4

Causes of Falsified and
Substandard Drugs

The committee recognizes that the factors that encourage the proliferation of substandard and falsified medicines are different but overlapping. In general, neglect of good manufacturing practices, both accidental and deliberate, drives the circulation of substandard drugs, while falsification of medicines has its roots in crime and corruption. Both types of products circulate because of the erratic supply and constant demand for medicines and weaknesses in the regulatory system. An inaccurate or inadequate understanding of the problem among health workers and the public contributes to the problem.

REASONS FOR SUBSTANDARD DRUGS

As Chapter 1 explains, substandard drugs are those products that fail to meet the specifications set by the regulatory authority and delineated in a pharmacopeia or the manufacturer’s dossier. Substandard medicines may, for example, be made in such a way that they do not dissolve properly; they may be of incorrect hardness or osmolarity; they may contain improper doses of the active ingredients; or be made from impure or unstable ingredients. Failure of good manufacturing practices is the root cause of substandard drugs.

Uneven Manufacturing Quality

Any company can make mistakes, but adherence to good manufacturing practices makes mistakes less likely and easier to correct. A factory run in accordance with best practices does not need to be the most technologically advanced or use state-of-the-art equipment, but there are costs to bring a factory up to standard, train staff on appropriate protocols, and observe them consistently. There are many exemplary manufacturers in developing countries that observe international best practices. There are also many that do not, but they operate anyway, either because the regulatory authority is unaware of the problem, or because regulators are under pressure to ignore it in the name of promoting industry.



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4 Causes of Falsified and Substandard Drugs The committee recognizes that the factors that encourage the prolifera- tion of substandard and falsified medicines are different but overlapping. In general, neglect of good manufacturing practices, both accidental and deliberate, drives the circulation of substandard drugs, while falsification of medicines has its roots in crime and corruption. Both types of products circulate because of the erratic supply and constant demand for medicines and weaknesses in the regulatory system. An inaccurate or inadequate understanding of the problem among health workers and the public con- tributes to the problem. REASONS FOR SUBSTANDARD DRUGS As Chapter 1 explains, substandard drugs are those products that fail to meet the specifications set by the regulatory authority and delineated in a pharmacopeia or the manufacturer’s dossier. Substandard medicines may, for example, be made in such a way that they do not dissolve properly; they may be of incorrect hardness or osmolarity; they may contain im- proper doses of the active ingredients; or be made from impure or unstable ingredients. Failure of good manufacturing practices is the root cause of substandard drugs. Uneven Manufacturing Quality Any company can make mistakes, but adherence to good manufactur- ing practices makes mistakes less likely and easier to correct. A factory 137

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138 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS Key Findings and Conclusions • There are equipment, staffing, and process costs necessary to meet international good manufacturing practices in the pharmaceutical industry. • Lack of investment capital and poor infrastructure hold back some small- and medium-sized drug companies in developing countries from meeting international standards. •  want of investment in pharmaceutical manufacturing, the poor For pay more for substandard medicines. • Unscrupulous manufacturers will deliberately produce poor-quality drugs, if the odds of getting away with it are favorable. •  hen regulatory checks on production are inconsistent, procurement W practices can help ensure that honest manufacturers get the largest market share. •  World Health Organization’s (WHO’s) Model Quality Assurance The System for procurement is a useful independent standard for procure- ment agencies. •  ational and international procurement agencies should follow the N WHO’s guidelines for procurement. Small agencies should not procure directly from manufacturers. run in accordance with best practices does not need to be the most tech- nologically advanced or use state-of-the-art equipment, but there are costs to bring a factory up to standard, train staff on appropriate protocols, and observe them consistently. There are many exemplary manufacturers in de- veloping countries that observe international best practices. There are also many that do not, but they operate anyway, either because the regulatory authority is unaware of the problem, or because regulators are under pres- sure to ignore it in the name of promoting industry. Quality control is a part of good manufacturing practices sometimes neglected in developing countries. The WHO compendium on pharma- ceutical manufacture describes the importance of having quality-control staff who are separate from production staff, working in an independent department (WHO, 2007b). A manager trained in quality control should supervise this department and run an equipped quality-control laboratory (WHO, 2007b). Quality-control staff should verify that everything that is a part of the factory’s product, including packaging, starting materials, intermediates, and finished products, meets requirements (WHO, 2007b). They may also do internal inspections and quality audits and evaluate the quality controls used by their suppliers (WHO, 2007b). The majority of the pharmaceutical industry in the poorest countries only formulates and re-

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CAUSES OF FALSIFIED AND SUBSTANDARD DRUGS 139 packages finished medicines, also called secondary and tertiary production (see Box 4-1). Confirming the quality control measures used by suppliers, who are often in other countries, is particularly difficult for these firms. Formulation companies have about a 6-month lag between placing an order for an active ingredient and selling a finished drug (Bumpas and Betsch, 2009). This delay can be even longer for firms in landlocked countries or places where customs clearance and transportation from the port of entry are slow or unpredictable (McCabe, 2009). It takes substan- tial working capital to cover costs during those lags (Bumpas and Betsch, 2009). Adding to the expense are the active ingredients themselves, which can cost thousands of dollars per kilogram; buying from WHO-prequalified or stringent-regulatory-authority–approved suppliers can add a 100 percent markup to the sale price (Bumpas and Betsch, 2009). The market for active ingredients has been especially volatile in recent years because of increas- ing costs of raw materials and growing environmental regulation in India and China (Bumpas and Betsch, 2009). Price volatility further complicates business for smaller firms, who tend to deal with less consistent (therefore cheaper) suppliers who are more vulnerable to market shocks. Although proper quality-control measures require purchasing only from suppliers who observe good manufacturing practices, supplier quality is often ne- glected because of logistical and financial obstacles. And, because the cost of active ingredients is by far the largest fraction of overall cost, a small reduction in active ingredient can vastly increase the profit margin. Good quality comes at a price, either from equipment costs, better ingredients, or the higher process cost of quality assurance. The water filtration system is a high risk for microbial growth in any pharmaceutical plant and should be monitored vigilantly (WHO, 2007b). Microbial con- tamination is more of a threat in countries with poor water quality; much equipment cannot run on erratic power supplies (Anderson, 2010). Drug manufacturers also need an air handling system that will prevent dust and residue from one work area from contaminating other parts of the factory (WHO, 2007b). The adequacy of the air handling becomes more impor- tant in areas of the factory where different products are being processed at the same time and opportunities for cross-contamination abound (WHO, 2007b). Some small-scale pharmaceutical companies make few finished formu- lations, but others make a wide range of products. Small firms are not gen- erally able to dedicate equipment to specific products; equipment cleaning and cleaning validation become especially important. When equipment used for multiple products is not properly cleaned, and the cleaning not validated prior to changing the product line, the drugs produced can become con- taminated. This type of contamination is difficult to detect. Quality-control assays generally test for the presence of the known ingredients, not the wide

