Illegitimate Drugs In The U.S. Supply Chain: Needle In A Haystack

West-African countries have been under attack by drug counterfeiting criminals for decades with little resistance until the last one.  The result, in 2002 Mohammed Yaro Budah, then president of the Pharmaceutical Society of Nigeria, estimated that 70% of the drugs in Nigeria were fake or substandard.  That’s an incredible figure, but starting around that time the Nigerian National Agency for Food and Drug Administration and Control (NAFDAC) under the direction of Professor Dora Akunyili began fighting back.

Initially they focused on inspecting drug imports at the Nigerian ports and airports and they were able to bring the percentage of fake or substandard drugs to come down considerably.  More recently they have begun employing a number of Raman Spectroscopy-based devices called TruScan (recently acquired by Thermo Scientific) to inspect drugs and anti-viral medicines being sold in pharmacies during “unscheduled” visits.

Even more recently, a number of pharma manufacturers have begun to add low cost scratch-off stickers to the drugs sold in Nigeria that cover a random number that can be scratched off and checked for authenticity by patients and healthcare professionals using SMS text message-based technology from Sproxil.  The service was launched in 2010 on a single product but that number is growing quickly as a number of large U.S.-based drug companies add the scratch-off stickers to their productsThe service is sponsored by NAFDAC.


That is, would these technologies help to reduce the number of illegitimate drugs in the U.S. supply chain? I believe that the answer is flatly “NO”.  The reason Raman Spectroscopy and Sproxil’s system work so well in Nigeria and are so appropriate there is because the percentage of illegitimate drugs in that country is so huge.

In comparison, the World Health Organization (WHO) has “estimated” that the percentage of counterfeit drugs in “industrialized countries with effective regulatory systems and market control”—countries like the U.S.—is “less than 1%”.  In reality, this “estimate” is not based on any actual measurement but appears to be just a guess.  We know that tiny quantities of illegitimate drugs are sometimes found in the U.S. supply chain today and we know that, even in the early 2000’s when criminals found a window of opportunity that no longer exists, the percentage has never approached 1% by any measure, so it is technically true that “less than 1%” of our drugs are illegitimate/counterfeit.

And we know, based on seizures in postal facilities alone, that the number of counterfeit drugs arriving on our shores through illegitimate channels is growing fast.  That was the real story seemingly hidden in plain sight in the recent CBS “60 Minutes” video essay “The fight against counterfeit drugs”.  The flood of counterfeit drugs on our shores that was the topic of that segment is coming in through ILLegitimate channels (mainly through unlicensed criminal pharmacies on the internet), not the legitimate supply chain that supplies our pharmacies (including properly licensed and fully legal internet pharmacies).

Despite unfortunate occurrences where illegitimate drugs made it into the legitimate supply chain as I analyzed in “Lessons from “Drug Theft Goes Big”, the actual percentage of illegitimate drugs in the legitimate U.S. supply chain is so small that it is actually immeasurable.  In my opinion, to say that the value is “less than 1%” actually inflates the problem beyond reality by at least five orders of magnitude.

The number of illegitimate drugs in the U.S. legitimate supply chain remains “less than .00001%”, and it is not growing (other than small fluctuations that are due entirely to the tiny numbers involved). That’s my “guesstimate” and it is likely based on more thought and observation of the U.S. supply chain than the WHO put into their guess for “industrialized countries”.  (Notice that my guesstimate of “less than .00001%” fits well within the WHO’s estimate of “less than 1%” so it doesn’t actually counter their estimate!)

If my guesstimate is accurate, that means that Nigeria conservatively has more than 1,000,000 times more counterfeit drugs in their pharmacies than the U.S. has in theirs.  Finding a package of a counterfeit drug is easy in Nigeria, perhaps one out of every 5 to 10 packages.  With a properly configured Raman Spectoscope, or a Sproxil scratch-off authentication code, these illegitimate packages can be found and removed from the market before patients are harmed.  But if applied in the U.S., using my guesstimate and assuming an even distribution, you would have to check well more than 10 million packages before you found one that was illegitimate.

Because the illegitimate drugs that are found in the U.S. supply chain are found in pockets and are not evenly distributed, you could easily check billions of packages and not find a single illegitimate drug if you don’t check in the “right” places (or is it the “wrong” places).  Clearly, checking all those drugs manually by either aiming a Raman Spectrograph at it, or scratching off a patch and texting a code to an authentication service is totally impractical for addressing the problem in the U.S. supply chain.


Raman Spectroscopy and Sproxil work well in Nigeria because counterfeit drugs are so easy to find there.  These technologies fit the problem.  We should all hope that the day arrives soon when Nigeria finds that their counterfeit drug problem has diminished so far as the result of the application of these technologies that they no longer fit the problem.  When that day arrives, even Nigeria will need another technology.

