Pharmaceutical supply chains are particularly affected by counterfeiting. Counterfeit drugs like fake pills are not only sold in illegal online pharmacies but also through the legal distribution chains. Common examples are fake viagra pills, fake antibiotics and since the beginning of the pandemic: counterfeit medicine like fake vaccines for COVID-19.

Blockchain supply chain solutions can help fight global trade in counterfeit drugs and other fake medicinal products. By using Blockchain Technology in Supply Chain Management counterfeit prevention, product safety and patient safety can be significantly improved.

Here you will find regular updates on the topic of counterfeit drugs, statistics, facts and news from the pharmaceutical sector.

Counterfeit drugs

Counterfeit drugs 2021: Statistics and Facts on how Blockchain can fight the pandemic

While COVID-19 and mutations of the coronavirus kept us on our toes in 2020, counterfeiters were able to distribute vast amounts of counterfeit drugs.

Pharmaceutical companies are struggling to monitor their suppliers and verify the authenticity of their supply chain. The booming counterfeiting market always seems to be one step ahead of them. So far, there is only one effective and reliable protection for supply chains: Blockchain Technology.

That’s what CEO and Blockchain expert Arman Sarhaddar elaborates in his article on counterfeit and fake drugs in the pandemic.

Click here to read the original article on the publisher’s platform Builtin.com: While you’ve been distracted by COVID-19, counterfeiters have been pushing fake drugs. Here’s how Blockchain can stop them.

Arzneimittelfälschungen/Counterfeit drugs 2021: Seit März 2020 tauchen im Zusammenhang mit der Corona-Pandemie zahllose Produktfälschungen im Netz auf. Die Imitate und Fakes infiltrieren auch die legale Supply Chain.

Counterfeit drugs 2021: Since March 2020, countless fake products have appeared on the web. Substandard imitations of pharmaceutical products and fake drugs also infiltrate legal supply chains.


Blockchain against COVID-19 and counterfeit drugs

 

Blockchain Technology in short is a trustworthy and tamper-proof decentralized system, that provides transparency and counterfeit protection for supply chains. All these features are useful not only in the field of cryptocurrencies and FinTech. Considering the facts, the application of Blockchain seems even more useful for a number of other purposes – including the fight against COVID-19.

Consequently, in March 2020 the World Health Organization (WHO) announced its cooperation with companies that are already successfully using Blockchain Technology. IBM, Oracle and Microsoft, are a few well-known examples. The goal, they say, is to develop a platform for collecting and sharing data to help contain the pandemic.

Such a platform is certainly helpful. But it is not the only way to use Blockchain Technology during the health crisis. In our previous article, we already explained 3 Digital Trends that could be revolutionized by Distributed Ledger Technology (DLT) or Blockchain in 2021.

Blockchain can help us fight COVID-19 and manage the global crisis in many ways. To mitigate the health risks posed by the global trade in counterfeit and fake drugs, for example, Blockchain can also be used to combat counterfeit medicines.

1. The surge of counterfeit drugs in 2020

 

Never before have so many scientists around the globe come together to research vaccines and combat a virus. The reason for this clear: The number of infections is increasing exponentially, threatening nearly eight billion people.

In March 2020, Europol published a warning, that there will be a rise in crime related to the pandemic. According to the EU’s law enforcement agency, especially cases of cybercrime, fraud, theft as well as counterfeiting will increase due to the coronavirus.

Since then, sales figures of counterfeit medical equipment such as protective gear and counterfeit medicines have been increasing rapidly. Counterfeiters are deliberately stoking people’s fears of shortages (of disinfectants for example) in order to make a profit. The demand for nutritional supplements and vitamins to support the immune system has also been exploited.

In Operation Pangea, a raid against organized crime in March 2020, Europol seized four million packages of various counterfeit drugs and about 34,000 fake surgical masks. Among the fake drugs were antiviral drugs, the anti-malarial drug chloroquine, as well as dietary supplements and vitamin preparations.

Along with other observations around products such as counterfeit antibiotics and Viagra, such incidents demonstrate that popular and much-needed pharmaceuticals are especially hard-hit by counterfeiting.

