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Remarks at the APEC Dialogue on Corruption and Illicit Trade

Remarks as Delivered of Margaret A. Hamburg, M.D.
Commissioner of Food and Drugs
APEC Dialogue on Corruption and Illicit Trade
Ronald Reagan Building and International Trade Center, Washington, D.C.
Wednesday, March 2, 2011

Good afternoon—and thank you for inviting me to this important meeting. The issues you’ve discussed today are of critical importance to the future of the global economy, and to the health and well being of people all over the world. So I’m heartened that you have come together—and particularly pleased that the need for governments to collaborate and partner across borders to address the scourge of counterfeiting has emerged as a common thread throughout the day.

I know that you have been busy. You have examined the negative impact of counterfeiting, corruption, and illicit trade on business, innovation, investments, economic development, and job creation—and addressed how intergovernmental cooperation and convergence can begin to address these burdens on our economies and contribute to legitimate economic growth.

You have explored the significant challenge that counterfeiting poses to law enforcement and the importance of international efforts to support the rule of law and fight organized crime and illicit international criminal syndicates.

And particularly important, from my perspective, you have looked at the tremendous negative impact that counterfeit or falsified medicines and other medical products have on the health of individuals and on the public health of nations throughout the world—and you have discussed how to combat these falsified, substandard medical products by examining the best ways to investigate corruption and illicit financial flows; to regulate and enforce actions at the national, regional, and global levels; and to identify points of synergy and collaboration for public and private sector counterparts.

This has clearly been a full and eventful day. I am pleased to be part of it…and I thank you all for staying until the very end to hear my remarks.

I am here this afternoon to not only reflect on and perhaps offer some synthesis of what has been focused on throughout the day but, more specifically, to reiterate and emphasize that the issue of counterfeiting is of such international importance to our economic health and our public and individual health—and affects the lives of so many people—that it must be elevated to the highest levels of international discourse, with APEC and more broadly. This meeting represents a key step in making that possible—and bodes well for the future.

As you heard today, the most intuitive impact of counterfeiting—the one people generally think about first—is its impact on the economy. Certainly as this group well knows, it is an intellectual property issue…and a significant business problem that involves the loss of income, jobs, and innovation as people feel their ideas and efforts are not protected or rewarded. Under these circumstances, entrepreneurs and investors fear that they will not be rewarded appropriately and they are likely reluctant to take the risks needed to develop a new product, concept, or business.

Today, as we emerge from a recession and strive to rebuild our global economy, this impact is particularly dangerous. And it is a major reason why President Obama and other world leaders are increasingly turning their attention to the issue.

There is also, as you know, the very significant challenge to law enforcement and efforts to deal with large scale and well-organized criminality. The dangers of rogue, so-called “entrepreneurial” counterfeiters may be increasingly—and dangerously—enlarged by the engagement of organized crime and international criminal syndicates. Now, it is less risky and just as lucrative to counterfeit prescription drugs rather than traffic in illicit drugs—so those involved in economic fraud are simply following the easier, safer money.

And then there is the significant public health impact of counterfeit health care and medical products. Though many may focus on the negative economic impacts of counterfeits, perhaps the most profound and dangerous aspect of the threat is to the health and well being of people.

As you can imagine, combating falsified medicines is an area in which the U.S. FDA must collaborate widely with other governments and other entities around the world to identify and implement local, regional, and global strategies to protect the public health.

Sadly, these criminals simply don’t care about the havoc they wreak or the people they kill in the process. The truth is pretty stark: it is one thing to think you’re getting a pair of Calvin Klein jeans and it turns out you’re getting a knock-off. It is quite another to think you are getting a legitimate, effective antibiotic that you need and trust…and find out that it too is a cheap imitation. Both are examples of economic fraud, and both are serious crimes. But one can cost you your health and possibly your life —and also have a long-term, wide-ranging impact on our ability to promote and protect the health of people locally and all over the world, including the development of antibiotic resistance and the spread of infectious disease.

In other words, this is a critical and serious public health issue—one that we simply cannot afford to ignore.

So let me take a moment to give you some background, and I hope that I’m not repeating too many things that have already been said.

As you know, the issue of falsified drugs is one of both domestic and international concern. It is shocking to realize that, in some parts of the world, it is estimated that between 30 and 50 percent of drugs to treat serious diseases may actually be counterfeit—and the numbers may be even higher.

In fact, it is hard to really know the full extent of the problem. Estimates vary, and we need better surveillance and other data to truly define the magnitude and scope of the problem. But what we do know is that it is real and growing every day.

Drug falsification, diversion, cargo theft, and economic adulteration of medicines are crimes of opportunity. And the opportunity is flourishing because of the dramatic way our world has changed in a relatively short period of time.

