How to combat fake drugs without harming the poor

Roger Bate Resident Scholar, AEI
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Last week, the Prescription Drug User Fee Act (PDUFA) passed reauthorization in the Senate, but not before an amendment offered by Senator John McCain (R-AZ) lost quite narrowly (43-54). McCain wanted to allow Americans with poor insurance coverage to personally import medicines from credentialed foreign pharmacies — a move opposed by U.S. pharmacists and drug makers. Hundreds of thousands of underinsured Americans currently buy medicine online from overseas sellers, sometimes at significant risk. The McCain amendment would have helped them buy medicine more safely.

McCain expected the amendment to flounder because of drug industry influence in the Senate. “I’m proud that many of our country’s drugs originate in New Jersey,” said Senator Frank Lautenberg (D-NJ). “It would be wrong to undercut the work of these trained New Jerseyans only to put Americans in danger.” Other senators from states with drug industry interests also voted down the amendment. Democrats like Charles Schumer (D-NY) had supported personal importation amendments in the past, as did Barack Obama when he was a senator. But in exchange for the pharmaceutical industry’s support of Obamacare, Democrats stopped opposing the industry’s positions.

Michael Enzi (R-WY), one of the promoters of PDUFA reauthorization, was obviously annoyed by the delay caused by McCain’s amendment, and was well-schooled by the pharmaceutical industry in trotting out the usual anti-importation arguments to The Washington Times: “The problem is not knowing where the drugs really come from that go through Canada to the United States.”

It seems unlikely that Senators Lautenberg, Enzi or Schumer actually read Senator McCain’s amendment, because its whole point was to ensure, as far as possible, that the drugs only enter the U.S. via licensed foreign Internet pharmacies and are as safe as possible. In my own research, which was cited by Senators McCain and Olympia Snowe (R-ME) in last week’s amendment debate, none of the 210 drug samples bought from credentialed pharmacies failed authentication. Of course that doesn’t mean all drugs from all of these sites will be authentic, but I have no evidence of any that are suspect.

To be fair to Mr. Enzi, he has a point: We do not know where many drugs coming into the U.S. actually come from — but that problem affects a large number of pharmaceutical providers, not just Canadian Internet pharmacies.

As I describe in my book Phake, the ultimate source of many drug ingredients and finished drugs coming into the U.S. is uncertain. After analyzing audits of Chinese producers, I concluded that more than one-third of the chemicals coming from Chinese drug suppliers to Western companies come from unknown sources.

The most recent example of a fake medicine coming into the U.S. was not sold over the Internet; rather, it came wholesale from Canada. In March, fakes of Avastin, which probably originated in the Middle East, went to traders in Denmark, Britain and Canada, before arriving in clinics in California, Illinois and Texas. At least one patient in Corpus Christi, Texas, actually took the fake.

Officials in both Canada and the U.S. are still working through who is to be charged for what offenses in relation to the importation of the potentially dangerous products. Some U.S. doctors could lose their licenses or even face criminal charges for buying the fakes.

The North American trader of the fake Avastin is also the brother-in-law of the CEO of one of Canada’s largest Internet pharmacies, Canadadrugs.com. While the Internet drug business is entirely separate from the wholesale business, if Canadadrugs’ CEO condoned or benefited from the trade, as informed sources indicate to me he did, then the Internet business will be the focus of the attention, because Canadadrugs is a well-known name. That would be unfortunate because the real problem is not Canadian Internet pharmacies but the international wholesale drug business.

As long as Middle Eastern, Chinese and Indian businessmen can make fake drugs without much likelihood of discovery or prosecution, someone will always work out ways to get those drugs into the U.S. supply chain. Current U.S. government approaches to this problem focus on increasing intellectual property enforcement and having more FDA inspectors to oversee foreign production plants. FDA inspections will spot some problems with products exported to the U.S. IP law is also valuable, but pushing IP law aggressively, as U.S. industry and government do, creates politically influential commercial opponents in nations we need as allies in the fight against dangerous drugs.

What the U.S. government should be pushing for, but isn’t, is better international public health law against fake drugs. There are treaties against fake currency and against narcotics, but not against fake drugs. This should change. A treaty against fake drugs would help countries currently awash in fake drugs to create laws based on public health considerations and not intellectual property rights. Right now, the rest of the world does not much care if it exports dangerous drugs to the U.S., because the U.S. pushes them to enforce intellectual property laws even when it might be counterproductive for them to do so. If we want safer supply chains, and fewer Avastin-type problems, we will have to help other countries improve their domestic public health laws.

Roger Bate is a resident scholar at the American Enterprise Institute and the author of Phake: The Deadly World of Falsified and Substandard Medicines.