FAUX OUTRAGE: COUNTERFEIT DRUGS IN A GLOBALIZING ECONOMY.

AuthorBarnett, Andrew
  1. INTRODUCTION

    With the many debates raging around healthcare in the United States and abroad, an often-overlooked aspect of the modern healthcare delivery regime is the shadow market that has emerged around counterfeit drugs. The World Health Organization (WHO) first noted the problem of counterfeit drugs at its 1998 World Health Assembly, and since then the problem has only successively worsened, culminating with the COVID-19 pandemic in 2020. (1)

    By 2010, the WHO predicted the value of traded counterfeit drugs to be in excess of seventy-five billion dollars; by 2015 the Organization for Economic Cooperation and Development (OECD) estimated the trade had swelled to a value of $200 billion dollars. (2) For context, Pfizer, one of the largest pharmaceutical manufacturers in the world, reported an annual revenue in 2018 of roughly fifty-two billion dollars, representing only a quarter of the value of the counterfeit market. (3)

    The market reach of counterfeit drugs is extensive, affecting both legitimate and illicit markets globally. The primary market for counterfeit drugs is largely thought to be for "lifestyle" medications including weight loss and popular erectile dysfunction medications. (4) However, with increasing healthcare costs, particularly pharmaceutical costs, in the United States and the relative lack of access to quality healthcare in poor and developing countries, the demand for counterfeits has extended into markets of lifesaving medications including those for HIV, malaria, and more recently COVID-19 tests and therapeutics. (5) The reach of counterfeit drugs is so great that it has even led to the counterfeiting of illicit controlled substances such as synthetic cannabis products and cocaine. (6)

    While the profits for those willing to peddle in the unseemly trade of counterfeit drug distribution are extremely high, the costs can also be devastating for society. (7) The rise of the internet has magnified the problem exponentially, as the web provides a nexus for trafficking counterfeit pharmaceuticals from underground suppliers, largely concentrated in Asia, with pent up markets in Africa and the West. (8) Counterfeit medications can at a minimum undermine and cast uncertainty onto legitimate treatments and at worst lead to the distribution of lethal and defective products. (9) Furthermore, evidence suggests that counterfeit drug distribution is a lucrative means by which global international terrorism and crime syndicates fund their operations, particularly in South Asia and Africa. (10)

    Like many issues in today's complex world, the issue of counterfeit drugs is multifaceted, and the regulation thereof derive from a variety of legal sources. Criminal law plays a role in counteracting the distribution of counterfeits directly by prosecuting those engaged in the trade. Healthcare policy plays a role in shaping the markets for counterfeits. International law also plays a role in synchronizing networks of governments and NGO's in combating the spread of counterfeits.

    Distinct yet uniquely stitched into the body of health policy and enforcement mechanisms is intellectual property law. Given the incredible importance of patent and trademark rights in the sphere of legitimate drug development and distribution, intellectual property provides a useful frame for addressing and considering the issue of counterfeit drugs. In particular, considering the varying regimes of intellectual property protections globally may elucidate why the counterfeiters have been able to develop and thrive in recent years.

    This note will consider the implications of intellectual property protections regarding the proliferation of counterfeit drugs. The note will first explicate the scope of the issue of counterfeit drugs with specificity towards the relationship between counterfeits and intellectual property, then considering the defects within present intellectual property regimes permitting or encouraging the growth of counterfeits.

    The note will then consider and propose solutions to resolve issues regarding the proliferation of counterfeit drugs. Criminal law, health law, international law, and broader health and economic policies will also be considered, as they are relevant to the underlying analysis of intellectual property regimes and the topic of counterfeit drugs.

