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Some websites simply require an ‘online profile,’ followed by a brief review by a physician. The physician never examines or communicates with the patient before the order is dispensed. One online pharmacy in particular was found to fill virtually every order that was placed. The physicians were compensated based upon the number of prescriptions they approved. The main focus of law enforcement today are online outlets called ‘rouge pharmacies.’ These sites distributed drugs to consumers without a prescription. They are harder to track by regulatory bodies because they are not registered anywhere. If the drug or counterfeit is available, a credit card is all that is needed. These pharmacies are largely located outside the U.S., but may advertise their products as being “FDA Approved.” Given the light penalties and the time lag for regulators or law enforcement to shut down these Internet websites, operators simply take down the website and relocate to another region of the country or perhaps to another country. From a business perspective, this is merely a relocation of a distribution center. Large and important pieces of the supply chain remain intact. A recent study found nearly 10.000 websites out of compliance with U.S. federal and state regulations. 2,274 of the sites have physical addresses located outside the U.S. and 3,708 maintain servers in foreign countries. Because of variations in drug laws from country to country, some countries may not be aggressive with either investigation or prosecution. In fact, GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 309 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 extradition may not be possible if the defendant’s actions are not considered criminal in the extraditing country (Lipman (2013)). According to Faucon et. al (2013), a cargo ship originating in Guangzhou, China set sail for Luanda, Angola. Part of the cargo was a shipment of loudspeakers. Within the loudspeakers, 1.4 million packets of counterfeit Coartem, a malaria drug, was discovered by Angolan customs. The destination of the loudspeakers was a Luanda pharmaceutical distributor.

He was arrested, questioned and released with no charges filed. It was enough to treat more than half the country’s annual malaria cases, if only they were genuine. Because of how many fake antimalarial drugs are being sent to Africa, health administrators fear a relapse. The counterfeit “Coartem” found in Angola did not have any active ingredients found in the real drug. Instead, they consisted of calcium phosphate, fatty acids and yellow pigments. Patients turn to markets where fake “Coartem” is known to be sold because it is much cheaper and easier to get. Some of the counterfeited “Coartem” found seemed to be destined for African countries specifically. According to WHO (2010), counterfeit and substandard medicines constitute a $431 billion market, which accounts for a 300% increase since 2000. Because of that increase, an estimated 25-60% of the medicine supply in developing countries is either substandard or counterfeit. The WHO also reported that more than 100 patients were killed in Panama by counterfeit glycerin contained in cough medicine. WHO also reported that around 100,000 deaths per year in Africa are linked to counterfeit drugs. Furthermore, Nayyar et al. (2012) collected surveys that examined 2,634 malaria drugs samples across 21 sub-Saharan African countries and found that one-third of them failed on the basis of chemical analysis. The London-based International Policy Network attributes 700,000 fatalities to fake malaria and tuberculosis medicines every year. In 2008, an active ingredient in “Heparin” was replaced with with a cheaper counterfeit substitute that resulted in 81 deaths. 2012 statistics show there were 841 counterfeiting incidents involving customs seizures or police/health inspector raids, 1,238 people arrested for counterfeiting worldwide, and 123 countries were impacted by pharmaceutical crime (Asia and Europe were the most highly impacted).

Analysis of the Situation

The human will to survive is a basic instinct. In regions with widespread chronic afflictions such as malaria, HIV/AID, tuberculosis, diabetes, etc., counterfeits can easily find markets to serve. These and other medical conditions drive consumers into the counterfeit market because they usually cost less than the authentic product and they are more easily obtained. The vast majority of these consumers are unaware that counterfeits do not undergo the rigorous testing of manufacturers and regulatory bodies. They also risk consuming material that was formulated in a setting that was void of the Good Manufacturing Practices (GMP) and may be void of the active ingredients necessary to address the medical condition. Criminal organizations and individuals are discovering that there is less risk and penalties associated with counterfeit pharmaceuticals than human trafficking and illegal drugs. Courts and judges generally do not view counterfeit pharmaceuticals as they may a violent crime. It seems to fall somewhere between what may referred to ‘white-collar’ crime and a violent offense. For example, a pharmacist in Ontario, Canada was arrested in 2005 for substituting talcum powder in heart medicine. The coroner cited “unauthorized medication substitution” in four deaths. The pharmacist was acquitted by a court in 2007 because prosecutors failed to prove criminal intent. He sued to get his license back and is now the owner of a pharmacy in Toronto (LaGanga (2014)).

