Counterfeiting has become a major growth industry, with no sign of abating. The dangers were most evident this Summer in the pharmaceutical sector, prompting the U.S. Food and Drug Administration (FDA) to launch a new initiative to protect the public from fake drugs. Stiff jail sentences and fines were meted out to criminals guilty of passing tap water off as a costly anemia medication, or selling fake prescriptions over the Internet.
Like any thriving entrepreneurs, counterfeiters are adopting more sophisticated packaging and distribution strategies, making their products more difficult to recognize and stop. Nevertheless, the FDA, pharmaceutical manufacturers and their chemical suppliers are joining forces against them. Drug companies are limiting distribution of costly, sensitive drugs and developing new packaging with both overt and covert security features.
FDA, meanwhile, is identifying "best practices" for manufacturers and distributers, improving outreach and education and strengthening ties with the Customs Bureau and Departments of Justice and Homeland Security. On the state level, Florida regulators are pushing laws that will require distributors to verify the authenticity of the pharmaceuticals they sell. Meanwhile, the U.S. Bioterror Act requires that manufacturers document the sources of imported raw materials they use.
There is a growing need for technologies that allow materials to be traced and tracked from their point of origin. An important part of FDA's program will be assessing new anticounterfeiting technologies, such as taggants, digital watermarking systems, barcodes, holograms and radiofrequency ID (RFID) that will make this possible. Later this month, Product Surety, a working group involving pharmaceutical companies, FDA, New Mexico State University's Physical Sciences Lab (PSL), and the corporate partners Reconnaissance International, Axxess Technologies and Sigma 4, will release the results of a study of risk assessment, technologies, and best practices for preventing counterfeiting.
Risk Assesment Algorithms
New Mexico University's PSL will develop algorithms to help determine the risks posed by imported drugs, raw materials and food products. FDA will use them to upgrade its computer system to screen shipments. Just as algorithms played a key role in helping banks and credit institutions detect fraud, this work will be critical to improving safety, says Benjamin England, former regulatory counsel to FDA's associate commissioner for regulatory affairs, and currently a lawyer in Hogan & Hartson's Food, Drug, Medical Devices and Agriculture practice group in Washington, D.C.
Pharmaceutical manufacturers are implementing tracing and tracking systems that ensure safety--some such as barcoding and RFID offer the added side benefit of improving supply chain management. These technologies will be essential to maintaining security and preserving product integrity. Currently, FDA estimates, about 2 million packages containing regulated drugs and other products reach the U.S. illegally each year. At a pilot test in Carson City, Calif., the Agency found that, although 650 suspect packages appeared each day, it could only inspect 381 suspect packages a week. Many of the drugs had been purchased over the Internet.
And pharmaceuticals are only part of the counterfeiting picture. Chemical processing companies today face a flood of fakes, not only imitations of their products, from urethanes and heat-transfer fluids to agricultural chemicals, but knockoffs of the valves, fittings, piping and other equipment essential to safe plant operations. Copycat valves, made by factories in China and elsewhere and sold for nearly half the price of the real thing, were obvious at first, but have gradually become more difficult to detect. In other cases, reconditioned materials are being resold as the real thing. Industry organizations have responded with education and outreach efforts.
Information and outreach
Chemical manufacturers have also intensified education and information programs. In addition, they're evaluating taggants and other identification technologies, or incorporating them into products and packaging, and, wherever possible, working with local authorities to investigate cases of counterfeiting. In China, Huntsman Polyurethanes, for example, worked with local authorities to stop production of counterfeit Irodur crosslinker. The company's efforts led to a raid on the manufacturing site, an old school building, where chemicals and fake labeling were found. Today, a growing number of chemical companies and equipment vendors are joining forces in groups such as the Quality Brands Protection Committee, which is working closely with customs authorities in China to increase awareness and help support enforcement efforts.
On the individual level, managers, engineers, plant operators and other chemical processing company professionals must understand the risks posed by counterfeit products and be vigilant about keeping them out of their plants. Maintenance and support departments should be warned as well. Vendors will likely provide information. The Valve Manufacturers Assn. offers guidance as well, and the U.S. Dept. of Energy's national laboratories' own guidelines for spotting MRO fakes can provide some help.