  2. BACKGROUND

    Counterfeit medicine as described by the Food and Drug Administration (FDA) is "fake medicine." (11) This rather simplistic definition is inclusive of a wide range of products ranging from knock-offs with limited pharmacological action, tainted fakes that can cause toxic bodily harm, or mere mimicries of pharmaceuticals that may actually have active ingredients present. (12) The market for counterfeit extends to lifestyle medications, such as weight loss drugs and erectile dysfunction medication, to life saving drug regimes, such as retroviral HIV therapy and malaria treatment. (13) Included in the definition of counterfeit medicine are some types of illicit recreational drugs, but given the illegality of such substances, they are largely beyond the reach of intellectual property protections. (14)

    While counterfeits have always been a component of illicit drug trades, the trade around counterfeit drugs has been buttressed and accelerated by the emergence of the internet. (15) Internet pharmacies have become a staple of digital commerce, and such outlets can be witting and unwitting distributors of counterfeit medications. (16)

    The National Association of Boards of Pharmacy identified in a 2013 report the internet as the primary supplier of counterfeit drugs. (17) Further the Board noted that ninety-seven percent of evaluated internet pharmacies were not compliant with either federal or state laws, or with industry standards. (18) Regardless of the potential risks associated with online pharmaceutical purchases, the FDA found in 2012 that roughly one in four internet users has utilized an online pharmacy. (19)

    The internet has long had a complicated relationship with intellectual property protections ranging from illicit downloads of art and music to the distribution of counterfeit goods. (20) The internet is particularly susceptible to the distribution of black-market goods for a variety of reasons not limited to instantaneity of communication, difficulty of monitoring networks, anonymity, and disparate legal regimes regarding the status of such goods. Counterfeit medicines are being plowed through the same digital channels as other black-market goods and have exposed the tensions of enforcing disparate intellectual property rights on a global platform.

    Intellectual property protections cannot resolve internet distribution of black-market goods on the basis of qualities inherent in the online platform, but intellectual property regimes can help standardize which products are market worthy and which market actors may trade in certain products. (21) Such protections provide a guardrail beyond the mere enforcement arm of the criminal law and the abstractions of broader healthcare policy. (22) In fact, intellectual property law plays a key role in resolving the tensions in defining counterfeit drugs, generic drugs, and patent "branded" drugs. (23)

    Patent branded pharmaceuticals describe drugs for which a patent has been issued and under which the patent protections still apply; generic drugs describe drugs available for mass manufacture though not protected by patents; counterfeits describe, to use the FDA's pithy definition, "fake medicine" and in the broadest sense fail to meet some regulatory status associated with legitimately sold generic and patented pharmaceutical. (24) While generics do not maintain patent protections, they may still retain trademarks on the basis of the "brand" or pharmaceutical entity that produces them. (25) Accordingly, the term "branded" pharmaceutical may describe a patented drug for which the active ingredient is associated or any class of drug possessing a valid trademark. (26)

    U.S. Patents are constitutionally dictated and enabled by Congressional statute. (27) The life of a patent is often twenty years, and though seemingly long in duration, due to the length of clinical trials and safety protocols, drugs generally do not come to market until 12 years after the original patent filing date. (28) Trademarks on the other hand arc inhered by common law and registered through the U.S. Patent and Trademark Office and serve as the marker of a brand. (29) Trademarks in the case of pharmaceuticals may manifest as the brand name of a drug, the shape of a pill, or other characteristics that distinguish the product from other competing products. (30)

    Another issue with counterfeit medications is that consumers arc often confused as to the distinctions between generic and counterfeit medications, in which case they will unnecessarily opt for more expensive branded pharmaceuticals. (31) In fact it should be noted that most counterfeit medications are not actually lethal. (32) Some counterfeits actually work and contain the specified formulation, while others contain inert or tainted substances. (33) In this manner counterfeits share an issue with the illicit recreational drug trade in that the issue with counterfeits is not that some counterfeits are not effective but that consumers arc unaware of what they are buying. Accordingly, in some respects the fact that some counterfeits are effective make them more insidious. If counterfeits merely were ineffective people would quit buying them, but their potential effectiveness makes them attractive to those often faced with the prospect of going druglcss absent the counterfeit.

  3. ISSUE

    1. The Supplier

      According to a WHO study in 2017, 10.5 percent of pharmaceutical drugs in low and middle-income countries are phony or substandard. (34) China, India, and other countries in South and Southeast Asia are particularly affected by the problem of counterfeit drugs. (35)...

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