The war on counterfeit drugs

By Franklin Cudjoe and Julian Harris

Deadly new mutations of diseases such as malaria and tuberculosis threaten over half the world’s population, the World Health Organisation and the Gates Foundation warned recently. One major culprit is counterfeit and substandard drugs that can provoke mutations that resist real medicines. Crackdowns, however, do not address the cause.

In a recent press statement issued by Ghana’s Food and Drugs Board (FDB), the chief executive said: “As part of the Food and Drugs Board’s mandate to assure the quality of medicines on the Ghanaian market and to protect the public health and safety, the FDB through its post-market surveillance activities has ordered the withdrawal of [22] batches of anti-malaria medicines from the Ghanaian Market due to quality defects.”

To tackle fake drugs, policymakers need to appreciate what makes their existence possible. It is common to blame globalisation, free trade and porous borders for the spread of fakes, and common to call for greater controls and regulation.

Yet most fake medicines exist in the places with the heaviest border rules and strongest barriers to trade, such as arduous regulations and high tariffs, which drive up trade costs for legitimate products.

Some of the highest rates of fake drugs are found in sub-Saharan Africa where a study last year found 35% of drugs failed quality testing. The World Bank notes in its 2009 “Doing Business” report: “High trade costs constrain participation in global trade for many countries, particularly in Africa.” It lists Angola as the worst, with Burkina Faso an ignominious second. Nigeria, a long-term victim of the fake drugs trade, still has among the highest tariff rates on medicines in the world, at nearly 15%. But Ghana has an annoyingly higher tariff. An importer of genuine medicines into Ghana would have paid a cumulative 30% tariff before he got them into his warehouse.

Of course, those obstacles provide wide opportunities for corruption.

In Nigeria, corruption and “abuses of court” mean “the criminals, who are usually very wealthy, very often go scot-free in court,” the director-general of its National Agency for Food and Drug Administration and Control, Dr Paul Orhii, said in a statement to officials and business people at the West African Forum on Access to Quality Medicines organised by IMANI Ghana and the ministries of health of Ghana and Nigeria last month.

The more globalised parts of the world where goods pass around relatively freely, such as Europe, the USA and Japan, suffer from far fewer counterfeits. These areas have no tariffs on medicinal products, making smuggling pointless, and they also, crucially, have excellent trademark protection — supported by independent courts, free from political influence and corruption.

There, trademark protection on medicines is rigorously enforced and fakes are rare, estimated at less than 1% of the market. Yet in developing countries and emerging economies, without such enforcement, fakes are difficult to avoid.

In this sense trademarks are a unique kind of intellectual property. They do not just protect the producers and their innovation: they also help patients choose products that they trust, while poor quality products attract a bad reputation and are shunned. Patients can be tricked into buying bad products when trademarks are faked but if trademarks and individuals’ rights are protected, counterfeiters are taken to civil or criminal court and punished, deterring the crime.

This system relies on independent courts and freedom from corruption, allowing people and companies to bring civil or criminal cases. Corruption not only ruins this process but also makes life worse when government officials and politicians meddle with the trade in medicines.

In Argentina, a counterfeit drug ring, also suspected of money laundering, has been linked to supporters of the president, implicating many leading officials. In Russia a former candidate for president was found guilty of producing fake medicines, along with his sister (who also has high-level political associations). In China, the head of the regulator was executed for taking bribes from counterfeiters — which may cause concern for Apollo Muhairwe, head of the Ugandan regulator, who is currently being questioned on suspicion of signing off deals for fakes.

The more layers of regulation and control exerted on the pharmaceuticals trade by governments, the more opportunities for corruption. Rather than looking for official crackdowns, citizens must demand the power to hold culprits to account, no matter how senior the guilty parties may be.

Courts must be free from political interference and able to process cases efficiently and fairly, with trademarks and consumer rights protected to ensure high quality products for all. These are crucial building blocks to reform, and, though they may not sound as instantly tempting as promises from politicians, they’ve been proven to actually work.

Franklin Cudjoe is editor of www.AfricanLiberty.org and director of IMANI Ghana, an independent policy think-tank in Ghana, named by Foreign Policy magazine as the sixth most influential think-tank in Africa in 2009.

Julian Harris MSc is a research fellow at International Policy Network (www.policynetwork.net), London, an international, non-governmental, educational and non-partisan development think-tank.