An end to these activities is far from in sight. In fact, quite the opposite is true.

The demand for vaccines and cures against COVID-19 remains huge. The supply is lagging behind, as we can basically see in every corner of the world. Counterfeiters continue to profit – especially online.

The World Wide Web is the biggest gateway for fake drugs as well as other counterfeit products. Ordering medicines from online pharmacies has become increasingly popular due to limited mobility during lockdown. But some providers cannot be trusted. Criminals lure unsuspecting buyers with seemingly attractive prices and products. During a global health crisis, these activities are particularly dangerous and pose an even greater threat to human life.

2. How Blockchain can fight counterfeit drugs

 

Pharmaceutical companies try to monitor their suppliers and ensure the quality and the authenticity of products in their supply chain. Yet it is difficult to ensure complete supply chain protection – at least it has been until now.

Blockchain Technology is the best anti-counterfeiting solution available to date. Yet, it can provide a revolutionary level of supply chain transparency and thus, the best protection against counterfeit drugs entering the supply chain so far. Blockchain is based on Distributed Ledger Technology (DLT, that allows data to be stored in a decentralized manner, instead of in a central database.

Each entry is encrypted individually and every change must be verified by all the distributed nodes within the system. This makes it virtually impossible to hack a Blockchain. So, once stored, data cannot be tampered with anymore. The technology therefore makes it much easier to detect fraud and identify weak points in the supply chain. This gives companies full supply chain visibility and optimal counterfeit protection.

The technology also opens up the possibility for any customer to verify the authenticity of a purchased product such as medicine – for example, by scanning a QR code on the product packaging via an app such as ivault. This makes it easy for any buyer to determine whether their product is genuine or whether it is likely to be a counterfeit.

Blockchain Technology is not only a useful anti-counterfeiting solution, but it also increases brand protection as well as product safety and, in the case of pharmaceutical products, patient safety.

In addition to combining Distributed Ledger Technology and QR codes, Blockchain solutions are also compatible with other established technologies, such as NFC, RFID or GPS. These are all technologies that are based on the contactless transfer of data.

As a result, Blockchain can be adjusted to the individual requirements of each company and it comes with a variety of advantages. This makes a Blockchain solution work for manufacturers of a large number of different products – from expensive testing equipment, such as X-ray or MRT machines to vaccines, masks and simple pills.

Arzneimittelfälschungen in der Corona-Pandemie 2020: Von gefälschten Schutzmasken und Fake Impfstoffen wird online alles angeboten.

Counterfeit drugs during the pandemic 2021: Some approvals are already through and the administration of the first vaccine doses has begun. But counterfeiters are waiting for their chance to put fake vaccines into circulation. Blockchain applications can help to track and trace the distribution of genuine vaccines.

 

Thus, ensuring product authenticity at the highest level possible can be achieved by using Blockchain Technology for Supply Chain. At the same time, Blockchain serves as an effective means of deterring counterfeiters, as it is very easy to determine where counterfeit products have entered a supply chain.

It is no wonder that more and more companies are turning to Blockchain Technology during the pandemic. After being trivialized for a long time (and sometimes being equated with cryptocurrencies), its full potential is now being recognized. It can provide the necessary transparency and the highest possible security, and thus also save human lives.


Counterfeit drugs statistics 2021:
Facts and figures to date

 

Right from the start, the crisis clearly demonstrated the severity and dangers posed by global trade in counterfeit drugs and other fake products. Serious health and safety issues arise when people order fake drugs online, as counterfeit drugs do not contain the right formula and may also contain dangerous ingredients.

During a public health crisis like the one we are confronted with today, the fight against this massive global problem becomes even more acute. Indeed, Interpol, for example, has noted an increase in counterfeit medical products linked to COVID-19.

We too recognized this trend early in the pandemic and formulated 5 forecasts of drug counterfeiting related to the coronavirus based on global counterfeit statistics.

