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Route cause

A convoluted journey to market may risk the integrity of the supply chain

Spaghetti-Junction A recent article in a national newspaper lists the 20 most stupid complaints holidaymakers have made to their travel agents. Among the more routine groundless grievances of sand on the beach being too white, and too much curry in Goa, was someone who expressed their disappointment that the sunglasses they had bought on the street for €5 had turned out to be fake. That he had no concerns about their provenance, nor was at all suspicious that the distribution method was sub-standard for a premium brand of sunglasses, would perhaps put him in a fairly small section of the population. I think most of us would accept – fairly early in the transaction process – that they were not 100 per cent genuine. Primarily because we see many aspects of the supply chain as underpinning the authenticity of the product, without those aspects, we accept that there may be a reason for the seeming bargain price.

Obviously such trade is of concern to the manufacturers of branded goods, but from a consumer point of view does it really matter that much? Your average fake Chanel handbag still holds your chattels, and your average fake Rolex watch still tells the time, so no harm done, bit of a laugh and if the crown falls off your 'Rolex' after two weeks (as happened to me), well, you put it down to experience.

Few of us, however, would purchase our prescription medicines from a guy on the street corner, however attractive the price. We would recognise the inherent risks of the process. Instead, we would go to a local pharmacy, where we would know that the product had come from a shiny clean manufacturing facility, perhaps via a wholesaler, to our chemist's store room. We would feel confident that such a medicine was safe and the contents were what they purported to be.

Real threat of fakes
Yet precisely because we do not see prescription medicines for sale on street corners, alongside €5 'Ray-Bans', the risk posed by fake medicines is not seen as a real threat. When we hear about such things, most people imagine it relates to individuals unfortunate enough to take up the (frequent and reasonably priced) opportunities offered on email by kindly strangers to deal with their concerns over erectile dysfunction, weight gain, baldness or similar. I don't doubt a smattering of schadenfreude passes through us, secretly mocking those foolish enough to order such things. It wouldn't happen to me…

In fact, we all risk encountering fake medicines. A bit of digging reveals that the problem is much more widespread. The WHO estimates that the counterfeiting of medicines now affects 10 per cent of the world market, with the US FDA pitching it higher. In some African countries, it can be up to 70 per cent. The European Pharmacists' Group, the PGEU, says that as much as 3 per cent of this market is counterfeit. This is over and above the postal market and cannot account for products that go unreported or undetected by the end user.

A consequence of our belief in a secure pharmaceutical supply chain makes it unlikely that we subscribe a headache or upset stomach to a counterfeit medicine. Much of the evidence is disposed of.

At the root of the problem is simple economics. The ex-pharmacy price of many medicines, given the research that goes into them, would buy genuine Gucci handbags several times over. So, if the effort of copying a handbag or watch is worth it, then so is faking a vial of colourless liquid and passing it off as a cancer treatment or growth hormone or interferon. Whether we like it or not, it happens, and it is probably no more technically demanding than reproducing the logo of a French or Italian design house.

Securing a solution
This is an issue of public safety, not to mention the potential damage to public confidence in medicines. The manufacturers argue that the solution is simple: if you secure the supply chain from factory floor to the point of dispensing, you can guarantee that what the patient should have is what the patient gets. Simple as this may seem, the existence of the European Union's internal market makes it difficult. There is substantial trade in legitimate pharmaceuticals between member states. This situation arises because of built-in arbitrage opportunities caused by price differentials in European countries, where it becomes profitable to take medicines from a low price country (often southern Europe) and sell them at a profit in higher price markets.

This parallel trade is perfectly legal, as the medicines involved are identically formulated in each country. The main challenge for consumers is that products destined for, say, the Greek market, tend to have their packaging materials and patient information leaflets in Greek, probably a step too far for a patient in Glasgow or Genoa. Thus the parallel traders need to make changes to the product packaging. This involves opening packs to replace the patient leaflets with ones in the correct language, or putting new stickers over the original box and so forth, to make them suitable for the destination market.

What this means is that prescription medicines may have a highly convoluted route to market. This can involve many steps: much more frequent handling by intermediaries, and batches being split and re-split. Packs may travel from one country to the intermediary in a second country, where they are opened and repacked, before being shipped on to a third.

This is a problem because it undermines the security and integrity of the supply chain. Repackaging means that any security features and information on the original box, such as the batch number, are lost, leading to a subsequent loss of traceability. If an unscrupulous individual wished to introduce counterfeit medicines into the legitimate supply chain, it is a lot easier if they know that goods are going to be removed from their original packs and separated from security and traceability features.

This is not to blame the parallel traders – free movement of goods within the EU goes back to 1957 and the Treaty of Rome – it is simply to highlight the problems posed by the complexity of the pharmaceutical supply chain today.

Opening gambit
The EC's recent 'Pharmaceutical Package' proposal contained a provision to try to deal with this issue. The pharmaceutical industry preferred a solution that would guarantee the integrity of the pack from the time it leaves the manufacturer to the point it reaches the patient. This would mean that the re-opening of a medicine pack would no longer be permitted. It's not unreasonable; you wouldn't be prepared to buy a box of breakfast cereal or a packet of biscuits in a supermarket, if it were obvious that someone in the supply chain had opened it already.

Sadly the Commission's proposal did not see it in quite this fashion but, to be fair, it did make some sensible suggestions. These include mandatory safety features on packs to, "to ascertain authenticity, identification, and traceability of medicinal products subject to medical prescription", and mandatory inspections of supply chain actors.

One interesting concept the Commission has proposed is the mass serialisation of products. This would mean equipping each pack with a unique code which could be checked at the point of dispensing. It would be possible to know whether the product had already been dispensed, dramatically reducing the chance of counterfeit medicines reaching the patient. It would also improve traceability.

If it could be made workable – it is certainly feasible – it would go a long way to providing the security and integrity required. A data matrix on the pack, in the form of a 2-D barcode, could contain all the necessary information. However, it would require a centralised database of codes to ensure that a pan-European system could operate. Pharmacists would also need to scan every product at the point of dispensing. Other alternative technologies are also available such as radio-frequency identification (RFID), but are yet to be proven fully functional, and would also require considerable investment in infrastructure, with associated costs for everyone along the supply chain.

Safety features
The proposals put forward by the Commission require some work and much clarification. For example, if repackaging were permitted, there would need to be a mechanism by which parallel traders could introduce equivalent features and link them back to the database. In addition, the repackagers would need to accept liability for the product that they repackage and circulate around Europe – something they don't have to do at the moment.

The challenges are not only technical. The rate of increase in counterfeiting means that standing still is not an option. But the current proposals are unlikely to be adopted in any form before 2011. In the meantime the problem will continue to grow. As it stands, no real interim measures exist.

The pharmaceutical industry, through the European body EFPIA, is attempting to address this and will pilot a product verification system in pharmacies later this year based on the data matrix code. EFPIA hopes that this will prove such a solution is workable and go some way to determining a European standard – should the Commission's proposal for any future mass serialisation initiative be adopted.

The project may not solve the problem immediately but it does represent a commitment to finding a solution. The trial will not be cheap, and industry is investing a substantial sum to make it happen – but it is worth it. A safe coding system will help promote public safety and confidence in medicines.

Pharma should be lauded for taking this stance against counterfeiting. It cannot, however, save the determined bargain seeker who chooses to use the more unconventional routes of acquisition, be it street corners or anonymous emails.

The Author
Colin Mackay is director, communication and partnerships at EFPIA
To comment on this article, email pme@pmlive.com

20th May 2009

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