EU Plans to Block Fake Drugs Spark Industry Row

27.04.2012 -

A European Union plan to tighten drug packaging rules in a bid to stamp out counterfeits has triggered a row between makers of big name medicines and those producing cheap generics, who argue the costs will be crippling.

Bogus drugs are rare in Western markets but a spate of high-profile cases in Europe, including the recent discovery of fake versions of Roche's injectable cancer drug Avastin en route to the United States, have fuelled concerns.

The European Commission, the EU's executive arm, is addressing the issue with a directive requiring medicines to be sold in tamper-proof packs from 2016, each with a unique identifier allowing them to be tracked through the supply chain.

The idea has been welcomed by companies like Pfizer, GlaxoSmithKline and Roche that make expensive patented medicines, since the move is likely to reinforce the reliability of their brands.

But Greg Perry, director general of the European Generic medicines Association (EGA), contends it is an unnecessary burden on generics companies, whose low-cost products are anyway of no appeal to criminal counterfeiters.

"Makers of expensive branded medicines can absorb these technological costs because they have far higher margins and their products are the ones being counterfeited," he said in a telephone interview.

"For us, it is a very different ball game ... there is not a single case of counterfeited generics being found in the EU legal supply chain."

$1.3 billion cost

The EGA calculates the cost of implementing the European directive for the generics industry alone could be €1 billion euros ($1.3 billion). Generics account for around half of Europe's drugs by volume but only 16% by value.

The new rules could add between four and 12 euro cents to the cost of a typical drug pack, which in the case of generics can sell for as little as 50 cents each, Perry said. Companies will also need to set up repository systems capable of tracking goods, in addition to retooling manufacturing lines, he added.

Rather than apply the new regulations across the board, he wants the EU authorities to adopt a risk-based approach that takes account of the fact there is very little danger of generics being counterfeited.

Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, which represents branded drugmakers, strongly disagrees.

"It is not reasonable to build a new system, that all wholesalers and pharmacies should be part of, including scanning of each pack before dispensing, and then exempt a big part of volume just because we have not yet seen any problems," he said.

"How we all share the costs between companies, and between the different sectors, is another thing. Exempting generics altogether is not a serious proposal."

The World Health Organization (WHO) estimates that less than 1% of medicines available in the developed world are likely to be counterfeit. But for a small group of criminals, faking prescription drugs is a very lucrative business.

Many are sold illicitly over the Internet but they can also enter the legitimate supply chain in countries like Britain, where the presence of 1,800 licensed wholesalers makes it hard to track medications as they change hands.

Underscoring the ongoing threat from counterfeits, Britain's Medicines and Healthcare products Regulatory Agency said on Friday it had made its largest ever confiscation order of £14.4 million ($23.3 million) against a trader.

Simon Hickman was originally sentenced to two years in prison in 2009 for supplying fake and unlicensed drugs, including bogus versions of Pfizer's impotence pill Viagra.