In the past decade, the pharmaceutical industry has shifted a large part of its manufacturing operations and supply sourcing overseas. Today, nearly 40 percent of the drugs Americans take are imported and nearly 80 percent of the active ingredients in the drugs on the American market come from other countries. In addition to the growth in volume of imports, there has been a dramatic increase in the variety and complexity of imported products. Other countries face such challenges as well.

Moreover, the supply chain—from raw material to finished product—increasingly involves a complex web of producers, manufacturers, re-packagers and distributors in a variety of locations. Like any chain, the medicines supply chain is only as strong as its weakest link, and the proliferation of additional handlers, suppliers and middlemen creates new points of entry through which contaminated, and otherwise falsified medicinal products can infiltrate the legitimate medical products supply.

This is an extremely serious situation from a public health perspective. We invest heavily in our own economies and in the developing economies of the world by building modern hospitals and clinics and training health care workers. But if the medicines and other medical products they have to use are falsified, they may become inadvertent vectors of harm to their patients…and all of this investment is for naught.

I strongly believe that when my agency, the U.S. FDA, authorizes medicines for the U.S. market based on scientific evidence and legal standards, the American people have the right to expect, and do expect, that they are getting exactly what the package says—a medicine or medical product that has been carefully evaluated for safety, efficacy, quality and performance. And I know that my counterparts around the world would say the same for the products in their jurisdictions.

All people should be able to trust that, of all things, the medicine they take when they’re sick will not make them sicker. Drug counterfeiting involves larceny and fraud on several levels. Certainly, it involves theft against the drug manufacturer, but perhaps even more importantly, it robs people of a faith and confidence they deserve to have.

Passing off a fake medical product is a direct threat to public health. Fake medical products may contain too much, too little, or the wrong active ingredient, and could contain toxic ingredients. They can also increase the likelihood of drug resistance, and they may prevent patients from getting the real medical products that they need to alleviate suffering and save lives.

As I mentioned earlier, this is all part of a growing criminal enterprise, which also includes the deliberate adulteration of drugs and consumer products to maximize profits, and there have been other security threats as well.

We have seen that the threat from fake and other intentionally adulterated products is real. And, unfortunately, we know that the results can be tragic.

In Haiti, Panama, and Nigeria, many children died in recent years due to cough syrup and teething medication poisoned with diethylene glycol.

In 2008, the blood thinning drug, heparin, was adulterated out of a desire for economic gain, causing serious injury and deaths in patients throughout the world.

Just last year, patients received counterfeit over-the-counter diet pills that had an ingredient that is found in a prescription diet pill. Patients with certain cardiac conditions were at special risk if they took the over-the-counter pill as directed on the label, because they would ingest a dangerous dose of the prescription version.

And last summer, our agency discovered patients who reported that their insulin was not controlling their blood sugar levels. Upon investigation, it was found that they were using insulin from lot numbers that had been stolen months before. It is thought that the insulin was not stored or handled properly by the thieves and lost its potency.

It is sad to realize that we live in a world in which some criminals are willing to maximize profits by placing poisons and other fake ingredients in products like infant formula, toothpaste and medically necessary drugs…or otherwise compromising the quality of essential medical products.

But it is a reality we must face—a reality we must confront…as proactively as possible—and by working together.

We must also recognize that as government officials, we have a very special responsibility as the stewards of the trust, resources and well being of our citizens. We must do everything that we can to prevent the entry of counterfeit, substandard or adulterated medical products into homes and health care facilities in our countries. We also must be certain that we are not–as part of well intended domestic or global health programs—spending public monies on medical products that do not meet acceptable quality standards. It is enormously heartening to see the kind of investments now being made in global health—efforts to reduce the burden of preventable disease that takes such a high toll on health and development in many nations. But as we support—hopefully expand—such efforts, let us make sure that we are helping to provide medicines that really work.

At so many levels, we all have a stake in this issue.

And that is why I am speaking to you today. Because I want to stress the need for us to continue to come together to address this growing problem…and to encourage the APEC heads of government to do so, as well.

Because counterfeits have a significant, negative impact on our economies, job markets, law enforcement and our health—and because it discourages innovation, something we simply cannot afford in 2011—I urge this conference to recommend strongly that the heads of governments of the APEC economies include counterfeits on the agenda when they meet in Hawaii this November.

The bottom line is that this is a global problem that crosses many sectors. It cannot—and will not—be solved by the actions of any one agency or nation.

It requires all of our resources—and all of our ideas. So we must band together. We must share information and compare analyses. And we must leverage our limited resources and implement coordinated international actions to protect people and promote the global public health.

So thank you for your time and for the important and productive steps you have taken at today’s meeting. I am confident that, by coming together, we can find solutions to these issues…and I look forward to working with you as we do.

Thank you.