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Chris Merchant, EMEA Security Director; Global Security Group MSD Merck & Co., Inc. [email protected] Counterfeiting & Product Piracy – An Industry Perspective

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Page 1: Counterfeiting & Product Piracy – An Industry …pa-europecom.webhosting.be/...Counterfeiting & Product Piracy – An Industry Perspective Merck & Co Inc MSD Merck Sharp Dohme Q60,000

Chris Merchant, EMEA Security Director; Global Security GroupMSD Merck & Co., Inc.

[email protected]

Counterfeiting & Product Piracy

– An Industry Perspective

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Merck & Co IncMSD Merck Sharp Dohme

60,000 employees worldwide$20+ billion sales worldwide$3+ billion spent worldwide on research & developmentEMEA -48 countries, 12,000 employees.Merck exists to put patients and their health first.

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EU Commissioner VerheugenArticle published on EC website under heading‘Commission warns about fake drugs on the internet’quotes Entreprise & Industry Commissioner as saying:

I am alarmed at the ever increasing number of counterfeit medicines sold via the internet. This represents a real danger to the health of patients. The Commission is working with European and international partners to do everything possible to ensure legal methods for marketing of medicines are respected and enforced.

– Brussels, March 27th, 2006

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EU Taxation and Customs Commissioner László Kovács.

"Counterfeiting continues to constitute a dangerous threat for our health, safety and the economy. I welcome the work done so far by the customs national administrations. However, I encourage all stakeholders to continue to cooperate and take actions at all appropriate levels: business, national customs administrations, police and other enforcement authorities. The public also has a responsibility here by not being tempted by the cheap fake holiday bargain. International customs cooperation with our major trading partners, in particular China (and India) needs to be further implemented."

Brussels, June, 2006

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EU Customs seizures 2006.An overall 330% increase in 2006 in the number of counterfeit and pirated goods seized by Customs at the external borders of the EU – 250 million compared to 75 million in 2005. Customs activity towards customs seizures has never been so high with an increase of almost 40% – almost 37,000 compared to 26,000 in 2005 – in the number of seizures. There has also been a significant increase in cases involving fewer articles. This could be explained by the fact that more traffic has been detected in postal and air traffic, due to booming internet sales. China remains the main source for counterfeit goods, with over 80 % of all articles seized coming from there.

Medicines have shown a dramatic increase in seizures – 2,5 million items compared to 500,000 items in 2005. India is the number onesource, followed by the United Arab Emirates and China. Togetherthese 3 sources are responsible for more than 80 % of all counterfeit medicines.Life style drugs such as Viagra, Cialis and Levitra are the most frequrently seized counterfeited medicines, - However, medicines for other serious indications were also seized: anti-cholesterol, anti-osteoporosis, anti-hypertension, etc...

http://ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/index_en.htm

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OECD –The Economic Impact of Counterfeiting & Piracy1. June 2007.According to the OECD, international trade in counterfeit and pirated tangible products could be up to USD 200 billion for 2005. While this assessment of the value of the goods moving across national borders alone is considerable, it represents only the tip of the iceberg since it does not include the significant volume of domestically produced and consumed counterfeit and pirated products, nor the value of pirated digital goods transmitted over the Internet.

OECD concluded that product counterfeiting and piracy impacts virtually every product category and economy, with increasing flows of these illicit goods across international borders. OECD noted that while more governments have acknowledged the problem and put laws and regulations in place, more effective enforcement is critical.

http://www.oecd.org/dataoecd/11/38/38704571.pdf

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Rx CounterfeitingCounterfeit drugs are about the money

~ $45 Billion / estimated to grow to $75 Billion by 20101

Counterfeit medicines are regularly found in less developed countries –often lacking strict regulatory framework and enforcement. It is a very serious issue for public health.Counterfeit medicines are more and more widely available in developed countries. The counterfeits are becoming very sophisticated across a wide range of medicines. It is a very serious issue for public health.The internet and parallel trade are key vectors which facilitate the traffic in counterfeit medicines and the associated threat to public health and safety.

1 World Health Organization (WHO) Fact sheet N°275, 14-Nov-2006

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GMP or………?

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Not so GMP…..?

