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My name is James Christian and I am Vice President
and Head of Global Corporate Security for Novartis International AG. Prior to joining Novartis, I was a Special
Agent in Charge with the United States Secret Service where my responsibilities included suppression
of counterfeiting of U.S.
currency in Latin America. At Novartis, I oversee operations to protect the
assets and reputation of Novartis in the 140 countries in which the company
markets its products or in which the products or their raw ingredients are manufactured, packaged,
stored, or shipped. In this capacity, I
have witnessed firsthand the considerable ingenuity and resourcefulness that
unlawful enterprises in foreign countries utilize to manufacture and distribute
ineffective and often unsafe counterfeit products.
There can be no question that foreign drug counterfeiters take full
advantage of offshore mail-order pharmacies, the Internet, and visitors from
other countries to market their goods.
Furthermore, if the United States permits the reimportation of drugs as provided in
legislation enacted last year, the financial rewards for drug counterfeiters
will ensure that they make every effort to penetrate deeply the U.S.
marketplace causing considerable harm to the health and safety of U.S. citizens
I.
BACKGROUND
Novartis Group is a multinational
research-based healthcare business headquartered in Basel, Switzerland, with
U.S. headquarters in New Jersey. We
have more than 67,000
employees worldwide with over 15,000 in the United States. The company’s
product
line includes 126 prescription
drugs to treat or prevent conditions as varied as rheumatoid arthritis,
schiozophrenia, hypertension, Alzheimer’s disease, high
cholesterol, migraine headaches, epilepsy, cancer, and organ rejection in
kidney, liver, and
heart transplants. Several weeks ago
the FDA approved our new orphan drug, Gleevec™,
for chronic myeloid leukemia, which represents one of the most significant cancer
treatment breakthroughs in many years.
Novartis
has a compelling interest in protecting the assets
represented by the drugs that it currently has in the market as well as those
now under development. In this year
alone, Novartis will spend more than $2.4 billion on drug
research and development. More
importantly, it is critical that patients
using Novartis products have every confidence that the drugs are safe and
effective. For these reasons, Novartis
dedicates considerable manpower and financial resources to addressing drug
counterfeiting on a global scale. Accordingly,
Novartis works closely
with law enforcement and health authorities in numerous countries to
investigate and suppress the counterfeiting of its products.
II.
COUNTERFEITING
Counterfeit drugs are “fake” drugs, produced
and packaged to look like the genuine article. Counterfeit drugs may include products
containing correct ingredients, incorrect ingredients, no active ingredient, an
insufficient quantity of active ingredient, or withand have phony
packaging and labeling. Illicit
operations may combine counterfeit product with
adulterated or expired product, or on occasion, with some genuine product to
make detection more difficult.
Counterfeiters employstate-of-the-art technologies
such as desktop publishing to produce counterfeit labelsthat
are indistinguishable from the
true original labels. These labels put false “new” expiration dates
on expired products and make adulterated or ineffective drugs look like the
real thing. Counterfeiters have the
ability to make and stamp tablets with company logos and even to package them in blister
packs.
While we have scores of examples of such
activities, there are some that demonstrate
the deceit and danger inherent in drug counterfeiting:
(1)
A raid on a
counterfeiter’s facility uncovered tens of thousands of vials of a drug whose
expiration
date had long-since passed. The vials were soaked in
hot water to remove the old labels, and counterfeit labels bearing a new
expiration date were affixed. In
similar circumstances, drugs in vials and ampules have lost their efficacy
because their temperatures were raised to unacceptable levels during the
label-removing process.
(2)
Our efforts also
interdicted millions of yellow
tablets that were virtually indistinguishable from the genuine product –
including the company logo. These
tablets were
made of boric acid, floor wax, and lead-based yellow paint used for road
markings. Sacks of these “raw
materials” were stacked throughout the counterfeiter’s site.
Counterfeiting is prevalent outside the
United States and is growing at an alarming pace. A joint workshop of the World Health Organization and the
International Federation of Pharmaceutical Manufacturers Associations concluded
in 1992 that in some countries as much as 60 percent of all drugs may be counterfeit. Since then, every major pharmaceutical
company has seen an increase in the volume of counterfeit medicines. Over the last fiveyears, Novartis has assisted
or otherwise been involved in over 100 investigations of counterfeiting
operations, in over 33 countries, involving more than 11 Novartis products and
more than 200 products manufactured by other companies.
A survey of the international media
demonstratesthat the problem
of counterfeit, substandard, contaminated, and poisoned drugs is worldwide —
fake Xenical in Hong Kong, phony ampicillin and AZT in Vietnam, counterfeit
Mefloquine in Cambodia. Recentlyin
the United States, counterfeit fertility drugshave
been found in New York and phony Propecia and Viagra discoveredin
Boston. Counterfeiting and diversion are particularly prevalent and dangerous
in Latin America and Asia.
