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The Chase Model United Nations 2010 Committee Background Information Package World Health Assembly

Topic: International Cooperation on Striking Phony Medicine
A. Committee Introduction
B. About The Topic
a. Statement of The Problem b. Past Actions c. Analysis d. Possible Solutions e. Proposed Solutions f. Countries Status The World Health Assembly is the decision-making body of WHO. It is attended by delegations from all WHO Member States and focuses on a specific health agenda prepared by the Executive Board. The main functions of the World Health Assembly are to determine the policies of the Organization, appoint the Director-General, supervise financial policies, and review and approve the proposed programme budget. The Health Assembly is held annually in Geneva, Switzerland. WHO is the directing and coordinating authority for health within the United Nations system. It is responsible for providing leadership on global health matters, shaping the health research agenda, setting norms and standards, articulating evidence-based policy options, providing technical support to countries and monitoring and assessing health trends. In the 21st century, health is a shared responsibility, involving equitable access to essential care and collective defence against transnational threats.
Counterfeit medicines are found everywhere in the world. They range from random
mixtures of harmful toxic substances to inactive, ineffective preparations. Some contain a
declared, active ingredient and look so similar to the genuine product that they deceive
health professionals as well as patients. But in every case, the source of a counterfeit
medicine is unknown and its content unreliable. Counterfeit medicines are always illegal.
They can result in treatment failure or even death. Eliminating them is a considerable
public health challenge.
The production of substandard and fake drugs is a vast and underreported problem,
particularly affecting poorer countries. It is an important cause of unnecessary morbidity,
mortality, and loss of public confidence in medicines and health structures. The
prevalence of counterfeit drugs appears to be rising and has not been tackled effectively
by close cooperation concerned with trade, health, customs and excise, and
In the committee of World Health Assembly, the debate will focus on phony medicine
in less developed countries.
Counterfeit medicines in less developed countries
Much of the debate surrounding counterfeit medicines to date has focused on how to
prevent them seeping into the supply chains of developed-country markets. The
majority of counterfeit medicines originate in Less Developed Countries (LDCs),
including most of those that end up in the US and EU. Steps should be taken to change
the incentives faced by counterfeiters in LDCs participating in the production and trade
of counterfeit.
While counterfeit medicines in wealthy markets are a growing concern for physicians
and law-enforcement agencies, their prevalence pales in comparison to their penetration
of less developed markets. According to the World Health Organization (WHO), 25 per
cent of all medicines in LDCs are counterfeit. In some countries, the prevalence is far
 Counterfeit medicines constitute between 40 and 50 per cent of total supply in
 In China, authorities have found that some products have a counterfeit prevalence  36.5 per cent of antibiotics and anti-malarials on WHO essential drugs list in  A recent survey by the WHO of seven African countries found that between 20 and 90 per cent of all anti-malarials failed quality testing. These included chloroquine-based syrup and tablets, whose failure rate range from 23 to 38 per cent; and sulphadoxine / pyrimethamine tablets, up to 90 per cent of which were found to be below standard (WHO, 2003). In spite of a lack of hard data, it is clear that counterfeit medicines are not confined to a handful of therapeutic classes. This is especially true in LDCs, where the range of fakes on the markets encompasses treatments for a diverse range of conditions and ailments. The top five counterfeited medicines in the Philippines provide some illustration of this point: 1. Antihypertensive drugs 2. Anti-asthma drugs 3. Analgesic medicines 4. Anti-diarrhoea 5. Vitamins This list is certainly not exhaustive. Other favourites for counterfeiting include drugs for treating anaemia, HIV, schizophrenia, as well as growth promotion hormone (used in the treatment of HIV). The problem also extends beyond fake pharmaceuticals to medical consumables such as non-sterile syringes and gauze and even substandard electronic medical equipment. A large proportion of the world’s counterfeit medicines originate in Asia. China in particular is a production centre, although precise data about the scale and scope of the problem within this country is neither widely available nor reliable. In 2001 it was reported that China had 500 illegal medicines factories and while no newer data is available, it is safe to assume that number has since increased. Also in 2001, it was reported that Chinese authorities “closed 1,300 factories while investigating 480,000 cases of counterfeit drugs worth $57 million.” Most Chinese counterfeit medicines that find their way into foreign supply chains first pass through the ports of Hong Kong and Shenzhen. South East Asia more generally is a major source of counterfeit medicines. According to the WHO, Cambodia had 2800 illegal medicine sellers and 1000 unregistered drugs on the market in 2003. The same report showed that Laos had about 2100 illegal medicines sellers, while in Thailand, substandard medicines account for approximately 8.5 per cent of the total market. One 2002 study by government officials showed that 9 per cent of all drugs tested in India were substandard. Some 15,000 generics manufacturers operate in India. Although the majority are legitimate, a small minority are likely to be ‘fly by night’ operations that do not comply with proper standards. Most of the counterfeit medicines in Nigeria originate in India, a fact that lead the Nigerian authorities to
threaten to ban the import of all drugs from India in 2003 (Raufu, A., 2003). However, it
should be noted that 70 per cent of the Indian domestic market is supplied by around 20
companies that regularly pass inspections from visiting officials from Western countries.
