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On June 6, 1944, 156,000 Allied troops captured Normandy Beach and marked a turning point in the tide of World War II—now commonly referred to as “D-Day.” At this point in the war, Germany had already consolidated its hold over much of Europe and the Allies needed a way in. The D-Day strategy was simple and effective: concentrate all available military resources into a coordinated strike—rather than dividing them across several fronts. This tactic allowed the Allied forces to regain a toehold in Europe and is widely considered to have been an integral component in the Allied victory.
In 2021, the world faces a different global crisis, with medical personnel playing the role of soldiers in the battle against COVID-19. Even as vaccines have begun to rollout, the war is not yet won, and under the current international drug regulatory scheme, National Regulatory Agencies (NRAs) are fighting individual quality assurance battles across the globe to guarantee that all medicines entering their respective countries are safe. As with the Allies during World War II, each NRA faces a herculean fight against an army of counterfeit and substandard drugs that threaten their populations. These agencies are the sole entities responsible for the safety and quality of their country’s drug supply, and without a unified strategy, their looming defeat will resound for all of us.
Although the globalization of trade is a powerful source of efficiency gains, it also brings new challenges. When markets are demanding a particular supply, such as the COVID-19 vaccine, the circulation of substandard and falsified drugs soars. Under the current regulatory framework, if a manufacturer does not meet the quality standards specified by a specific NRA, it can still export the unapproved batch to a low-income country with a less stringent protocol that does not enforce high-quality standards. Furthermore, drug manufacturing companies do not have incentives to assure the quality of the drugs they export to developing countries that do not have the capacity to conduct regulatory inspections abroad in order to assess the safety, efficiency, and potency of the drugs that they import. The majority of the substandard ingredients and counterfeit drugs come from two places: China and India. To win the war against the substandard drug crisis, regulatory agencies around the world must cooperate and concentrate their efforts.
The World Health Organization estimates that less than one percent of drugs available in the developed world are likely to be counterfeit. However, the global figure is around 10 percent, if we add developing countries into the equation—where counterfeit drugs can comprise as much as a third of the total supply. Two years ago, a Chinese manufacturer violated standards, producing 250,000 doses of a substandard vaccine for diphtheria, tetanus, and whooping cough. The consequences were twofold: people thought that they were protected when they were not, and, more crucially, people began to distrust the vaccine production process. In addition, substandard drugs increase antimicrobial resistance (AMR). When medicine uses a low-quality active ingredient, or a lower dosage than is necessary, that medicine generates AMR and decreases the effectiveness of even high-quality products.
How we can avoid these issues? Whose responsibility is it to ensure vaccine efficacy from the manufacturer to the patient? Can a “D-Day” strategy help address the substandard drug crisis? Should countries join forces and concentrate their resources to inspect the big manufacturers? To answer these questions, we first need to understand how the regulatory process works and identify the risks involved along the way.
Defining the problem
The purpose of NRAs is to protect consumers from substandard and falsified medicines. In low- and middle-income countries, these agencies are incapable of fulfilling their purpose due to the lack of financial resources and a shortage of high-skilled workers. In developed countries, however, NRAs can ensure that a high percentage of medicines are safe, efficient, and potent. Nonetheless, as a result of a complex global supply chain, substandard and falsified drugs can still get into high-income countries’ markets and cause serious health repercussions such as occurred with Avastin in the United States. In this case, several medicines contained a mix of chemicals, but none of the active pharmaceutical ingredient, which is used to treat colon, lung, kidney, and brain cancer. Also, in 2008, a Chinese production facility exported a blood thinner called Heparin that was contaminated and caused dozens of deaths and hundreds of allergic reactions across the United States.
The globalized pharmaceutical supply chain generates gaps where substandard and counterfeit products can filter through. In every step of the COVID-19 vaccine supply chain there are opportunities for counterfeit ingredients to enter the market and this is where NRAs come in.
Each NRA is responsible for the safety of its country’s drug supply, but no agency can entirely guarantee this. Thus, to accomplish their objective, and ensure the global safety of the COVID-19 vaccine, regulatory agencies around the world must increase their cooperation.
Updating the definition
The global community has yet to agree upon an international definition of substandard medicines; however, in recent years, there has been a substantial effort to achieve global agreement. In May 2012, the WHO established a new mechanism for international collaboration regarding substandard, spurious, falsely-labeled, falsified, and counterfeit medical products (SSFFC). However, this definition was heavily criticized, mainly by the governments of Brazil and India. By placing all illegitimate medicines under one broad term, the WHO improperly generalized the causes of these deficiencies. In reality, each part of the SSFFC framework is different and requires a unique solution. The terms were so mixed up that until 2016, “falsified” and “counterfeit” were used interchangeably.