According to the World Health Organization (WHO), an increasing number of counterfeit drugs are also being sold in developing countries in connection with the coronavirus. Both U.S. Customs and Border Protection (CBP) and other countries’ customs authorities reported seizures of counterfeit COVID-19 tests and protective equipment such as face masks and hand sanitizers.

These examples show that, unfortunately, our predictions were correct and to this date too little has been done to tackle these problems. Apart from companies, also governments need to ensure the legal and safe origin of pharmaceutical products both online and in local pharmacies. After all, counterfeit drugs cause considerable economic damage as well as risks to the health and safety of citizens.

To help governments, the OECD and the European Union Intellectual Property Office (EUIPO) joined forces to provide policymakers with solid empirical data on the value, volume and trends of global trade in counterfeit drugs.

1. Counterfeit and fake products on a global scale

 

In an updated report, the OECD illustrates some facts and figures on global trade in counterfeit products:

“The results are alarming. In 2016, counterfeit and pirated goods amounted to as much as 3.3% of world trade, and up to 6.8% of EU imports from third countries. These figure underscore once again the need for coordinated action against IP crime in general and trade in counterfeits in particular.

3,3 % corresponds to as much as 509 billion USD, while in the EU alone, imports of counterfeit products amounted to up to 121 billion euros (134 billion USD). The graphic below shows the products that are the most frequently counterfeited:

Welche Produkte sind von Fälschungen betroffen? Grafik der OECD

Which products are most frequently affected by counterfeiting? Source: OECD, Trends in Trade in Counterfeit and Pirated Goods.

 

2. Counterfeit drugs statistics 2020

 

Counterfeit drugs not only cause economic losses for the pharmaceutical industry, but also pose a serious threat to the health of the public as a whole. The joint EUIPO/OECD study on trade in counterfeit pharmaceutical products, published on March 23, 2020, shows that international trade in counterfeit drugs reached about €38.9 billion in 2016.

EUIPO/OECD: Trade in Counterfeit Pharmaceutical Products

The study shows that counterfeit antibiotics, sexual enhancers or lifestyle drugs, as well as painkillers are dominating. But other counterfeit drugs were also seized (see chart below). Counterfeit drugs may contain too little, too much or no active ingredient of the real drug. They may also be contaminated or contain entirely different ingredients.

EUIPO (Juni 2020): Häufigkeit verschiedener beschlagnahmter Arzneimittelfälschungen von 2014-2016

EUIPO (June 2020): frequency of various counterfeit medicines seized from 2014-2016, source: EUIPO, 2020 STATUS REPORT ON IPR INFRINGEMENT.

Due to counterfeit drugs related tax evasion EU governments lose approximately €1.7 billion in revenue. 96% of all counterfeit medicines seized by customs, are postal or express courier shipments. The social cost of counterfeit drugs is also high. It is estimated that each year more than 80,000 jobs are lost due to counterfeiting in the EU pharmaceutical and related sectors.

However, counterfeit drugs, such as unproven treatments, or fake equipment and accessories, such as corona tests, medical devices, masks, ventilators, gloves, etc., have been flooding not only the European market since the early 2020s.

A number of illegal web shops worldwide promote and sell counterfeit drugs and vaccine fakes for the prevention and treatment of COVID-19. In March 2020, a large number of new domain names were registered for illegal purposes, containing terms such as “covid,” “corona,” and “virus.” These appear to be professional counterfeiters who have previously sold other fake drugs online and are now trying to make a profit from COVID-19-related counterfeit drugs.

The National Association of Boards of Pharmacy (NABP) has identified many of these illegal online pharmacies that purport to sell prescription drugs for the treatment of COVID-19. They also found that over 90% of the identified COVID-19 domains were registered anonymously, making it difficult for law enforcement agencies.

NABP, 2020: Rogue Online Pharmacies in the Time of Pandemic: Capitalizing on Misinformation and Fear

The pandemic has thus shown that criminals can adapt quickly to new market conditions and always find ways to infiltrate the legal supply chain of pharmaceutical companies. Especially with the lack of an effective anti counterfeiting solution to track and trace the supply chain.

