Impact of Counterfeits on Parallel Trade Pharmaceutical Distribution: Issues, initiatives and insights for supply chain integrity

Date: September 22, 2009
Pages: 148
US$ 3,835.00
Publisher: Business Insights
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Hard Copy Mail Delivery, CD-ROM Mail Delivery

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Impact of Counterfeits on Parallel Trade  Pharmaceutical Distribution: Issues, initiatives and insights for supply chain integrity

Parallel trade is a legitimate method of pharmaceutical import and export within the EU zone. Although previously recognized in North America as illegal, cross-border reimportation is now permitted following legislation allowing drugs to be imported into the US from Canada. However, counterfeit drugs have been shown to be increasingly introduced into the global supply chain, which threatens patient safety, ethical pharmaceutical sales, and undermines the integrity of the distribution channels. Parallel trade is regarded as a major contributor to counterfeiting and this is explored in the report.

Furthermore, the report provides a comprehensive account of the route of market access for counterfeits and shows how companies and governments in Europe and North America are tackling the problem strategically. It also updates the reader on the latest parallel trade and anti-counterfeiting initiatives adopted globally and whether current efforts to stem the practice have been successful or not. The report discusses further action plans and recommends which strategies are likely to best curtail the practice.

This report also evaluates the extent of parallel trade in Europe and counterfeiting globally with an analysis of major counterfeit-producing countries and the anti-counterfeiting efforts currently in place.

Key findings

  • Parallel trade is an expanding global sector of industry now that reimportation is permitted in the USA. European parallel trade is set to grow based on accession countries providing new markets in which to trade multiple products in multiple markets.
  • Counterfeiting is prevalent in higher priced drug markets of developed nations and also in lower priced markets of essential drugs in developing countries.
  • The drug distribution routes are the market access points for counterfeits. Parallel traded and non-parallel traded routes are vulnerable to counterfeiting.
  • Anti-counterfeiting technologies are being deployed in westernised countries but there are issues that need to be resolved before widespread implementation such as standardization of protocols, technology reliability and validity, and stakeholder funding.

  • Key features of this report

  • Analysis of parallel trade and counterfeiting in European Union, North America, Asia and Africa. Country-by-country analysis including France, Germany, UK, USA, Spain, Netherlands, USA, Canada, China, India, and other countries.
  • Evaluation of the drivers behind parallel trade and counterfeiting in context of drug distribution.
  • Coverage of recent regulatory and legislation changes relative to parallel trade and counterfeiting in Europe and North America.

  • Use this report to

  • Understand how the international markets are affected by parallel trade and counterfeiting.
  • Information on the scope of parallel trade and counterfeiting in key European territories and how importation has affected pricing in North America.
  • Evaluate the impact of importation on the US market and how counterfeits can penetrate the drug supply-distribution chain.
  • Shows the routes of market access for counterfeits and why they are increasingly being produced.

  • Discover

  • What is the process of parallel trade in Europe and North America and why is it associated with counterfeiting?
  • What is the extent of parallel trade and reimportation in Europe and North America?
  • How has recent regulation and legislation changed the parallel trade sector?
  • What is the impact of online pharmacies on parallel trade and counterfeiting?
  • How are countries dealing with counterfeiting and what efforts have been implemented?

  • Impact of Counterfeits on Parallel Trade &
    Pharmaceutical Distribution
    Executive summary 10
    PT in Europe: A legitimate mechanism for redistribution 10
    PT in North America: A cross-border growth industry 11
    Counterfeits and the global supply-distribution chain 12
    Anti-counterfeiting strategies: current perspectives 13
    Global initiatives to combat counterfeiting 14


    Summary 16
    Introduction 17
    The parallel trade process 18
    Driving factors for profitable parallel trade 20
    Drug price differential 20
    Exchange rate fluctuations 21
    Government price controls 22
    Pharmacoeconomics as a price control measure 24
    Multiple importation markets driving profit margins 24
    Supportive legal and regulatory free trade framework 25
    Selection criteria for parallel-traded drugs 26
    Disease incidence and type 26
    Drug formulation 26
    Transport and distribution 27
    Advantages and disadvantages of parallel trade 29
    Key advantages of parallel trade 29
    Key disadvantages of parallel trade 31
    Quality and safety concerns: the risk of counterfeiting 32
    Parallel traders: building bridges for portfolio services 34
    Extent of parallel trade in European markets 35
    Denmark 37
    Germany 38
    France 38
    Netherlands 39
    Norway 39
    Spain 39
    United Kingdom 41
    Direct-to-pharmacy distribution 42
    Pharmaceutical Price Regulation Scheme 2009 43
    Recent legislation on parallel trade in Europe 44
    Importance of stakeholder support 46


    Summary 48
    Pharmaceutical importation in the US 49
    The legal framework: past and present 49
    2003 Medicare reform bill and Canadian imports 50
    Recent legislature on importation 53
    Scope of parallel importation in the US 54
    Online pharmacies and parallel distribution 56
    Unapproved imports in Canada 61