Finally, in 2017, the WHO updated its definition so that any manufacturing issues relating to Intellectual Property (IP) would not fall within the description of “falsified medical products.” In addition, the WHO eliminated the term “counterfeit” from the definition, reducing the final scope to “substandard and falsified medical products.” Nevertheless, the new “falsified” definition seems to embody all the characteristics of what was previously called “counterfeit.”
- Main definition (Green): The “counterfeit” and the “falsified” definitions share the same first paragraph (“deliberately and fraudulently mislabel/misrepresent…”)
- Authorized and generic product (Blue): The “counterfeit” scope included branded and generic products, whereas the “falsified” definition makes the same distinction and broadens the scope by stating “authorized and not authorized medical products.”
- Substitution and adulteration (Orange): Whereas the counterfeit medicines specify different types of substitution or adulteration, the new, broader definition of falsified medical products embodies all the examples by wording “any substitution.”
While the old definition of “counterfeit” and the new definition of “falsified” seem to be similar, one difference worth noting is the change from “medicine” to “medical products.” This new scope covers a wide range of products that were not included before, such as vaccines and testing kits.
It is improbable that these changes, spearheaded by the WHO, will have much impact, as countries are unlikely to change domestic legislation that is based on the previous WHO definition of “counterfeit.” However, if NRAs maintain their old scope, consumers and patients will be the ones to suffer the consequences. As the WHO stated: “[T]he primary focus of combating counterfeit medical products is the protection of public health and the main victims of counterfeiters are patients.”
The public health consequences of the new definition
To understand its consequences, the new definition must be examined through the lenses of the three main stakeholders: drug manufacturers, consumers, and governments.
First, from the manufacturers’ perspective, medical products can be:
- Falsified: When they deliberately or fraudulently misrepresent their identity, composition, or source.
- Substandard: When they fail to meet quality specifications set for them by NRAs.
- Non-authorized: When they have not undergone evaluation or approval by the NRA for the market in which they are marketed or used.
- Counterfeits: When they infringe on a registered trademark by bearing an identical or near-identical mark.
Since medicines are post-experience goods, buyers cannot perceive their quality even after consumption, so both governments and drug manufacturers have a stake in protecting the public from potentially dangerous pharmaceutical products. Drug manufacturers spend billions of dollars advertising their products to ensure that consumers value their brand and associate it with quality. Conversely, counterfeiters freeload on those investments without offering quality, potency, or safety.
These same risks of falsified and counterfeit drugs exist for the COVID-19 vaccine. A falsified vaccine can capture a more profitable market by taking advantage of a brand’s trademark and abuse their reputation. The counterfeiter does not care about preserving the value or perception of a trademark nor the health of the consumer—they care about reducing costs and maximizing profit. Thus, there is a high probability that the counterfeit drug will contain the wrong dosage of the active ingredient, no active ingredient at all, or a potential contaminant that could be lethal. For these reasons, a counterfeit product does not only involve the violation of IP rights, but also the violation of regulatory standards defined by NRAs.
From the consumer perspective, the technical discussion around the definition of substandard, falsified, or counterfeit is irrelevant. No matter how countries—or the WHO—define these terms, they all are low-quality medicines that jeopardize consumer health by prolonging the state of diseases or even causing death due to the absence of the active pharmaceutical ingredient (API).
Imagine that a person receives a counterfeit COVID-19 vaccine. While he or she might believe that they are now immune to the virus, they will be less likely to take the necessary precautions required of people who are not yet inoculated, and therefore, they will be at a higher risk of contracting and spreading the virus than they would have been if they had not received the counterfeit vaccine at all. Even worse, counterfeit products diminish consumers’ trust in the legitimate brands, and vaccines generally. In this way, counterfeit medicines are not only trademark infringement, but also threats to public health. Therefore, an IP rights-based solution that only identifies the rights holder as the victim of counterfeiters will not solve the issue. In the case of medical products, the real victims are the patients.
From the government and its public health perspective, corrective action against counterfeit medicines should be taken by NRAs and not by the IP rights owners or anti-counterfeit agencies. Currently, the first responders are usually private companies whose interests are sometimes misplaced, while the agencies only tend to respond once an IP holder files a complaint. In contrast, NRAs’ objectives are to ensure the quality and safety of the product for consumers.
Quantity over quality
Increasing affordability and availability of properly manufactured drugs should be the central policy to combat counterfeit and falsified drugs. While price control over medical products is one type of policy that governments may use to increase affordability, a large body of evidence from developed countries shows that these regulations come with a downside. Any policy that aims to increase access to medicine by lowering the price must acknowledge that there is a risk of a surge in substandard production because manufacturers will try to protect their margins by cutting costs. This is particularly important in the case of COVID-19 vaccines, which need to be priced low enough so that they are globally accessible.
