Counterfeit Drugs and Their Smuggling

Alongside the dynamic pharmaceutical drug market in Israel there is a parallel market booming with equal vigor—the manufacture and trading in counterfeit drugs i.e. non-original drugs manufactured in non-pharmaceutical conditions. This phenomenon is not unique to Israel, and many countries are attempting to combat its effects with varying degrees of success.

Pharmaceutical crime is growing steadily around the world, hand in hand with the pharma industry itself. These criminals are not small fry; they are international organizations dedicated to the manufacture, theft and illegal trade of drugs masquerading as legitimate medical products. Beyond the counterfeiting of the drugs themselves, these criminals also fraudulently copy drugs' packaging, divert drugs from their original target countries (to markets where the dealers' profits are higher), and sell drugs illegally to pharmacies and consumers through newspaper ads and the Internet.

There is currently no precise data on the extent of the counterfeit drug distribution around the world, and estimates range between one percent of all drugs sold in developed countries to more than ten percent in developing countries. A more pessimistic estimate is that every fourth drug sold in developing countries is likely to be counterfeit. Yet another assessment suggests that as much as 50-60% of drugs in the third world are counterfeit. The leading countries in sale of counterfeit drugs are China, India, Russia and the United Arab Emirates. Three years ago, the U.S. Food and Drug Administration estimated that annual sales of counterfeit drugs worldwide reached about 3.5 billion dollars. Another estimate, published recently in the U.S., warns that if no concrete action is taken to combat counterfeit activities, annual sales are forecasted to hit a staggering 75 billion dollars.

Pharmaceutical Crime in Israel

Several years ago, the Institute of Drug Safety, an international organization, published a report which ranks Israel tenth in the world for the number of instances of counterfeit drugs identified by enforcement bodies (other sources estimate that Israel is in eighth place.) Israel's "neighbors" in the rankings are hardly complimentary – Russia, China, Uzbekistan, Ukraine, Brazil and Peru. When publishing the report, its authors were quick to note that the findings do not necessarily reflect the actual extent of crime.

The dangers stemming from counterfeit drugs are many: first and foremost, they pose a danger to patients' immediate health and may even result in death (according to one assessment, between 500,000 to one million people die every year from consuming counterfeit drugs). Beyond the threat to consumers, counterfeit drugs damage manufactures' reputation, hurt sales, and chip away at consumer trust, resulting in considerable economic harm.

What Is Being Counterfeited?

Original drugs, generic drugs (Viagra, Cialis, Levitra, weight-loss drugs), steroids, anti-carcinogens, antibiotics, hypertension drugs, and others are being counterfeited.

It appears that the absence of appropriate legislation, ridiculously inadequate punishment, non-enforcement of the law, parallel imports, the ability to purchase drugs on the Internet and a long, unsupervised supply chain create comfortable conditions for the counterfeit drug industry. Israel has its own unique characteristics in this regard as natural crossroads between the main counterfeit-producing countries in the East to the destination markets in the West, as well as its proximity to the Palestinian Authority (a major consumer of counterfeit drugs).

Drug manufacturers in Israel estimate that last year alone more than one million counterfeit and stolen drugs, valued at about 120 million shekels, were sold in Israel. However, the officials who deal with this matter—the police and the Ministries of Health and Justice—have no accurate data on the extent of the problem. Nevertheless, anyone even tangentially connected to the issue recognizes the existence of a deep-seated problem in Israel. According to public health officials, the problem and its impact are only slated to grow, and the need for proper enforcement is crucial.

The growing pressure of various organizations such as the Permanent Forum on International Pharmaceutical Crime (PFIPC), IMPACT—an international task force fighting illegal trade in medical products, which operates under the aegis of the World Health Organization (WHO), and Interpol and drug companies led to the establishment of the Ministry of Health's Pharmaceutical Crime Fighting Department in 2007. This unit, which answers directly to the Ministry of Health, deals with pharmaceutical crime, thefts and sale of the stolen drugs, counterfeit cosmetics, the use of drugs and chemical components to manufacture dangerous drugs, the use of drugs for purposes other than those indicated on the license, the import of anabolic steroids, and also trading in and marketing counterfeit veterinary drugs.

Despite the good will of the members of this unit, its operation is under-budgeted and under-regulated. The Knesset Information and Research Center prepared a special report on the subject which investigated the reasons behind the unit's downsize despite its obvious importance. According to the results of the report, the Ministry of Finance allotted the Ministry of Health 140 inspector positions (70 in 2011 and another 70 in 2012), and the decision not to assign said positions was the prerogative of the Ministry of Health. The Ministry of Finances added in the interceding three years, the Ministry of Health has not requested any discussion of the matter in budget hearings.

According to the Knesset Report, an effective solution demands a holistic approach with the participation of all the enforcement bodies involved in this war. For example, the drugs unit of the Customs Authority notes that requires assistance every day, both in the central unit and at the border crossings, but because the pharmaceutical unit is so small, it is unable to meet those needs. According to UN regulations, the Customs Authority is required to monitor 23 substances that could be used to manufacture drugs. However, without consultation from the pharmaceutical unit, Customs officials are unable to properly identify the substances.

We must state briefly here that without revised budgets and regulatory procedures for pharmaceutical unit at the Ministry of Health, as well as added manpower for the Customs Authority and the police, and increased consumer awareness of the dangers involved in using counterfeit drugs, these hazardous phenomena cannot be fought effectively. Legislative changes, harsher punishment, closer examination of the supply chain, and the adoption of new technologies for the monitoring, supervision, control, and identification of counterfeit drugs will also be required to make a dent in this booming industry.