ISO 9000- A Contrary Viewpoint

Management of College Graduate Recruits

The Risk of Counterfeit Pharmaceuticals

The Risk of Counterfeit or Poor Quality Pharmaceuticals

by Norman J. Smallwood
Partner
The Core Team ®

Access to less expensive pharmaceuticals from Canada , Mexico , India and other countries is a significant topic of public interest and policy in the United States at this time. The issue has been elevated by the Canadian Government's practice of negotiating with U.S. pharmaceutical manufacturers to buy drugs for their socialized healthcare system at a significant discount compared to the U.S. market price. Some politicians have cited the cost difference between Canada and the U.S. as evidence of U.S. consumer price gouging by the pharmaceutical industry. The purpose of this brief paper is to offer some perspective that will promote more informed and critical thinking about this matter.

The U.S. pharmaceutical industry is the best in the world. The FDA (U.S. Food & Drug Administration) with all of the bureaucratic limitations does a reasonably good job of assuring product efficacy. Furthermore, the record reflects that the FDA is unmatched in competence as a regulatory agency compared to all other countries.

To produce a new drug in the U.S. under the rigorous FDA regulatory protocol, the average time is about 14 years and the average cost is about $800 million. Under the umbrella of FDA regulatory approval, U.S. pharmaceutical companies price products on the basis of the projected U.S. market volume to justify the investment. To make sales in other countries with less rigorous regulatory requirements, U.S. companies have to discount the price to be competitive against foreign companies operating under a less rigorous development and manufacturing protocol. While the profit margin on foreign sales is sometimes negligible, the production cost including overhead is recovered and is distributed over a larger total sales volume that benefits both U.S. producers and consumers.

If FDA unregulated drugs are allowed to be sold in the U.S. , the consequences will be the undermining of the U.S. pharmaceutical industry that produces all of the "miracle" products and the efficacy of the foreign products will pose a considerable risk to the U.S. consumers. Against this conclusion, the argument could be made that the FDA should regulate foreign drugs. This is not a viable solution in terms of access and practicality. The FDA is challenged in carrying out the assigned mission in the United States .

The final issue and the issue that poses the greatest risk is the matter of counterfeit drugs. Any relatively high-priced product attracts the unscrupulous to produce and distribute counterfeits. Scanning and software graphics technology is such that packaging can be easily replicated. Fake tablets and capsules can be easily produced. Thus, worldwide counterfeit drug trafficking is a major threat to the public health.

Counterfeit drug trafficking is occurring within the United States . It is a significant concern to both the FDA and FBI. To essentially eliminate the possibility of receiving counterfeit drugs, it is best to make purchases from major retail drug chains like Walgreens and CVS. These retailers deal directly with the manufacturers. It is not likely that counterfeiters can penetrate the distribution system. Smaller retailers that deal with a 3 rd party are more vulnerable to counterfeit drugs.

India especially has a checkered reputation for drug efficacy. Without specific knowledge of the source, a drug produced in India has a relatively high probability of either being poor in quality or counterfeit.

The bottom line is that drugs produced and distributed under the regulatory scrutiny of the FDA are likely to be safe and effective. Drugs form other sources are high risk --a risk that the author would not recommend or take!

2005 The Core Team ® Risk of Counterfeit or Poor Quality Pharmaceuticals

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