WHEN we buy a branded product we expect to get what we pay for. The rule of law, administered and upheld by an independent judiciary, makes it nearly certain that when we go into a store and buy an iPod, we will get something manufactured by Apple that does exactly what we expect it to.
These days, you can’t be so certain that the same will be true for the medicines you get from the pharmacy. Counterfeit drugs are now a booming global business. Over the last two years, the number of counterfeit drug cases examined by the FDA doubled, and it is estimated that such drugs now account for over 10 per cent of the global market.
While a large portion of those sold in the US are ‘lifestyle’ drugs such as Viagra, a host of other fakes are finding their way into the medicine cabinets of people with life-threatening conditions. Racketeers now produce fakes of all classes of drugs, including medicines for cancer, anti-hypertension, cholesterol, obesity and even human growth hormone.
Recently, customs agents seized a large shipment of fake Tamiflu, currently one of only two drugs that can provide treatment in the event of an Avian Flu pandemic. At their best, counterfeit drugs lack adequate quantities of the active ingredient; meaning sick people are not getting the doses they need. But they can also contain substances that are actually harmful, such as when anti-freeze was fatally added to cough syrup in Haiti.
Counterfeit drugs can also render genuine, branded drugs useless
If they contain too little of the active ingredient, such drugs may act like an “inoculation” to the virus, bacterium or parasite they are designed to kill. The Internet is currently awash with fake Tamiflu, which, in the event of an Avian Flu pandemic, could help the virus mutate into new, drug resistant strains.
This is a very real and frightening prospect: It is already happening with malaria. Counterfeiters around the world have cashed in on the massive demand for the latest and most effective anti-malarial drug, Artemisinin. Over half the drugs sold in Southeast Asia contain incorrect levels of the active ingredient. As a result, drug resistance to anti-malarials is becoming disastrous—more than 100,000 people die each year as a result of fake anti-malarials in Southeast Asia alone.
The same is true for the antiretroviral drugs used to treat HIV-AIDS. The effectiveness of even the latest drugs is undermined by drug-resistant forms of the HIV virus—largely due to counterfeits.
The gravity of counterfeits prompted the World Health Organization to hold a conference in Rome last month to develop an international framework to address the problem. But no global treaty can overcome the reality that fake medicines are the product of increasingly organized criminal gangs who feed on the weaknesses of the legal systems that characterize the majority of less-developed countries.
When properly upheld, the rule of law—contract law, civil law and property rights—ensures that entrepreneurs can participate freely in the market, ensuring economic growth and progress. When the rule of law is weak or arbitrary, as it is in the majority of lower-income countries, people are forced into the black market as a way of sidestepping the bribes and uncertainty of conducting business legally.
In addition to being responsible for decades of economic underperformance in Africa and other continents, this situation is also to blame for the increasing numbers of dangerous fake drugs finding their way into the US. There are several reasons why this is so.
First, when there are few legitimate business opportunities, people will be driven to crime to support themselves. Counterfeiting is a high-profit, low-risk business, so it offers an easy way to make a fast buck.
Second, countries with corrupt law-enforcement bodies will not necessarily act when a counterfeiting ring is discovered. Often, the criminals in charge of the operation can bribe or even intimidate the police and courts to make them turn a blind eye.
Third, countries that have weak civil liability law provide few opportunities for those harmed by counterfeit medicines to seek redress. Cases can take many years to progress through under-resourced—and sometimes corrupt—courts. This gives an almost free rein to the racketeers.
Finally, and perhaps most importantly, countries that do not enforce trademark laws make life a cinch for counterfeiters. Weak trademark law means that companies cannot protect their trademarks, or “brands,” which are the main means by which they signal the quality of their product to a consumer. When consumers cannot tell the difference between a fake and the real thing, counterfeiters get a free ride.
China and India are two of the main sources of the counterfeit drugs that are increasingly infiltrating the UK market
Despite their recent economic advancements, they are still hobbled by an arbitrary, uneven and sometimes corrupt administration of the law. Fakes are also flowing into the US from nearer neighbors, such as Costa Rica and Mexico, as well as from Africa.
Twenty million packages containing pharmaceuticals are mailed into the US every year, while many other fakes seep into the supply chain from unscrupulous overseas wholesalers. These are often undetectable without sophisticated testing equipment.
When officials gathered in Rome last month, the talk was of some kind of international framework to co-ordinate action against counterfeits. This is a start, but does not go to the heart of the problem—weak rule of law. This is not just some arcane side issue. It goes right to the heart of African nations’—and other countries’—failure to progress economically, and is the main reason why the trade in fake goods is increasing.
Rather than wait for the WHO to come up with a grandiose plan, governments in countries where fake drugs are manufactured should act immediately to improve the situation. That means undertaking legal reforms to bolster the free and fair functioning of courts of law. Fail to address this, and we can never be certain that the drugs we entrust our lives with will heal rather than kill.