Counterfeit medicines also abound in Latin America, with instances reported in
Argentina, Brazil, Colombia, Venezuela, Mexico, Peru and Guatemala: Mexico is a major
global source of counterfeit medicines, with the trade standing at an estimated value of
US$650 million per year – equal to around 10 per cent of total drug sales in the country.
In Russia, it is estimated that counterfeits constitute between five and ten per cent of the
total market. In 1999 alone, 1,500 lots of Russian-made drugs failed to pass quality tests.
Counterfeit medicines can cause harms in various ways: the presence of toxic chemicals
frequently causes injury or death; inappropriate delivery systems and/or inadequate
amounts of active ingredient prevents the drugs from working effectively and, again, can
lead to injury or death; more broadly under-dosing fosters resistance to the active
chemical. In the cases of HIV/AIDS and malaria, this latter aspect is particularly
Counterfeit medicines often contain agents that are injurious to health, as for example
when 89 people in Haiti died after ingesting cough syrup manufactured with diethylene
glycol (a chemical commonly used as anti-freeze). This particular product was made in
China, transported through a Dutch company to Germany, before winding up on the
Haitian market. A similar case occurred in Nigeria in 1995, resulting in the death of 109
children and again in Bangladesh.
The dangers of widespread counterfeiting were illustrated in 1996 during a meningitis
epidemic in Nigeria. Some 60,000 people were inoculated with counterfeit vaccines,
resulting in the deaths of 2,500 people .
More importantly, counterfeits medicines typically provide inadequate doses of drugs,
either because too little active ingredient is included in pills or because the delivery
vehicle (including otherwise ‘inactive’ ingredients) are inappropriate (for example,
chemicals that are not water-soluble). As a result, patients receive too little medicine and
die or are far sicker would have been the case if they had received an adequate dose.
It is estimated that in China between 200,000 to 300,000 people die each year due to
counterfeit or substandard medicine. However, this “official” statistic may over, or
understate the true number of cases.
Drug resistance
Perhaps one of the most worrying implications of the global boom in counterfeit
medicines is the acceleration of new, drug resistant strains of viruses, parasites and
bacteria. If drugs contain too little of the active ingredient, not all the disease agents are
killed and resistant strains are able to multiply and spread.
This is already being observed in the treatment of malaria. Counterfeiters around the
world have cashed in on the massive demand for the latest and most effective
antimalarial drug, artemisinin. A field survey conducted in 2004 showed that 53 per cent
of artemisinin-based
antimalarials in a range of South East Asian countries contained incorrect levels of active
ingredient, which implies that swathes of patients are receiving the incorrect dose. The
direct consequences are death and serious injury resulting from improper treatment. In
addition, malaria parasites exposed to inadequate concentrations of artesunate may result
in the multiplication of parasites resistant to the drug. Even though Artemisinin has only
been widely available since the late 1990s, scientists are already reporting cases of
resistance. According to Dr Dora Akunyili, the head of Nigeria’s national drug regulator,
the racket in fake medicine is directly responsible for this resistance, and is a contributing
factor to the doubling of malaria deaths over the last 20 years.