In another example, a Chinese national was accused as being the architect of a world-wide pharmaceutical counterfeiting operation when he was arrested in New Zealand in 2010. He was released on bail and failed to appear for an extradition hearing. Authorities suspect he fled to China (Gillette (2013)). Finally, a U.S.

citizen pled guilty to one count of conspiracy to traffic and one of trafficking. He received 10 months in prison and a $5,100 fine. According to Donelly, director of Pfizers global security team in the Americas, “…the laws against drug counterfeiting are too weak. If he were a crack dealer, for the same type of operation, he’d be looking at a five-year minimum” (Gillette (2013)). The research in the area counterfeit GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 310 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1 pharmaceuticals and law enforcement seems to reference “arrests,” “questioning,” “detainment.” It’s rare that any paper published in this area ends with the phrases “sentencing” or “incarceration.” In the rare occasion the phrase ‘sentencing’ is mentioned it’s usually in the context of ‘ridiculously low’. In fact, some counterfeit drug distribution has occurred from totally unsuspected sources, For example, in 1995 Niger suffered a widespread outbreak of meningitis. In an effort to provide aid to its neighbor, the government of Nigeria shipped 88,000 doses of meningitis vaccine to Niger. The vaccine was discovered to be counterfeit and resulted in the deaths of 2,500 people. Counterfeit drugs currently account for approximately 30% of the medicines distributed in developing African nations (Chavez (2009)). Counterfeiting is more prevalent in countries where government and regulatory officials choose to turn a ‘blind eye’ to the situation. The depth and breadth of counterfeiting can also differ from rural to urban settings with a country.

According the WHO’s (2010) survey of 24 African and Eastern Mediterranean, only three in the eastern Mediterranean have specific legislation on counterfeit medicines. Based upon subsequent discussions and meetings of survey responses, the number one recommendation was, “Member states should develop specific legislation that empowers National Medicines Regulatory Authority’s (NMRA’s) and criminalizes counterfeit products”. Organized criminal elements within Italy have played a lead role in the importation and dissemination of a variety of counterfeit goods. According to the U.S. Department of Treasury, the criminal group Camorra may earn as much as $2.5 billion of their annual profit from counterfeit goods, including pharmaceuticals. According to Shelley (2012), “Corruption within the Italian government is a key component in their ability to operate on such a large scale”. Central and South America are fast emerging as a production and sales territory for a wide variety of counterfeit goods, including medicines.

Many of these medicines travel north into the U.S. This trade survives because of “…corrupt officials of all ranks...” (Shelley (2012)).

The Australian government recently threatened to withhold a $38 million medical aid project destined for Papua New Guinea (PNG) due to corruption allegations. A large contractor, Borneo Pacific Pharmaceuticals was accused by the PNG medical society of “giving presents to people in the government procurement system” and branded the process ”corrupt”. The PNG Health Departments’ drug supply division was described by its minister in 2011 as “Riddled with corruption” (Towell (2013)). The continent of Africa is an example of a large group of countries with borders that ill defined and is easily breached.

During a 9-month period in 2012, China exported $1.5 billion worth of medical products to Africa which in some cases have few or no active ingredients at all (Good Governance Africa (2013)). According to the United Nations Office on Drugs and Crime, in 2012, 500 million container movements were recorded. Of those containers, only 2% received any attention in regard to inspection.

