BWorld 206, Intellectual property rights in East Asia

* This is my column in BusinessWorld last April 19, 2018.

The degree of wealth and economic size of East Asian economies generally correlate with their degree of private property rights protection, both physical and non-physical or intellectual property. While protection of physical properties like houses, cars, and land are easier to see and measure, the protection of intellectual property rights (IPR) like patents, copyrights, trademarks, and trade secrets are not so tangible.

IPRs are important because they represent the “heart and soul” of private enterprises and the goods and services that they produce.

For instance, people differentiate and choose shoes made by companies as represented by their logos such as a big check, three striped leaves, or letter F. These same people also choose products from food companies with logos of a double arch, a happy insect, or a smiling young female.

Here are some numbers showing the degree of IPR protection of selected East Asian economies. (Data and report sources are (1) Property Rights Alliance (PRA)- International Property Rights Index (IPRI) 2017 Report, (2) US Chamber of Commerce (USCC)- Global Innovation Policy Center (GIPC), International IP Index (IIPI) 2018, and (3) World Economic Forum (WEF), Global Competitiveness Report (GCR) 2017-2018. The numbers in parenthesis beside each report represent the number of countries or economies covered. The WEF’s GCR is composed of 12 pillars and pillar #1 is about Institutions; among the sub-pillars there is IPR protection).

These numbers show that East Asian tiger economies also rank high in IPR protection. Conversely, emerging economies aspiring to join the club of tiger and developed countries tend to have medium to low ranking in IPR protection. The exception is Brunei, a developed economy in terms of per capita income (thanks to its high gas exports and small population) but it is low in IPR protection.

The issue of IPR protection in the region was tackled by a symposium early this week entitled “Intellectual Property Rights in the ASEAN Economic Community: Challenges and Potentials” at Intercontinental Kuala Lumpur, Malaysia. The event was organized by the Institute for Democracy and Economic Affairs (IDEAS), Malaysia’s first and most dynamic free market think tank.

There are moves to abolish the trademark, corporate logos and branding of products deemed “unhealthy” in many countries.

For instance, plain packaging of tobacco products has been legislated in Australia and France, and is currently considered to be legislated in Singapore too. Such trademark busting policies are also considered as extended to other “unhealthy” products like alcohol, sugary food like chocolates, confectionery and candies.

IDEAS commissioned a study that was presented in the symposium entitled “Challenges in Improving Intellectual Property Rights in ASEAN: Case study of Singapore, Malaysia, Indonesia, Thailand and Philippines” by Adidarmawan, S.H. and Marolita Setiati.

In the paper, the two authors noted that:

“Trademark promotes freedom of choice and enable consumers to make quick, confident and safe purchasing decisions. Standardizing… packaging for tobacco products that would restrict the use of brands, trademarks and trade… concern is if brand marks are eroded, then consumers are not able to differentiate between inferior products and those with a reputation for reliability that may create an environment in which companies may end up competing on price instead of quality. In addition, plain packaging is easier for counterfeiters to copy and could result in an increase in inferior — and more dangerous — imitations. The counterfeiters will have an easier time duping the consumer into buying products that are sub-standard. Brand restriction sets an unfortunate precedent, opening the door for IP rights to be weakened in other industries.”

A BusinessWorld report early this week entitled “Excise tax increase triggers widespread cigarette smuggling” also underscores these concerns.

High taxes, rising regulations and plain packaging have similar effects — they make the consumption of legal and branded products like tobacco and alcohol more restricted and more costly, which open up more space and markets for illicit, illegal, smuggled, and cheaper products. This results in more smoking, more drinking, more consumption of the restricted products.

Governments should focus on protecting private property rights, both physical and intellectual. Weakening such property rights will also lead to a weakened state and strengthen the powers of smugglers and criminal syndicates who do not pay taxes and do not respect brands and intellectual property.

Bienvenido S. Oplas, Jr. is President of Minimal Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.

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See also:
BWorld 203, TRAIN, inflation and PPP, April 10, 2018
BWorld 204, Mining attractiveness index and the Philippines, April 30, 2018 

BWorld 205, Energy mix and wishful thinking, April 30, 2018

IPR and Medicines 31: Trademark Stealing and Counterfeit Medicines

Today, I will attend the 1st day of National Consciousness Week against Counterfeit Medicines, Theme: Kapakanan ng Pamilya Alagaan, Huwad na Gamot Labanan, to be held at the JY Campos Hall, Bayanihan Center, Unilab Complex in Pasig City. The event is sponsored by the Food and Drugs Administration (FDA) and today's event is mainly for civil society organizations (CSOs), including Minimal Government Thinkers, Inc.

Production of counterfeit, fake and substandard medicines is generally stealing the trademark and logo of famous pharma companies, both innovators like Pfizer and GSK, and generics like Unilab, then selling those fakes. Patients and their family/guardians think that they are buying the real products of these known companies and the patients end up getting some adverse side effects, or they don't get cured and the disease in their body mutate or expand into something more serious. So counterfeits is costly in terms of expanding the treatment, and can be fatal.

As an advocate of rule of law as the main function of government, I believe that government, both national and local units, should be serious in fighting this crime because it endangers public health. This is a more useful function that imposing drug price control and mandatory, forced priced discounts for senior citizens and perons with disabilities (PWDs). Of what use to certain sectors are cheap, forcibly discounted medicines, if they some of them are fake and substandard and  hence, can cause more health problems? Declining prices of  medicines and healthcare can be done by having more competition among more pharma players, among drugstores and hospitals, among physicians and other health professionals.

