I WAS IN CHARGE OF THE FBI’S ATLANTA OFFICE WHEN IT CONDUCTED A MAJOR INVESTIGATION INTO PHARMACEUTICAL SAMPLE ABUSE. THE FINDINGS FROM THIS INVESTIGATION WERE AMONG THE FACTORS THAT LED TO THE CONGRESSIONAL HEARINGS THAT RESULTED IN THE ENACTMENT OF THE PRESCRIPTION DRUG MARKETING ACT. I HAVE ALWAYS BELIEVED THAT STRICT CONTROLS ON THE FLOW OF PRESCRIPTION DRUGS ARE ESSENTIAL TO PROTECTING THE HEALTH AND SAFETY OF AMERICANS. CONCERNS ABOUT THE RISK TO PUBLIC SAFETY FROM ADULTERATED AND COUNTERFEIT IMPORTED MEDICINES WERE PARAMOUNT IN THE MINDS OF LEGISLATORS WHEN THEY ENACTED THE PDMA. IN MY OPINION, CONCERNS FOR THE PUBLIC HEALTH AND SAFETY OF AMERICAN CITIZENS SHOULD CONTINUE TO BE PARAMOUNT IN THE MINDS OF THIS LEGISLATURE, AND SHOULD INFORM ANY LEGISLATION PASSED BY THIS OR ANY CONGRESS.

THE KEY POINTS TO MY BRIEF REMARKS TODAY ARE AS FOLLOWS:

COUNTERFEITING OF PRESCRIPTION DRUGS IS A GLOBAL PROBLEM.

PHARMACIES, DISTRIBUTORS, AND CRIMINAL ENTERPRISE IN MEXICO ARE A SIGNIFICANT SOURCE OF THE COUNTERFEIT AND DIVERTED MEDICINES ON U.S. SHELVES AND IN U.S. MEDICINE CABINETS.

FACTORIES IN INDIA AND CHINA ARE THE SOURCES OF MOST OF THE BULK ACTIVE USED IN COUNTERFEIT PHARMACEUTICALS WORLDWIDE.

IMPROVED TECHNOLOGY AND THE INTERNET HAVE CONTRIBUTED TO THE EXPANSION OF TRADE IN COUNTERFEIT PHARMACEUTICALS.

FDA, DEA, AND U.S. CUSTOMS SERVICE LACK THE RESOURCES TO POLICE EFFECTIVELY FOR COUNTERFEIT AND DIVERTED PHARMACEUTICALS.

COUNTERFEITING OF PRESCRIPTION DRUGS IS A GLOBAL PROBLEM.

COUNTERFEIT PHARMACEUTICALS ARE A GLOBAL PROBLEM. THE WORLD HEALTH ORGANIZATION (W.H.O.) HAS ESTIMATED THAT BETWEEN 5 AND 8 PERCENT OF THE WORLDWIDE TRADE IN PHARMACEUTICALS IS COUNTERFEIT, AND THAT THE PROBLEM IS WORSE IN DEVELOPING NATIONS THAN IN DEVELOPED NATIONS SUCH AS THE UNITED STATES. THE W.H.O. ACKNOWLEDGES THAT 5 TO 8 PERCENT IS ONLY AN ESTIMATE, SINCE NO ONE HAS CONDUCTED A SYSTEMATIC WORLDWIDE STUDY OF THE COUNTERFEIT MEDICINES PROBLEM. NEVERTHELESS, BASED ON MY 24 YEARS OF EXPERIENCE WITH THE FBI AND MY 12 YEARS WITH BRISTOL-MYERS SQUIBB, I AM CONFIDANT THAT "5 TO 8 PERCENT" IS, IF ANYTHING, AN UNDERESTIMATE.

INCREASINGLY, THE ILLICIT PHARMACEUTICAL TRADE RESEMBLES THE WORLDWIDE NARCOTICS TRADE, WHERE PRODUCT IS SOURCED IN ONE COUNTRY, FORMULATED INTO TABLETS OR CAPSULES IN ANOTHER COUNTRY, PACKAGED IN YET ANOTHER COUNTRY, AND THEN TRANSSHIPPED THROUGH OTHER COUNTRIES TO ITS FINAL DESTINATION.