HIV/AIDS treatment is also under threat from counterfeit medicines. The recent
discovery of counterfeit antiretrovirals in the Congo (Ahmad, 2004) raises the prospect
that the first line therapies for treatment of HIV/AIDS could soon be rendered useless.
With few new research leads in the pipeline, this could have grave implications for the
people of sub-Saharan Africa.
Bird flu
Finally, counterfeit medicines could be undermining our ability to contain and treat a
potential avian flu pandemic. As demand has grown for the anti-viral drug Tamiflu, one
of the best current treatments for the disease, counterfeiters have ramped up production
of illegitimate versions. Already, the Internet is awash with spurious Tamiflu, while
consignments have been
discovered as far apart as New York and Beijing. The risk is that copies containing
sub-therapeutic levels of active ingredient could facilitate the development of drug
resistant forms of the avian flu virus, leaving very few tools to contain a potential
Undermining R&Dresearch and development
Counterfeiting can also undermine the incentives of R&D based companies to invest in
future innovation. Even near-perfect copies of on-patent medicines cause harm by
competing with legitimate supplies of medicines from originating companies, which
reduces revenues and undermines incentives to invest in future R&D.

The problem of counterfeit medicines was first addressed at the international level in
1985 at the Conference of Experts on the Rational Use of Drugs in Nairobi. The
meeting recommended that WHO, together with other international and
nongovernmental organizations, should study the feasibility of setting up a clearing
house to collect data and to inform governments about the nature and extent of
In 1988 the World Health Assembly adopted resolution WHA41.16 which requested
the Director-General of WHO to initiate programmes for the prevention and detection
of the export, import and smuggling of falsely labelled, counterfeited or substandard
pharmaceutical preparations. Given the rapid spread of counterfeit drugs in many
national distribution channels, the World Health Assembly in 1994 adopted resolution
WHA47.13. This requested the Director-General of WHO to assist Member States in
their efforts to ensure that available medicines were of good quality, and in combating
the use of counterfeit drugs.
Increasing international trade of pharmaceuticals and sales via the internet has further
facilitated the entry of counterfeit products into the supply chain. In 2006 this led to
WHO's launch of the International Medical Products Anti-Counterfeiting Taskforce
(IMPACT) which has been the main conduit for WHO's work against counterfeits
Stringent regulatory control of medicines and enforcement by national medicines
regulatory authorities contributes significantly to prevention and detection of
counterfeit medicines. WHO provides direct country and regional support for
strengthening medicines regulation.
To fight counterfeit medicines effectively, a range of stakeholders – not just health
professionals – is needed. In 2006, WHO helped to create the International Medical
Products Anti-Counterfeiting Taskforce, or IMPACT. The aim is to involve a range of
stakeholders in collaborative efforts to protect people from buying and taking
counterfeit medicines. To prevent the manufacture and distribution of counterfeit
medicines, IMPACT's areas of focus are: legislative and regulatory infrastructure,
regulatory implementation, enforcement, technology and communication.

