'Counterfeiting' is a Problem That Can Only Be Solved By Big Pharma

If a business produces something and sells it for a price that covers costs and also gives a decent profit, that's a good model. Others may make the same thing, so a business needs to make the best and work hard to make sure they are not undercut. But most people will pay for something good rather than something that isn't up to scratch, if they can afford it.

However, if a business produces something and sells it for a price that is a complete distortion of the above business model, it is worthwhile for someone else to produce the same thing and charge a lot less. They don't even have to cut costs, they can just accept a lower profit. And those who have no chance of affording the expensive product may well be able to afford the cheaper one.

This is an oversimplification, but it is roughly what the pharmaceutical industry does, charges an outrageous price for something because they can. In addition, the industry depends on a form of protectionism called 'intellectual property rights'. Arguably, this has its uses, even that it is vital, but it is still a form of protectionism.

Often, the research that pharmaceutical companies claim to spend so much on is done by publicly funded, or partially publically funded, institutions. But there is little or no return to the public. And the amount spent on PR and marketing far exceeds what is actually spent on research.

So when someone else makes the same product but demands less for it, the industry reacts by resorting to all sorts of tricks to make sure the competition is destroyed. Competition, when you don't have a high level of trade protection, is not appreciated by the pharmaceutical industry.

The word 'counterfeit', therefore, can mean all sorts of things. It can mean a generic version of a branded drug, a fake version of a branded drug, a substandard version of a branded drug and probably other things. But a generic version of a branded drug is not a counterfeit and claiming that it is one threatens to deny  lifesaving treatments to many people in developing countries.

If drug companies don't want generic versions of their drugs to be produced, they should produce affordable versions themselves. There is clearly a huge market for them and a very good profit to be made. Dropping the price to affordable levels would also make the production of substandard and fake drugs a lot less tempting, perhaps not even worth the effort.

But instead of encouraging the production of generic drugs, the EU and, of course, the entire pharmaceutical industry, want to make sure affordable versions of drugs are not produced. They are currently trying to rope India into signing a 'trade agreement' whereby it will no longer be possible for the country to produce cheap drugs. Yet another form of protectionism.

India is one of the main sources of affordable drugs for developing countries. Some drugs will cost many times, perhaps even tens or hundreds of times more, just because they are protected by the sort of regulation that big industry claims to detest.

There is no doubt that some drugs are fake, made of materials that have no effect or are harmless, and this is unacceptable. But as long as ridiculous profits are made from drug pricing models, people will always find ways of selling their versions, no matter how useless or dangerous. It's not as if copyrighted drugs are always effective, or that they are never dangerous, either.

The pharmaceutical industry, already protected and subsidised in so many ways, wants more public money to be used to 'regulate' drug supplies in developing countries. Multinationals refuse regulation for themselves, but they seem to love the idea of regulating any competition.

Big Pharma have effectively created counterfeiting and many other related problems themselves, it's how they keep their profits so inordnately high. So they should sort it out themselves. If people object to the danger to the health and lives of so many people, they should aim their objections at the industry, the problem, not the mere symptoms of the problem.

The Science and Development Network have a selection of articles on the subject of 'counterfeit' drugs and some of the many issues involved. But the article doesn't really point out that Big Pharma don't lose out from counterfeiting because most of those who buy cheap drugs will never be able to afford the expensive versions.

Big Pharma Must Think We Are Idiots

A former British politician called Lynda Chalker who interferes with intellectual property (IP) issues in East Africa, says she is sure that East African IP legislation will not confuse generic and counterfeit drugs on the one hand and fake drugs on the other. But Kenya's Constitutional Court has already ruled that its own Anti-Counterfeit Act, only two years old, does confuse the three phenomena. And the court admits that this could result in people presently receiving affordable antiretroviral (ARV) therapy for HIV being denied the drugs the future. Chalker describes Kenya's decision as a 'drawback' to anti-counterfeiting efforts.

But Chalker herself simply makes the same confusion. She says that 'an anti-counterfeit law is essential in Uganda and east Africa as a whole; one only has to look at the number of deaths arising from counterfeit pharmaceutical products, electronic goods and auto spare parts'. If a drug or produce is causing death or injury, that is a health and safety problem. Branded goods can cause death and injury. Putting a brand name on a product illegally doesn't make it harmful, nor does doing so legally make it safe. The harm comes when the goods are substandard or when drugs are fake, not real drugs at all.