NUMEROUS DRAMATIC STORIES OF DEATHS AND ILLNESS CAUSED BY COUNTERFEITS AND DIVERTED MEDICINES IN VARIOUS COUNTRIES SUCH AS SOUTH AND SUBSAHARA AFRICA, ASIA, EUROPE, AND LATIN AMERICA HAVE BEEN REPORTED IN THE MEDIA.

A RECENT EXAMPLE OF THIS NEFARIOUS TRADE WAS DESCRIBED IN SCRIP – WORLD PHARMACEUTICAL NEWS IN JULY 2000. THE ARTICLE REPORTED THAT ITALIAN AUTHORITIES HAD SEIZED 240,000 PACKS OF COUNTERFEIT DRUG PRODUCTS IN GENOA AND MILAN, AND THAT THE PRODUCTS WERE WORTH MORE THAN $1 MILLION. THE COUNTERFEIT PRODUCTS WERE FROM INDIA AND CHINA, AND WERE INTENDED FOR HUMAN AND ANIMAL USE. ITALIAN AUTHORITIES ARRESTED TEN INDIVIDUALS INVOLVED IN THIS ORGANIZED CRIMINAL ENTERPRISE.

SEPARATE AND APART FROM NEWS REPORTS, OVER THE PAST SEVERAL YEARS, THE PHARMACEUTICAL INDUSTRY HAS BEEN INVOLVED IN VARIOUS STUDIES AND INVESTIGATIONS REGARDING COUNTERFEIT MEDICINES.

A PHARMACEUTICAL SECURITY INDUSTRY GROUP CONDUCTED A 15-MONTH STUDY IN THE PHILIPPINES DURING 1994 AND 1995. DURING THIS PERIOD, WE COLLECTED 1,359 SAMPLES FROM 473 DRUGSTORES. WE DETERMINED THAT 8 PERCENT OF THE SAMPLES WERE COUNTERFEIT AND THAT 11 PERCENT OF THE DRUGSTORES VISITED WERE DEALING IN COUNTERFEIT MEDICINES. FULLY 17 PERCENT OF THE MEDICINES OBTAINED WERE ILLEGALLY IMPORTED OR ILLEGALLY DIVERTED INTO THE PHILIPPINES. THE COUNTERFEIT MEDICINES INCLUDED CARDIOVASCULAR, RHEUMATOID ARTHRITIS, OSTEOARTHRITIS, ASTHMA, ANTI-INFECTIVE AND ANTI-INFLAMMATORY DRUGS.

IN A SIMILAR STUDY IN INDONESIA, WE COLLECTED 1,309 DRUG SAMPLES. WHILE THE RESULTS WERE NOT AS CONCLUSIVE AS THE PHILIPPINES STUDY, ONE COMPANY REPORTED A SIGNIFICANT COUNTERFEIT PROBLEM WITH ONE OF THEIR BEST SELLING DRUGS AND A LESSER PROBLEM WITH ANOTHER.

THE PHARMACEUTICAL SECURITY GROUP SUBSEQUENTLY CONDUCTED A STUDY IN CHINA. WE COLLECTED 842 DRUG SAMPLES FROM 262 OUTLETS IN 11 CITIES. FIVE DIFFERENT COUNTERFEITS OF THE SAME PRODUCTS WERE FOUND. DURING THIS SAME PERIOD, WE ENCOUNTERED ONE STATE-OWNED PHARMACEUTICAL COMPANY THAT COUNTERFEITED THREE BEST-SELLING DRUGS FROM THREE DIFFERENT MANUFACTURERS AND SHIPPED THESE PRODUCTS TO THE PHILIPPINES AND TO EUROPE. COUNTERFEITING IN CHINA HAS EXPANDED IN SCOPE AND SOPHISTICATION SINCE THAT TIME.