Defining the extent of counterfeiting is difficult for a number of reasons. The variety of
information sources makes compiling statistics a difficult task. Sources of information
include reports from national medicines regulatory authorities, enforcement agencies,
pharmaceutical companies and nongovernmental organizations, as well as ad hoc studies on specific geographical areas or therapeutic groups. The different methods used to produce reports and studies also make compiling and comparing statistics difficult. Studies can only give snapshots of the immediate situation. Counterfeiters are extremely flexible in the methods they use to mimic products and prevent their detection. They can change these methods from day to day, so when the results of a study are released, they may already be outdated. Finally, information about a case under legal investigation is sometimes only made public after the investigation has been concluded. Counterfeiting is greatest in regions where regulatory and enforcement systems for medicines are weakest. In most industrialized countries with effective regulatory systems and market control (i.e. Australia, Canada, Japan, New Zealand, most of the European Union and the United States of America), incidence of counterfeit medicines is extremely low – less than 1% of market value according to the estimates of the countries concerned. But in many African countries, and in parts of Asia, Latin America, and countries in transition, a much higher percentage of the medicines on sale may be counterfeit. Not only is there a huge variation between geographic regions in terms of incidence of counterfeit medicines, variation can also be significant within countries: for example, between urban and rural areas, and between cities. All kinds of medicines have been counterfeited – branded and generic – ranging from medicines for the treatment of life-threatening conditions to inexpensive generic versions of painkillers and antihistamines. Several factors contribute to the counterfeit medicine problem. Paying for medicines can consume a significant proportion of individual or family income. Some people seek medicines that are sold more cheaply. These are often available from non-regulated outlets, where the incidence of counterfeit medicines is likely to be higher. People might also purchase medicines from non-regulated outlets if, as is often the case in the rural areas of developing countries, medicines supplies at regular health facilities do not meet demand. Counterfeiting medicines can be very lucrative. Since many countries have not yet enacted deterrent legislation, counterfeiters often do not fear prosecution. The growth in international trade of pharmaceutical ingredients and medicines adds a further dimension of complexity to this issue. For example, trade through brokers and
free trade zones where regulation is lax or absent (and medicines repackaged and
relabelled to conceal country of origin) is increasing.
Absent or defective IP protection
One way to prevent the sale of unauthorised copies of medicines is to enable companies
to register and enforce trademarks. These enable vendors to signal the quality of their
product to potential purchasers. Trademark owners have strong incentives to ensure that
the quality of their product is maintained because their reputation and hence future
profitability depend upon it. In many LDCs, it is difficult to enforce trademarks – even
for local companies. Where trademarks cannot be enforced, cheaply produced poor
quality copies will typically crowd out good quality drugs.
Lack of adequate civil liability
Civil law protects the consumer against mis-sold or defective goods. By enabling
consumers (or their relatives) to obtain redress from the manufacturer or supplier of a
harmful product, such liability both compensates those who are harmed and discourages
manufacturers and suppliers from selling counterfeits. In many LDCs, however, civil law
is either poorly defined or difficult to enforce.
Inability to resolve disputes over property rights and contracts in independent
Underlying the lack of civil liability and weak IP protection are costly and inefficient
legal systems. As a result, it can often take years for cases to be heard. Many courts in
LDCs are hampered by a lack of basic things such as reliable electricity and inefficient
processes, causing delays. In many LDCs, law enforcement is also corrupt. In such places,
criminal counterfeiting gangs may be able to pay corrupt law enforcement agents to
turn a blind eye to their activities. If a case does make it to court, the gangs may be able
to pay off the judge and thereby induce a favourable judgement.
Weak or absent rule of law
In LDCs with a weak rule of law, political and legal decisions tend to be arbitrary and
designed to benefit the elite. As a result, regulation designed to combat counterfeiting is
often ineffective. Corruption within regulatory agencies and police forces exacerbates
this problem, so that the enforcement of regulations is seen as an opportunity to collect
Price controls
The imposition of price controls by governments prevents companies from selling goods
at different prices to different consumers. Also, where prices are controlled at different
levels in different markets, traders exploit these price differentials through arbitrage. Such
trade (called parallel trade) may create gaps in the supply chain which can be exploited
by counterfeiters. For example, it is often necessary to repackage drugs in order to sell
them in a different market, which requires that the packages will require relabelling in
the correct language. This creates opportunities for unscrupulous intermediaries to
penetrate the supply chain with fakes. Price controls in wealthy country markets
therefore increases the chance that copies of patented medicines produced in LDCs will
leak back into wealthy country markets. In addition, companies have less incentive to
register products in markets where their drugs are subject to price controls, leading to
shortages in supplies. They also reduce the margins made by pharmacies, making the
distribution of drugs to remote and rural regions financially unviable. For example, the
price caps forced on certain drugs in South Africa have been implicated in the closure of
103 pharmacies. If markets are left unsupplied in this way, it presents a clear incentive for
counterfeiters to fill in the unmet demand.