The E.U. is a collection of “industrialized countries” where the counterfeit drug problem is believed by the WHO to be “less than 1%”.  Again, the problem in the E.U. is really too small to accurately measure and the bulk of the problem never enters legitimate channels, but from press reports (one example), it appears that the occurrence of illegitimate drugs in the E.U. supply chain falls somewhere between my guesstimate of “less than .00001%” for the U.S. and the WHO’s estimate of “less than 1%” and is probably closer to whatever the real value is for the U.S. than it is to the 1% value.

The problem is different in the E.U. than it is in the U.S. however because parallel trade in pharmaceuticals, or what I refer to as  “economically motivated diversion”, is somewhat legal in the E.U.  That is, it is apparently legal for a wholesaler to import drugs into a member country that sets the purchase price at a lower value, repackage these drugs for sale in a different member country that sets the sales price at a higher value.

As I understand it, the repackaging step is usually necessary due to language and regulatory differences in the packaging between E.U. member countries.  It’s this frequent legitimate need for repackaging that can provide “cover” for criminals to introduce counterfeit drugs into the legitimate E.U. supply chain.  Repackaged drugs are harder to trace than drugs that remain in the original manufacturer’s package.

(For Dr. Adam Fein’s thoughts on the importance of the differences between the U.S. and ex-U.S. supply chains and how that would impact any legalization of drug importation in the U.S., see his recent excellent essay “Importation is back? Really?!?”.)

Now I’m no expert on the E.U. pharma supply chain so I expect to be challenged by parallel traders in the E.U., if they ever pay attention to statements made by U.S.-based and –focused bloggers.  The reason I bring up this apparent difference (and the reason I keep using the word “apparent”) is that the contribution to the introduction of counterfeit drugs into the legitimate drug supply chain in the E.U. has been a hotly debated topic there for some time with lots of people on both sides of the question.

The point is, the supply chain is significantly different in the E.U. than it is in the U.S. and that causes the problem to be different.  I think that difference leads to the need for a different solution. The solution that works in the E.U. will very likely be different from the solution that works in the U.S., just like the solution that works right now for Nigeria would not be appropriate for either the U.S. or the E.U.


The European Federation of Pharmaceutical Industry Association (EFPIA), an industry organization, proposes a model that would only detect illegitimate drugs at the point of dispense (POD) in the pharmacy.  In this model, all drugs must be serialized in some standard way and the pharmacist must execute an internet-based check on the authenticity of that serialized ID at the time the drug is being dispensed to the patient.

I’m not a big fan of POD because it doesn’t really help find and stop counterfeiters, but when drugs can legally pass through a complex supply chain that includes one or more repackaging and movement from country to country, perhaps simple POD makes the most sense.  (I first discussed POD Authentication in my essay “What are Pedigree Laws Trying to Accomplish Anyway?”.)


The real problem with selecting a technology for securing the U.S. supply chain from the introduction of illegitimate product is that the proportion of illegitimate product is so tiny compared with that of the legitimate product.  Mandating almost any technology to detect “the needle” will undoubtedly introduce inefficiencies that will result in increased costs to everyone for “the hay”.

I discussed this problem in my essay “Do We Even Need To Mandate Drug Pedigrees Anymore?”.  Interestingly, since I published that essay we have learned from Katherine Eban about how some stolen drugs made it back into the supply chain.  It appears that it may have allegedly been a combination of method #2 “Legitimate wholesalers who are unable to make the pledge to only buy directly from the manufacturer”, and method #4 “Criminal wholesalers and/or pharmacists/pharmacies”.  And counter to my point in that essay, electronic drug pedigrees would almost certainly have detected the criminal activity before patients were harmed, as I later pointed out in my more recent essay “Reliance on Trust in the U.S. Pharma Supply Chain”.

(Dr. Fein has published many essays on these topics in his Drug Channels blog.  Here is one from 2006 that has some pertinent thoughts:  “Our Demand Side Counterfeit Drug Problem”.)

The real questions now are, what less costly technology exists (less costly than a full ePedigree system) that would have detected that crime before patients consumed the drugs?  POD Authentication is one.  Is that the solution that best fits the problem here?  Is the extra cost of a full ePedigree system worth it to be able to find and prosecute the criminals?  If so, who should pay for it?


One thought on “Illegitimate Drugs In The U.S. Supply Chain: Needle In A Haystack”

  1. “A needle in a haystack”?!? Dirk, you risk letting facts get in the way of the implementation!

    And you better not tell our self-appointed overlords from California who supposedly still plan to implement a burdensome (and perhaps unnecessary) e-pedigree law with an agency lacking the tools, funding, or knowledge to implement or enforce it. See my dated, but still relevant, post Pedigree and Obscenity.

    So, which is a bigger waste of money: high-speed rail from nowhere to no place, or serialized e-pedigree by legislative diktat?

    Just sayin’…


    P.S. Thanks for the shout-out. Not much has changed judging by the NACDS’ March 2011 press release stating that that the pharmacy industry “does not support the report’s proposal to mandate a ‘track and trace’ system in the U.S.”


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