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Experts Warn Drug Industry, Government About Weaknesses in Drug Supply Chain

Donna Young

As an alternative to robbing banks, trafficking in illegal drugs, and extortion and kidnapping rackets, terrorists are turning to counterfeit pharmaceuticals as an easier way to finance their activities, said Neil C. Livingstone, chief executive officer of Global Options, a Washington, D.C., risk-management research firm.

“Our concern, in the final analysis, is that not only are pharmaceuticals increasingly becoming a way that terrorists are funding their operations, but that they could be used as a weapon against the United States,” he said.

Livingstone’s comments came at the Institute for International Research’s Pharmaceutical Supply Chain Integrity conference in September where government officials and industry representatives met in Washington, D.C., to discuss concerns about drug counterfeiting.

Livingstone’s company recently released a report that analyzed terrorist threats to the American medicine supply chain.

The most frightening threat, the report stated, is a terrorist attack using drugs adulterated with poisons or pathogens.

Terrorists use Web sites, too. The potential use of misleading Web sites by terrorist organizations to sell tainted drugs to unsuspecting American consumers who are seeking lower drug prices on the Internet is a big concern for government regulators and the pharmaceutical industry, Livingstone said.

“If [terrorists] can find a way into the United States with phony pharmaceuticals, they can also send thousands of pharmaceuticals out, particularly through a variety of mail-order distribution efforts, to kill Americans in their homes across the country,” he warned.

Global Options surveyed hundreds of Web sites, Livingstone said, to determine registered locations and from where the companies were shipping their products.

“We’ve looked for examples just to show you how unregulated and how deceptive some of the practices are,” he said. “We looked at Internet pharmacies all over, and they are generally unregulated.”

Global Options found 64 domain names that use Canada Rx or Canada pharmacy in their Internet addresses.

But many of those online pharmacies are misleading Americans to believe that drugs are dispensed by mail-order companies in Canada, when in fact, Livingstone claimed, the drugs are dispensed by companies in Mexico, Asia, or other locations, and often the origin of the drug’s manufacturer is unknown.

Global Options discovered that two Web sites, and, are actually based in Mexico.

Livingstone suspected that one popular Web site from which American consumers purchase prescription drugs,, obtains its drug products from India, “which is one of the principal counterfeiting nations in the world.”

Another Web site that Global Options investigated,, is actually operated out of the Swizzle Inn in Bermuda, he said.

“They got the guy with the white coat looking like a doctor or a pharmacist selling this stuff online, and when you really look where [the Web site] goes to, it is a guy sitting behind a bar in Bermuda and basically filling orders,” Livingstone said.

Illegal imports. Terrorists could also use unethical wholesalers and distributors that illegally import drugs across the borders from Canada and Mexico to disseminate tainted or counterfeit pharmaceuticals into the American medicine supply chain.

Livingstone is worried that, if Congress approves legislation that would allow drug products to be reimported into the United States from other countries, it will create an open market for terrorists to attack Americans using the drug supply chain.

“We’ve got to have a system that works before we can even consider ideas of expanding the sources of pharmaceuticals to our consumers in this country,” he said.

FDA’s battle. FDA has recently cracked down on Internet companies, such as RxDepot, that are involved in the illegal shipping of drug products from Canada and other countries to consumers in the United States.

“FDA is fighting for its regulatory life,” said Donald E. deKieffer, a Washington, D.C., attorney who specializes in international trade and customs laws.

If FDA permits its regulatory authority to be ignored, whether it is by states—Iowa and Illinois announced in September that they are exploring options of procuring cheaper drugs from Canada for state insurance programs—or by a consumer who orders Schedule II controlled substances over the Internet, the agency’s power to enforce laws becomes increasingly meaningless, he said.

“We’ve seen in the last two years, and most recently in the last two weeks, political efforts by various organizations, including the state of Iowa, to literally ignore and do an end run around the entire FDA regulatory regime,” deKieffer said. “If the FDA permits anybody to buy any drug anywhere they want and just ignore the FDA regulatory regime, the FDA regulatory regime does become irrelevant.”

FDA, he said, is a “regulatory agency with its back against the wall where it recognizes that people say ‘We don’t care about your stinking regulations. We are going to buy cheap drugs, whether it means getting on a bus to Mexico, buying on the Internet, or talking to our favorite governor.’”

At the end of the day, deKieffer said, FDA must answer to Congress if the agency fails to stop illegal imports of drug products into the United States.