The distinction seems basic enough, but Chalker and the people who put together the original Kenyan bill appear unable to comprehend it. Worse still, Uganda and several other countries seem keen to follow Kenya's lead, despite the Kenyan's change of mind. Chalker and others who follow this tendency to conflate counterfeits, generics and fakes then go on to deny that their stance could jeopardize availability of affordable generic drugs, such as ARVs. But their denial sounds hollow when they go to so much trouble to confuse generics with counterfeits and fakes.

Someone who has been taken in by this deception pontificates about 'fake' drugs (and doctors) in Uganda in another article. Eleven Ugandan 'legislators' are querying the quality of drugs from India, which is the source of most of Uganda's affordable generic drugs. They note that the price of the same drugs from the UK is higher and wonder why. Perhaps that's a question for Chalker. But usually a huge difference in the price of drugs indicates that the expensive ones are branded versions and the cheap ones are generic versions.

Of course, there may also be counterfeit drugs and fake drugs in circulation. When drugs are priced so that no one in developing countries can afford them, in the hope that aid money will be used to purchase them, it's not surprising that some people will try to cash in on the market for cheap drugs. If the pharmaceutical industry is concerned about the fact that it is quite easy to make a good profit from counterfeit and fake drugs, they need to sort out their own pricing policies, perhaps by taking a look at what the 'market' can tolerate. Otherwise they might be accused of depending on subsidies and of rigging the market, which would be quite intolerable.

Chalker expresses her concern at the 'extra burden counterfeiting places on health services in developing countries'. If she is worried about health services being burdened, it is branded goods she should target. If she thinks that health services will be unable to afford the growing need for ARVs, she needs to champion the cause of those producing affordable generic versions of the grossly overpriced branded drugs that her friends in the pharmaceutical industry produce.

Chalker says that IP laws should be 'well-drafted', which, presumably, all laws should. But well-drafted for whom? Intellectual property is for the benefit of industries like big pharma, not for the benefit of poor people who are sick and dying. IP laws are not, as Chalker seems to think, to protect people from harm, and I don't think anyone who knows about IP would claim something so stupid. That's why human rights activists had to fight for international law to protect people from IP laws and allow poor countries access to affordable generics. I don't believe Chalker is stupid, though. She just thinks that everyone else is.

Excessive Drug Prices Promote Counterfeit Drug Industry

According to the WHO, lifesaving drugs are not exempt from the trade in counterfeit medicines. But nor are they exempt from the rights of powerful multinational pharmaceutical companies to make obscenely high profits, regardless of the cost in terms of sickness, suffering and death in developing countries. Organisations like WHO and Interpol (effectively, publicly funded) are busy trying to help these poor victims, the pharmaceutical companies, that is. Otherwise, their ability to extract higher and higher profits every year may be compromised.

Yes, the WHO is right, it is cynical to produce counterfeit drugs, some of which may not help the person taking them; some may make them worse or even kill them. But it is also cynical for Big Pharma to put such impossibly high prices on drugs, spend far more on marketing and lobbying than on research, compromise doctors and other health professionals to push their products, produce goods for the rich world while ignoring the poor majority, using people in poor countries as cheap research fodder for drugs intended for the rich world, preventing poor countries from producing and making generic equivalents of overpriced branded drugs, lobbying the WTO (World Trade Organisation) to make laws that protect Big Pharma at the expense of poor countries and generally frustrating any attempts to regulate them, even slightly.

I don't know how many people die from counterfeit drugs but I know that an estimated 14 million die every year from infectious diseases, many of them preventable or treatable. The policies of Big Pharma ensure that the majority of people who need drugs most will never be able to afford them. A notable exception is antiretroviral drugs (ARV) for HIV, which have only been reduced slightly in price and only because they are being paid for by aid money. And no one need worry that production of ARVs on a massive scale at slightly reduced prices causes Big Pharma to suffer in the least. If they didn't get the HIV industry to buy their drugs, the market for them would be miniscule in comparison to what it is now.

