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.
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.
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.
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.