Just a few weeks ago, in late May, yet another international law enforcement operation uncovered another series of drug counterfeiting outfits, seizing more millions of dollars worth of fake prescription medicines, resulting in the arrest of hundreds more makers and distributors of illegal drug products. Nearly 200 enforcement agencies across 111 countries, led by Interpol, took part in Operation Pangea VII, targeting the criminal networks behind the sale of fake medicines.
It's a struggle also because time is running out. This is not a spontaneous gesture by the private sector. It is a response to European Union rules adopted three years ago, that are due to come into full effect less than three years from now. There are no options: heavy new obligations will fall on each of these components of the medicines supply chain, and the private sector players are simply trying to set up the most cost-effective way to meet those obligations through a largely self-regulatory system. If they fail, they face legal action for non-compliance, and still tougher—and doubtless more expensive and onerous—obligations under additional legislation and systems that will be imposed on them by the authorities.
The report listed the many tasks that must be accomplished for the system to work. Specifically, manufacturers will have to modify production lines to affix a 2D data matrix code on each pack that will bear the product code, batch or lot number, expiry date, and a unique randomized serial number. They will also have to apply tamper-evidence features to each pack. And they will have to report the data securely to a national data repository that they will also have to create, along with a Europe-level "hub" that can allow national systems to talk to each other. Pharmacists will have to install equipment and data-transfer links so they can read the 2D code and receive instant verification (or an alarm) via the "hub" on each product before they dispense it. Wholesalers will also have to be plugged into the system so they can keep a check on products going through their hands. And parallel traders will have to work with the system too, affixing new 2D codes and new tamper-evidence features to every medicine they re-label or repackage, and reporting the new data to the system. Everyone will have to be able to receive and respond to queries regarding codes, and make provision for handling exceptions, reverse logistics with recalls, and further queries and investigations.
There are costs as well as long lead-times attached to all these elements. Current estimates range from $100 million a year to double that sum, just for running the system. Unsurprisingly, the question of costs has been at the heart of the discussions—and remains so today. Above all, the cost question has caused a split among manufacturers, with the European Federation of Pharmaceutical Industries and Associations (EFPIA) firmly inside the partnership, and the generics industry still hesitant on the outside.
The European Generic medicines Association (EGA) feels its members are being unfairly treated, since the products they produce are—it claims—so rarely counterfeited that the complex new EU requirements are disproportionate and excessive. There is little reason for them to share the cost burden when the real targets of counterfeiters are the more expensive branded products made by research-based companies, they say.
The generics industry has not given up hope of winning some exemptions under the EU legislation. But it is also hedging its bets, and is exploring joining the partnership if it can do a cut-price deal. What it is insisting on is that the costs—most of which are to be shared among manufacturers—should not be based on volume sales, because that would disadvantage its members, who specialize in large runs of low-cost products. A compromise could be reached soon. EGA has proposed a flat rate approach, under which each company would pay a fixed amount for each of the marketing authorizations it holds. Since big companies with many products in many markets hold more individual marketing authorizations than smaller companies with restricted product ranges, the idea is that this formula would tip the balance the other way.
But it is not yet a done deal. EFPIA has somewhat reluctantly conceded that this methodology might be acceptable. But EGA has yet to win the backing of its board for the approach. And even if it does, there are countless other questions to be resolved to get this system up and running in time for the 2017 deadline that the EU has set—and on which the Commission is refusing to make any concessions.
By a profound irony, the one thing that all these efforts will have no impact at all on is the one thing that Operation Pangea VII was exclusively devoted to: illegal online drug sales. The EU legislation covers only the legal supply chain—leaving gullible patients the world over still just as vulnerable as ever to the purveyors of counterfeit treatments for everything from erectile dysfunction to cancer.
Reflector is Pharmaceutical Executive's correspondent in Brussels.