The topics and speakers for today's event are:

1. Keynote Address by DOH Assistant Secretary, Atty. Nicolas Lutero, OIC of the FDA.

2. "Global Perspectives on Counterfeiting Medicines and the Current WHO Initiatives on SSFFC" by Mr. Michael Deats, Group Lead, SSFFC Medical Products Safety and Vigilance Essential Medicines and Health Products, WHO, Geneva, Switzerland

3. "A Multistakeholder Approach to Strengthening Community Advocacy for Safe and Quality Medicines (Highlights of the MeTA Discussion Series)" by Ms. Cecilia C.  Sison, Country Coordinator, Medicines Transparency Alliance (MeTA) Philippines

4. "Impact of counterfeit medicines to public health and patient safety" by Dr. Maria Minerva P. Calimag, President of the Philippine Medical Association (PMA)

5. "Counterfeiting and its impact to national security and public safety" by Mr. Eric McCloughlin, Deputy Attaché, Homeland Security Investigations, U.S. Immigration and Customs Enforcement (ICE), US Embassy in Manila

6. "Understanding the problem and working together to combat counterfeit medicines" by Mr. Samson Chiu, Director, Asia-Pacific Region, Pharmaceutical Security Institute (PSI)

7. "Food and Drug Administration process and initiatives in combatting counterfeit medicines" by Ms. Maria Lourdes C. Santiago, OIC, Center for Drug Regulation and Research

8. "Enforcement Policies and Regulations on Medicines Anti-Counterfeiting" by Atty. Edna Valenzuela, Senior Assistant State Prosecutor, Department of Justice (DOJ)

9. "Initiatives of Intellectual Property Office of the Philippines in combatting counterfeit medicines" by Atty. Ricardo Blancaflor, Director General, Intellectual Property Office of the Philippines (IPO)

10. Industry’s effort in combatting counterfeit medicines proliferation: 

Best Practices in private industry enforcement programs to stop counterfeit medicines from endangering public

a. Mr. Tetsuda Ikeda, Director Global Security, Asia Pacific Region, Pfizer, Inc.

b. Mr. Teodoro Padilla, Executive Director, Pharmaceutical Healthcare Association of the Philippines (PHAP)

c. Ms. Dolora P. Cardinal, Head, Public Affairs Committee-FDA, Philippine Chamber of the Pharmaceutical Industry, Inc. (PCPI)

Closing remarks by Dr. Ariel I. Valencia, FDA Deputy Director General for Field Regulatory Operations

On the 2nd day tomorrow, the same speakers from the WHO, PSI, US Embassy, others, to be held at Diamond Hotel, Roxas Blvd, Manila. Target audience are mostly government enforcement agencies. And the 3rd day on Wednesday, it will be a pledging session by various groups at the FDA office in Alabang, Muntinlupa.

Meanwhile, some materials on counterfeit medicines I found several years ago:

1. Coalition Against Fake Medicines Launched

The medicines we take for day-to-day ailments and life-threatening conditions should make us feel better or save our lives. But because of the presence of counterfeit medicines in the country today, we should be cautious as to the medicines we buy.

This was the warning issued by the Department of Health (DOH), which noted that about ten percent of medicines bought in pharmacies today are fakes. Fake medicines, which are not registered with the Bureau of Food and Drugs, may be useless, harmful, or even deadly.

This dangerously widespread occurrence pushed similarly-minded government agencies, and private institutions to form a coalition group to help combat and eventually eliminate this illegal trade. The Coalition Against Fake Medicines is composed of ten organizations - the Department of Health (DOH), Department of Trade and Industry (DTI), Department of Justice (DOJ), Philippine Medical Association (PMA), Drugstores Association of the Philippines (DSAP), Mercury Drug Corporation, Zuellig Pharma Corporation, GMA 7 Broadcast Network, Philippine Daily Inquirer and Pfizer. Inc..

Present during the MOA signing were (standing from left): Manuel Quiogue, President, GMA 7 Network, Inc.; Celine Madamba, AVP-Strategic Marketing Communications, PDI; Jack Concepcion, VP-Merchandising, Mercury Drug, Inc; Dr. Jose Sabili, Vice President, Philippine Medical Association. 

Seated from left are Celia Carlos, President, Drugstores Association of the Philippines; Hon. J. Norman Jocson, Assistant Secretary, Department of Trade and Industry; Hon. Manuel Dayrit, Secretary, Department of Health; Rey Gerardo Bacarro, President and Country Manager, Pfizer, Inc; Hon. Macabangkit Lanto, Undersecretary, Department of Justice; and Michael Becker, President and CEO, Zuellig Pharma Corporation.

2. From The News Today, 2006.

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See also:
IPR and Medicines 27: More on Glivec and India's SC Decision, April 02, 2013
IPR and Medicines 28: Politicizing Innovation, Rewarding Rent-Seeking, April 06, 2013
IPR and Medicines 29: Parallel Importation and Patent Linkage, August 19, 2014
IPR and Medicines 30: R&D and Innovator Companies, November 03, 2014

Counterfeit Drugs 7: WHO, InterPol and IFPMA on SFFC

The spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines or simply counterfeit medicines is a big public health problem. Patients who take such fake and/or substandard drugs will not experience improvement from their illness unless their immune system is strong enough. At worse, their condition might even worsen as the disease can mutate and evolve into something more complicated, and can even result to death.

While the more commonly faked medicines are those patented or newly-introduced ones and hence, are priced high, even cheaper but popular generic drugs are also counterfeited. The Department of Health (DOH) and the Food and Drug Administration (FDA) are also raising public awareness of this problem, like this DOH poster.

