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Can You Can Tell Which Pill Is Fake?   (June 8, 2006)


My source inside global pharmaceutical giant Astra-Zastra tell me that Chinese-based counterfeiting of the company's new hot-selling drug Zombiestra has reached epidemic proportions, threatening the firm's sales, reputation and profitability.

The rep showed me two pills (pictured here) and asked me to select the fake one. They looked identical to me, and I said so. "They are identical," he fumed, "at least on the outside. Inside, the fake is just sugar and cornstarch. These pirated pills are killing us, absolutely killing us."

The rep then referred me to some recent media reports which confirmed the dire consequences of massive drug counterfeiting in China: Counterfeiting in China (CNN transcript):
MANN: I ask about that because at one point you wrote that in fact some of these drugs are so badly pirated that they could make people sick who think that they are going to benefit.

FISHMAN: Yes, well there is that, too. You know, there are the renegade factories, probably not the ones run by the government, that copies drugs, but only copy them in form and color, and people who need lifesaving drugs die from them, hundreds of thousands of people have died in China because of this.

And it could also threaten an American company that makes the actual drug, because these false drugs are working their way into the supply chain. So you could have 28 good pills and two bad pills, but those two bad pills could kill somebody. We know what happens when legitimate drug companies have bad drugs. Well, they could get burned from bad drugs from counterfeiters making their way into the vials of drugs that have their own name on them.
The rep also asked me to read this report: Public Safety Jeopardized by Chinese Counterfeiters, Experts Say; Fake pharmaceuticals contradict notion of "victimless" crime.

The problem, the Astra-Zastra source reported, isn't China's copyright and trade-secrets laws per se, but the enforcement of those laws, which is basically zero. He referred to this expert's explanation:
MANN: China has been getting a lot of attention, and we've been devoting a lot of attention in this program, to intellectual property theft and copyright piracy. Does China deserve the blame it's getting?

YUEH: I think in a lot of ways the copyright issue has highlighted the main fragility in the Chinese economy, outside of the economic reforms, and that is the legal system. China actually has patent, copyright and trademark laws dating from the mid-1980s, which are essentially at the international standards, in accordance with the Trips (ph) Agreement.

However, implementation and enforcement are entirely different issues, and I think that's why China has been under a lot of criticism to speed up legal reform, so that the legal protections accorded to (INAUDIBLE) and foreign products can meet international standards.

And, of course, the difficulty here is that if there is political posturing, then it could derail attention from actually the most critical part of this issue -- is that it is in China's interest to improve intellectual property rights protection, to foster innovation, both domestic and to give assurance to foreign investors that they can transfer technology and invest in China and it will be a win-win situation for everybody involved.

And if China can't do that, then there is a real danger that it will not gain the productivity advances that it needs to continue its phenomenal rate of growth. So everybody is headed in the same direction. However, a lot of the disputes that we see, it's because there is a lot of both misapprehension and I think a degree of misunderstanding of where China's IPR laws actually stand. But it is true, they still have a long ways to go, and the Chinese are well aware of it.
The rep complained that they've already closed their primary plant in China because sales had fallen. "People took our erectile dysfunction drug and nothing happened," he said, "because the counterfeit drugs were being wholesaled alongside the legit pills. Since no one could tell the difference, word-of-mouth blamed our product. Our brand's reputation went down the toilet, and so did sales."

Even worse, the rep explained, fake Zombiestra pills are entering Canada in huge numbers, where they are passing into the hands of U.S. customers. "People who suffer from quatro-polar disease (please see The New Disease We Just Know You've Got) are actually feeling better taking the pirated pills," he said in great frustration. "They're nothing but sucrose and starch. It's killing our side-effects sales."

The rep, who prefers to remain anonymous, leaned forward and spoke in a softer tone. "I don't need to tell you about Zombiestra's side effects, right? Bed-wetting, heart palpitations and road rage. I mean, road rage is getting hot; it's being touted now as the new syndrome, and we're really piling into this new market: road rage is a real disease."

"Zombiestra is sort of a loss-leader for us," he explained. "The really big sales are on the follow-throughs, the meds to control the bed-wetting, heart palpitations and the road rage. Now that customers are feeling better on the pirated Zombiestra, and without the side effects, they're not ordering the follow-through meds. It's killing us, I mean really killing us. My commissions are way off, way off."

The rep's mood darkened and he fell silent. Then he perked up and said, "but this new road-rage market, it's huge. We're gonna do gangbusters in that one."


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copyright © 2006 Charles Hugh Smith. All rights reserved in all media.

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