comparison of the characteristics of most of the above technologies here.

robustness and efficacity
of anti-counterfeiting

As it is commonly accepted the robustness and efficacity of anti-counterfeiting global effort strongly depends from the variety and depth of technologies/measures adopted. See for instance:

  • The joint position of (EFPIA, IFPMA, PhRMA , 2014):
    No single solution will prevent counterfeiting. Rather, a holistic approach comprising use of covert and overt anti-counterfeiting features, well-regulated, secure supply chain and appropriate laws and penalties to deter and punish counterfeiters, is necessary to provide maximum patient protection
  • The approach suggested in ISO 22383:2020 – Guidelines for the selection and performance evaluation of authentication solutions for material goods (ISO, 2020):
    an authentication solution can constitute a more robust solution when layered, and therefore it promotes the use of individual authentication elements in combination.
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Solutions proposed by AlpVision

ALPVISIONS ANSWER TO PHARMA COUNTERFEITING AND BRAND PROTECTION

AlpVision provides digital invisible anti-counterfeit and product authentication solutions to Fortune Global 500 companies across many industrial sectors worldwide; we are a leader in the brand protection market.

Our technologies and solutions
AlpVision proposes a series on covert anti-counterfeiting technologies,
suitable for printed and packaging and physical products.:

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CRYPTOGLYPH

As indicated by its name, the covert security features are invisible to the naked eye. Examples are invisible inks, fluorescent color trackers, or special chemical tracers. These technologies generally require a special reading device and are therefore in general used for internal use by, for example, brand owners, law enforcement, governments and distributors to verify the authenticity of the products. The invisible solution enhances the security level of your product. It cannot be as easily duplicated as an overt technology. Find out more about this solution here.

 
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FINGERPRINT

Track and Trace is used to track a product at every step from its production through distribution along the supply chain, to the end-user by adding a UID (unique identifier) such as bar code, scratch-off, serial number. Track means the current and the past locations of the products. Trace informs about the origin of the product and the various stages his has gone through during its lifetime. Nevertheless, it is important to note that Track and Trace does not bring any protection level against counterfeiting.
Find out more about this solution here.

 
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SECURED QR CODE

As indicated by its name, the covert security features are invisible to the naked eye. Examples are invisible inks, fluorescent color trackers, or special chemical tracers. These technologies generally require a special reading device and are therefore in general used for internal use by, for example, brand owners, law enforcement, governments and distributors to verify the authenticity of the products. The invisible solution enhances the security level of your product. It cannot be as easily duplicated as an overt technology.
Find out more

 
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BMS, Brand Monitoring System

Track and Trace is used to track a product at every step from its production through distribution along the supply chain, to the end-user by adding a UID (unique identifier) such as bar code, scratch-off, serial number. Track means the current and the past locations of the products. Trace informs about the origin of the product and the various stages his has gone through during its lifetime. Nevertheless, it is important to note that Track and Trace does not bring any protection level against counterfeiting.
Find out more

 
All these technologies are natively AI-fueled and can be further customized for meeting the requirements of a potential life-science customer. It is interesting to realize that regulators (such as the FDA) have started to approve AI software for use in healthcare.

THE KEY FACTORS OF ALPVISION’S COMPETITIVE ADVANTAGE

The key for the commercial success of AlpVision solutions is determined by the following factors:

  • Security features are guaranteed to be highly secure against copying, by design
  • Authentication can be easily performed with a smartphone App (on both iOS and Android).
    No need for exotic or expensive devices
  • Technology is easy and straightforward and does’t add heavy manufacturing steps. The result is low implementation costs, and low TCO
  • Security features are covert, completely invisible to the naked eye
  • Authentication results are immediate, with highest reliability

Specific to the pharmaceutical sector:

  • AlpVision is capable of working within the quality requirements of a critical supplier of a pharma company, with a Quality Management System that has been positively audited many times
  • AlpVision can supply GxP computerized systems compliant with the FDA 21 CFR Part 11 regulations (and also corresponding European regulations)

ALPVISION PROTECTS OVER 30 BILLION products PER YEAR

AlpVision has a history of projects starting from the early 2000’s to protect pharmaceutical products from anti-counterfeiting. Today AlpVision solutions protect over 30 Billion products per year, and include many Fortune Global 500 customers.

 
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PATENTS HELD

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PRINTERS WORLDWIDE

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PRODUCTS PROTECTED

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years of innovation

Counterfeit Products Market

BRAND PROTECTION
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GOVERNMENT
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PRECIOUS METALS
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WINE & SPIRITS
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AUTO LUBRICANTS
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OTHER INDUSTRIES

Our digital invisible technologies for product authentication and counterfeit protection can be applied to a broad range of branded products across a multitude of industries, including: Household Appliances, Electromechanical parts (e.g. circuit breakers), Agrochemicals (e.g. pesticides), Cosmetics, Oil & Gas (e.g. lubricants), Consumer Goods, Food & Beverage and more.

 

Would you like to see how this technology can be applied to your product?

Contact us!