Mexico and Central
America. Counterfeit products area major concernin Mexico,
Central America, and the Dominican Republic.
Counterfeiting in Mexico is particularly dangerous for American
consumers because of the shared border between Mexico and the United
States. U.S. consumers traveling over
the border to Mexico to buy products off pharmacy shelves may purchase
dangerous counterfeit or adulterated products.
A recent article in the New York Timesreportedthata
chemical analysis had found several sampled Mexican drugs to be counterfeit-
including an anti-depressant, an ulcer treatment, and a diabetes medication.
American law enforcement officials opined that the
amount of counterfeit and substandard medications in Mexico could be as high as
25 percent. Based
on our knowledge, the problem could be much larger. Moreover, in my experience, U.S. Customs and FDA lack the
resources and infrastructure to police the border adequately to prevent
criminal smuggling of bulk counterfeits from Mexico to the U.S.
Argentina. From May 1999 until June 2000, Novartis
worked with authorities in Argentina to combat the counterfeiting of four
Novartis products - Voltaren (an anti-inflammatory), Tegretol (an anti-epileptic),
Hydergine (dementia), and Reliveran (arthritis). As a result of that investigation, 72 individuals were arrested,
7 tons of counterfeit pharmaceuticals were seized, 49 different counterfeit
pharmaceuticals were identified, 13 clandestine labs were dismantled, and 5
print shops were seized.
Brazil. In early 1999, it became apparent to the
pharmaceutical industry that there was a major counterfeit pharmaceutical
problem in Brazil. At that time, 132
counterfeit products - from most major companies - were identified as being
distributed in Brazil. The Pharmaceutical Security Institute (an industry
organization formed to support anti-counterfeiting efforts) working with the
Brazilian Minister of Health trained a team of 25 investigators to attack the counterfeit
medicine problem. Approximately 20 clandestine labs were seized and numerous
arrests were made.
Colombia.
Counterfeit drugs are manufactured in Colombia for international
distribution. In 2000 alone, more than
400 products from 80 companies, either expired, adulterated, diverted or
counterfeit, were seized by INVIMA (the Colombian food and drug authority)
working with Novartis and other multinational pharmaceutical companies.
Investigations, raids, and seizures are continuing with extraordinary results. So far, approximately 6 million ampules of
counterfeit Voltaren have been seized.
Tens of millions of counterfeit tablets of another pharmaceutical
company's non-steroidal anti-inflammatory drug have been seized. Dr. Miguel
Rueda, Director of INVIMA, believes that the counterfeit, expired, and altered
drugs were to be distributed not only in Colombia but also in Ecuador, Peru,
Venezuela, and Central America. While INVIMA is working hard to combat the
problem in Colombia, the necessary resources are not always available.
Asia. The counterfeiting of pharmaceuticals is a
burgeoningproblem in China. For
example, in March 2001, Novartis and other pharmaceutical companies
participated in a raid with authorities in Shantou that resulted in the seizure
of over 1800 cartons of counterfeit pharmaceutical products from 14
multinational companies.
India. Another threat to U.S. consumers relates to
the distribution of bulk pharmaceutical products from India. India refusesto
recognize intellectual property rights and as a result, through process
patents, Indian companies manufacture and ship patent-protected bulk
pharmaceutical products around the world. Technically, the Indian products
should only be shipped to countries that recognize process patents, but in fact
much of this bulk product shows up in countries that recognize product
patents. In fact, there is reason to
believe that some of this material is shipped to the United States for
manufacturing and packaging, and then exported to other places such as
Mexico. Often the product ends up back
in the United States when American citizens go to Mexico to purchase
pharmaceuticals. Health authorities in
a number of Latin American countries believe that India and Cuba use the region
as a dumping ground for batches of pharmaceuticals that
are substandard. For example, health authorities have discovered products
without sufficient active ingredient and contaminated with foreign materials
including pieces of glass. Those
products can be sold to U.S. consumers in Mexico or may be smuggled into the
U.S. and placed on U.S. pharmacy shelves.
III.
LACK OF CONTROL OF COUNTERFEITING
Novartis,
like other drug companies, and, unfortunately,
law enforcement authorities are hampered in ourtheeffort
to control international counterfeiting practices by severalfactors
including: (1) the difficulty of detecting counterfeits; (2) the lack of
dedicated resources in local jurisdictions and the failure
to give appropriate priority toanti-counterfeiting
activity; (3)the ingenuity of
counterfeiters and the ease with which criminal elements can resume operations
at new sites; and (4) the lack of applicable criminal statutes and the
prevalence traditionally light sentences.
