Drug Makers Fight Back!

New Technology, Packaging and Distribution Are Helping in the Battle Against Counterfeits

In the old frontier days, and for decades after, snake oil salesmen sold dangerous medicines to the American public. It took over one hundred deaths from a toxic cold syrup 65 years ago to set the standards that have made the U.S. pharmaceutical supply one of the safest in the world.

Today, manufacturers are arming themselves with new technology and packaging, auditing suppliers and distributors, and going beyond current Good Manufacturing Practices (cGMP) standards to protect this bastion from a new generation of snake oil salesmen: drug counterfeiters, who now command a global market worth up to $50 billion.

Despite stringent cGMP regulations, criminal penalties set by the Prescription Drug Marketing Act (PDMA), and reporting requirements set by Sections 321 and 322 of the Bioterrorism Preparedness Act, counterfeit drugs are a growing business in the U.S.

Within the last two years, the number of cases investigated by the Food and Drug Administration (FDA) increased nearly four-fold (Table 1).

Not only mom-and-pop shops, but organized crime and terrorist networks are players in this shadowy underworld. (Box)

As they ape the marketing, packaging and distribution schemes of legitimate producers (Photo), the impact of their products can only be guessed at.

This counterfeit product mimicked features down to the blister packaging of the original. Photo courtesy of FDA

The World Health Organization estimates that counterfeit pharmaceuticals account for 7 to 10% of the world market. In some countries, including China, India, and the Philippines, fake drugs make up nearly half of all the medicines sold. In Mexico, a prime destination for U.S. citizens looking for bargains in prescription medications, between 25% and 40% of medicines are currently believed to be counterfeit materials coming mainly from China.

Security analysts fear that we're seeing just the tip of the iceberg. "While the evidence is only anecdotal, it's clear that thousands of people in the U.S. are being harmed each year by medicines they've bought illegally on the Internet,"says Neil Livingstone, CEO of the security consulting group Global Options Inc., Washington. The organization tracked over 307 Internet sites selling pharmaceuticals as part of a comprehensive study of threats to the U.S. pharmaceutical industry that was published last spring (www.globaloptions.com\booktext2003.pdf).

FDA has begun several hundred investigations and arrested people involved in 60 websites. However, few data have been gathered. "Neither FDA nor the Department of Homeland Security (DHS) have paid enough attention to these issues," Livingstone says.

FDA admits that vulnerabilities continue to run throughout the supply chain. Imported raw materials remain one Achilles heel, since over 80% of active pharmaceutical ingredients (APIs) used in the U.S. are imported. "There's a big risk on the manufacturing end in areas of the world where there is less oversight and monitoring of ingredients,"says Myles Culbertson, director of New Mexico State University's Physical Science Laboratory (PSL). The laboratory is a prime contractor for Product Surety (www.productsurety.org), a working group involving industry and FDA that is developing risk assessment criteria, evaluating technologies and helping define best practices.

One problem is that counterfeits of any kind may be mixed into shipments of legitimate products. In addition, pedigree information, the documentation tracking a supply source, may be incomplete or fraudulent. "Someone buying primary ingredient may not know where it's really come from," Culbertson says, "It's less of an issue for U.S. manufacturers, but U.S. buyers still have to be careful."

Questionable Pedigrees
"There's no way to guarantee the chain of control---pedigrees are easily forged, and background checks are not required," says Livingstone. FDA lacks the resources needed: "A System Overwhelmed," title of FDA testimony before the U.S. House of Representatives last June, says it all. Currently, only 180 of FDA's 430 full-time inspectors are deployed to inspect offshore manufacturing facilities, something they're required to do every few years. The Senate's commerce committee has questioned the Agency in the past about its backlog of GMP inspections. As of 2000, some 4,600 facilities shipping to the U.S. hadn't been inspected.

Meanwhile, inspectors at the back end of distribution, monitoring suspicious packages that arrive in the mail, can only keep up with a trickle of the flood of illegal pharmaceuticals---some two million packages a year---arriving in the U.S. In addition, information technology problems have plagued FDA's computerized import-tracking system, the Operational Administrative System for Import Support (OASIS) in the past, making it difficult for manufacturers to file data, and for FDA to analyze them. The Agency has been overhauling the system to address these issues.

As legislators move to allow U.S. consumers to buy lower-priced prescription medications from abroad, questioning the safety of the offshore drug supply has become extremely unpopular. "It's a politically charged issue,"Livingstone says. "But we're hoping it doesn't take an incident to get people to take this seriously."

Some groups are calling for a radical revamping of U.S. packaging. The Healthcare Compliance Packaging Council (HCPC; Falls Church, Va. www.unitdose.org) advocates use of unit-of-dose and blister packs. Already required in Europe, these packages are gaining presence in the U.S. to reduce medication errors (Pharmaceutical Manufacturing, summer 2003, p. 9). "The U.S. system, in which a druggist counts out pills into a container, is a formula for disaster," says Livingstone.