It’s time to put Blockchain to work here.

3. Additional ressources:

 

EUIPO (Juni 2020), 2020 Status Report on IPR Infringement, Why IP Rights are important, IPR infringement, and the fight against counterfeiting and piracy, doi: 10.2814/165063, https://op.europa.eu/en/publication-detail/-/publication/d7e6f903-c577-11ea-b3a4-01aa75ed71a1 (visited on 04/01/2021)

European Commission (Dezember, 2020), Commission Staff Working Document, Counterfeit and Piracy Watch List, Brüssel, https://trade.ec.europa.eu/doclib/press/index.cfm?id=2225 (visited on 04/01/2021)

OECD/EUIPO (März 2020), Trade in Counterfeit Pharmaceutical Products, Illicit Trade, OECD Publishing, Paris, https://doi.org/10.1787/a7c7e054-en.

Sarhaddar, Arman (Juni 2020), Wie die Blockchain vor Arzneimittelfälschungen schützt, https://www.industry-of-things.de/wie-die-blockchain-vor-arzneimittelfaelschungen-schuetzt-a-937779/

 

Coronavirus: Eine Vielzahl von Tests und Studien zur Umwidmung bereits zugelassener Medikamente werden durchgeführt. Diese könnten bereits gefälscht werden.

Coronavirus prognosis: 5 theses on counterfeit drugs

In our last blog post we provided a detailed forecast on counterfeit drugs in view of the current crisis caused by the outbreak of coronavirus. Here are some additional thoughts, summarized in 5 theses on coronavirus and counterfeit drugs… as well as the blockchain.

With the blockchain, companies can not only protect their supply chain against counterfeit drugs. In addition, everyone could easily check with their smartphone whether a purchased product is original or fake.

With the application of blockchain technology in the pharmaceutical sector, Europe can now seize the opportunity to become a global blockchain pioneer. CEO Arman Sarhaddar’s contribution to the future of a Blockchain Europe has now been published by the renowned blockchain news platform Industry of Things as well.

The recent corona-apps to donate data should also be based on blockchain technology, as this is the only way to ensure optimal data security and protection against hacker attacks.

coronavirus Heilmittel coronavirus impfstoff, corona arzneimittelfälschungen, counterfeit drugs

Battling coronavirus… and counterfeit drugs that have not yet been thought of.


5 theses on drug counterfeiting in 2020

 

Thesis 1: Counterfeit drugs of the year 2020

 

Vaccines and drugs to treat corona patients will be the drugs of the year… and so will counterfeit drugs.

The examples of Viagra and antibiotics (see below) show that popular and urgently needed drugs are counterfeited particularly frequently, of course. The demand for the remedies against coronavirus is huge and the supply will inevitably lag behind.

For even if all conceivable production facilities are mobilized and pharmaceutical companies work together instead of competing with each other (as is usually the case), production will need one thing above all: time.

While the first million, let alone the first billion, of drugs are produced, at the same time counterfeiters will produce imitations and counterfeit drugs cheaply on a massive scale. These can quickly be sold online through illegal distribution channels.

Moreover, as soon as the first corona drugs leave production, the counterfeiters will be able to infiltrate the supply chains of pharmaceutical manufacturers and sell potentially dangerous counterfeit drugs in the legal distribution chain.

Fake drugs could potentially cause more damage than the coronavirus itself. But it is not only human lives that are at stake. The producers of the coronavirus drugs are only partially rewarded with fame and heroism, because the counterfeit drugs, that made it into the legal distribution chain, will cause massive damage to their image, which will compensate for every good deed.

 

Thesis 2: Counterfeiting market in developing countries

 

On the counterfeiting market of developing countries, cheap counterfeit drugs appear as unrivaled “better” offers.

The demand for coronavirus cures will come from all countries equally and counterfeiters will proceed exploiting the poor. They are already taking full advantage of the counterfeit market in poor countries:

About 30% of the drugs in Asia or South America and up to 50% in Africa are counterfeit drugs.