THE PHARMACEUTICAL SECURITY INSTITUTE IS A SECURITY GROUP REPRESENTING THE PHARMACEUTICAL INDUSTRY WHOSE PRIMARY FOCUS IS ADDRESSING THE TRADE IN COUNTERFEIT MEDICINES. IN A 1998 TRIP TO TIJUANA, A PHARMACEUTICAL SECURITY INSTITUTE REPRESENTATIVE VISITING A PHARMACY WAS STEERED TO PRODUCTS WHICH WERE SAID TO BE AS "GOOD AS THE ORIGINALS BUT AT LOWER PRICES." THE PACKAGING WOULD HAVE LOOKED FAMILIAR TO A U.S. CUSTOMER – THE LABELS WERE IN ENGLISH AND THE BOTTLES APPEARED TO BE AMERICAN. NEVERTHELESS, THERE WERE SIGNIFICANT DIFFERENCES BETWEEN THESE MEXICAN KNOCK-OFFS AND LEGITIMATE U.S. PRODUCTS. FIRST, THERE WAS NO GUARANTEE OF THE QUALITY OF THE MEXICAN KNOCK-OFFS. THERE WAS NO WAY TO KNOW WHETHER THEY HAD BEEN MANUFACTURED IN ACCORDANCE WITH GOOD MANUFACTURING PRINCIPLES, OR TO KNOW THE CONDITIONS UNDER WHICH THEY HAD BEEN PACKAGED, STORED, HANDLED, OR SHIPPED. INDEED, THERE WOULD HAVE BEEN NO WAY FOR A CONSUMER TO KNOW THE TRUE CONTENTS OF THE BOTTLES. MEXICAN KNOCK-OFFS COULD CONTAIN THE PROPER ACTIVE INGREDIENT IN THE WRONG AMOUNT, OR THEY COULD CONTAIN A TOTALLY DIFFERENT ACTIVE INGREDIENT THAN THE ONE LISTED ON THE LABEL. THE PILLS COULD BE SUPERPOTENT, SUBPOTENT, OR EVEN TOXIC. SECOND, IT IS OFTEN IMPOSSIBLE FOR A CONSUMER SUFFERING FROM AN ADVERSE REACTION TO IDENTIFY AND CONTACT THE MANUFACTURER OF ONE OF THESE MEXICAN KNOCK-OFF DRUGS. THE INVESTIGATOR IN QUESTION WAS UNABLE TO LOCATE ONE MANUFACTURER, EVEN WHEN HE DESCRIBED AN EMERGENCY SITUATION. UNFORTUNATELY, THERE WAS NO COMPANY ADDRESS OR PHONE NUMBER ON THE LABEL. AFTER SEVERAL CALLS, THE DISTRIBUTOR OF THE PRODUCT WAS LOCATED, BUT ON THREE SUCCESSIVE DAYS, HE REFUSED TO PROVIDE A LOCATION OF THE MANUFACTURER EVEN WHEN IT WAS MENTIONED THAT SOMEONE WAS INJURED BY THEIR PRODUCT.

