The $4 Billion Cyber Fraud - Pharmaceutical Executive

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The $4 Billion Cyber Fraud
Consumers and pharma, beware: The Internet's many "pharmacies" hawking counterfeit brand-name drugs can be very hazardous to your health


Pharmaceutical Executive


In the most extreme and widely reported case, a 57-year-old Canadian woman died late last year after taking pills she bought online. The drugs, which were sold as anti-anxiety medications and sedatives, contained uranium, strontium, selenium, aluminum, barium, and boron, according to subsequent news reports. At the time of her death, just after Christmas, the Canadian Pharmacists Association warned that nearly half of all drugs bought from online pharmacies could be counterfeit or otherwise substandard. The pills in this case were purchased from a Web site claiming to be a legitimate Canadian supplier.

While it's hard to tell without actually testing the drug in question whether it's fake, diluted, or even poisoned, some reasonable conclusions can be drawn from the price data. For example, MarkMonitor researchers compared the sale of one drug by both certified and noncertified online pharmacies. It found that the nonaccredited sites offered it for $2.72 while the certified competitors charged $10.85. The noncertified entities were somehow able to offer a whopping 75 percent discount. This would strongly imply that the medication was not kosher.

Another site promoted itself as a Canadian pharmacy when, in fact, it originated in Russia and had faked its accreditation. It was selling individual prescription pills that are not legitimately available in individual pill quantities. In cases like this, it's clear that the prospective buyer does not know who is selling or what is being sold.

Personal data of unsuspecting buyers is also at risk. Nearly half of the online pharmacy sites surveyed did not implement even the most rudimentary security. There was no Secure Socket Layer (SSL), no encryption. Researchers found that a fifth of post-purchase e-mail messages captured had links to unprotected consumer data. A customer putting in credit card or other information is playing roulette with that information.

The High Cost to Pharma

The drug brand-abuse problem extends beyond the world of consumer distribution right up into the pharmaceutical supply chain itself. During the four weeks of the survey, MarkMonitor found nearly 400 business-to-business exchanges listing the six brands. Twenty-one of the exchanges listed price information, and the numbers shed light on possible vulnerabilities in, or corruption of, the drug supply chain.

Many prices posted for the drugs were too low to be true—at least for legitimate drugs. One of these exchanges listed the availability of 75 million pills for $2 each, or $150 million total. The chance of this being a legitimate pharmaceutical exchange was virtually nil. Again, this would suggest that the goods being proffered are not the real deal. China hosts nearly a third (31 percent) of these exchange-site listings; the United States, 26 percent; and India, 19 percent.

The net takeaway here is that both wholesale and retail sites are claiming to sell branded goods that are anything but. At best, these drugs are innocuous placebos or copies; at worst, they can be health- and even life-threatening.

For a corporation that has spent time and money building up a legitimate and beneficial pharmaceutical brand, these online threats are very real. And even though the drug firms are not involved in this activity, the use of their closely watched brand names by outside interests beyond their control hurts their credibility and customer relationships.

Pharmaceutical companies that develop and promote branded drugs have a duty to themselves and their customers to patrol their brands in the digital distribution channels just as they do in their physical channels and to help keep bad or outdated drugs from entering the supply chain. They must proactively monitor what is happening with their brands online, identify potential abuse early, and nip it in the bud.

Frederick Felman is the chief marketing officer at MarkMonitor. He can be reached at


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