At the World Health Organization (WHO) website, this basic information is posted.

http://www.who.int/mediacentre/factsheets/fs275/en/

Medicines: spurious/falsely-labelled/ falsified/counterfeit (SFFC) medicines

Fact sheet N°275
May 2012

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Key facts

• Spurious/falsely-labelled/falsified/counterfeit (SFFC) medicines are medicines that are deliberately and fraudulently mislabelled with respect to identity and/or source.
• Use of SFFC medicines can result in treatment failure or even death.
• Public confidence in health systems may be eroded following use and/or detection of SFFC medicines.
• Both branded and generic products are subject to counterfeiting.
• All kinds of medicines have been counterfeited, from medicines for the treatment of life-threatening conditions to inexpensive generic versions of painkillers and antihistamines.
• SFFC medicines may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient or too much active ingredient, or with fake packaging.

Recently, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), based in Geneva like the WHO, produced a short video clip about the danger of SFFC medicines, Watch Out for False Friends.

Some of the points mentioned by the WHO above were reiterated there. It also highlighted that some 124 countries are impacted/affected by these fakes, and 532 products have been counterfeited. The longer, 3:30 minutes version, is found here.

These fakes that are dangerous to public health are being exposed by certain civil society organizations including the federation or association of pharma companies themselves, both innovator and generic. And there is a big role for the government here, when civil society effort are not enough and a bigger, wider network of government agencies, local and national, armed (the police) and non-armed, are needed. After all, the main function of government is to promulgate the rule of law, including the law against stealing the intellectual property of certain companies like trademark, patent and copyright.

The former Executive Director of PHAP, Reiner Gloor, wrote a paper about this subject a few months ago. He discussed the role of the Interpol, in coordination with country governments, drug manufacturers and civil society organizations, in battling this global crime. For instance,

In 2012, an Interpol-supported initiative spanning 100 countries aimed at disrupting the organized crime networks behind the illicit online sale of medicines, resulted in some 80 arrests and the seizure of 3.75 million units of counterfeit medicines worth $10.5 million.

Below is the article.
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http://www.bworldonline.com/content.php?section=Weekender&title=Interpol-in-fight-vs-fake-medicines&id=67608

Interpol in fight vs fake medicines

Medicine Cabinet -- Reiner W. Gloor

Posted on March 21, 2013 07:22:41 PM

FAKE MEDICINES are found everywhere in the world. Emerging economies like the Philippines, as well as highly developed countries with strong regulatory systems, have fallen victims to pharmaceutical counterfeiting.

In the Philippines, close coordination between the government and the pharmaceutical industry has resulted in the monitoring and seizure of counterfeit medicines in Metro Manila and some provinces. A multi-stakeholders alliance advocating patient safety called the Safe Medicines Network has also been established to help the government in the campaign against fake medicines.

EMHN 8: Brand Protection and Safe Medicines

Our international health network has produced another good paper, Fake medicines in Asia The importance of brands to medicine quality. Authored by a good friend Philip Stevens, this six pages long paper is able to argue that corporate brand protection and brand competition coupled with rule of law, are the best way to protect the public from counterfeit and/or substandard medicines.

Fake or substandard drugs are dangerous and can be fatal. Either the patient does not get well, allowing the disease inside the body to mutate and become more serious, or the drug causes several adverse reactions and trigger more diseases and complications. 

As the "cheaper medicines" mantra is all over the country and the planet, somehow it gives an opening to dirty businessmen to offer really cheap but fake or substandard medicines. They do this by introducing unknown or lesser known brands to non-suspecting patients and drugstores. Or they simply copy the logo, brand and trademark of some known drug manufacturers, innovator or generic, and sell cheap.

The chief government regulating agency is the Food and Drugs Administration (FDA, http://www.fda.gov.ph/ in the Philippines, http://www.fda.gov/ in the US, and so on). The big problem is that this small bureau is mandated to check on the quality of (a) drugs, medicines and vaccines for humans, (b) drugs, vaccines for animals and fishes, (c) food/drink supplements and vitamins, (d) food and juice ingredients, sauces, etc., (e) perfumes, shampoo, soap, detergents, body odor spray, etc., (f) poisonous substances like insecticides and pesticides, and many others.

I think these products constitute at least 10 percent of the total output of the economy. FDA therefore, should have pharmacists, doctors, dentists, chemists, physicists, biologists, engineers, on top of having lawyers and administrators. Is it possible to have such an agency with supposedly super-technical powers and capability to minimize or control mistakes in doing its functions? I really doubt it.

One way to minimize risks and threats to public health, is to devolve product quality to the manufacturers and traders themselves, via brand protection and competition. Like "Jollibbee or McDonalds burger yan", "Starbucks or UCC or Figaro coffee yan", "Pfizer or GSK or Unilab or Pharex medicines yan", "Mercury or Watsons or The Generics yan", and so on. Consumers hold on to the brand as generally safe and these companies do all they can to avoid not even a single, not one, case of food or drinks or drug poisoning. 

Thus, products of these brands will be given minimal regulations and approval process. The main regulator for these brands and companies is the fear of being blacklisted or boycotted or sued by consumers due to bad or unhealthy products. Since these are huge if not global brands, the thought of being put in a bad light scares them more than the peering eyes of a few inspectors from the regulatory agency. Then the latter can focus their energy and resources on new products and brands. Shrewd and opportunist businessmen can put up a company and sell bad products and services that can harm public health. When the company is blacklisted, they simply close down the company and put up a "new" one and create new schemes to fool the public.