IN AUGUST OF LAST YEAR, INVESTIGATORS MADE ANOTHER VISIT TO TIJUANA. AGAIN THE STORE CLERK – WHO WAS NOT THE PHARMACIST – DIRECTED THE INVESTIGATORS AWAY FROM NAME-BRAND PRODUCTS TO WHAT HE CALLED "GENERICS." THESE PRODUCTS SHOULD NOT BE CONFUSED WITH "GENERIC DRUGS" IN THE SENSE THAT YOU AND I UNDERSTAND THE PHRASE. IN THE UNITED STATES, WHEN A DRUG LOSES ITS PATENT PROTECTION, THE FEDERAL FOOD, DRUG, AND COSMETIC ACT PERMITS GENERIC MANUFACTURERS TO MARKET "GENERIC" VERSIONS OF THE DRUG, SUBJECT TO CERTAIN CONDITIONS. THESE U.S. GENERIC PHARMACEUTICALS MUST BE IDENTICAL TO THE NAME BRAND PRODUCTS ON WHICH THEY ARE BASED. ALSO, THE MANUFACTURERS ARE SUBJECT TO GOOD MANUFACTURING PRACTICE REGULATIONS. SO-CALLED MEXICAN GENERICS ARE NOT APPROVED IN THE U.S. AND MAY NOT BE MANUFACTURED IN COMPLIANCE WITH U.S. GOOD MANUFACTURING PRACTICES. THEY ARE NOT TRUE "GENERICS" – THEY ARE FAKE PRODUCTS DESIGNED TO FOOL U.S. CITIZENS. IN TIJUANA LAST YEAR, WE FOUND PRODUCTS WITH FAMILIAR-LOOKING PACKAGING, ENGLISH LABELS, AND U.S. BOTTLES. SOME OF THE LABELS ON THESE MEDICINES IDENTIFIED LISTED A NON-EXISTENT U.S. COMPANY AS THE MANUFACTURER.

WITH THE INCREASE IN INTERNATIONAL TRADE, IT HAS BECOME INCREASINGLY DIFFICULT TO TRACE THE PEDIGREE OR LINEAGE OF A NY PARTICULAR COUNTERFEIT DRUG PRODUCT. AS I STATED EARLIER, A PRODUCT MAY BE SOURCED IN ONE COUNTRY, FORMULATED INTO TABLETS OR CAPSULES IN ANOTHER, PACKAGED IN YET ANOTHER, AND THEN TRANSSHIPPED THROUGH OTHER COUNTRIES TO ITS FINAL DESTINATION.

RECENTLY WE HAVE FOUND THAT COMPANIES IN INDIA AND CHINA ARE HEAVILY INVOLVED IN MANUFACTURING THE COUNTERFEIT DRUGS THAT EVENTUALLY MAKE THEIR WAY TO THE MEXICAN BORDER AND INTO THE HANDS OF U.S. CONSUMERS. IN FACT, WE CURRENTLY BELIEVE THAT SOME PRODUCTS ARE SOURCED IN INDIA, FRAUDULENTLY LABELED IN THE SAN DIEGO AREA, AND THEN SHIPPED INTO MEXICO FOR SALE TO UNSUSPECTING AMERICANS. A 1997 CUSTOMS SEIZURE OF MORE THAN $60 MILLION WORTH OF MISBRANDED AND COUNTERFEIT PHARMACEUTICALS THAT WERE DESTINED FOR TIJUANA DRUGSTORES TENDS TO SUPPORT THIS THEORY. THE ACTIVE INGREDIENTS APPEAR TO HAVE ORIGINATED FROM INDIA.

ALSO, IN NUMEROUS INSTANCES WE HAVE FOUND BULK ACTIVE THAT WAS SOURCED IN INDIA, SHIPPED TO VARIOUS EUROPEAN COUNTRIES, AND THEN SHIPPED TO MEXICO. THE DOCUMENTATION PROVIDED WITH THESE PRODUCTS INDICATED FRAUDULENTLY THAT THE PRODUCT WAS SOURCED IN EUROPE RATHER THAN INDIA.

FINALLY, THERE IS SUBSTANTIAL CONSOLIDATION IN THE BORDER TRADE. DURING THE PSI VISIT TO TIJUANA IN SEPTEMBER 1998, IT WAS ESTIMATED THAT THERE WERE APPROXIMATELY 800 PHARMACIES OPERATING IN THE TIJUANA AREA ALONE. IN AUGUST OF LAST YEAR, THE NUMBER OF PHARMACIES OPERATING IN THE BORDER AREA AROUND TIJUANA HAD BEEN REDUCED TO LESS THAN 100. INFORMATION HAS BEEN RECEIVED FROM RELIABLE CONFIDENTIAL SOURCES THAT MEXICAN ORGANIZED CRIMINAL ELEMENTS ARE INVOLVED IN THE DISTRIBUTION AND SALE OF COUNTERFEIT MEDICINES IN MEXICO.