Poor countries have many loopholes, such as the complete lack of import controls due to lack of personnel in some cases, through which counterfeit drugs can be distributed without any difficulty.

Counterfeit drugs can easily be offered at a lower price. For poor countries and many of their institutions, these seem to be “better offers” and the originals in comparison are no longer a competition.

coronavirus Heilmittel coronavirus impfstoff, corona arzneimittelfälschungen

Every 2nd or 3rd drug in Africa is a fake! Taking medicine in poor and developing countries seems to be a game of chance. Whoever only catches the despicable fake without any active ingredient can be considered lucky. According to the WHO, 60 % of all counterfeit drugs contain no active ingredients, while about 16 % contain completely different active ingredients. These are mainly counterfeit antibiotics – the most needed medicines.

 

For comparison:

Industrialized nations are safer from counterfeit drugs due to appropriate drug law controls and close cooperation between manufacturers, wholesalers, pharmacies and the authorities. Nevertheless, we do not remain unaffected by large-scale counterfeiting crime: In the United States, around 1.5 million counterfeit birth control pills containing too little active ingredients were seized.

Another example is Sildenafil, better known as Viagra: In 2006, 2.5 million fake Viagra pills were seized in the EU alone. In 2007 there were 3.4 million. [Source]

The “professional” counterfeiters who have successfully infiltrated legal distribution channels in Europe or the USA before will be those to occupy the coronavirus niche of the counterfeit market.

 

Thesis 3: Drug repurposing: Using the already approved to fight corona

 

The counterfeiters may already have started to manufacture counterfeit drugs of those pharmaceuticals that are eligible for repurposing.

Thanks to global supply bottlenecks, the trade in counterfeit medical equipment is already increasing dramatically.

In addition to the development of new drugs against the coronavirus, a large number of clinical studies are being conducted to repurpose existing drugs like antiviral medicine, that originally has been developed to treat other diseases.

This is because it is more likely that a drug that has already been approved will bring the desired cure first. A completely new drug needs much more time to be available to the general public.

Coronavirus: Eine Vielzahl von Tests und Studien zur Umwidmung bereits zugelassener Medikamente werden durchgeführt. Diese könnten bereits gefälscht werden.

On average, the development of a new drug costs approximately 1 billion euros, because it has to go through a much longer process: from development and clinical studies, through drug law controls and initial approval, to production… which has to begin with the establishment of the production facility. A drug that has already been approved does not have to go through all of the above steps again, a production facility is ready to use and a certain amount of a the drug is already available. [Source]

Currently, fake COVID-19 drugs are no longer an exception on the internet. But mass distribution of counterfeit drugs will begin when people are officially informed that an effective remedy against the coronavirus is available.

And this process of information via media and news has already begun. For example, it has become known that the common Japanese flu drug Avigan has a very good chance of being effective against coronavirus – and Germany has already stocked up on millions of packages.

Of course, this is what the counterfeiters know as well, and they might have already started producing. Counterfeit drugs of these promising drugs can easily brought to the market thanks to the knowledge conveyed by the media and news.

Just think about it for a second: How many people have already searched the Internet for a way to purchase a pack of Avigan? And how much are they willing to pay to get such a promising drug?

 

Thesis 4: The lack of cybersecurity 

 

The counterfeiters will find it easy to get the necessary information from pharmaceutical companies and their distribution partners because of a lack of cybersecurity.

For one thing, the problem is the use of computers at home, from which many home office employees currently access the internal servers of companies. But, given the crisis, those who can stay home should of course stay home.

At this point, companies must ensure that information security and data protection is guaranteed on every PC in every home office.

However, it is not only home computers, but also the trend towards corona apps, which has now arrived in Germany. The Robert Koch Institute (RKI) provides an app to “donate data” and emphasizes that it is a voluntary donation of personal data, which is stored and evaluated pseudonymously using an user ID for each individual.

However, the controversial measure has prompted criticism from data protection experts. Although some degree of privacy is guaranteed, the collected data is stored centrally and is therefore not sufficiently protected against hacker attacks.

A blockchain solution could help by storing the health-related personal data in a decentralized database and thus make the data unhackable.