The sub-topics discussed by the paper are:

* Limits of regulation
* Brand competition and drug quality
* Intellectual property and brand integrity
* Brands are not just for multinationals
* Rule of law in defending brands
* Technological solutions to fake medicines
* Malysia's meditag scheme
* 2D and QR barcodes
* Dangers of government-mandated technology

And the paper's brief conclusions are:

The most fundamental cause of the spread of fake drugs in Asia has been the inability of manufacturers to protect the identity of their products. This is largely down to a lack of functioning rule of law, which makes it very difficult for manufacturers to protect their trademarks and brands via the civil and criminal courts – thereby handing a free rein to counterfeiters. The extra regulation called for by many commentators may well entrench the corrupt relationship between criminals and certain drug regulators. 

Strengthening the rule of law is a vital but long-term process. In the meantime, the private sector should take advantage of its innovative capacity to experiment with different technological solutions to brand infringement. It is well placed to lead this process, as it has unparalleled access to the entire pharmaceutical supply chain, as well as the clear financial incentive to protect its revenue. Governments should encourage this process, but refrain from mandating specific technologies or systems.

This new paper is another good reference for both government administrators and healthcare advocates in the country or abroad. Markets work. And though there are indeed market failures, there are also market solutions to such failures. Government simply have to focus on only one thing: rule of law. Private players and enterprises should do what they say they are supposed to do, and not offer counterfeits or substandard if not entirely useless products and services. If they don't, existing  governmentregulations and the penalty system should be slapped on them. No exception and no one can grant an exception. The law applies equally to unequal people.
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See also:
On IPR Abolition 12: Patent, Mini-Monopolies and Trademark, September 20, 2011
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013 
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013

EMHN 6: Fake Medicines in Asia

Our regional health group, the Emerging Markets Health Network, has produced a new paper, EMHN Briefing No. 1: Fake Medicines in Asia. Authored by Philip Stevens and Helmy Haja Mydin, the paper has argued that 

Fake medicines - which are either criminally motivated or the result of lax manufacturing standards - are a worsening problem, particularly in Asia. In some of poorer parts of the continent, up to a quarter of medicines fail quality tests. 

Evidence shows that cheap generic drugs are the most faked medicines in Asia, although there appears to be a particular problem with anti-malarial drugs in places such as Laos and Cambodia. China and India appear to be production hotspots. 

Producers and purveyors of fake medicines are exploiting the increasing globalisation of the pharmaceutical supply chain, poorly defined and  enforced civil and criminal laws, and a lack of an international definition
of what legally constitutes a fake medicine. 

Below is one of the graphics contained in the report. About 40 percent of the pharma crime incidents in 2011 occurred in Asia, followed by Latin America and Europe. I am just wondering why incidents in Africa constituted only three percent of the total. This could be a result of under-reporting of such incidents in Africa, or other factors.

The presence of counterfeit or substandard drugs is a problem here in the Philippines. One time, an anesthesiologist friend told me, a patient was lying on the operating table, surgeons were about to slice his tummy, so the anesthesiologists come first before them. The injected substance is supposed to make the patient feel numb and sleep, within minutes. But after giving the necessary dosage, the patient was still awake and numbness was light. He would be shouting in pain if the surgery would proceed. They realized that they got a fake or substandard anesthesia from one local pharma company that was purchased by the hospital. Right there and then, they scrambled to get another anesthesia as the surgery must proceed that day, otherwise the patient's condition will deteriorate.

So the doctors wrote tot he FDA in a confidential letter to complain about the product of this local company, and the latter knew about their letter, they must have a "mole" inside the agency. This company threatened to sue the doctors for criticizing their company. I offered to write about the story but the physicians were hesitant to give me full details as it is still under FDA investigation. 

The report did mention about the case of fake medicines in the Philippines.

How to solve this increasing problem? The usual solution by many groups is... more legislation, more government. The authors, and I agree with them, caution against this move. They wrote,

In countries where the rule of law is weak, the creation of new regulatory layers and tougher criminal sanctions may be counterproductive, as new powers for regulators create opportunities for bribery and corruption.   

To be effective, stiffer criminal penalties depend on an efficient and fair rule of law, something which does not exist in many Asian countries, particularly the poorer ones which have the greatest problem.

Stronger criminal penalties will likely drive activities further into the hands of organised criminal cells and will also likely result in further corruption, as the criminal cells seek to infiltrate law-enforcement agencies. The fake medicines trade is already showing worrying signs of mafiaisation, with organised crime groups such as Chinese triads and Mexican drug gangs all becoming implicated in the trade over the past decade. 

More effective solutions must address its fundamental cause, which revolve around the inability of legitimate manufacturers to protect the integrity of their brands. Legal reforms can go some way towards addressing these problems, as can innovative uses of technology. 

Protection of intellectual property rights (IPR) like patent and trademarks, enforcement of existing laws against such bad practices, or simply promulgate the rule of law, is the best thing that governments can do, not the creation of new and more regulations and laws.

Civil society groups concerned with or engaged in public health issues would better focus their energy more in battling this bigger problem of proliferating fake medicines, instead of circumventing or disrespecting IPR. As the report noted, the more faked medicines are the known branded generics more than the innovator drugs.

EMHN is a project of the Institute for Democracy and Economic Affairs (IDEAS) in Kuala Lumpur.
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See also:
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012
EMHN 3: Penang Workshop Report, September 10, 2012
EMHN 4: Free Trade, TPP and Public Health Protection, January 13, 2013
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013

Counterfeit Drugs 6: Online Drugs, US FDA and G8 on Fighting Fake Drugs

Counterfeit drugs are dangerous. A patient taking it may develop new diseases as the original illness is not cured and may have evolved into something more serious inside the patient's body.