    Summary 64
    Introduction 65
    The extent of counterfeiting – a global analysis 66
    Factors driving counterfeit trade 67
    Counterfeits in developed countries: recent evidence 70
    European Union 70
    United Kingdom 71
    France 72
    Germany 73
    Italy 73
    Netherlands 73
    Recent enforcement action in the EU 74
    North America 76
    USA 76
    Canada 77
    Counterfeits in developing countries 78
    Counterfeiting in Africa, Asia, Middle East, and South America 79
    Africa 81
    Middle East 82
    Asia 82
    Types of drugs targeted by counterfeiters 83
    Counterfeits and the pharmaceutical distribution chain 86
    Access points for counterfeits 86
    Repackaging, wholesaling, and counterfeiting: recent issues 89
    Repackaging and counterfeiting 89
    Wholesaling and counterfeiting 90
    Online pharmacies 90
    Unauthorized Internet pharmacies and counterfeits 91
    Major producers of counterfeit drugs: China and India 94
    China 95
    Domestic counterfeiting: recent evidence 96
    Contract manufacturing and the risk of counterfeiting 97
    The counterfeit route: going West 99
    India 99
    Factors contributing to copycat & counterfeiting activities 100
    The legitimate distribution pathway: problems going West 102


    Summary 104
    Anti-counterfeiting strategies 105
    Technical strategies 105
    Non-technical strategies 105
    Non-technical strategies and counterfeiting: current initiatives 106
    Anti-counterfeiting technologies in developed countries 107
    Current focus: track-and-trace technologies & mass serialization 109
    European Union 109
    United States 110
    Mass serialization: main technology types 112
    Barcodes 112
    Radio frequency identification 112
    Radio frequency identification in developed countries: recent activities 116
    Chemical authentication technologies in developed countries: recent activities and initiatives 117
    New packaging technologies 119
    Anti-counterfeiting technologies in developing countries 120
    Radio frequency identification in developing countries: recent activities 120


    Summary 122
    International anti-counterfeiting initiatives 123
    Government efforts 123
    European Commission 123
    United States Department of Health & Human Services 126
    World Health Organization 127
    INTERPOL 129
    Non-government efforts 129
    UNICEF 129
    Medecins Sans Frontières 130
    UNITAID 130
    Anti-counterfeiting initiatives in Asia 131
    India 131
    China 132
    Taiwan 134
    Pharmaceutical trade and industry organizations 135
    Pharmaceutical Security Institute (PSI) 136
    International Federation of Pharmaceutical Manufacturers Associations
    (IFPMA) 136
    European Federation of Pharmaceutical Manufacturers Associations (EFPIA) 137
    The European Alliance for Access to Safe Medicines (EAASM) 139
    New initiative: Rx-360 139
    Stockholm Network 140
    Considerations for parallel trade and counterfeiting 140
    Key points and recommendations 140


    Primary research methodology 143
    References 143
    Websites 144
    Glossary 145
    Index 147


    Figure 1.1: Generalized parallel trade process for pharmaceuticals in Europe 19
    Figure 1.2: Major factors contributing to parallel trade in the EU 28
    Figure 1.3: Advantages & disadvantages of parallel trade 32
    Figure 1.4: Estimated market penetration of parallel imports by value in key European destinations (%), 2001 & 2009 37
    Figure 2.5: Key opposing issues on parallel importation from Canada 53
    Figure 2.6: Prescription drugs typically imported into the US 56
    Figure 2.7: Typical savings offered by a Canadian online pharmacy, 2009 58
    Figure 2.8: Lowest price guarantee offered by Canadian online pharmacy, 2009 59
    Figure 3.9: Therapy areas with largest increase in incidents y-o-y (%), 2008 67
    Figure 3.10: Key factors driving counterfeiting in pharmaceuticals 69
    Figure 3.11: Increasing trend of counterfeiting, illegal diversion and theft of pharmaceuticals, 2002- 2008 70
    Figure 3.12: Counterfeit access points in the drug distribution chain 87
    Figure 4.13: Non-technical and technical anti-counterfeiting strategies used in the drug supply and distribution chain 107
    Figure 4.14: Advantages & disadvantages of RFID & EPC anti-counterfeiting technologies 115


    Table 1.1: Common pharmaceutical pricing controls 23
    Table 1.2: European stakeholder support initiatives 46
    Table 2.3: Key Provisions of the H.R.1 [108th] Medicare Prescription Drug, 51
    Table 2.4: Key Provisions of the H.R.1 [108th] Medicare Prescription Drug, 52
    Table 2.5: Popular online pharmacy brands, 2009 57
    Table 2.6: Popular full service online pharmacies in the US 60
    Table 2.7: Drug price savings offered by Canadian pharmacies in 2009 61
    Table 3.8: Results of IMPACT-INTERPOL anti-counterfeit initiatives in developing countries 80
    Table 3.9: Lifestyle drugs potentially targeted by counterfeiters 84
    Table 3.10: Products susceptible to counterfeits in the US, 2004 85
    Table 3.11: Authorized online pharmacies in the US 92
    Table 4.12: Anti-counterfeiting technology types 109
    Table 5.13: Key European Commission anti-counterfeiting proposals, 2008 124
    Table 5.14: World Health Organization guidelines to combat drug counterfeiting 128
    Table 5.15: EFPIA policy initiatives on parallel trade to maintain supply integrity 138

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