Taxes and tariffs
LDC governments also stimulate demand for cheaper fakes by artificially driving up the
price of legitimate drugs through taxes and tariffs, which can inflate the retail price of
drugs by up to 50 per cent (see table below). Many of the high tariff countries also have
a significant indigenous counterfeit medicine industry and / or problem. It is unlikely
that this is entirely coincidental.
Duties and taxes on retail medicines
Country Combined total duties and taxes
India 55%
Sierra Leone 40%
Nigeria 34%
Pakistan 33%
Bolivia 32%
Bangladesh 29%
China 28%
Jamaica 27%
Morocco 25%
Georgia 25%
Mexico 24%
Table adapted from European Commission, 2003

The counterfeiting of drugs is a global problem which will not be eliminated until the
supply-side issues are addressed. The majority of counterfeit drugs are manufactured in
LDCs, so reform in these countries is absolutely vital if progress is to be made. The most
pressing area for reform in the majority of LDCs is the application of the rule of law, the
definition and enforceability of property rights and the enforceability of contracts.
Without such reforms, counterfeiters will continue to kill hundreds of thousands of
people every year.
In order to contain the global counterfeiting scourge, it is necessary to address those dynamics which encourage the manufacture and supply of counterfeit medicines. Since the majority of these drugs originate in LDCs, it should be a matter of priority to address those lacunae of governance which allow LDC counterfeiters to ply their trade with relative impunity. Most importantly, it is essential that contracts, property rights and the rule of law be upheld in the countries in which the majority of these drugs are produced. When properly upheld, these formal market institutions enable entrepreneurs to participate freely in the market, leading to economic growth and technological development. When these institutions are not upheld, as is the case in most lower-income countries, people are forced into the informal economy as a way of side-stepping the cost and difficulty of conducting business formally. And when the majority of the population subsist within the informal economy, they are unable to avail themselves of the protection that would otherwise exist from contracts or the implied reputation of trademark-protected products.
At the international level, the agreement on trade related aspects of intellectual property
rights (TRIPs), which is part of the WTO Agreements of 1994 and is mandatory for all
World Trade Organisation members, requires that the trademark laws of member
jurisdictions are compatible with each other, a quality which is known as
‘harmonization'. LDCs that are members of the WTO should therefore have TRIPs
compliant trademark recognition. However, the only way for aggrieved countries to
enforce breaches of the TRIPs agreement is through trade sanctions. This is often not a
particularly desirable option, for several reasons. First, trade sanctions hurt both parties –
people in the offending country will lose much-needed export revenue and associated
employment opportunities, while people the aggrieved country will lose the economic
benefits of importing goods from a country that has a comparative advantage in
production. To the extent that employment falls in the offending country, more people
may end up with a smaller disposable income and thereby more likely to purchase
cheaper counterfeit medicines.
Secondly, the enforcement of TRIPs can, in certain cases, undermine popular support
for intellectual property protection, making future enforcement more difficult politically.
For example, in 2001 the research-based pharmaceutical companies sought to challenge
in the courts a South African law that seemingly contravened TRIPS. In response to a
very vocal campaign by AIDS activists, the pharmaceutical companies withdrew their
case. While the dispute was not brought in the WTO, the negative PR given to it created
a persistent fear of the possible fall-out from bringing such a WTO dispute.
Bilateral trade agreements
An alternative way of persuading LDCs to institute intellectual property regimes is
through tempting them with bilateral and regional free trade agreements (FTAs). Most
FTAs involving the United States contain provisions that require signatory countries to
bolster their intellectual property regimes. By promising access to large and lucrative
markets, these agreements can be a way of persuading LDCs to respect the fundamentals
of intellectual property protection, which is a vital step for curtailing counterfeiting.
Although these agreements are not as beneficial as unconditional free trade, they are a
step in the right direction, freeing up trade and thereby improving economic well-being.