Here are four recent articles in BusinessWorld by Reiner Gloor on the subject. Reiner comes from the federation of mostly innovator and multinational pharma companies, PHAP. So he knows this subject through and through. The four papers are:

1. Medicines online, June 15, 2012
2. What's in a fake drug, June 01, 2012
3. G8 commits to fight global counterfeiting, May 25, 2012
4. Keeping safe from counterfeit drugs, February 23, 2012

(1) Medicines online 

June 15, 2012

Medicine Cabinet -- Reiner W. Gloor

http://www.bworldonline.com/weekender/content.php?id=53465

In the Philippines, a global research marketing group disclosed that one in three Filipinos have access to the internet. The 2011 Nielsen report further said that five in 10 survey respondents have high-speed internet connections at home while others frequent cafés or use their mobile phones to surf the Web.

The rapid growth of internet penetration in the country is expected to result in huge benefits. However, a recent global meeting of world leaders called for the need to put up barriers to threats that could adversely affect a user’s health, among others. The so-called Camp David Declaration of the Group of Eight Nations recently pledged to protect public health and consumer safety by committing to exchange information on rogue internet pharmacy sites that sell counterfeit medical products. The Declaration came ahead of World Anit-Counterfeiting Day on June 7 that also focused on pharmaceutical counterfeiting.

On May 29, the US Food and Drug Administration (FDA) warned consumers and healthcare professionals about a counterfeit version of a medicine used for the treatment of attention deficit hyperactivity disorder (ADHD) and narcolepsy. The fake version of the controlled substance is being sold on the internet.

The FDA reported that preliminary lab tests showed that the counterfeit version of the 30 mg tablets contained the wrong active ingredients. The genuine drug contains four active ingredients. The fake medicine was found to have tramadol and acetaminophen, which are ingredients in medicines used to treat acute pain. The physical look of the fake product purchased from the internet is a giveaway. It did not come in its original package, the color and shape of the pils were irregular, and there were no markings on the tablets. There were also misspellings on the package such as “Singel” instead of “Single” and “Aspartrte” instead of “Aspartate.”

Developed countries have established a system of regulating legitimate online pharmacy sites. But even with safeguards, counterfeit medicines continue to be a threat to those who purchase drugs online.

Some copycat medicines sold on the internet fit the World Health Organization (WHO) description of “spurious, falsely labeled, falsified and counterfeit” medicines. Their ingredients are too strong or weak, have dangerous ingredients, are expired, and are not manufactured using safe standards. If taken by a patient these could have dire health consequences.

Furthermore, fake pharmacy sites sell medicines that are not appropriate for one’s condition while other sites place personal credit information at risk.

Counterfeit Drugs 5: Mongolia Case

My friend from UlanBaatar, Jargal Dambadarjaa, who is also the head of the Mongolians for Fair Taxes and Wise Spending wrote two months ago in his blog, Counterfeit Medications. Jargal wrote,

... We, the citizens, already know that we use counterfeit drugs poisonous for our health. Those who lost their loved ones because of using poisonous counterfeit drugs, knows even better.

Citizens of Mongolia want to know only about why your drugstores are not stopping to sell counterfeit drugs and what you, Mr. Minister, are doing to stop this kind of crime as the highest competent one in charge of population health. You said “Drug control is carried by the State Professional Inspection Agency, but originally the Health Ministry must take control of drugs”. Can Mongolian Government and state-run agencies control themselves? State controlling agencies are all already in entrenchment....

Even innocent young kids die on hospital beds because hospitals inject counterfeit injections. Wondering if You are in power to stop your subordinate who force patients to buy counterfeit drugs or not?

As Minister for Health, can you publicly announce how many companies are licensed to import medications in Mongolia, when did they get such licenses, on what grounds the licenses are suspended and how many of these licensed companies are linked to current and previous ministers, deputies and to those authorized to issue licenses? The citizens doubt that You can announce all these publicly....

Jargal did not cite figures of how what percentage of local drugs are estimated to be counterfeit. I think he also referred substandard drugs (those with correct ingredients but at insufficient amount or ratio) as counterfeit (those with zero or very little useful ingredients). But this is a minor point. The important one is that government health authorities, like Mongolia's Ministry of Health, should be made to explain, if not made to account, for the proliferation of counterfeit drugs.

I am happy that true to his being a free market crusader, Jargal pointed out this lackluster performance by an office of the Mongolian government, especially in protecting citizens' health via respecting property rights of important commodities like medicines. It is those violators of property rights like the manufacturers and traders of counterfeit drugs that endanger public health.

In the Philippines, the DOH and local players estimate that about 10 percent of drugs in the local market are counterfeit and/or substandard. Such drugs are more likely to be sold by ambulant drug vendors who carry drugs in their bags and walk from house to house selling their wares. Or drugs sold in some rural or small town pharmacies which have no clear sign that they are a drugstore, like in this photo.

In such situation, ordinary folks would easily be lured to buy counterfeit or substandard drugs because they are sold very cheaply.
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See also:
Counterfeit Drugs 1: On the Growing Fake Drugs Worldwide, December 21, 2007
Counterfeit Drugs 2: IPN Report on Fake Drugs in Poor Countries, May 29, 2009
Counterfeit Drugs 3: The SCLD, RA 8203, June 04, 2009
Counterfeit Drugs 4: Drugs Can Kill, December 17, 2010

Counterfeit Drugs 4: Drugs Can Kill

(Note: this is my article yesterday at thelobbyist.biz)

Drugs and medicines are among the highly emotional and political commodities in any society because they are associated with people’s health, People almost always look at drugs as compounds or substances that can heal or cure them from their illness. Thus, the endless political intrusion in drug pricing, trading and manufacturing in many countries.

