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U.S. Department of Health and Human Services


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Counterfeit Drug Task Report February 2004 Update - EXECUTIVE SUMMARY

The counterfeiting of currency and consumer products are common problems that plague governments and manufacturers around the world, but the counterfeiting of medications is a particularly insidious practice. Drug counterfeiters not only defraud consumers, they also deny ill patients the therapies that can alleviate suffering and save lives. In some countries the counterfeiting of drugs is endemic—with some patients having a better chance of getting a fake medicine than a real one. In many more countries, counterfeit drugs are common. In the United States, a relatively comprehensive system of laws, regulations, and enforcement by Federal and state authorities has kept drug counterfeiting rare, so that Americans can have a high degree of confidence in the drugs they obtain through legal channels. In recent years, however, the FDA has seen growing evidence of efforts by increasingly well-organized counterfeiters backed by increasingly sophisticated technologies and criminal operations to profit from drug counterfeiting at the expense of American patients.

To respond to this emerging threat, Commissioner of Food and Drugs Mark McClellan formed a Counterfeit Drug Task Force in July 2003. That group received extensive comment from security experts, Federal and state law enforcement officials, technology developers, manufacturers, wholesalers, retailers, consumer groups, and the general public on a very broad range of ideas for deterring counterfeiters. Those comments reinforced the need for FDA and others to take action in multiple areas to create a comprehensive system of modern protections against counterfeit drugs. FDA discussed those ideas, and considered alternatives and criticisms at its public meetings, to develop a comprehensive framework for a pharmaceutical supply chain that will be secure against modern counterfeit threats. The specific approach to assuring that Americans are protected from counterfeit drugs includes the following critical elements:

1) Implementation of new technologies to better protect our drug supply.

Because the capabilities of counterfeiters continue to evolve rapidly, there is no single "magic bullet" technology that provides any long-term assurance of drug security. However, a combination of rapidly improving "track and trace" technologies and product authentication technologies should provide a much greater level of security for drug products in the years ahead. Similar anti-counterfeiting technologies are being used in other industries, and FDA intends to facilitate their rapid development and use to keep drugs secure against counterfeits.

a. The adoption and common use of reliable track and trace technology is feasible in 2007, and would help secure the integrity of the drug supply chain by providing an accurate drug "pedigree," which is a secure record documenting the drug was manufactured and distributed under safe and secure conditions.

Modern electronic technology is rapidly approaching the state at which it can reliably and affordably provide much greater assurances that a drug product was manufactured safely and distributed under conditions that did not compromise its potency. FDA has concluded that this approach is a much more reliable direction for assuring the legitimacy of a drug than paper recordkeeping requirements, which are more likely to be incomplete or falsified, and that it is feasible for use by 2007. Radiofrequency Identification (RFID) tagging of products by manufacturers, wholesalers, and retailers appears to be the most promising approach to reliable product tracking and tracing. Significant feasibility studies and technology improvements are underway to confirm that RFID will provide cost-reducing benefits in areas such as inventory control, while also providing the ability to track and trace the movement of every package of drugs from production to dispensing. Most importantly, reliable RFID technology will make the copying of medications either extremely difficult or unprofitable. FDA is working with RFID product developers, sponsors, and participants of RFID feasibility studies to ensure that FDA's regulations facilitate the development and safe and secure use of this technology. FDA is also working with other governmental agencies to coordinate activities in this area.

b. Authentication technologies for pharmaceuticals have been sufficiently perfected that they can now serve as a critical component of any strategy to protect products against counterfeiting.

Authentication technologies include measures such as color shifting inks, holograms, fingerprints, taggants, or chemical markers embedded in a drug or its label. The use of one or more of these measures on drugs, starting with those considered most likely to be counterfeited, is an important part of an effective anti-counterfeiting strategy. Because counterfeiters will adapt rapidly to any particular measure and because the most effective measures differ by product, the most effective use of authentication technology will vary by drug product over time. FDA intends to clarify its policies and procedures to help manufacturers employ and update these technologies safely and effectively. In particular, FDA plans to publish a draft guidance on notification procedures for making changes to products (e.g., addition of taggants), their packaging, or their labeling, for the purpose of encouraging timely adoption and adaptation of effective technologies for detecting counterfeit drugs. FDA also intends to continue to evaluate and provide information to stakeholders on forensic technologies (e.g., use of product fingerprinting, addition of markers) and other analytical methods that allow for rapid authentication of drug products. FDA also plans to support the development of criteria that contribute to counterfeiting risk, and/or the development of a national list of drugs most likely to be counterfeited based on these criteria, to assist stakeholders in focusing their use of anti-counterfeiting technologies as effectively as possible.

