What's Behind Counterfeit Drug Demand

The trail of counterfeit Avastin is becoming clearer, with Egypt emerging as the likely origin point. See Fake Avastin's path to U.S. traced to Egypt.

Unfortunately, the latest information supports my contention about the economics behind the counterfeit purchases. The fake product entered the U.S. supply chain through good ol' fashioned, financially-motivated diversion. I stand by my initial observation: Greedy Physicians Invite Fake Avastin Into the Supply Chain.

Today, we'll take a deeper look at what went wrong. Tomorrow, I'll explain how a manufacturer's commercial channel strategy can support product security and reduce the risk of counterfeit infiltration.

AN OFFER THEY SHOULD HAVE REFUSED

Dirk Rodgers at RxTrace created this very informative flowchart showing the fake drug’s alleged path from Egypt to 19 U.S. medical practices. (BTW, Dirk’s entire article is great: How Counterfeit Avastin Penetrated the U.S. Supply Chain.)

As I point out in Greedy Physicians Invite Fake Avastin Into the Supply Chain, there are only 4 authorized specialty distributors of Avastin to U.S. physician offices—Besse Medical/Oncology Supply, BioSolutions Direct, McKesson Specialty Care Solutions, and CuraScript Specialty Distribution. So why did the 19 medical practices allegedly bypass these companies?

Pharmalot shows us the money, in the form of the Montana Healthcare Solutions price list. (See it here.) The fake product was being offered for $1,860, which was reportedly about 17% less than normal pricing. In the first quarter of 2012, the ASP+6% Medicare payment amount (from the CMS site) was $2,443 for a comparable quantity. In other words, the practice's profit margin almost tripled when purchasing from the criminal channel. Ka-ching!

Disturbingly, Montana Healthcare Solutions offered many other cancer products, including Gemzar and Eloxatin.

JUST SAY NO

Even if the low price didn't set off the alarm bells, I still contend that any medical practice purchasing from Volunteer Distribution or Montana Health Solutions is responsible and should be held accountable.

The supply chain for a specialty drug with a limited network is straightforward: manufacturer–>authorized distributor–>medical practice. ANYTHING outside of that channel is diversion. In this case, the medical practices purchased from a non-authorized distributor, which had illegally imported the product from a non-authorized source (i.e., not the manufacturer), and so on. This process requires economically-motivated medical practices at the end of the supply chain.

Perhaps naively, I assume that physicians would know how to—or want to—follow safe sourcing procedures. The U.S. system is very safe, but only if buyers stay within it. Don’t buy from non-authorized distributors and don’t buy imported product on faith. Why is that so hard to understand? As Nancy Reagan suggested: Just say no!

The medical practices should have known not to buy from Volunteer. Ignorance is not a valid excuse when lives are at stake. So, I stand by my accusation of the medical practices that purchased from a shady vendor.

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Tune in tomorrow, when I explain how channel strategy can help to limit counterfeits. Same bat-time, same bat-channel!