Others are asking that FDA require pedigrees tracing manufacturing sources for pharmaceuticals and ingredients that were originally proposed in 1994 as part of PDMA for 21CFR 203.3(u) and 203.50. These requirements, believed to be costly and impractical in paper form have been stayed until April 1. However, as FDA has noted in its Counterfeit Drug Task Force's interim report (www.fda.gov/oc/initiatives/counterfeit/report/interim_report.html), some new anti-counterfeiting technologies would allow an electronic pedigree to be established. Florida isn't waiting for an electronic version. The state saw a tremendous increase in counterfeiting, given a labyrinthine distribution system where a drug may change hands 10 times before it's sold. It now requires a paper pedigree for pharmaceutical distributors (Pharmaceutical Manufacturing, Fall 2003, p. 80).

In the meantime, pharmaceutical manufacturers and the FDA are addressing weaknesses through Product Surety and other collaborative projects. Leads provided by manufacturers have helped FDA close in on a number of counterfeit rings so far, while FDA involvement has helped manufacturers implement new packaging and authentication technology quickly and more efficiently.

Front-End Security
Progressive manufacturers are vetting raw materials sources closely. The strongest and most effective step is actually visiting the manufacturing sites of any offshore suppliers, says Daniel Lobato, a raw materials quality and testing specialist who has worked extensively in biotech, and is now vice-president of Microvirology Laboratories, a contract lab start-up in Berkeley, Calif.

Generally, he says, it's best to restrict alliances to companies registered with FDA. "It's the first indication you're working with a credible vendor," Lobato says, "but you still need to verify this on your own."

Most large biotech companies conduct onsite audits as a matter of course, he says, dispatching a team with representatives from purchasing, manufacturing and management. "Audits show commitment and allow you to discern a company's culture," Lobato says. In addition, they can be particularly important for bioprocessors, since offshore manufacturers may be doing food processing at the site that may not coincide with requirements for drug manufacturing, or they may be working on animal products when the drug needs to be certified as coming from a non-animal source.

Checklists can serve as a good starting point for the audit (for basic guidance, see a template developed by ISPE, available on www.gmp1st.com/drauch.htm). Hiring an auditor can also make sense when you're working with small suppliers, or when you need to focus on a specific area beyond your workaday expertise.

Local auditors can be particularly helpful, Lobato says, but you need to make sure that they have a thorough knowledge of FDA requirements. In one recent U.K. audit, Lobato says, he found an auditor who could sift through EU and FDA requirements and evaluate the supplier to ensure that both were met. "If you need translation done," Lobato recommends, "hire someone yourself, on the front end, rather than trusting the supplier."

Physical testing is also essential in qualifying a vendor. "Make sure you have multiple lots worth of data verifying that raw materials meet all your criteria," Lobato says. "Once you've performed 100% inspection on the first "x" lots of product and the supplier has met all requirements, then you can go to sampling."

It's also important to ensure that suppliers follow labeling requirements and use strong closures and tamper-evident packaging. With new security regulations, even legitimate materials may be held for long periods on humid docks in inappropriate conditions awaiting inspection, Lobato says. "It may make sense to hire an expediter to usher materials through Customs," he adds.

Back-End Limits
If they're limiting the number of suppliers they work with, manufacturers are also restricting the number of companies that can distribute their products. Serono, for example, which saw two cases of counterfeiting of its costly AIDS treatment, Serostim, has moved to a "secure distribution" program involving a network of contracted pharmacies and distributors, says spokesperson Carolyn Castel.

This approach is not yet widely used, but may prove important with high-end medications, particularly those requiring continuous refrigeration at liquid-nitrogen or carbon dioxide temperatures, says Lew Kontnik, analyst and pharmaceutical facilitator with Product Surety.

But Serono did not stop with limiting distribution. Each package of Serostim now features a tracking number, barcode and hologram. Such track-and-trace technologies (Box) are being evaluated and used by most U.S. pharmaceutical manufacturers and distributors, Kontnik says, and their use is expected to grow substantially in the future.














Manufacturers take different approaches to selecting anti-counterfeiting technology, with some emphasizing detection and others deterrence, says Richard Jotcham, Director of Technology Services for of Axess Technologies Ltd. in the U.K, a partner in the Product Surety initiative. "Each drug needs to be assessed in terms of its use, copy resistance and supply chain-enforcement systems or security technologies must be carefully selected to meet particular needs," he says. (Table 2)

Table 2 - Allies in the fight against fakes

Technology and providers                                                 Pros/cons

Holograms, optical systems


New Light Industries


DuPont Authentication Systems (www.labelsysinc.com)

Pacific Holographics, Inc. (www.pacholo.com)

Offer good overt security with distinct

features such as depth, color change,

image flip/Some holograms can be copied,

unless additional "covert" features are

added to the package design



Spectra Systems Corp. (www.spsy.com)

Keymaster Technologies (www.keymastertech.com)

DVT, Inc. (www.dvtsensors.com)

Biocode Technologies, Inc. (www.biocode.com)

Wide variety of taggants and readers available,

from polymer and DNA markers, and from

UV, microscopy- and spectroscopy-based

readers/Cost, effectiveness vary


Barcodes and other printing

Zebra Technologies, Inc. (www.zebra.com)

Quint Co. (www.quintco.com)