Inability to detect. Many counterfeit pharmaceuticals are
manufactured so cleverly that it is virtually impossible for consumers,
government officials, and law enforcement agencies to identify them as
counterfeit. Counterfeiters do not care about the quality and safety of the product. They
concentrate theirresources
on the appearance of the product and its packaging. The goal is to sell a cheap, fake product to an unsuspecting
consumer, not to provide a safe and effective medicine to a patient.It can be virtually impossible for
consumers to tell the difference between a counterfeit and a genuine product.
Even pharmacists, doctors, and government regulators can be fooled. Field tests
can determine whether the active ingredient is present, but not whether the
active ingredient is present in the appropriate amount, whether there are any
impurities or foreign substances in the product, or whether the product is
expired.
The ability to detect counterfeit products is made more difficult by
the practice of combining
counterfeit product, adulterated product, expired product, and genuine product.
Distributors supply the resulting intermingled combination to physicians,
hospitals, pharmacies, and health agencies.
Such shipment might be 50 percent "bad." If a test is performed on a genuine pill
from the intermingled shipment, the counterfeit shipment passes undetected.
Lack of enforcement. Many countries fail to enforce their
counterfeiting laws vigorously. Local
jurisdictions frequently lack the resources and technological sophistication
needed to address the problem. Some countries spend their resources on other
national priorities and not anti-counterfeiting activities. In other.
countries, criminal operations have infiltrated the law enforcement and
regulatory community, precluding effective enforcement of the law.
Professional criminal element. Drug counterfeiters may be extremely large,
sophisticated and well financed operations or, at the other extreme, they may
be small opportunistic enterprises. In
Mexico, for example, it is believed that most, if not all, of the pharmacies
located along the border, are owned and operated by Mexican organized crime
groups. In Latin America, crime syndicates bring together manufacturing and
printing skills and often link them with existing pharmaceutical distributors. By
the time a counterfeiting operation is identified by a pharmaceutical company,
it has generally been in operation for some time. The subsequent investigation to develop facts, identify suspects,
and determine the locations of clandestine labs and print shops can take years.
During that time counterfeit drugs continue to be produced. Oftentimes the
company's investigation must be fully developed before the local government
will take any official interest in the problem. Clandestine labs are usually
crude and can be easily shut down and reopened elsewhere by counterfeiters who
suspect that they or the location have been compromised. In my experience, the professional criminals
who engage in counterfeiting of pharmaceuticals are able to elude arrest and
prosecution by shifting their operations from location to location and by
taking advantage of delays in the investigation process.
IV.
THE THREAT TO U.S. CONSUMERS
There is ample opportunity for counterfeit
products to enter the United States across the Mexican border. A recent survey
by the Drug Enforcement Administration and U.S. Customs at the border between
Tijuana and San Diego revealed that a sample group of 200 travelers returned to
the United States with 28,409 dosage units. Assuming that 25 percent of Mexican
pharmaceuticals are counterfeit or adulterated, those 200 patients alone may
have brought 7000 counterfeit or adulterated doses into the United States.
Counterfeit products present a severe safety
risk to consumers. Counterfeit products
are deliberately and fraudulently mislabeled with respect to their identity and
their source. They might be manufactured in garages, basements, and
warehouses. The manufacturers do not
adhere to good manufacturing practices.
There is no guarantee the products were manufactured in a sterile
environment, and no information about how the products were packaged, stored,
handled, or shipped. Active
ingredients, when present, are often in an incorrect amount. Often there is no active ingredient at all,
or a completely different ingredient.
If the medication is intended for a serious condition, an unexpected
change in the dosage, the substitution of an illegal ingredient, or the lack of
an active ingredient could well be life threatening. If the medication is intended for a serious and chronic
condition, a month's supply of counterfeit drugs could place the consumer's
long-term health in jeopardy.
Additional problems arise with expired and
adulterated medicines. Parallel trade
and diversion of medicines often results in labels being changed so that they
are in the local language. There are
instances where the products lose efficacy during the label change process.
Labels are often added to outdated products, giving the appearance that the
shelf life is much longer.
V. CONCLUSION
In 1987, the House Energy and Commerce
Committee concluded that permitting re-importation of American drugs
"prevents effective control or even routine knowledge of the true sources
of merchandise in a significant number of cases." As a result, "pharmaceuticals which
have been mislabeled, misbranded, improperly stored or shipped, have exceeded
their expiration dates, or are bald counterfeits, are injected into the
national distribution system for ultimate sale to consumers." Indeed, "the
very existence of the market for reimported goods provides the perfect cover
for foreign counterfeits." Since 1986, criminal counterfeiting operations
have become more numerous, more sophisticated, and more aggressive. The resulting danger to U.S. consumers is greater
than ever before. Now is not the time
to weaken the ability of the United States to prevent counterfeit drugs from
reaching U.S. citizens. If reimportation of prescription drugs resumes,
Congress will soon be holding hearings to determine how to stop the flow of
dangerous counterfeit medicines into the United States.
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