B2B trade boards: a key link in the counterfeit trade?

It is well-established that many medicines bought over the Internet are fake, but less attention has been paid to the role of online business-to-business (B2B) bulletin boards in the counterfeit drugs trade.

Trade boards such as alibaba.com and ec21.com are intended for legitimate trade in goods and materials but have been hijacked by organisations peddling illicit supplies of bulk pharmaceuticals, active ingredients and packaging components.

Browsing around the pharmaceutical chemicals section of alibaba.com whilst researching this article uncovered nearly 50,000 entries from around 400 sellers, selling a huge range of active pharmaceutical ingredients, intermediates and other raw materials.

Other sections feature the usual crop of highly-counterfeited drugs as loose tablets and in bottles, but also included tablet presses and encapsulation machines and even quantities of packaging and package inserts for pharmaceutical products.

According to OpSec, a security technology provider that has just completed a two-year investigation into the practice, there has been a 30 per cent increase in online B2B trade boards listing bulk pharmaceutical products over that period.

OpSec’s investigation found listings for zolpidem tartrate - the active pharmaceutical ingredient (API) for a widely-used treatment for insomnia - advertised in 25 kilogram drum quantities.  A single drum could be used to produce 2.3 million sleep aid pills with a retail value of $32m.

Jeffrey Unger, president of Brand Protection at OpSec Security, said: “Unfortunately, the easy anonymity, lax regulations, and global reach of the Internet allow counterfeit drugs to enter into the legitimate supply chain.”

OpSec’s own investigations revealed that none of the traders included pedigree information, even when offering to ship to the USA where the Food and Drug Administration (FDA) requires pedigree tracking by each link in the distribution chain.

The availability of bulk pharmaceuticals on B2B trade boards, which are unregulated environments, provides a global sourcing platform for buyers and intermediaries in the pharmaceutical supply chain.

While some of this trade may be legitimate, there are often deals on offer from organisations which hide or disguise their identity which is a strong indicator of illegality.

Julie Cotterill, director of brand security at OpSec Security in the UK, has been concerned about the role of B2B boards in the counterfeit drugs trade for some time.

“This is big business,” she said in an earlier interview with SecuringPharma.com. “It’s important that brand owners enforce their rights on the Internet and send a strong message to trade boards, as well as online pharmacies.”

It is also important for brand owners to push for legislation to give enforcement agencies the weapons they need to combat this sort of activity, she said.

No prescription needed

Meanwhile, the OpSec probe also provided further evidence of the explosive growth in Internet pharmacies that do not require a prescription or only require an online consultation before shipping medicines.

“Over the two-year period, a growing number of Internet pharmacies have abandoned the basic requirement of a valid prescription,” said OpSec.
 
OpSec found a 65 per cent increase in the number of online pharmacies operating in this manner, and most alarming a 300 per cent hike in pharmacies offering medicines at very steep discounts – 60 to 80 per cent below retail prices.

Deep discounting is one of the key signatures of counterfeit medicine supplies.

Of the hundreds of unaccredited Internet pharmacies researched, the average price of prescription drugs across a representative sampling of top-selling drugs was 78 per cent below the average price on the National Association of Boards of Pharmacy’s (NABP) Verified Internet Pharmacy Practice Sites (VIPPS) accredited sites, it said.

Consumers are often targeted with potentially dangerous promotions when buying drugs online. For example, one network of sites offered free erectile dysfunction pills with any purchase.

For patients taking medications to prevent a heart attack or stroke, this promotion would be especially dangerous as they are advised not to take drugs that increase their heart rate and blood flow.

There are even sites which allow people to sign up for free and set up their own online pharmacies, contributing to the rapid growth in the unregulated sector, according to Cotterill.

Brand protection strategy

Cotterill believes companies should develop a profile of the exposure of their brands on the Internet, for example whether it is finished goods and/or APIs, where and when the items are promoted, and the price points being used.

Conducting test purchases can help identify counterfeit and diverted goods and provide more information about where the product is actually coming from, she said.

This information can help companies gauge the health and safety risk to patients, and assess the impact that counterfeiting and diversion is having on their business. That should then enable them to mount a response, whether it be tightening up business practices, the application of authentication or trace-and-trace technologies,

It is important to involve the right people in the company – not only corporate security if it exists, but also legal, sales and marketing and other departments, she said.

There have been instances where bulk pre-printed, branded packaging has been offered for sale on the trade boards, and there is clearly no legitimate reason for this type of activity, she told SecuringPharma.com.

Where this occurs companies can ask the board to close down the seller’s listings under a cease-and-desist process on the grounds of infringement of intellectual property or a risk of counterfeiting.

“At the moment brand owners have tended to focus on business-to-consumer (B2C) sites such as eBay, but the volumes involved mean the problem is actually much bigger on the trade boards,” she said.