Pharmaceutical Counterfeiting: What is it and Current Issues with IP Regulations

Pharmaceutical Counterfeiting: What is it and Current Issues with IP Regulations

What is Pharmaceutical Counterfeiting?

Counterfeit goods are an age-old consequence of economic markets. These consequences are especially troubling when raising concerns about the delivery of prescription medicines that the public are presumed to trust. The World Health Organization (WHO) recognizes this. To improve the global supply chain's security, they have defined Pharmaceutical counterfeiting as medicine that is deliberately and fraudulently mislabeled concerning the identity and/or source. Counterfeiting is not limited to either branded or generic products. It occurs in different fashions, such as the inclusion of wrong ingredients, deficiencies of active ingredients, and false packaging.


Problem with IP Regulations and the Supply Chain

A more technical consequence of pharmaceutical counterfeiting is that these medicines can often violate companies' patent rights offering legitimate medicines. In Canada, three pieces of legislation compose the legal framework surrounding intellectual property rights in the biopharmaceutical industry: (1) the Patent Act; (2) the Patented Medicines Regulations; and (3) "Data Protection" found in Canada's Food and Drug Regulations1. Together, these regulations serve to protect innovations from being stolen or reproduced for consumer use and profit.


Manufacturers of fake medicines are motivated by profits. They are likely to avoid the expense of precision measurement and formulation that directly infringes upon patent holders' rights. Unfortunately, many technicalities are involved in drafting biopharmaceutical patents, and because counterfeit manufacturers often cut corners in the production process, direct patent infringement may not always occur. Thus, patent holders and regulatory officials have two separate issues on their hands pertaining to supply chain security: counterfeit drugs that fail in effectiveness altogether and efficacious but patent-infringing generic drugs.


Potential Solutions

Several recommendations to protect biopharmaceutical manufacturers may be offered. First, raising public awareness on the issues of pharmaceutical counterfeiting is essential1. By pushing for campaigns that warn of pharmaceutical counterfeiting risks, we can limit the purchase and use of these fake medicines1. Next, improving regulatory oversight could restrict the manufacturing of pharmaceutical counterfeits1. Criminal sanctions and massive fines would likely deter companies from making counterfeit drugs while strengthening biopharmaceutical intellectual property rights1. Finally, incentivizing domestic production of pharmaceuticals would limit the import penetration of counterfeits in the market. Nonetheless, a significant consideration for manufacturers is production cost, which is much cheaper in other countries.


High taxes, high salaries, and, most importantly, inadequate intellectual property protections have discouraged Canadian manufacturing as well. It is entirely possible that to fully secure the biopharmaceutical supply chain and eliminate counterfeits from the market, Canada will need to shift its focus to strengthening intellectual property rights.


Written by Khristoff Browning. Khristoff is a first year JD candidate at Osgoode Hall Law School. He is a contributing IPilogue editor and IP Innovation Clinic Fellow.