This is an excerpt of the Executive Summary of a lengthy PRI Issue Brief which is accessible in its entirety here:
Counterfeit drugs may look like real medicines, but they are not. These fakes do not contain enough, or any, of a prescribed medicine's active ingredient. Often, they contain harmful contaminants, which have included cement, gypsum, talcum powder, baking soda, sawdust, industrial solvents, yellow highway paint, and spurious pharmaceuticals. In addition to threatening the health of patients, these illegal medicines also impose large costs on the economy. While difficult to quantify, studies that have attempted to measure this large illegal market estimate that total global sales are between $200 billion and $431 billion annually.
From a health perspective, counterfeit drugs deny patients safe and effective treatments, which is particularly dangerous for patients with life-threatening diseases. Counterfeit drugs expose patients to potentially lethal contaminants, unprescribed drugs to which they may be allergic, or unprescribed drugs that will have adverse interactions with other medicines they may be taking. They may also increase public health risks by failing to effectively treat contagious diseases like Covid-19 or tuberculosis, or exacerbating public health crises like the problem of anti-microbial resistance (AMR).
Counterfeit drugs reduce global pharmaceutical industry revenue, which, in turn, reduces the resources the global pharmaceutical industry can devote to R&D efforts. Since the industry invests approximately 17 percent of its gross revenues in new R&D, the revenues lost due to counterfeiting reduces annual R&D expenditures by between $17 billion and $73 billion. Based on the average cost to develop a new drug of $2.6 billion, every year these revenues are lost translates into the loss of between six and 28 new medicines, a detriment to both industry and public health.
From an economic impact perspective, and based on U.S. firms' share of global revenues, the U.S. biopharmaceutical industry is annually losing between $37.6 billion and $162.1 billion in revenues. Based on the industry's economic multiplier, these lost revenues reduce total U.S. economic output by between $82.0 billion and $353.3 billion, and have reduced the total number of jobs in the U.S. by between 57,500 and 247,800.
Reducing the economic and public health damage from counterfeit drug sales should be a top policy priority. The first priority should be to stop proposing policies that would make the counterfeit drug problem worse. These include proposals to allow drug importation or impose price controls on drugs. Allowing drug importation opens the drug supply chain to a wide number of less secure sources, usually Internet based, from which it is easier for counterfeit drugs to infiltrate. Price controls, wherever they have been implemented, lead to drug shortages that will increase the incentive to purchase drugs from alternative, less secure, sources where counterfeit drugs are often sold.
However, simply stopping the introduction of policies that will worsen the counterfeit drug problem is insufficient. Government policies need to discourage the supply of, and demand for, counterfeit products by increasing the costs to counterfeiters, securing the drug supply chain, and educating the public. Specific policy changes should:
• Increase the punishment for selling counterfeit medicines;
• Boost enforcement efforts in order to increase the probability that counterfeiters will be caught;
• Improve the data- and information-sharing across government departments including the FDA, Customs and Border Patrol, Department of Homeland Security, and United States Postal Service;
• Adopt cutting-edge track-and-trace systems that would make it more difficult to introduce counterfeit drugs into the U.S. market;
• Implement consumer education programs that explain the risks from using counterfeit drugs, the signs that a drug could be a counterfeit, and provide information regarding where consumers can find reputable Internet pharmacies; and,
• Implement provider and pharmacist education programs on the consequences from counterfeit medications.