But do many people realize that while drugs can heal, drugs can also kill?

There are many ways that drugs can kill, directly or indirectly.

One is when patients take counterfeit or substandard medicines. The counterfeits are those that do not contain the necessary ingredients and hence, cannot deliver the substances to control or kill a particular disease. Substandard drugs are those that contain the sufficient ingredients but at insufficient amount, usually below 80 percent of the required active pharmaceutical ingredients. When patients take these drugs, the virus, bacteria, or other disease molecules in their body either multiply or evolve to something more serious or more deadly. As days pass by, either the patient does not get well, or becomes even more sickly.

Two is when patients take the correct, non-fake, and manufactured at good standard drugs, but mis-stored and mis-handled, reducing their efficacy and safety. For instance, drugs that should be stored at 20 to 30 deg. C at all times, when brought to a place at 31 C or warmer for an extended period of time, will lose their full efficacy and safety. These drugs may deliver the same negative result as taking the fake or substandard ones.

Three is when there is irrational drug use. When patients self-medicate and take just any drugs that they heard from other people or saw in tv or billboard advertising, without professional supervision by a pharmacist or a physician. This case happens more often if drugs are given away for free or are sold cheaply. So patients may take the wrong drugs, or the right drugs but at the wrong dosage, and so on.

Four is when patients take expired drugs and hence, have almost zero efficacy and are unsafe. These drugs may be in some cabinet in the house for a long time, or given away for free by some local government units but the drugs are not well-supervised and monitored by professional pharmacists. There have been reports where useful drugs, expired drugs, cockroach, garbage and other dirty materials are mixed up in one room with no temperature control by some municipal or city or provincial pharmacies.

Five is when patients take drugs that are well-stored, well-handled, produced at good manufacturing practices, but were developed in other countries and continents. The various clinical trials have been conducted on people from the tropics or poorer countries in the temperate zones, the trials produced good results, but may have harmful results on patients in the northern hemisphere and richer countries. This is a tricky subject, and there is a long discussion about this at Deadly Medicines. I suggest that readers visit that article.

There should be other factors that can contribute to “drugs can kill” cases. That phrase actually came from a Filipino pharmacist friend who emphasized the importance of professional supervision by trained pharmacists and physicians when people are sick.

So the next time we are sick, we should not take just any drugs that we heard from friends or we saw on tv or newspaper or billboard ads. Perhaps we may not need drugs at all, perhaps we may need only more rest, more water, and less or zero undesirable food and drinks that can trigger some adverse health results in our body. Seeking health professionals’ advice and maintaining healthy lifestyle will produce better health outcome, than just taking any drugs, even if these drugs are priced very low or given away for free.
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See also:
Counterfeit Drugs 1: On the Growing Fake Drugs Worldwide, December 21, 2007
Counterfeit Drugs 2: IPN Report on Fake Drugs in Poor Countries, May 29, 2009
Counterfeit Drugs 3: The SCLD, RA 8203, June 04, 2009

Counterfeit Drugs 2: IPN Report on Fake Drugs in Poor Countries

Early this week, the International Policy Network (IPN, www.policynetwork.net),  a think tank based in London, released its new report, “Keeping it Real: Combating the spread of fake drugs in poor countries”. The 28 pages long paper is also co-sponsored by 18 international think tanks from 18 countries, including Minimal Government Thinkers.

The new Report has some figures that can be shocking to patients. Among these are the following. One, fake tuberculosis and malaria drugs alone are estimated to kill 700,000 people a year. That’s more than 1,900 deaths per day and equivalent to four fully laden jumbo jets crashing every day. Two, the WHO estimates that counterfeit drugs constitute up to 25 per cent of the total medicine supply in less developed countries (LDCs). Three, 68 percent of artesunate (anti-malaria) drugs in Laos, Myanmar Cambodia and Vietnam contain insufficient active ingredients, rendering them less effective, if not totally useless, in curing the sick. Four, about 75 percent of imported counterfeit drugs come from India, according to one European Commission estimate; and China is also a significant producer of counterfeit drugs.

These figures are significant because the new “Cheaper Medicines Law” (RA 9502) has a provision legalizing “parallel importation” of locally-patented medicines, and the premise of this provision is that cheaper medicines to be imported will come from India, home to some 22,000 small drug producers, many of whom are informal.

Since the foreign manufacturers (Indian, Chinese, others) are different from the wholesalers, importers and local retailers, i.e., they are not one and the same company but several different companies, tracing of who will be accountable if the imported drugs are counterfeit or substandard that can result to adverse effects to the patients, will be difficult.

One of the dangers of taking fake drugs is failure to provide effective treatment. The Report says “as fake drugs usually contain insufficient bioavailable active ingredient, a patient who believes he is addressing his disease is in fact going untreated. The disease thus progresses, often leading to death, especially in children and the elderly.”
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I attended this morning a round table discussion on "Quality issues in delivery of health care services: A Policy perspective” at the AIM Conference Center. The event was sponsored by the Health Policy Network (HPN) project of the Center for Legislative Development (http://hpn.cld.org) and was attended by mostly NGO leaders. A 30-page long paper entitled “Equity Issues in Access to Quality Health Care: A Policy Perspective” by the event organizer was also distributed to the participants.

Access for all to quality health care. This is a vision dreamed by almost all people in the world and is thus perfectly rationale. But resources are limited, the supply of well-trained doctors and other health professionals, the supply of good quality hospitals and clinics with sufficient laboratories and diagnostic instruments, the supply of safe and effective medicines and vaccines, are limited. While the demands for such health services and medicines are unlimited.

