Counterfeit Drug Sales to Reach $75 Billion by 2010, Report Says

Counterfeit Drug Sales to Reach $75 Billion by 2010, Report Says
November 1, 2005

On September 20, experts on regulation, security, and trade of illegal pharmaceuticals gathered in Washington, DC to discuss what they described as the global threat of illegal, cross-border drug trafficking. The international drug counterfeiting conference, organized by the Center for Medicines in the Public Interest (CMPI) and the Pacific Research Institute (PRI), brought together a panel of speakers from the United Kingdom and the United States.

At the conference, CMPI released a new report projecting counterfeit drug sales to reach $75 billion in 2010, a 92 percent increase from 2005.

Peter Pitts is director of Center for Medicines in the Public Interest and senior health policy fellow for the Pacific Research Institute. This article is adapted from his speech at the September 20 conference.


The business of selling fake prescription drugs to unsuspecting consumers is a burgeoning, global industry. It represents a major public health risk for people around the world.

Nearly $39 billion, or 11 percent, of global pharmaceutical commerce will be counterfeit this year. By 2010, that dollar number will nearly double.

A report by the Center for Medicines in the Public Interest (CMPI) released on September 20 estimates counterfeit drug sales will grow by an average of 13 percent annually through 2010, compared to just 7.5 percent projected annual growth for global pharmaceutical commerce.

Many of the products sold via drug traffickers contain ingredients that could be harmful, and these products come from illegal operations with very poor controls. Many of these operations use phony, fly-by-night Web sites, the study found.

CMPI estimates counterfeit pharmaceutical commerce globally will grow to become 14 percent of the aggregate size of the legitimate industry by 2010, a 40 percent increase in share over 2004.

Drug costs in America are a high-value bargain when compared with the cost of hospitalization that modern drugs avoid. Because of advanced pharmaceuticals, we are living longer and more productive lives. But individual drug costs are high, especially for seniors living on Social Security and investment income.

Since seniors are by far the biggest users of prescription drugs, monthly pharmacy bills of $300 and $400 a month are not uncommon.



Canadian Safeguards Insufficient

Many well-intentioned people, including some public officials, believe the key to containing drug costs in the United States is to legalize and encourage the widespread importing of drugs from foreign countries where government-imposed price controls allow the sale of drugs at prices lower than those charged for name-brand drugs in a U.S. pharmacy.

Canada is a stable democracy with a legal system very much like that of the United States, and it has a national health agency that guards the purity of drugs sold there just as aggressively as the FDA does here.

None of this guarantees the safety of drug exports from Canada to the United States, however, and nobody is more adamant in saying so than the Canadians themselves. Health Canada, the country's national health agency, has been open about saying they cannot possibly monitor drug shipments across the United States border. Some of these drugs are not even produced in Canada.

Through a process known as transshipment, drugs come into Canada from around the world, including developing countries such as China, Chile, India, Belize, the Bahamas, and Vietnam. Most of these third-country drugs are mailed to customers in the United States from the growing number of Internet pharmacies in Canada that take prescriptions from Americans, sometimes with the help of Canadian physicians hired to co-sign prescriptions.

In addition, while Canada's pharmacy standards are close to those of the United States, there still remains a greater chance for misunderstanding or outright deception when something as important as a personal prescription is handled over the Internet. That danger was underscored in July 2004 when the U.S. Food and Drug Administration (FDA) found that a Canadian Web site pharmacy advertising Canadian generic drugs was in fact selling fake, contaminated, and substandard versions of three widely prescribed medicines.



Studies Show Serious Problems

Not only is evidence of problems with imported drugs mounting in Canada and the United States; threatening numbers are also developing across the world. According to a 1997 report from the World Health Organization (WHO), 10 to 20 percent of drugs tested in developing countries failed the most basic quality test, meaning the medicines are either counterfeit or they have not been handled according to manufacturer specifications.

According to a June 2005 study by the European Federation of Pharmaceutical Industries and Associations (EFPIA), 50 percent of the entire pharmaceutical sales market in Pakistan consists of counterfeit medicines, similar to the situation in China and Nigeria.

The largest counterfeit market with proximity to the EU free trade zone is Russia, where the generally accepted estimate is that 12 percent of the nation's drugs are counterfeit. Now that the Baltic nations of Latvia, Lithuania, and Estonia have joined the European Union, the WHO has warned that an increase in the risks of counterfeits entering the EU supply chain is evident.



Stronger Controls Needed

"Once you allow the importation of drugs from Europe, you allow the importation of drugs from everywhere," said British security expert Graham Satchwell. "Drug importation encourages drug counterfeiting, opening channels to get bogus drugs into the market more easily," he said.

With the global supply of counterfeit drugs already huge and growing, it is obvious that the U.S. drug market, which accounts for nearly 50 percent of the world's medicine sales, would be a prime target for counterfeiters, especially if we make their job easier by weakening our current drug import protections.

An even greater danger is that massive drug imports will create a major opportunity for international terrorists to kill thousands of Americans with intentionally contaminated drugs packaged as legitimate pharmaceuticals.

According to Dr. Jonathan Harper, the lead author of a report for the Council of Europe on counterfeit medicines, "Counterfeiting medicines is criminal and life threatening and undermines the integrity of health systems, but it is hard to detect because it is an increasingly sophisticated business activity." Counterfeiting medicines is clearly aligned with organized crime, Harper said, and he warned it is becoming "the 21st century bioterrorism."


For more information ...

A World Health Organization fact sheet on substandard and counterfeit medicines is available online at http://www.who.int/mediacentre/factsheets/fs275/en/.

The June 2005 report of the European Federation of Pharmaceutical Industries and Associations, Combating Counterfeit Medicines and Protecting Patients through a Partnership Approach, is available online at http://www.efpia.org/4_pos/legal/counterfeit2005.pdf.

Video and html-formatted transcripts of presentations delivered at the October 2003 National Symposium on Drug Importation, sponsored by The Heartland Institute, are available online at http://www.heartland.org/Article.cfm?artId=13270.

The full text of "What's Wrong with Importing Drugs," a book compiling the presentations at the October 2003 National Symposium on Drug Importation, is available online at http://www.heartland.org/Article.cfm?artId=13955.

More than 120 documents addressing prescription drug importation are available through PolicyBot™, The Heartland Institute's free online research database. Point your Web browser to http://www.heartland.org, click on the PolicyBot™ button, and choose the topic/subtopic combination Health Care/Drugs: Importation.