2) Adoption of electronic track and trace technology to accomplish and surpass the goals of the Prescription Drug Marketing Act

At the time PDMA was enacted the only way to pass on a pedigree for drugs was to use paper, which has posed practical and administrative challenges. RFID technology, which would provide a de facto electronic pedigree, could surpass the intent of PDMA and do so at a lower cost. In light of the rapid progress toward much more effective electronic pedigrees that can be implemented within several years, FDA intends to continue to stay its regulations regarding certain existing pedigree requirements to allow suppliers to focus on implementing modern effective pedigrees as quickly as possible.

3) Adoption and enforcement of strong, proven anti-counterfeiting laws and regulations by the states.

Because states license and regulate wholesale drug distributors they have an important role in regulating the drug distribution supply chain. The FDA is working with the National Association of Boards of Pharmacy on its effort to develop and implement revised state model rules for licensure of wholesale drug distributors. Such rules will make it difficult for illegitimate wholesalers to become licensed and transact business, thus making it easier to deter and detect channels for counterfeit drugs. Some states have already reduced counterfeit threats by adopting such measures. FDA will continue working with NABP and states to facilitate adoption of the Model Rules.

4) Increased criminal penalties to deter counterfeiting and more adequately punish those convicted.

Although increased criminal penalties would not affect FDA's regulatory framework for overseeing the U.S. drug supply, they would provide an added deterrent to criminals who work to counterfeit our citizens' medications. FDA has requested that the United States Sentencing Commission amend the sentencing guidelines to increase substantially the criminal penalties for manufacturing and distributing counterfeit drugs and to provide for enhanced penalties based on the level of risk to the public health involved in the offense.

5) Adoption of secure business practices by all participants in the drug supply chain.

Effective protection against counterfeit drugs includes actions by drug producers, distributors, and dispensers to secure their business practices such as ensuring the legitimacy of business partners and refusing to do business with persons of unknown or dubious background, taking steps to ensure physical security, and identifying an individual or team in the organization with primary responsibility for ensuring that effective security practices are implemented. The wholesalers have already drafted a set of secure business practices and FDA will continue to work with other major participants of the drug supply chain to develop, implement, and disseminate such business practices, through such steps as issuing guidance and supporting the development of industry best practices. To help ensure secure business practices, FDA intends to increase its inspection efforts of re-packagers whose operating procedures place them at increased risk for the introduction of counterfeit drugs.

6) Development of a system that helps ensure effective reporting of counterfeit drugs to the agency and that strengthens FDA's rapid response to such reports.

If counterfeit drugs do enter the American marketplace, procedures should be in place to recognize the hazard and alert the public quickly and effectively. FDA plans to take new steps to encourage health professionals to report suspected counterfeit drugs to FDA's MedWatch system. FDA also intends to create a Counterfeit Alert Network to provide timely and effective notification to affected health professionals and the public whenever a counterfeit drug is identified.

7) Education of consumers and health professionals about the risks of counterfeit drugs and how to protect against these risks.

FDA will develop educational materials, including new tools on the FDA website at www.fda.gov, new public service announcements, and new educational partnerships with consumer and health professional organizations, to help consumers avoid counterfeits. FDA will enhance its educational programs for pharmacists and other health professionals about their role in minimizing exposure to, identifying, and reporting counterfeits.

8) Collaboration with foreign stakeholders to develop strategies to deter and detect counterfeit drugs globally.

Counterfeit drugs are a global challenge to all nations, and criminal counterfeiting operations are increasingly operating across national borders. FDA intends to work with the World Health Organization, Interpol, and other international public health and law enforcement organizations to develop and implement worldwide strategies to combat counterfeit drugs.

The steps described in this report are intended to secure the safety and of the U.S. drug supply, which the FDA regulates. The FDA does not have the legal authority or resources to assure the safety and efficacy of drugs purchased from other countries outside our domestic drug distribution system, or from unregulated Internet sites that are not run by pharmacies licensed and regulated by U.S. states.