This is where the initial problem of access to quality health care arise. Add the fact that some people are too irresponsible to take good care of their own body and that of their own family, like those who drink and smoke heavily, take illegal drugs and fatty foods excessively, live in dirty places and do not observe personal hygiene, get into frequent fights, have sedentary and promiscuous lifestyle, etc.

Then add the fact that many governments think that medicines and health care are just like any other commodities like beer, hamburger and movies that must be slapped with multiple taxes and fees. That government corporations engaged in health insurance are accountable to the President and top politicians, and not to private citizens who were coerced to contribute to the health insurance funds.

One concept that was emphasized by the HPN is that for health care to be accessible, first it must be made available and second, it must be affordable. That is, available + affordable = accessible. While this may be correct in many cases, it does not mean that this will lead to “quality” health care which is the ultimate goal of all those public policies that people are talking about.

Take the case of those medicine warehouses managed and owned by some local government units (LGUs). During the MeTA forum last January in Manila, a World Bank-Philippines staff showed – complete with pictures – some of those medicine warehouses by big cities and provinces, where rats, garbage, useful and expired medicines are mixed in one room, often with no stable temperature control, some do not even have a thermometer to monitor room temperature.

Here, those medicines are available. They are more than affordable, they are distributed free. The poor patients in those LGUs therefore, have “access” to medicines. But do they get “quality” medicines that can cure them from their illness and diseases? Probably Yes, but probably No, and some may have contracted new diseases and complications if they happened to take substandard, expired or garbage-contaminated drugs.

It is not enough that there should be “more government budget for health care” as demanded by many sectors in society. Money can buy us subsidized or free medicines, safe and counterfeit alike, and money can also give us lazy and irresponsible government personnel who dispense expired and contaminated drugs.

More than bigger government taxation, regulation and intervention in health care, what is needed more is individual and parental responsibility for preventive health care, plus a competitive business environment where private health care providers and medicine producers can compete with each other in providing the safest and most reliable drugs and health care services to the people with varying health needs and varying financial resources.

Meanwhile, a physician friend thanked me for my paper on counterfeit drugs. She said that "there is a need to strengthen regulation and implement/add requirements to ensure product quality."

For me, more than regulation and government accountability, I want to see more corporate responsibility, that medicine producers and sellers should be directly accountable for all the products that they sell, no one else will be answerable should some things screw up later. Because counterfeit drugs is a very serious and criminal offense. A patient who waits for the medicine to cure him is actually waiting for his illness to mutate and evolve into a more dangerous disease because the medicine that he took was a fake or substandard.

And this is a big issue in parallel importation. If company A imported a cheap but countefeit medicine and the patient here died or developed a new diseases, that company should not say, "Oh I didn't know it was counterfeit, I only bought it from wholesaler X which he got from manufacturer Y in India. You should run after them, not me."

Whoever brought in the medicines, they alone should be accountable. If something bad happens to the patients who bought and took the drugs they sold, the importer and/or seller alone should go to the prison bars and pay indemnity to the affected patients, no one else. BFAD can only do so much, or it can even be possibly corrupted by some pernicious importers. Counterfeit or substandard drugs are sold dirt cheap because there was very little or zero research and innovation involved. By selling cheap, that alone will appeal to many poor patients, especially those who pinned their hopes in the "cheaper medicines law".

If corporate accountability is very clear and transparent, then I think counterfeiting can be drastically minimized. BFAD then will focus its limited resources and manpower on regulating those food and medicinal products produced and sold by enterprises which have hazy brand integrity.

* Counterfeit Drugs 1: On the Growing Fake Drugs Worldwide, December 21, 2007

China Watch 5: China's New Patent Law

Ronald Cass, Dean Emeritus of Boston University School of Law, and President of Cass and Associates, has a good article in the Wall Street Journal yesterday, "Patent Reform with Chinese Characteristics". The focus of his paper is China's recent Third Amendment to the patent law, which provides for, among others"

1. Encourage innovation in China and protect genuine inventiveness, such as increased protections for innovations created by cross-border research efforts.

2. Adoption of an “absolute novelty” standard, stop patent grants to Chinese applicants who were effectively “hijacking” inventions from abroad.

3. Provision for compulsory licensing (CL) by the State, without the approval of the patent holder, to anyone who is able to produce the product once given access to the patented technology.

Ron Cass noted that while the first two are positive development, the 3rd is not. And rightly so. China is among the major sources of counterfeit or substandard medicines that are exported to many countries. Copying and counterfeiting an existing product or technology is the mark of a non-innovator economy or company. A culture of innovation, of producing original products and new inventions, will help control if not erase this impression.

On the third reform, CL, the term "compulsory" already implies mandatory, coercive action by the State to confiscate or appropriate a license or any form of privately-owned property, physical or intellectual property. This immediately results in violation of private property rights and promulgation of the rule of law. These two principles, private property and rule of law, are the strongest mechanisms by which freedom by individuals and private enterprises are respected and innovation is encouraged.

There are some similarities between the Philippines' new "cheaper medicines law" and China's third amendment, in the conditions by which a CL can be issued by the state -- under national emergencies, anti-competitive behavior by the patent holder, etc. There could be an "Asian wave" of popularizing CL by Asian governments: Thailand, Philippines, China, also India? Other Asian countries may not be far behind.
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Meanwhile, I read yesterday in Business Mirror here in Manila, a news item, "Novartis picks RP as Asia research hub". This seems to be a brave move by Novartis considering that the "cheaper medicines law" is very bias against popular innovator drugs, and very lenient on generics drugs sale and manufacturing.