However, they do raise complications in the form of ‘rules of origin’ issues, which are
costly to monitor and administer. Furthermore, an overly-complex ‘rules of origin’
system may lead to the development of illicit trade routes which could be exploited by
traders in illegitimate goods such as counterfeit medicines.

Despite frequent media stories in China reporting the success of the State Food and
Drug Administration (SFDA) and its local branches in cracking down on counterfeit
drug makers, there is growing concerns that fake drugs are expanding from rural
markets to bigger drugstores in major Chinese cities. Commercial corruption and poor
performance of drug regulators are major contributors to the prevalence of fake drugs,
many local authorities are reluctant to respond to reports and follow-up inquiries. The
high price of medicines is a significant factor driving counterfeit drug making. Most
counterfeiters target expensive drugs sold by international pharmaceutical firms in
China. Although most Chinese drugs are generics whose production costs are quite low,
many domestic pharmaceutical companies have successfully registered their medicines as
highly priced new medicines, due to China's loose regulation on new drugs. There are
few who refute accusations against drug regulators, claiming that they have studied and
implemented various measures against fake drugs, but the high profits of fake drug still
stimulate people to do so. Currently the relevant Chinese laws only stipulate penalties
up to two times of the sales volumes of fake drugs, which is too low as compared with
the tremendous profits of the illicit behaviour. It also suggests the huge numbers of
pharmaceutical companies and drug sellers in China provide many channels for fake
drugs to be distributed.
African countries
The World Health Organization (WHO) estimates that up to 30 percent of medication
on the market in countries in Africa are counterfeit and have found that nearly half of
the drugs sold in Angola, Burundi, and the Congo are substandard. The origin of fake or
substandard drugs sold in Africa is often hard to track because these medicines are often
hidden in cargoes sent on roundabout journeys to prevent the source from being
discovered. The problem of counterfeit medicines is more prevalent in countries where
medicine regulation is ineffective, smuggling of medicines is rampant, secret
manufacturing exists, sanctions are absent or very weak, and there is high corruption.
West Africa has increasingly become the target of a range of counterfeit medication,
including antibiotics, antiretroviral drugs and medicines to fight malaria and tuberculosis.
Most of these fake pharmaceutical products, which appear to be genuine but contain
little or no active ingredient, are imported, particularly from South and East Asia, but
some come from the local pharmaceutical industry.To combat this illegal market, UN is
calling on rich States to stop using Africa as a dumping ground for fake medicines.
Private companies complicit in this trade should be named, shamed and banned, and
codes of conduct more rigorously enforced. Governments should step up their
regulatory efforts to ensure stricter control and enforcement of pharmaceutical
regulations. Governments must also enforce their laws, drawing on the support of
donors, regional partnerships and the support of international instruments like the
United Nations Conventions against Corruption and the United Nations Convention
against Transnational Organized Crime.
Latin American Countries
In Latin America the cost of medicines has increased at a rate faster than inflation. The
number of pharmaceutical units sold in many countries in the region decreased despite
increased drug expenditures, confirming that access to medicines has become more
difficult. To ensure that countries have access to needed medicines at an affordable price,
WHO has recommended the use of essential drug lists to guide drug selection,
registration and procurement by governments; it has also recommended the
implementation of policies to promote the use of generic drugs. The need to increase
the availability of and access to generic drugs has gained visibility with the failure of
antiretroviral therapy to reach patients in the developing world . Countries in Latin
America need to harmonize their basic vocabulary on pharmaceutical products and
agree the technical procedures needed to ensure the quality of multisource products.
Drug regulatory agencies need to be strengthened so that the population can have
confidence in the quality of the drug supply. Agreeing on basic principles would also
facilitate the exchange of information, the ability to build on one another's experience
and the study of how different pharmaceutical policies affect the affordability of and
access to pharmaceuticals.
1. 2. 3. 4. 5. 6. 7. 8. "Counterfeit medicines in less developed countries Problems and solutions" By Julian Morris and Philip Stevens International Policy Network London


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