Producers may discriminate pricing according to the purchasing power of the consumer country’s population, however while price discrimination could be a good strategy, it also presents some challenges. Some manufacturers restrict the distribution of their most expensive products to countries with lower prices for fear that a distributor will buy them up and then resell it in higher-priced markets. If a country has acquired vaccine doses for a lower price, it could resell to other countries and make a profit. Additionally, if there is not enough quantity to supply the demand, consumers will go outside of the legal supply chain and procure the medicine through illegal channels.
The consequences of tiered manufacturing
To prevent substandard medicine from entering the market, NRAs must verify that the manufacturers comply with the current good manufacturing practices (GMP). If manufacturers are not able to meet the quality standards specified by the NRA, they can still export the low-quality batch to low- and middle-income countries that have a lower standard for imported medicines. This process is known as parallel production or tiered manufacturing.
Drug exporting countries might facilitate tiered manufacturing by applying a double standard. They could not require the same evaluations for exported drugs as for those sold locally. Therefore, a manufacturer can exploit this “quality loophole” by producing substandard medicines for less rigorous markets without receiving sanctions by the local authorities. This situation is worse when the tiered manufactured products are doses of the COVID-19 vaccine. An exporter country could change the active ingredient quality level according to the stringency of the NRA in the importing country.
To avoid the chances of receiving substandard products into their market, some NRAs from importing countries have the capacity to inspect abroad. Since this process requires a large number of high-skilled resources, some countries began to cooperate through Mutual Recognition Agreements (MRA) to share foreign inspections costs. Nonetheless, MRAs can only work between NRAs with similarly high standards that trust and rely on each other’s inspections.
The COVID-19 vaccine
There is a need for a new framework that promotes and ensures safe and effective medical products around the world. An international organization should have the purpose of ensuring the quality of medicine by concentrating its resources on inspecting the exports of each country. The European Medicine Agency (EMA) and the system by which Schengen countries are receiving the COVID-19 vaccine could serve as models.
Right now, the majority of drug quality tests are administered by importing countries rather than exporting countries. For example, China is the world’s leading producer and exporter of active pharmaceutical ingredients (APIs), accounting for 20 percent of total global output. Moreover, India, which is the global leader in generic drug production, imports nearly 70 percent of its APIs from China. However, these two nations suffer from fragmented regulatory systems and an unclear division of responsibilities between state and federal governments that allow the production of substandard and counterfeit products.
Manufacturing countries might change API quality levels by taking into consideration the destination market and the stringency of the NRA (see API Exporter Map below).
When NRAs lack the resources and capacity needed to enforce a drug-safety policy, good manufacturing practices (GMPs) can ensure that quality medicines get the largest market share. Adequate quality assurance of products made for export would decrease the presence of substandard medicine.
An effective substandard and anti-counterfeit strategy must have an international organization with all the resources of individual NRAs combined and the authority to coordinate and execute manufacturing inspections where needed.
This approach offers many advantages. First, it avoids redundancy in GMP inspections. Thus, weaker NRAs can focus their scarce resources on downstream functions such as local , which adds value to manufacturers and patients. Nonetheless, the reliance of this international entity does not imply that NRAs would give up their sovereignty or accountability. NRAs would still retain the ability to make their own regulatory decisions. This would allow developing countries to receive a safe and potent COVID-19 vaccine faster. Second, it constitutes a unique and harmonized regulatory body that assists NRAs in providing access to safe, efficient, and quality-assured APIs. Third, while a centralized quality assessment would decrease the collection of fees by NRAs, it would also reduce the risk of substandard products. Furthermore, in countries with a high corruption rate, there is no assurance that the fees paid are being used to verify the quality and safety of the drug. If the fees are paid to a global agency, it would prevent the possibility of embezzlement from local authorities. Finally, weaker NRAs would benefit by being able to reduce administrative tasks and cut down costs as a result of using the expertise and resources of more stringent regulatory authorities.
Although substandard and counterfeit drugs proliferate in international markets, efforts to control them vary widely across countries. Under the current regulatory scheme, countries are not incentivized to assure the quality of exported medicine. Manufacturers are incentivized to import drugs to countries with less stringent NRAs, and governments are incentivized to apply less burdensome regulation in order to attract investments and increase local manufacturing capacity. Hence, NRAs and their respective countries must work together to create a new global agency. It is inefficient and redundant to divide quality controls across country-specific NRAs. Regulatory authorities must join forces and work together by concentrating all their resources to inspect the big API-exporting countries and manufacturers. Uniting forces worked in 1944 and it will work again. The only question yet to be solved is: why do we not yet have a global medical product regulatory agency that can fulfill this role?
Ezequiel Carman is an Argentine lawyer and global health and trade policy consultant. Previously, he served as a legal advisor for the Ministry of Justice of Buenos Aires and as an assistant professor in international public law at Universidad Católica. Most recently, he worked as a research assistant for the O’Neill Institute for National and Global Health Law.
You can connect with him on LinkedIn or via email at: ecc98@georgetown.edu