Novartis' research center will open by June this year, doing research and manufacturing for both generics and innovator drugs. Maybe their focus will be more on generics, considering the above discussions.

* See also: China Watch 4: Chinese Nationalism, Tibet, April 23, 2008

Counterfeit Drugs 1: On the Growing Fake Drugs Worldwide

In my free time, I join a few on-line discussions, and one of the blogs I like participating is that of the International Herald Tribune's. In "managing globalization" blog, one discussion is about free trade zones and counterfeit drugs. Below are the original post by the blog writer, then my comment, plus a counter-comment from another reader, then my rejoinder.

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http://blogs.iht.com/tribtalk/business/globalization/?p=609

A side effect of free trade zones

Posted by Daniel Altman in General, Rough trade

17 December 2007 7:38 am

How much regulation of trade is too much? It's a tough balance to strike. On the one hand, if you're too finicky about the provenance of the goods you import, then you risk being accused of protectionism. On the other hand, if you regulate too loosely, you may leave the door open for scams and fraudsters. The latter case, as Walt Bogdanich writes, is apparently what's happening with some counterfeit drugs.

Bogdanich reports that drug counterfeiters have found safe havens in free trade zones ranging from Hong Kong to Dubai. With regulations designed to restrict trade as little as possible, the zones offer the makers of fake drugs a chance to conceal their products' origins and move them around with little fuss. Even when the local regulators suspect what's going on, they aren't even sure if they have jurisdiction.

It seems like it should be possible to stop fake drugs without significantly impeding trade. But governments may worry that by rooting out fake drugs, they will also find numerous other violations of rules of origin, e.g. goods produced outside the free trade zone that are masquerading as local output. The solution may be for for importers like the United States to relax their rules-of-origin requirements in exchange for better monitoring of fake and dangerous products in free trade zones. Given the difficulty of moving global trade talks along, though, my expectations for any sort of quick, clean resolution are extremely low.

Comments:

Anything can possibly enter in free trade zones — useful/original drugs and counterfeit drugs. Food and drinks, medicines and poisons, fertilizers and bombs, and so on.

The presence of counterfeit drugs can never be an excuse to relax international trade, or in the case of Hong Kong and Dubai, to undertake unilateral trade liberalization.

Brand or original manufacturers of medicines can check the origin of drugs that were purportedly "manufactured" by them from some countries. After all, when counterfeit drugs purportedly from GSK or Pfizer or other big pharma companies will be detected, it will be those pharma companies' image (and their sales and profits) that will be adversely affected. Corporate screening mechanisms will help minimize if not stop trading of counterfeit drugs around the world. But free trade must continue to march forward. Protectionists simply do not appreciate the "net gains" in trade - winners are plentier than losers. Otherwise, people will not trade voluntarily with each other.

Posted by: Nonoy Oplas — 18 December 2007

Nonoy - There was a lengthy article just a day or two ago in IHT about a very widespread problem within and between free trade zones, in which counterfeit drug makers seem to easily evade detection amid massive confusion over jurisdiction and regulation of international commerce. Please clarify how the big pharmaceuticals could succeed in catching the counterfeiters or in screening the illicit drugs when governments have so far been unable or unwilling to do so. You're probably right that much tighter inventory control measures would help, but such measures would be expensive and probably would defeat the purpose of importing cheaper drugs.

I generally support the concept of free trade, but Mr. Brinkman is right that the American government has negotiated very poorly for American businesses in its so-called "free trade" deals. As far as I know, America's trade deficits have widened with every country involved in such agreements, although I haven't checked statistics since the dollar's sharpest and most recent declines. Even with the falling dollar, I don't believe these agreements will be in America's interests for a long, long time. Perhaps someday when developing nations have narrowed the gaps between their own living standards and America's, the economic benefits might be more reciprocal. I'm not holding my breath, and until that day comes, the principal beneficiaries of these agreements will be people at the top of corporate America, and of course, their trading partners.

(From Japan)

Posted by: Gary Henscheid — 19 December 2007 7:32 am

Hi Gary, the issue of counterfeit medicines is also a problem here in the Philippines, partly because of the government's "parallel importation" policy I think. Cheaper medicines from India and China, same brand from same manufacturers, are imported into the country. Turns out that a number of those "same drugs" were counterfeit, very cheap, yes, but ineffective if not dangerous to the patients. A friend I talked to who works for Pfizer says some of those drugs purportedly manufactured by Pfizer India, imported into the Philippines by the government's international trading corporation or some of its accredited importers, turn out not to come from Pfizer India, but by some of those pharma companies in India that produce fake drugs. And the government has no capacity to detect such fake products, or perhaps the government does not care, all it wants is to sell cheaper medicines perhaps at all cost.

That is why I suggested that the pharma companies based in the importing countries be involved just to check if indeed those cheap but counterfeit medicines indeed came from their own manufacturing plants abroad.

But what escapes from many debates on counterfeit and expensive drugs, are taxation. Medicines are not taxed in India and Pakistan, for instance, one reason why they can produce cheaper drugs. Here in the Philippines, there are at least 2 taxes slapped on medicines — import tax and value added tax (12%). Plus income and other taxes on companies selling drugs, wholesalers and retailers. So when the Philippine (or other) government complains that local drugs are expensive compared to those available abroad, it blames somebody else, not itself.

Abolition of import tax, and free trade, as in free — zero tariffs and non-tariff barriers –and have a full range of competition among pharma companies and retailers, should help reduce drug prices. Then no need for "parallel importation" that risks entry of counterfeit drugs.

Posted by: Nonoy Oplas, Philippines — 21 December 2007