The threat of counterfeit pharmaceutical drugs is on the rise in Canada.
From April 2016 to March 2017, Health Canada seized close to 5,500 packages of counterfeit drugs mainly sexual enhancement drugs such as Viagra on their way to patient hands.
In a single week last year, Health Canada confiscated $2.5 million worth of bogus pharmaceuticals at the border.
And in December, companies controlled by the online pharmacy Canada Drugs pleaded guilty to selling counterfeit and misbranded pharmaceuticals in the United States and agreed to forfeit $29 million, equal to their sales of illegal drug proceeds from 2009 to 2012.
Clearly, counterfeit drugs, which may be presented as name-brand or generic, put patients at risk. They may contain no active ingredient, harmful ingredients, the wrong drug, the wrong concentration, the wrong dose or drugs past their expiry dates, resulting in reduced treatment effectiveness, unexpected side-effects and potentially death.
Moreover, counterfeit pharmaceuticals containing a greatly reduced dose of the active component contribute to global microbial resistance and more virulent forms of disease, undermining the fight against infectious diseases. Counterfeit medicines contribute to antibiotic-resistant forms of shigella, cholera, salmonella and tuberculosis.
While reports of counterfeit drugs in Canada's licensed pharmaceutical supply chain are rare, there have been cases when brick-and-mortar pharmacies have dispensed counterfeit drugs by mistake.
But Canadians, including young Canadians, mainly obtain counterfeits via the illegal drug trade, which includes illegal internet pharmacies.
Prescription drugs are now the third most common substance misused by Canadian youth, following alcohol and cannabis. Tragically, in the spring of 2017, several middle-schoolers in British Columbia and Ontario died from fentanyl poisoning after taking counterfeit pills.
While the human toll is obviously most important, there's also the cost to legitimate drug manufacturers and distributors, including the neighbourhood pharmacy. Precise calculations of lost sales and revenues are difficult to obtain, but the World Health Organization estimates that counterfeiting costs the global pharmaceutical industry $75 billion a year. And Criminal Intelligence Service Canada says that "[m]ost estimates range in the billions annually for global losses."
In addition to lost revenue, counterfeiting imposes other costs on legitimate players. Those include increased costs to secure the supply chain, investments in anti-counterfeiting technologies, and potential damage to reputations and risk of liability. And, with lower revenue, there's less money for research and development of potentially life-improving or life-saving drugs.
A new Fraser Institute study details the magnitude of the problem. According to a 2015 report, worldwide pharmaceutical sales reached US$1.1 trillion in 2015. The Organization for Economic Co-operation and Development estimates that counterfeit goods accounted for 2.5 per cent (or approximately $200 billion) of the global pharmaceutical drug trade in 2013. That means the counterfeit trade is worth only slightly less than the $246-billion illicit drug trade.
And experts estimate that the sale of counterfeit drugs is growing at twice the rate of legitimate pharmaceuticals and is expected to grow by 20 per cent annually in coming years.
Remarkably, the counterfeit medicine market is more lucrative than the narcotics business because counterfeit drugs are worth more than illicit drugs.
So what can be done to combat the counterfeit drug trade and protect patients, providers and manufacturers?
According to the Fraser Institute study, possible solutions include raising public awareness, improving regulatory oversight, regulating pharmaceutical trans-shipments, increasing criminal sanctions, harmonizing regulations among countries and pursuing an international treaty.
Although history highlights the difficulties of defeating counterfeiters, policy-makers must take the threat seriously and move to protect patients.
At the same time, it's important to continue to examine the extent of the problem, including counterfeit production and distribution, and links to organized crime.
And it's crucial to keep pursuing appropriate policy responses.
As the trade in counterfeit drugs grows, so do the risks to Canadian patients and the costs to legitimate manufacturers.
Kristina Acri is an associate professor of economics at Colorado College and senior fellow at the Fraser Institute.