But, he added, “there has been a lot of buck passing between FDA and the Congress as to who has the authority to do what.”

“Nobody wants to be the first one to tell granny that she can’t have her Procrit from Canada and she is going to have to pay twice as much for it,” deKieffer said.

But, he added, what is at stake is not merely a couple of vials of injectable drugs purchased from Canada “but the entire regulatory regime of controlling drugs that has existed in this country for the last 50 years.”

A lack of political commitment by government leaders and weak regulations and penalties encourage prescription drug counterfeiters and smugglers to continue their activities, said pharmacist Eshetu Wondemagegnehu, technical officer for the World Health Organization’s Division of Quality Assurance and Safety of Medicines.

High prices of drug products in the United States also contribute to the problem, he added.

Deceptive packaging. Counterfeiters, Wondemagegnehu said, have become experts in making fake labels and packaging that are difficult for investigators to identify.

Geoff Power, director of packaging security for GlaxoSmithKline, said counterfeiters are using “very sophisticated graphics techniques” that have confounded investigators.

Many pharmaceutical manufacturers have turned to using special holograms on their packaging and taggants in drug products, he said.

But, he added, there is “no single security device or technology that stands alone” and some counterfeiters have already figured out how to copy most holograms.

Power reminded drug makers that, “there is no quick fix. There is no one solution.”

One of the most sinister plots that he has investigated, Power said, involved diphtheria, tetanus, and acellular pertussis (DTaP) vaccine for children.

Asian counterfeiters, he said, had recycled contaminated syringes and repackaged them in DTaP prefilled syringe packs.

Health care practitioners need to pay close attention to packaging before delivering a drug to a patient, Power said.

Consumers, he added, also need to closely inspect drug products.

But, Power said, most consumers have “no real appreciation” of the drug products they buy.

“Customers take a closer look at a basket of strawberries” than they do the medicines they purchase, he declared.

But, he added, drug manufacturers and regulators are ultimately responsible for protecting the integrity of the drug supply chain.

Absence of resources. The United States seriously lacks the resources it needs, in terms of FDA inspectors and law enforcement personnel, to secure the medicine supply chain, Global Option’s Livingstone said.

Thomas McGinnis, FDA’s director of pharmacy affairs, agreed and said that the agency relies on Congress to allocate more funds to “give us more resources.”

It is virtually impossible, he said, to check every drug product that enters the United States.

Counterfeit drugs have been present in the United States since 1910, when a fake form of Bayer aspirin was discovered in Chicago, McGinnis said.

The first large-scale discovery of counterfeit drugs in the United States involved oral contraceptives in 1985 that entered the country from South America and quickly spread throughout the distribution system, he added.

Bulk active ingredients were also a big target for counterfeiters in the 1990s, he said.

“All the big drugs that are in the top 30 in sales in the United States are pretty much subject to these counterfeiters,” McGinnis proclaimed.

Nearly perfect copies of some drug products are appearing in the marketplace, he added.

“The security people at some of the major firms cannot tell the difference,” McGinnis said.

In one case, he said, it took investigators using sophisticated analytical techniques up to two weeks to determine that a product was counterfeit because it had the right amount of active ingredients.

Criminal investigations of counterfeiters jumped from an average of 5 cases per year in the 1990s to 22 cases in 2002.

“I wouldn’t be surprised that 2003 brings more cases,” McGinnis said.

Recent action. FDA announced on September 29 that spot examinations of 1153 imported drug products shipped to U.S. consumers revealed that 1019, or 88% of the products examined, were in violation of U.S. law because they contained unapproved drugs.

The examinations were conducted by FDA and inspectors from the U.S. Customs and Border Protection at mail facilities in Miami, Florida; New York City; and two California cities: San Francisco and Carson.

Approximately 100 parcels, each of which may have contained multiple drug products, per day per facility were selected based upon their country of origin and historical experience, FDA said. The packages were opened by Customs inspectors and jointly examined by both agencies.

Many of the packages came from Canada (161), and others entered from India (146), Thailand (141), and the Philippines (82). The remaining packages were shipped from other countries, FDA stated.

In a statement, the agency said that neither it nor Customs has “sufficient resources to perform comprehensive examinations of all mailed packages due to the huge volume of parcels entering the United States through international mail and courier services, the consuming time requirements for processing and returning illegally imported drugs, and multiple, competing enforcement priorities.”