Our Demand Side Counterfeit Drug Problem

Let’s return to a perennial favorite topic of this weblog: What can be done to stop counterfeit drugs given the economic and market realities of the drug channel?

The supply side solution to counterfeits is well-known – prevent counterfeits from entering the wholesale supply chain by putting counterfeitors in jail, monitoring the channel, and requiring all wholesalers to source properly.

But what about the demand side problem: How do we stop pharmacy buyers and consumers from purchasing outside of a theoretically secure supply chain?

Three Rules

For the sake of argument, let’s assume that we had a perfect system for tracking every dose of medicine from a manufacturer’s plant to a pharmacy (open or closed door). This is not realistic for many years (if ever), but play along with me and assume that our wildest RFID fantasies come true. (I’ll return to RFID fantasies later this month.)

There are still three rules that have to be followed for such a system to actually make us safer:

1. Pharmacy buyers must demand pedigree documents (electronic or paper) from wholesalers and be able to validate the authenticity of these documents.
2. Pharmacy buyers must only purchase from wholesale distributors in the “Normal Distribution Channel” or wholesale distributors that are willing and able to supply pedigree.
3. Consumers must (a) refuse to do business with any pharmacy that does not adhere to the preceding two rules, and (b) be able to validate a pharmacy’s compliance with these rules.

The National Association of Boards of Pharmacy Model State Pharmacy Act and Model Rules for Licensure of Wholesale Distributors clearly cover Rules 1 and 2 by outlining various “Criminal Acts” associated with knowingly handling counterfeit drugs.

That leaves us with at least two major consumer behavior problems that are as yet unsolved.

Problem 1: Consumers need to stop buying from pharmacies that do not follow Rules 1 and 2.

Right now, that’s pure fantasy. The Harris/WSJ poll released last Thursday found that only 9% of Americans feel strongly that “a law prohibiting pharmaceutical imports from Canada and other countries helps protect Americans from potentially harmful drugs.” Even more troubling, 11% report buying drugs from a foreign country (by going there, on the Internet, or by mail), which is double the percentage in 2002.

Last week’s Mediplan bodyslam by the FDA provided more evidence about the dangers of personal importation, but is anyone listening? Mediplan’s founder would not say where the drugs ship from, but readers of this blog know that wouldn’t tell us much anyway in a world of massive parallel trade.

There’s a good post at Envisioning 2.0 on the communication challenge ahead, although Fard forgets to note the cosmic irony of July’s US Senate vote.

Problem 2: Consumers need to be able to validate safe sourcing practices.

I guess this only applies to the apparent minority who know or care, but we also have a classic principal-agent problem. How can I (the principal) guarantee that my agent (the pharmacy) is acting in my best interests given that I do not have perfect information about the pharmacy’s sourcing behavior? IOW, how do I know that the pharmacy follows rules 1 and 2, thereby minimizing my risk of getting a counterfeit product when I pick up my prescription?

Obviously, not shopping in Canada is a good place to start. But how do I know that my local pharmacy is playing by the rules? As an industry insider, I’m aware of what the industry has done. (See my June post on the FDA’s counterfeiting report.) Yet even I wondered a bit when I recently picked up a prescription for my daughter.

Just say No?

Despite the techno-hype, RFID monitoring will not solve these demand-side problems because it is simply not practical to monitor all 160,000 unique points of drug dispensing to make sure they abide by “safe sourcing” rules.

The bigger political question: will the industry really spend billions to solve this problem when consumers can’t even be bothered to avoid obvious sources of counterfeit drugs? Apparently not, if you believe last Friday’s WSJ cover story on FDA user fees stating that pharmaceutical and biotech companies “…have balked at other FDA suggestions that would, among other things, route user-fee money toward fighting drug counterfeiting.”

Paging La Toya Jackson?