Counterfeit pharmaceuticals are a global problem and pose a significant threat to consumers and brand owners alike.
In 2021, Operation Pangea, an international initiative to target illegal trade in medical products coordinated by INTERPOL, resulted in seizures of illicit medical products with an estimated value of around USD 23,414,483. Antibiotics, lifestyle drugs and painkillers are the types of medicines often targeted by counterfeiters, but worldwide customs authorities have also seized counterfeit treatments for malaria, diabetes, epilepsy, heart diseases, allergies, HIV/AIDS and cancer, to name just a few.
These counterfeit medicines put consumers’ health and lives at risk. They may be medicines which have been altered, stored incorrectly, or have passed their expiry date, or they could be entirely fake containing inactive or even dangerous substances.
This blog post examines where counterfeit medicines are coming from, where they are going, and one of the major tools at your disposal to stop it – recording your IP, particularly trade marks, with Customs internationally.
Producing economies
In 2020, the EU Intellectual Property Office (EUIPO) and Organisation for Economic Co-operation and Development (OECD) collaborated on a report on Trade in Counterfeit Pharmaceutical Products which identified key provenance economies for pharmaceutical counterfeits.
India and China were identified as the main origin sources. According to the report, India accounted for around 53% and China around 30% of the total seized value of counterfeit medicines worldwide in 2016.
Other jurisdictions identified include Hong Kong, the United Arab Emirates, Singapore, Egypt and the Philippines.
Destination countries
Counterfeit medicine and healthcare products are sold worldwide, but are commonly found in low and middle-income countries. A lot of counterfeits exported from China end up in Thailand, Vietnam, Cambodia, Malaysia, and Myanmar, for example.
There is also an obvious market for counterfeit pharmaceuticals in the UK, the EU and the US, as these countries are some of the biggest importers of pharmaceuticals. Last month (August 2023) saw one of the biggest single seizures of prescription medications within the UK as part of the Operation Vulcan police investigation, which has already seen an estimated £2 million worth of prescription drugs seized.
It is also worth bearing in mind that, if your product is or is likely to be popular in a particular market, you are more likely to see counterfeits there, as counterfeiters will see a great opportunity to capitalise on your product’s success. For example, an acne treatment may be more likely to be counterfeited in the Asia Pacific region, which is the largest market geographically for these goods according to some reports (see e.g. www.precedenceresearch.com/acne-treatment-market).
Transit points
Rather than being sent direct from source to destination, counterfeits are often sent via other territories. This can mask the provenance of the goods, making it much harder, or even impossible, to trace who is making them. It may also give the appearance that they are more credible or authentic if they appear to the end consumer to have come from the jurisdiction that the genuine goods originate from, or at least a jurisdiction known to be one of the bigger producers of genuine pharmaceuticals.
An example given in the EUIPO / OECD report is a case where seven counterfeit pharmaceutical products were seized in May 2006 by UK Customs; investigations eventually revealed a complex supply chain of fake drugs that ran from China through Hong Kong, the United Arab Emirates, the UK, and the Bahamas, ultimately to be sold online to customers as Canadian medicines. In cases such as this, it can be complex to determine where enforcement action can be taken, and against whom. It may be necessary to take action in multiple jurisdictions.
The report identifies Iran, Switzerland and the United States as specific transit points for fake pharmaceuticals shipped to the European Union, with Hong Kong and the United Arab Emirates being main transit points worldwide.
Customs recordals
Seizing counterfeit products at the border is one of the most effective ways of preventing counterfeit goods from entering circulation, where they can be more difficult and expensive to deal with. Recording your trade marks, and other IP rights, with Customs around the world enables authorities to detect, seize and ultimately destroy fake medicines, protecting both consumers and the reputation of your brand.
However, many pharmaceutical brand owners won’t have the budget to record their IP rights with custom authorities in every country in which they are registered and will instead need to think more strategically.
Any key destination countries identified for your products, particularly the most important to you commercially, are a good starting point.
Whilst it is likely to be sensible to record IP rights with Customs in key producing economies, it is important to bear in mind that not all authorities routinely screen exports. For example, whilst Chinese Customs will detain goods suspected of infringing recorded IP rights, be it at export or import, Indian Customs can only prevent goods being exported where advance information about suspected counterfeits is provided by the rights holder.
In some countries, like the UK and EU, counterfeits in transit can often be stopped even if their final destination is elsewhere (although the goods will be released if the holder provides evidence that the trade mark owner is not entitled to prohibit the placing of the goods on the market in the final destination country).
Our blog post How to mobilize your IP rights in the fight against counterfeit goods: Customs Application for Action details the process and requirements for recording your trade marks with customs authorities in the UK and EU. In many other jurisdictions, there is a similar process available.
In others, it is necessary to deal with local authorities in a slightly different way. For example, in Venezuela there is no central office for the registration of trade marks with Customs, although it is possible to present documents before the National Customs Administration and the main customs offices in the country, so that the authorities know who the rights holders are and who to report to if there is any seizure of allegedly false merchandise.
Training of local authorities
Once IP rights have been recorded with Customs, one highly effective additional tool available in some jurisdictions, such as Brazil and Colombia, is the ability to offer training to enforcement officers, to make sure they have detailed information about the genuine brand and how to identify counterfeits.
Your IP advisors can help you build a customs recordal and enforcement strategy that is tailored to your brand and the particular challenges you are facing.
