Counterfeit Drugs: A Bitter Pill To Swallow

Richard Howells

An estimated $200 billion of counterfeit drugs go on the market annually. That makes it the largest fraud market in the world.

Not too surprisingly, in third-world countries, the proportion of counterfeit drugs is very high. But even in the developed world, you could buy life-saving medicine from your local pharmacy that were previously returned. If the manufacturer didn’t adequately verify the return, your drugs could be fake.

But it isn’t like buying a fake designer bag. According to the World Health Organization, fake drugs, while seemingly identical to the real thing, often “fail to properly treat the disease or condition for which they were intended, and can lead to serious health consequences, including death.”

And it obviously affects the trust that patients have in the brand that is being ripped off.

It is estimated that only 2-3% of drugs sold are returns, but their value exceeds $6 billion a year. Would you want a 1-in-50 chance of getting a counterfeit product?

Serialization is the cure

One of the challenges is that authorities and regulatory bodies around the world are responding differently to the counterfeiting challenges and there are no common standards.

The Falsified Medicine Directive (FMD) went into effect in most EU countries in February 2019, ensuring that all drugs must be serialized or bar-coded. The EU chose to adopt a centralized regulator’s database where manufacturers upload serial numbers. Suppliers can connect to the database to verify the good’s authenticity.

The US took a different approach with the 2013 Drug Supply Chain Security Act (DSCSA), which is being phased in over a 10-year period.  Under the act, manufacturers had to implement serialization or bar-coding at a package level by November 2018. By November 2019, these serial numbers must be used to verify returns. However, there’s no centralized regulator database in the US.

Technological remedy

When you are dealing with over $1,200 billion of pharmaceuticals worldwide (and 49% are in the US) that all need to be tracked at the consumer package level, you have quite a “big data” challenge.

How can manufacturers, wholesalers, hospitals, and pharmacies safely and efficiently create, manage, and communicate these volumes across multiple databases?

This requires collaborating to share detailed information with all parties and to track products through every step of the supply chain while quickly and easily complying with changes in legislation.

In September, SAP announced its latest partnership with Chronicled to provide blockchain technology to help pharmaceutical companies comply with the US Drug Supply Chain Security Act (DSCSA). In this partnership, Chronicled’s MediLedger solution will serve as an integral part of SAP Information Collaboration Hub for Life Sciences, helping ensure patient safety and security for companies in the pharmaceutical supply chain.

Companies can verify the authenticity of medicine packages returned to wholesale distributors from hospitals and pharmacies, which are then resold to customers as mandated by the DSCSA. Utilizing blockchain technology can provide a secure, reliable, and distributed network to enable verification routing, detect potential counterfeit products, and improve patient safety.

Learn how technologies such as blockchain help safeguard patients’ health.

This article originally appeared on Forbes SAP BrandVoice.


About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.