Report Finds that Pharmaceutical Counterfeiting Busts Fell in 2012

Posted 24 January 2013 | By Alexander Gaffney, RAC 

An annual report just issued by the US Customs and Border Patrol (CBP) shows that counterfeit and pirated goods experienced "explosive growth" in 2012, causing problems for healthcare product regulators who continue to struggle with ways to prevent counterfeit products from entering the supply chain.

The Scale of the Problem: Big, but less so for Pharmaceuticals

Purveyors of counterfeiters often use a tried-and-true tactic to get counterfeit products into the country: Throw as much of it into transit as possible, and hope border patrol agents aren't able to seize all of it.

Those economies of scale are on display in the CBP report, and the scale of the problem is clearly enormous. Agents seized a total of $1.26 billion worth of goods in 2012-up 13.5% from the year prior, part of a steady increase in the value of products seized over the last decade.

Seven percent of the value of those products, or $82.9 million, was derived from pharmaceutical and personal care products, down significantly from 2011 when such products accounted for at least 13% of the value of all products seized.

The products were seized in 2,350 separate seizures, CBP noted, or 9% of the total number of seizures. That number was also down significantly from 2011, when it numbered 3,206 total seizures.

Part of that decline might be associated with an operation dubbed "Operation Pangea V," a global effort CBP said was aimed at "disrupting organized crime networks behind the illicit online sale of counterfeit drugs." That operation resulted in nearly 80 arrested and the seizure of 3.7 million doses of counterfeit medications, officials said, the value of which was more than $10 million.

The Main Source of Counterfeits: China

CBP's report also indicates that the vast majority of counterfeit goods originate either from China (72%), Hong Kong (12%), India (1%) or Singapore (1%). China alone accounted for roughly half of all counterfeited pharmaceutical and personal care products by value ($46.9 million), while Hong Kong was second with $12.3 million and India in third with $5.3 million.

Most of those goods attempted to enter the country through cargo shipments, though a smaller percentage attempted to enter through express shipments or mail shipments as well.

The report notes that the Department of Homeland Security seized a total of 5,319 parcels containing counterfeit, substandard or unapproved pharmaceuticals in the international mail system in 2012.

FDA Response

The report comes on the heels of a difficult year for the US Food and Drug Administration (FDA), which grappled throughout 2012 with multiple instances of fake products entering the supply chain. Some of those products, including Avastin and Botox, were purchased by doctors who went outside approved suppliers to obtain the product, putting consumers at risk.

In the wake of those instances, FDA has called on the Congress to give it additional authority to go after counterfeit products, but legislators have been slow to answer that call, stripping at least one provision that would have strengthened supply chain protocols from the FDA Safety and Innovation Act, which passed in July 2012.

Medical devices were not explicitly mentioned in the report, though they are a problem that companies and regulators have issued warnings about in the past.

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