Fake Pharmaceuticals: How They and Relevant Legislation or Lack Thereof Contribute to Consistently High and Increasing Drug Prices

Article excerpt

I. INTRODUCTION

The use of pharmaceutical products in the United States has increased more than the use of any other health resource from 1960 to 1990.1 In excess of 9,600 drugs were on the market in 1984, and the Food and Drug Administration ("FDA") approves approximately 30 new drugs and countless new applications for alterations of already existing drugs each year.2 In 2001, the $300 billion pharmaceutical industry sold $154 billion worth of prescription drugs in the United States alone, nearly doubling its $78.9 billion in sales in 1997.3 With such a rapid increase in market domination and expenditures, the U.S. government and many hospitals have focused their attention on the sales and pricing practices of pharmaceutical companies, as well as other potential factors contributing to these escalating prices.4 One such cause of the steadily increasing prices of brand name pharmaceuticals is the sale of fake or counterfeit pharmaceuticals (also called "look-alike" drugs).5

Fake pharmaceuticals are drugs sold as pharmaceutical company brand name drugs, yet at a much lower price.6 These counterfeits appear in several different forms. They either contain a lesser amount of the real drug's active ingredient, or they contain no active ingredient and are, instead, composed of substances varying from talcum power to aspirin to poison.7 Fake pharmaceuticals generally look like the real drug, inclusive of the manufacturer's labels, pamphlets, and purity seals.8 Because counterfeits are manufactured at a lower cost and have market prices well below name brand drugs, they damage pharmaceutical companies through lost sales and by fostering public association of the brand name drugs with these substandard and dangerous products.9

Not only do counterfeiters manufacture and market fake brand name drugs, but they also assemble and sell fake generic drugs in the same fashion. Authentic generics are low-cost drugs which are the bioequivalent of an already FDA-approved drug.10 Generics have the same active ingredient, same dosage form, and strength as the approved drug.11 Because generics do not go through the long development and approval steps, which are necessary for the approval of brand name pharmaceuticals, they are created for substantially less money.12 Therefore, they serve as a cheaper alternative to the brand name products.13 Even so, counterfeiters' production and sale of fake generics is a substantially lucrative venture.

In an effort to lower prices and save consumer and government funds, Congress has made several attempts during the past decade to remedy problems in the area of fake pharmaceuticals.14 In addition to state statutes, the Agreement on Trade-Related Aspects of Intellectual Property Rights, the International Anti-Counterfeiting Coalition, and Pharmaceutical Research and Manufacturers of America each aid in enforcing international intellectual property agreements and monitoring service mark, trademark, and patent infringement.15 However, these so-called remedies possess many loopholes which render their intended efficacious nature impotent.

Part II further describes these fake pharmaceuticals and their geographic origins. After additional explication of fake pharmaceuticals and generics and their effects on the pharmaceutical industry in Part III, Part IV describes procedures pharmaceutical companies employ to combat fakes. Part V discusses regulatory inadequacies and the negative, unpredicted repercussions of seemingly useful legislation and possible remedies.

II. FAKE PHARMACEUTICALS

A. WHAT ARE FAKE PHARMACEUTICALS AND WHO DO THEY AFFECT?

Fake pharmaceuticals are referred to as "look-alike" drugs because they have the same appearance as the brand name and generic drugs they mimic.16 They are generally indistinguishable in their outward packaging, and pill color, shape, size, and markings; they even have electronic bar codes, which pharmacists scan to verify drug authenticity. …

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