Boston, MA - January 15, 2002
For many reasons Americans are going online to purchase
medicine. Consumers are replacing a trip to the local drug store with
surfing to e-pharmacies for their needs. Web sites are able to offer
convenience, privacy unlike the local pharmacy and enable consumers to
comparison shop. The vast number of these sites also provides
unparalleled variety, availability and information for people looking
to research new or different treatments. These reasons have led
Forrester Research to project that in 2004 online prescription sales
will account for 9.2% of a market surpassing $385 billion in 2001.i
There is a downside to online pharmacies, those who would
exploit the idea of online drug distribution for personal gain. "The
development of the Internet has opened up many new options for
consumers to purchase products more conveniently," said Jane Henney,
MD, Commissioner of U.S. Food and Drug Administration (FDA). "However,
the Internet has also provided unscrupulous individuals with immense
new opportunities to promote and sell [unlawful medications] to
unsuspecting patients."ii
The Public and Private Risk
These 21st Century criminals have found their way into legitimate
markets through the Internet. Their activities threaten the lives of
everyday people and prey on the vulnerable. For example, a man buys
Viagra from an online drug peddler, then abruptly dies during sex. An
autopsy reveals that he had a heart condition and should never have
been allowed to use the medication. The risk to public health is
clearly the greatest concern with the distribution of counterfeit,
misused and substandard drugs.
In mid-May, investigators from Columbia's National Institute
for the Supervision of Medications and Food discovered a thriving drug
business in Bogot�. It was not a cocaine or heroin factory, instead it
was producing the flu drug Dristan and Ponstan 500, a painkiller made
by Pfizer. The Columbian official in charge of the investigation said
the pills contained boric acid, cement, floor wax, talcum powder and
yellow paint with high levels of lead, all in an effort to replicate
the drugs genuine appearance. These pills, like the Viagra could have
taken the lives of people using the counterfeit medicine for their
health.iii
The threat is not only to the general public. In cases like
these personal injury lawyers will be out on the prowl. Knowing it is
not worth suing the counterfeiter or e-drug merchant based in the Third
World they go after the deep-pocketed manufacturers of the genuine
medication. They argue the companies' liability stems from not keeping
the counterfeit pill from being sold through suspect channels.
In today's mass media society, the threat to major drug
manufacturers is not only the million dollar liability settlements, but
also the threat to the companies' and the products' billion-dollar
brand equity. News coverage of contaminated, counterfeit, mislabeled
and misused medication undermines public trust and brand image.
Pharmaceutical brand values are based on individual's belief that
medications will help those in need, not hurt them. In 2001, the Pfizer
Inc. brand name was valued at nearly $9 billion.iv
Counterfeited, misused and substandard products also affect
other companies within a given value chain and threaten to undermine
pharmaceutical manufacturers' business relationships. Partners and
consumers have an expectation that manufacturers will proactively
maintain the integrity of their value chain. If they don't, they expose
themselves and others to civil liability and threats to their brand
equity.
Securing the Value Chain
With the number of consumers buying prescriptions and
non-prescription medications online increasing, the cost of
pharmaceuticals rapidly rising and the sophistication of counterfeit
production and distribution networks growing to encompass the whole
world, the threat to consumers and companies is mounting. There are
Third World drug rings finding counterfeit medications more profitable
than street drugs and thousands of web pages and other forms of entry
into the legitimate pharmaceutical market. To overcome the challenges
set forth by the new world of the Internet and globalization companies
must obtain the technology and strategy to counteract these 21st
Century criminals.
Given the scope of the problem, affecting both the real world
and the Internet, the solution becomes two fold. Rather than focus on
one world at a time, the most efficient strategy is to attack the
problem on two fronts. First, companies must proactively protect their
products throughout their value chain to mitigate the risk from
counterfeit products. Second, companies must use next generation
technology to continually monitor the Internet for suspect pharmacies
selling unauthorized products and other threats to public safety.
Over the last two years numerous government and professional
agencies have made great strides to help combat this threat. The
American Medical Association (AMA) has urged state medical boards,
government regulators, and licensing agencies to investigate doctors
who prescribe medications to patients who they have not examined. The
AMA has taken the position that prescribing medications without patient
consultation is unethical, but not illegal. The National Association of
Boards of Pharmacy (NABP), which represents state pharmaceutical
licensing authorities, has taken the position that any site that uses a
questionnaire without a legitimate patient relationship is illegal. And
last year the U.S. FDA devoted over 10,000 staff-hours per month to
investigate Internet sites for online distribution of counterfeit
pharmaceuticals.v
During that same period private companies have developed new
technologies and tactics to combat this global problem. The technology
and experience available at GenuOne can attack the problem along the
two front strategy. Such an approach is by far the most efficient and
effective way to cover both the physical and the Internet. GenuOne
employs both automated Internet crawling and patent pending
authentication technology to hunt down illicit Web sites and client
dedicated analysts to integrate GenuOne's products into existing
corporate technology.
An example illustrates GenuOne's comprehensive approach to
securing the value chain. Recently, a large multinational
pharmaceutical company, with revenue near $1 billion approached GenuOne
about counterfeiting and diversion issues. In the last few years their
business has spread around the world and due to currency fluctuations
3rd party product diversion has become profitable. The company
envisions that counterfeiting is not far behind. The company also does
not sell their products online, but they have noticed their products on
e-pharmacies.
Conclusion
Identifying and disabling counterfeiting networks around the
world is a daunting task, demonstrated by the amount of public and
private agencies and level of effort currently employed by the task.
Pharmaceutical companies are exposing themselves, the public and their
brand integrity to significant risks. If the worldwide counterfeiting,
misuse and substandard issue is not addressed with the full resources
of private companies, government and private agencies then the threat
to public safety will become epidemic.
About GenuOne
GenuOne systems enable companies to
secure their value chain from counterfeiting, product diversion and
intellectual property theft in the physical world and on the Internet.
GenuOne's portfolio of technologies for comprehensive authentication
and tracking of products helps GenuOne's clients minimize price,
channel and brand erosion, customer dissatisfaction, and loss in
shareholder value. For more information, please visit www.genuone.com.
i) Enos, Lori, U.S. States Target Illegal Online Pharmacies, E-Commerce Times, March 31, 2000
ii) "Regulating Online Pharmacies: Can the Industry Police Itself?"
http://www.MdNetGuide.com/articles.shtml?issue=25&dept=1
iii) Capell, Kerry, "What's in That Pill?" BusinessWeek Online, June 18, 2001.
iv) http://www.brandchannel.com/images/home/ranking_methodology.pdf, January 2, 2002.
v) Wedell, Kristin, "Cyberpatients and Online Prescription Sales"; The Internet Law Journal, November 15, 1999.
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