So the humbug WHO claim to be worried about ordinary people being exposed to counterfeit drugs. But this is just an excuse to use lots more public money to protect the interests of Big Pharma. Already, public money has gone into the research the pharmaceutical industry claims to do. But most of the costs of drug research are met by publicly funded bidies, such as research institutions, laboratories and universities. Then the drug companies slap a patent on the results and pocket all the profits. If the WHO was really concerned about endangering the public they would lobby Big Pharma to do one simple thing: lower their prices.

But that is one thing the industry will not do. Far from it, they will continue to lobby to be protected so that they can continue to make far bigger profits than most other industries. Lowering their prices, or even lowering their prices to affordable levels for drugs needed most by developing countries, would have little negative impact on their profits. In fact, like with HIV drugs, they may discover a market they have long been ignoring. But they would prefer to fight for their right to charge more than people in developing countries can afford, perhaps by lobbying for aid money to be spent on drugs other than just ARVs.

As long as patented drugs continue to be too expensive for people in developing countries, it will be worthwhile for counterfeiters to target them with their products. As long as Big Pharma lobbies against the production and distribution of generic versions of patented drugs, people in developing countries will have no option but to look for cheaper alternatives. Big Pharma, in its efforts to maximise its profits, is creating the ideal market for counterfeiters. Getting Interpol and the WHO to spend increasing amounts of money and creating more sophisticated law enforcement systems is pointless. Counterfeiters will also become more sopisticated, as they are amply demonstrating.

Why? Because there is good money to be made. Pharmaceutical products don't just include drugs, the number of products that are artificially overpriced because they are produced by this industry is enormous. Who wouldn't grasp the opportunity to take advantage of the opportunity to produce relatively cheap products that can be sold on at ridiculous prices, only slightly less ridiculous than the prices charged by Big Pharma?

It's because I sympathise with vulnerable people, mainly in developing countries, that I think that drug counterfeiting should be stopped. It's not because I think the pharmaceutical industry should be allowed to hold the world to ransom. But I think the industry itself is creating the problem. The cost of drugs needs to be reduced to make them affordable in developing countries and it needs to be possible for developing countries to produce and/or buy generic equivalents of life saving drugs because they will never be able to pay the prices currently demanded by the industry.

The Odds Are Not Stacked Enough in Our Favour, Say Big Pharma

The 'Counterfeit Act' signed by the Kenyan government last year is being challenged as unconstitutional, violating the right to health. This act was not really necessary because it was already an offense to make and distribute fake goods and there are already officials whose job it is to enforce existing laws.

In fact, the act seems to have been cobbled together and rushed through parliament at the behest of big industry, especially big pharma. The last thing they would want is competition, except where the odds are well stacked in their favour. So they whinged to the government (a process called lobbying in some countries) about how things were so unfair and the government kindly came up with a piece of legislation that fails to distinguish between fake goods and generic goods.

As a result, generic versions of drugs destined for Kenya have been held up in various countries on the grounds that they may not be legally distributed in Kenya. This is great for big pharma, they never wanted generic versions of drugs to be produced unless they themselves produced them, at inflated prices. But they were forced to reduce their prices when producers won the right to produce generics and big pharma have been fighting them ever since.

GlaxoSmithKline has come up with the expedient of reducing a few well known products, such as some of their antibiotics, to try to undercut generic versions. However, they don't seem to understand the concept of undercutting: their prices need to be lower. They have reduced their prices, sure, but they are still far more expensive than generic versions. What they are offering are hardly loss leaders, rather some kind of token gesture, to which journalists give the expected publicity and praise. And it's still not even certain if the reductions will be passed on to consumers.

The result of Kenya's self-serving piece of legislation is that there is widespread confusion about pharmaceutical products. People really have no way of knowing what is fake and what is not. The fact that something has a well known manufacturer's name on it does not guarantee that it is not fake. But if it is genuine, you are still robbed of the extra cost that going for the branded product involves.

People are just not able to afford many of the branded products. Slight reductions here and there, or even substantial reductions, miss this point. What is never so clear is what people have to sacrifice if they do go for the expensive branded product. But that's of little interest to organisations like GlaxoSmithKline or to the journalists who flock to report on whatever titillating rubbish is being reported on by all other journalists.

I'm glad to hear this despicable act is being challenged and hope those opposing it succeed. Because other countries, such as Uganda, are considering similar acts, no doubt in response to lobbyists for big pharma and other industry interests.