A Path Forward

Some administrators looked into finding some way to battle counterfeiting. They are using private investigators and many new technologies such as RfIds to trace medicine. But to get right to the problem’s core, one has to understand it. One of the major reasons is poverty. People hold on to the tiniest bit of hope, which, in this case is what usually hurts them more. But it is the only thing they can afford, without prescription. If medical care was cheaper, no one would look into buying a medicine that can possible hurt them in any way. Consequently economical, educational and social policy implemented by local government can help avoid the proliferation of counterfeited medicine. Another part of fighting counterfeited drugs is enforcing the laws. Laws regarding counterfeiting are way too weak and does not scare criminals away. Drug dealers face a harsher sentence compared to medicine counterfeiters. The government has to make it clear that they are not facing a few months but more like a couple of years.
Finally, another way to fight counterfeiting is to check larger cargos rather than just letting them go.

Not only will it take them by surprise but it will also make it possible to arrest the people that are at the base rather that just the drop shippers.

GCBF ♦ Vol. 11 ♦ No. 1 ♦ 2016 ♦ ISSN 1941-9589 ONLINE & ISSN 2168-0612 USB Flash Drive 311 Global Conference on Business and Finance Proceedings ♦ Volume 11 ♦ Number 1


Counterfeiting is a terrible problem that took its place worldwide. Not only is it crushing the economy but it also is crushing people’s health and hopes. It would be easier if customers stopped buying medicines online. Sadly, there are many other factors that play along, such as poverty or emotions. Economics combined with a severe medical condition tend to establish an end user market for counterfeit pharmaceuticals. This demand is more easily serviced when laws are nonexistent or not rigorously enforced.

One reason laws may not be enforced is because of the lack of an effective regulatory system and a government in place that chooses to ignore certain criminal activities. The last major piece is access – the challenge to counterfeiters to move their materials into the country and establish the forward distribution networks.


Bird, R. C., (2008) “Counterfeit Drugs: A Global Consumer Perspective,” Wake Forest Intellectual Property Law Journal, vol. 8(3), pp. 387 – 406 Chavez, A., (2009) “A Growing National Headache: The Prevalence of International Counterfeit Pharmaceutical Trade in Developing African Nations,” Suffolk Transnational Law Review, vol. 32(3), pp.

631 – 654 Faucon, B., Murphy, C., Whalen, J., (2013) “Fake-Pill Pipeline Undercuts Africa’s Battle with Malaria”, The Wall Street Journal, Eastern Edition, New York, 29 May 2013 Gillette, F., (2013) “Inside Big Pharma’s fight against the $75 billion counterfeit drug business”, Bloomberg Business week, (4313), pp. 58-61 LaGanga, S. A. (2014). The Partnership for Safe Medicines. Retrieved September 11, 2015, from The Partnership For Safe Medicines Web Site: http://www.slideshare.net/SafeMedicines?utm_ campaign=profiletracking&utm_medium=sssite&utm_source=ssslideview Liang, B. A., (2008) “A Dose of Reality: Promoting Access to Pharmaceuticals,” Wake Forest Intellectual Property Law Journal, vol. 8(3), pp. 302 – 386 Lipman, B., (2013) “Prescribing Medicine for Online Pharmacies: An Assessment of the Law and a Proposal to Combat Illegal Drug Outlets,” American Criminal Law Review, vol. 50(3), pp. 545 – 573 Nayyar, G. M. L., Breman, J. G., Newton, P. N., Herrington, J., (2012) “Poor-quality antimalarial drugs in southeast Asia and sub-Saharan Africa,” The Lancet Infectious Diseases, Vol. 12(6), June 2012, pp.

488-496 OseiTutu, J. J. (2013) “Private Rights for the Public Good?” SMU Law Review, vol. 66, pp.

767 – 816.

Shelley, L. I., (2012) “The Diverse Facilitators of Counterfeiting: A Regional Perspective,” Journal of International Affairs, Fall/Winter 2012, Vol. 66 Issue 1, pp. 19-37 Towell, N., (2013). Fear of counterfeit drugs in $38m aid project for Papua New Guinea. The Canberra

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