 

Thesis 5: Blockchain for supply chains

 

Europe has a chance to become the leader in the field of blockchain now – by using blockchain to make supply chains counterfeit-proof.

Arman Sarhaddar, the inventor of the ivault Blockchain, already reported for Blockchain Insider about the chances of Europe to become a global blockchain pioneer. Now Industry of Things has published his insights as well. We already published a translation of his article for our English readers here: Europe as blockchain pioneer (with ivault leading from the front)

It is the second contribution of our CEO on the renowned platform for blockchain experts. In the first one he reported on counterfeit products in the supply chain:

“Tracking and tracing of ingredients is crucial, especially in the medical sector. […] Customers of medicinal products and pharmaceuticals want to be sure that they have not purchased a counterfeit. For them, the quality of the ingredients plays an essential role and in case of damage, the weak point must be clearly identifiable.”

Europe now has the opportunity to take the role of a global blockchain leader by implementing the most intelligent solution for the Supply Chain Management of pharmaceutical companies: Blockchain Technology.

This technology not only offers the most effective protection against counterfeit drugs entering the supply chain. It also simplifies the detection of counterfeits and the tracing of the weak spot, as it provides the highest possible supply chain transparency for the manufacturer.

But that’s not even all of it: On top of that, every buyer could check the authenticity of a purchased drug by scanning a QR code on the product packaging via an app on his or her smartphone. This way, each individual can tell if a drug could be a fake.

For comparison: Current methods for increasing protection against counterfeits are intelligent and complex – after all, counterfeiters should not succeed in producing authentic counterfeit drugs – but they are not necessarily practical and neither are they very efficient.

1. One example is the counterfeit protection securPharm

“During the production process, the marketing authorisation holder affixes the safety features to each pharmaceutical package. The data of the unique identifier (serial number, product code, batch number, expiry date) are applied to the pack in clear text and in the form of the Data Matrix Code and uploaded to the centralised database of the pharmaceutical industry. Before the pharmaceutical is dispensed to the patient, the Data Matrix Code is scanned for authentication, thereby reconciling the pack data with the data in the system.”

The one big mistake is that the data is stored centrally and can therefore be easily manipulated by sophisticated hackers. Counterfeit drugs in the legal distribution may not be recognized because the data has been tampered with.

Blockchain, in contrast, stores data in a fundamentally different way: data is distributed among nodes (computers) in a global network. This is the key feature of Blockchain Technology: It is a decentralized database.

Thus Blockchain creates a much higher level of information security than any technology before. Decentralized databases are virtually unhackable. All entries are individually encrypted on the computers, changes must be confirmed by all computers in the system, so that data cannot be manipulated anymore.

2. Merck is protecting products with Securalic Reveal:

“Securalic® taggants use hidden markers to authenticate products from the inside out. This smart approach to anti-counterfeiting involves concealing tiny identifiers inside a variety of materials that tell people where the materials really come from. It’s a bit like giving products or even materials like plastics, coatings, or inks their own unique fingerprint. And because all of our taggants are strictly monitored and handled through a restricted supply chain, it is virtually impossible for unwanted parties to even know they’re there.”

The microscopically small particles can be added, for example, to printing inks for product packaging or other materials. But how practical is such a process?

BUT it requires a special detector device to check the product for authenticity. This device must be in the possession of producers, wholesalers, small pharmacies and even the individual buyer to really guarantee product safety – which is neither very realistic nor a practical solution.

On top of that: If a fake turns up how can you trace back where it came from?

With the blockchain, in contrast, it is possible for each individual consumer to check a product’s autheticity on every smartphone. Thus blockchain not only ensures optimum brand protection, but also product and patient safety.

Such a high level of protection against counterfeits can only be provided by the blockchain and nothing else. The blockchain thereby serves as an effective deterrent against counterfeiting crime, because it is easy to trace back where counterfeits have entered the supply chain.

To our knowledge there is no other system that is more practicable and effective. The only hurdle left for Europe to position itself as a blockchain leader: We must act NOW.