CHINA IS ANOTHER SIGNIFICANT SOURCE OF THE BULK ACTIVE USED IN COUNTERFEIT PHARMACEUTICALS. WE HAVE FOUND COUNTERFEIT PHARMACEUTICALS SOURCED FROM CHINA ALL OVER THE WORLD.

AS WEB-BASED PHARMACIES PROLIFERATE ON THE INTERNET, SO DOES WEB-BASED COUNTERFEITING. THIS IS BORNE OUT BY INCREASED U.S. CUSTOMS SEIZURES OVER THE PAST FEW YEARS.

ONE DRAMATIC EXAMPLE OF WEB-BASED COUNTERFEIT WAS DESCRIBED BY THE NEW YORK TIMES IN MARCH 2000. THE U.S. CUSTOMS SERVICE, ALONG WITH THAI AUTHORITIES, CONDUCTED SEARCHES OF ONLINE PHARMACIES BASED IN THAILAND. SEVERAL ARRESTS WERE SUBSEQUENTLY MADE IN THAILAND ALONG WITH SIX INDIVIDUALS IN ALBANY, NEW YORK. OFFICIALS SEIZED 20 COMPUTERS, 245 PACKAGES READY TO BE SHIPPED, AND OVER 2.5 MILLION DOSES OF DRUGS. THESE COUNTERFEIT MEDICINES ARE MANUFACTURED IN UNCLEAN, NONSTERILE SITES, WHICH CERTAINLY WOULD NOT MEET FDA APPROVAL.

IMPROVED PACKAGING TECHNOLOGY MAKES IT DIFFICULT FOR EVEN THE EXPERT EYE TO DIFFERENTIATE BETWEEN MANUFACTURED LABELED PRODUCT AND COUNTERFEIT LABELED PRODUCT. CERTAINLY IT IS EXPECTING TOO MUCH TO EXPECT A U.S. CUSTOMS INSPECTOR TO MAKE THIS JUDGMENT. FURTHER, LIMITED RESOURCES AFFECT THE NUMBER OF SHIPMENTS THAT CAN BE INSPECTED AT OUR PORTS AND BORDERS BY U.S. CUSTOMS INSPECTORS. FDA AND DEA HAVE SIMILAR RESOURCE CONSTRAINTS.

WHAT CAN WE AND SHOULD WE BE DOING TO ENSURE THAT THE WORLD PROBLEM IN COUNTERFEIT AND DIVERTED PHARMACEUTICALS DOES NOT BECOME A SIGNIFICANT U.S. PROBLEM?

WE MUST RECOGNIZE THAT THE U.S., AS THE LARGEST AND MOST LUCRATIVE MARKET IN THE WORLD, IS THE ULTIMATE TARGET OF MANY COUNTERFEITERS AND DIVERTERS. WE MUST NOT MAKE IT ANY EASIER FOR CRIMINAL COUNTERFEIT OPERATIONS THAN WE ALREADY HAVE.

THEREFORE, WE MUST CONTINUE TO:

MAINTAIN OUR POLITICAL WILL AND NOT ALLOW THE DESIRE FOR LOW COST MEDICINES TO UNDERMINE OUR COMMITMENT TO PROTECTING THE PUBLIC HEALTH OF U.S. CITIZENS.

ENSURE THAT WE MAINTAIN COMPREHENSIVE LEGISLATION TO PROTECT OUR PHARMACEUTICAL INDUSTRY AND ENCOURAGE INNOVATION.

AGGRESSIVELY ENFORCE THE LAWS DESIGNED TO COMBAT TRADE IN SPURIOUS MEDICINES.

MAINTAIN STRONG PENAL SANCTIONS AGAINST INDIVIDUALS CONVICTED OF VIOLATING THE VARIOUS DRUG LAWS.

MR. CHAIRMAN AND COMMITTEE MEMBERS, THANK YOU FOR THE OPPORTUNITY TO EXPRESS MY VIEWS ON THIS IMPORTANT SUBJECT.