Well-established technology that is easy

and cost effective to extend/Data-carrying

capacity is limited unless two-dimensional

code is used; 2-D code requires more

expensive readers and infrastructure


RFID tags/chips and readers

Texas Instruments Inc. (www.ti.com)

Checkpoint Systems Inc. (www.checkpointsystems.com)

Matrics Co. (www.matrics.com)

Intermec Technologies (www.intermec.com)

Flying Null, Ltd. (www.flying-null.com)

Allow immediate scanning and reading, and

complete tracking and supply-chain control/

Fully activated chips are costly, as are readers;

In some cases, chips and readers can be

damaged during high-temperature processing

(e.g., sterilization)


Digital watermarking

Digimarc (www.digimarc.com)

Impossible to remove, provides good covert

security features, is machine-readable/

Some watermarks can be counterfeited


Security inks

Difficult to imitate

InkSure Technologies (www.inksure.com)


Westvaco Brand Security



Combined packaging systems


Kurz Transfer Products (www.kurzusa.com)


Lawson Mardon Singen/Alcan (www.lawsonmardon.com)


Hueck Folien (www.hueck-folien.de)


API Foils (www.apifoils.com)



Holograms and optically variable effects provide visible, or overt, security that can be applied to packaging or seals, Jotcham says. "Criminals have to copy these, which provides an added obstacle." Advances in tagging technologies mean that covert security features, visible only with designated readers such as ultraviolet light or a microscope, can be integrated into packaging substrates, adhesives inks and print, he adds.

Today, says PSL Director Culbertson, bar coding is a very effective method. There are ways to add more dimensions to allow it to carry more information, he explains, and it already exists and is being used, so it's easy to extend. However, 2-d readers are expensive.

Electronic tagging using radio frequency identification (RFID) or chipless tags also can be used to authenticate product. The devices vary in cost from a few cents to several dollars depending on the data capacity, range and read/write capability of the taggant, Jotcham says. Read-only chips are said to cost up to 20 cents each, while fully active chips reportedly run from $10 and $50. Data can be electronically stored and processed so they can be attached to a dedicated database allowing product identification and tracking. However, the cost of reading equipment and infrastructure is high.

The prime benefits of RFID are speed and ease of use, says John Dempsey, executive director of trade relations and brand security at Ortho Biotech Products (Raritan, N.J.), which has been evaluating the technology closely. "RFID allows you to scan everything simultaneously and automatically, with huge implications for efficiency and staffing," he says. The Healthcare Distributors Management Assn. (HDMA) has advocated its use, and Astra-Zeneca in the U.K. has used the technology for its anesthetic, Diprivan.

Companies whose products have been counterfeited have taken a flexible approach to secure them for the future (Photo). "The greatest danger to any security plan is complacency or stagnation," Dempsey adds. "It needs to be fluid, and to change every six months or so. You need to be able to add on or remove features as needed."











Packaging should include both overt and covert security features, experts say. Secure Text, shown here, fits up to 200 characters,100 microns high, into one inch of space. This covert feature was used, along with a hologram, in packaging developed by API Foils and Pacific Holographics for a Glaxo Product sold in Latin America. Photo Courtesy of Pacific Holographics

Ortho used a combined approach to foil counterfeiters of the anemia medication, Procrit, settling on a closure seal with a digital watermark (Photo). "It features both overt and covert features, both of which are essential to any brand security program," says Dempsey, and is now used on all packages of the drug.











For Viagra, a prime target for counterfeiters, Pfizer Inc. (New York) has developed a multilayered approach to secure packaging. The company recently introduced labeling using color-shifting inks for Viagra sold outside the U.S., and is now gearing up to introduce this new labeling for the U.S. market, says Richard Hollander, senior director of packaging. Hollander believes that such inks, part of a spectrum that includes heat- and light-sensitive materials, will soon be widely used throughout the industry.

FDA, meanwhile, is addressing vulnerabilities. Its counterfeit drug task force will submit its final recommendations in January. The Agency's work with PSL and Product Surety has helped develop a database of technologies, define areas of risk, best practices and potential areas where industry and regulators can work together.

The Agency is conducting inspections of foreign API manufacturers, and has established an "authentics" database for imported APIs. In addition, FDA says, it is implementing a surveillance program to test APIs for quality and counterfeits, and to emphasize APIs during inspection of finished dosage manufacturers.

In October, PSL started to develop a proof-of-concept model for a risk-based automated import-entry examination system, a set of advanced algorithms that FDA would use to screen food and drug imports quickly based on predefined risk assessment criteria. The software should make it easier for the Agency to examine trends and detect fraud, just as algorithms have helped banks and credit companies, says Benjamin England, former regulatory counsel to FDA's associate commissioner for regulatory affairs, and now a lawyer with Hogan & Hartson in Washington.

Currently, FDA says, its computer system, OASIS, is being redesigned to incorporate these risk-assessment programs, a project that will be completed by March 2004. The move represents significant progress, building upon the foundation set by joint efforts involving FDA and industry, England says. "You can't prevent people from lying,"he adds, "but you can ensure compliance and design a regulatory system that makes fraud easier to detect."

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