Technologies curbing counterfeit threats in the healthcare industry

Technologies curbing counterfeit threats in the healthcare industry

By Gopi Kuppuraj

The rise of online transactions and complex pharmaceutical distribution and supply chain models have made counterfeit medicines increasingly difficult to identify, track, and avoid. Curbing fake drugs is everyone’s responsibility, from top pharmaceutical companies right down to individual consumers.

A bitter pill to swallow:

One of the most complex and challenging problems faced as a result of the globalization of healthcare delivery is the safety of medicines. Counterfeit pharmaceuticals are illegally sold in the worldwide market creating patient and consumer health dangers in the healthcare system. According to a PwC report, the market for counterfeit drugs is worth US $200 billion, making it the largest segment of the US $2.0 trillion in illegal goods sold globally every year. Even in the most secure markets, such as the United States and Western Europe, it is estimated that at least 1% of all drugs in circulation are counterfeit.

The rapid expansion of e-commerce has given rise to illegal online pharmacies that can put counterfeit medicines in the hands of unsuspecting consumers. Similarly, the rise in the global economy has created geographically diverse and advanced distribution channels around the world. This has led to counterfeit opportunities that can occur at any step in any country – manufacturing, distribution, labeling, packaging, and smuggling.

The risks of counterfeit drugs:

Counterfeit manufacturers produce all types of medicines – branded drugs, generic medicines, over the counter pills, and herbal supplements. These products may be subject to any number of issues, such as containing no active pharmaceutical ingredient, containing harmful ingredients, having the wrong dose or concentration, or manipulated expiry dates. These counterfeit drugs undermine the research and development efforts, costs, brand value, and growth strategies of legitimate pharmaceutical companies.

However, the problem of counterfeit products in the healthcare world is not limited to drugs. Cases of counterfeit medical devices, such as contact lenses, condoms, surgical mesh, and diagnostic strips used by diabetics, have been discovered. All of these put unsuspecting consumers at risk for treatment failures, adverse side effects, and dangerous pharmacological interactions.

Contributing factors:

  • Profits: The obvious and most important factor driving counterfeit drugs is financial gains. World Finance reports that the British software security firm Sophos estimates it is possible to earn an average of $16,000 per day by selling counterfeit drugs, particularly for drugs that promise to treat baldness, weight management, and erectile dysfunction.
  • Drug demand and abuse: The demand for fake medicines is aggravated by the abuse and/or addiction of prescription drugs. Individuals who misuse prescription drugs may purchase them without a prescription, through channels outside of the regulated supply chain. According to the Government of Canada’s report for preventing counterfeit drugs, individuals who develop an addiction to prescription opioids seek to obtain them outside of the regulated distribution channels, i.e. without a physician’s prescription. This is also true of individuals who are ashamed and embarrassed to buy erectile dysfunction drugs from legitimate sources.
  • Complex supply chain models and lack of regulation: There are numerous gaps between government regulations and the global pharmaceutical supply chain. Many pirated drugs arrive from illegal online pharmacies operating in distant corners of the world, beyond the reach of regulators. Digital channels enable illegal syndicates to evade security and regulatory barriers designed for traditional drug distribution networks. Even the stricter security regulations are far from foolproof.

The industry’s response: What’s being done?

Curbing counterfeit drugs is everyone’s responsibility, from top pharmaceutical companies, policy makers, regulatory authorities, and law enforcement, to individual consumers.

In 2008, Sanofi opened its Central Anti-Counterfeit Lab (LCAC) to combat the counterfeiting of its products. The LCAC analyzes suspected counterfeit samples with the most sophisticated analytical techniques. To prevent wrongdoing in supply chain channels, Sanofi has also developed a specific label known as the Sanofi Security Label, which contains a visible verification (for distributors and patients) as well as invisible authentication (known only to Sanofi).

Merck reported that it has incorporated a variety of tracking and authentication technologies on its products to secure supply chains. The company’s Anti-Counterfeiting Operational Network (MACON) is responsible for globally monitoring and implementing all anti-counterfeiting activity for its products. The network reviews up to 100 cases of counterfeit crime per year, including inquiries from authorities that arise during backtracking investigations.

In the UK, to prevent the sale of counterfeit drugs on the web, the General Pharmaceutical Council operates an internet pharmacy logo scheme to identify genuine UK-based online pharmacies so that patients can ensure they are purchasing safe and authentic medicines online. Each logo contains the pharmacy’s unique identity number and when clicked takes the user to the Council’s website to help verify the pharmacy. In addition, the Council has passed a regulation that all online UK pharmacies must receive a legally valid prescription before dispensing prescription drugs.

Operation Pangea is a global consortium comprising 113 countries, Interpol, pharmaceutical companies, and internet service providers, that aims to crackdown on illegal drugs sold online and educate internet users about the dangers of buying medicines online. In May-June 2016, Pangea:

  • Seized 12.2 million fake and illicit potentially harmful medicines, worth approximately US $53 million;
  • Shut down 4,932 illegal drug selling websites;
  • Made 393 arrests; and
  • Recovered more than 270,000 medical devices worth US $1.1 million.

New technologies to keep vigilant:

New technologies adopted by healthcare companies will continue to address counterfeit medications head on. For instance, with the rise of handheld devices and quick testing and discovery of counterfeits, keeping potentially harmful drugs out of the supply chain is possible.

The power of blockchain:

The emerging blockchain technology can stop the entry of counterfeit drugs into the supply chain. Blockchain uses a highly scalable transparent protocol in order to assign every manufactured product an asset. These assets are then added to the blockchain and assigned a unique identification number, referred to as a hash. The technology then verifies the hashes to find out whether or not the product in question is counterfeit or genuine. Blockchain thus creates a visible supply chain where all entities – suppliers, vendors, distributors and partners – are brought together and keeps record of all transactions open to all concerned parties, while lessening the tampering of records. The supply chain is made transparent, secure, decentralized, and verifiable, all while plugging loopholes in the supply of authentic medicines.

For example, CryptoSeal makes use of the blockchain protocol to make their supply chain more legitimate. Each CryptoSeal contains a near field communication (NFC) chip installed with a unique registration number which is stored and verified on a blockchain. Besides a product’s identity, the CryptoSeal also records the identity of its registrant and packaging onto the blockchain.


The truth is that counterfeit medications are difficult to eradicate completely from the global market and the growth of the web and e-commerce pose additional challenges for eradication. The good news is that the industry continues to make advancements in combating the problem. Deeper partnerships, increased collaboration, and greater resource sharing will keep consumers safe and counterfeiters behind bars. Blockchain technology has the potential to stop fake medicines business model, and its crypto-protocol can empower and protect genuine drug manufacturers and patients.

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