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The Internet………Millions of hits on www when searching for medicines, internet pharmacies …….Uncontrolled, unregulated, huge volumes of product in postal and courier systems supplied to individual customers worldwide.No contact with physicians, pharmacists, hospitals or existing regulated wholesalers.What relevance are current controls on the supply of prescription medicines?The ideal means of supplying counterfeit & illegal goods direct to customer –a virtual electronic market place.

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Kolowich conspired to have unapproved drugs made in India and Pakistan enter the United States via the Bahamas.

As a result, counterfeit drugs were shipped from India to the Bahamas. The drugs were then shipped to World Express Rx customers in the United States. More than 900 of these packages were intercepted in Miami in September 2003. The government seized approximately 1.6 million pills in Florida, valued at approximately $9.8 million.

WorldExpressRX.com

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MyRxForLess.comU.S. Postal Inspection Service commented, "Illegal pharmaceutical distribution is a growing problem which will continue to receive increased attention from law enforcement. In this investigation in excess of 100,000 Express and Priority mail shipments of illegal drugs were identified”.

From December 2002 to March 2004, more than $1.7 million in payments for credit card purchases from the MyRxForLess website were wire transferred from World Express in San Diego to MyRxForLess in Florida. MyRxForLess.com, advertised for sale prescription drugs with "no prescription needed."

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Internet Test Purchase –Germany 200624 internet addresses, - only possible to place orders with 19 traders. Of 9 orders placed, only 12 traders delivered. Of 7 traders that were unable to supply the product, 5 traders who demanded credit card payment did not respond at all, one did not supply to Germany and in one case of credit card fraud, the credit card was charged even though the goods were not shipped. Altogether 14 shipments were received, as two traders sent the goods unrequested twice in two separate shipments –another example of fraud. Of these, 6 of the deliveries were counterfeit. The others were illegally diverted product.

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Analysis of www Test Purchases–MSD Propecia1.

Pharmacuetishe Zeitung PZ 22.02.2007

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Test Purchases -Germany

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RxNorth.com, et.al.May / June 2006

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InvestigationMajor criminal conspiracy to manufacture high quality counterfeits in China for sale and distribution to US / Canadian and other consumers via multiple internet sites Established links with other major counterfeiters worldwideCaribbean Order Fulfillment Center Confirmed linkage between Caribbean Operations and Canadian/other int’l internet pharmacies Use of circuitous international routes to disguise Caribbean order fulfillment (NYC entry point)Majority of seized products counterfeit co-mingled with possible diverted or otherwise genuine brand name and generic products

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FDA Public Health Announcement – 30 August 2006

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Parallel Trade may allow potential for counterfeit to enter Supply ChainEach additional transaction in the supply chain is a potential opportunity for counterfeit product to enter the supply chainThe more times product changes hands before it reaches the patient, the more opportunities to insert counterfeitsUK MHRA initiated 4 Class 1 recalls in May & June 2007 related to counterfeit drugsCounterfeits entered through parallel trade routes from elsewhere in EU

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www.mhra.gov.uk

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Counterfeit drugs impact everyonePatients

Health & safety risks due to substandard drugs, drugsw/o or insufficient active ingredients or with dangeroussubstancesLoss of faith in health/care system

AuthoritiesNegative impact on health of populationEconomic loss (competitiveness, tax revenues and jobs)Loss of supply system integrityLoss of confidence in established legitimate supplychain

Pharmaceutical companiesPatient health risk / Loss of patient/health care providers’confidenceImage/reputation negatively impactedSales and income loss (which will impact R&D)IPR infringments

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Product security key strategies.Maximum protection for public health & safety.Zero tolerance of counterfeiting and illegal supply of patent / trademark infringing product into EMEA.Identify sources and methods of supply and obtain evidence of illegal activities. Attack both source of production and method of supply.Cooperation and partnership with other industry partners and law enforcement agencies.Encourage good IPR legislation.

Encourage proper adequate controls on supply chain.

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http://www.who.int/medicines/services/counterfeit/en/

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http://www.efpia.org/content/default.asp?PageID=175

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Brussels; June 2007

Chris Merchant, EMEA Security Director; Global Security Group

MSD Merck & Co., [email protected]