Novartis allegedly duped in anti-counterfeiting deal

Novartis has allegedly been duped by an anti-counterfeiting technology supplier that sold it cheap chemicals instead of a hard to fake secret formula.

The allegations - made by media firm Fairfax - focus on a three-year-old deal between Novartis and DataTrace DNA, a joint venture originally set up by Australia's national Commonwealth Scientific and Industrial Research Organisation (CSIRO) and DataDot Technology Ltd.

According to the report, DataTrace knowingly passed off basic chemicals as a unique tracer to mark vials of Voltaren (diclofenac), an injectable anti-inflammatory drug used to treat arthritis.

According to the claims, three months before the deal was signed, a scientist working on the project, Gerry Swiegers, warned of the problem in an internal email in 2010, writing: "The code which has been offered to Novartis may not be fit for purpose…because the material is commercially available from a variety of vendors."

Novartis bought the tracer thinking it was made in a secure lab in Melbourne, Australia, but was apparently prevented from analysing it under the terms of a confidentiality agreement between the two parties. Security features were reportedly fitted at the site ahead of a visit by Novartis.

Internal documents appear to show officials at both the CSIRO and DataDot were aware they were selling an easy-to-source tracer that could be easily duplicated by counterfeiters. Three months after the five-year deal was inked, CSIRO sold its stake in DataTrace.

SecuringIndustry.com contacted both Novartis and DataDot Technology for comment. There was no reply from the technology provider - which has now been placed under a trading halt by the Australian Securities Exchange - but Novartis' head of global corporate security Andrew Jackson told us the company is "rigorously" investigating the claims.

In a statement, Novartis said: "The product verification feature which has been the topic of media interest is used as an additional verification feature and does not affect product quality or the safety and efficacy profile of the product. It is neither used for product identification nor quality determination."

Like many large drugmakers, Novartis employs a range of anti-counterfeit technologies on its products to help it fight counterfeiting. In 2009 the company started rolling out a digital marking technology on product packaging that could allow genuine packs to be detected using a simple office scanner.

Novartis confirmed that it uses several verification features on its products.

"If one verification feature were compromised, this would not prevent us from being able to clearly determine the origin and authenticity of our products," said the company.

"We cannot comment on the actions of DataTrace or CISRO or on any communication by their employees," it added, although reiterated that it is investigating on this matter, "in full collaboration with the appropriate authorities."