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140 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS BOX 4-1 The Medicines Manufacturing Process Drugs are made with four or five main steps between the raw ma- terials and the packaged final formulation (Figure 4-1). Medicines manu- facture in the poorest countries is generally limited to the last steps in this process: formulation and packaging (Bumpas and Betsch, 2009; IFC, 2007). Of the 46 countries in sub-Saharan Africa, about 80 percent have local pharmaceutical industries, but only South Africa produces active ingredients (Bumpas and Betsch, 2009). South Africa alone accounts for 70 percent of the region’s medicines production (Bumpas and Betsch, 2009). The firms that make final formulations in developing countries buy excipients and active ingredient from chemical suppliers abroad, mostly from China and India. China supplies about 43 percent of the world’s active ingredients for anti-infective medicines and exports 77 percent of the active ingredient made in the country, a $4.4 billion industry. India exports 75 percent of the $2 billion worth of active ingredients it pro- duces (Bumpas and Betsch, 2009). COMPONENTS Sterile API API Raw materials Intermediates APIs Finished products PROCESSES Chemical synthesis Formulation Packaging Fermentation Extraction Primary production Secondary production Tertiary production FIGURE 4–1 Schematic block diagram of a pharmaceutical manufacturing process. NOTE: API = active pharmaceutical ingredient. SOURCES: Adapted from Kaplan and Liang, 2005; Wilson et al., 2012. range of possible unknown contaminants. Good pharmaceutical manufac- turing requires drug producers to follow a cleaning protocol laid out in their standard operating procedures and to follow cleaning with validation testing (APIC, 1999; WHO, 2007b). There is significant expense necessary for pharmaceutical companies to follow good manufacturing practices. Multinational companies, both

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CAUSES OF FALSIFIED AND SUBSTANDARD DRUGS 141 innovator and generic, operate on a scale that allows them to recover the costs of running high-quality factories. This is not true for many smaller manufacturers in developing countries. In India, for example, large pharma- ceutical companies supply medicines and vaccines of the highest quality to every country in the world, but thousands of small manufacturers struggle to implement quality-assurance and quality-control procedures (Kaplan and Laing, 2005). A World Bank study found that one-tenth of Indian regis- tered pharmacies report substandard medicines, most of them coming from small- and medium-sized producers (Kaplan and Laing, 2005). Because the registered pharmacy is the most strictly regulated medicines outlet in India, the proportion of substandard medicines sold in the informal market is presumably much higher. The problem is not limited to India. In a survey of antibiotic quality in Indonesia, investigators found 89 percent of samples of one local company’s cotrimoxazole were substandard (Hadi et al., 2010). Critics of local manufacture have cited these problems as reasons against pharmaceutical manufacturing in low- and middle-income coun- tries (Ahmed, 2012; Bate, 2008). This may be a short-sighted argument. Domestic manufacture of medicines is an important part of health and industrial policy in many countries. Governments are understandably eager to ensure a safe drug supply for their population. In theory, locally made products could be cheaper because of lower shipping costs incorporated into the final price (Kaplan et al., 2012). Manufacturing medicines also gives people jobs and facilitates technology transfer (Wilson et al., 2012). Companies that start out packaging only finished drugs will slowly develop the trained workforce needed for more complicated secondary and primary manufacturing. Initial capital investments and infrastructure problems stand between quality medicines and many small- and medium-sized medicine manufactur- ers. There are companies in developing countries that want to meet inter- national quality standards and buy from reliable suppliers, but they fail to do so for reasons beyond their control. Governments alone cannot supply the technical depth or money to fix these problems (Wilson et al., 2012). The private sector must be involved. The International Finance Corporation (IFC) and the Overseas Private Investment Corporation (OPIC) can work to encourage private sector growth in developing countries. With the initial investments made, governments can take on the more manageable role of encouraging partnerships with foreign manufacturers. Recommendation 4-1: The International Finance Corporation and the Overseas Private Investment Corporation should create separate invest- ment vehicles for pharmaceutical manufacturers who want to upgrade to international standards. Governments can complement this effort by encouraging partnerships between local and foreign manufacturers.

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142 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS Poor infrastructure, management problems, and insufficient training for staff can all hold back pharmaceutical manufacturers in low- and middle- income countries. While the extent to which each of these factors impedes progress varies among countries, there is a common problem of lack of capital (Cho et al., 2012; Patricof and Sunderland, 2005). Small- and medium-sized businesses have a particularly difficult time securing business improvement loans, as do firms in Africa (Patricof and Sunderland, 2005). The only capital available to many small- and medium-sized drug manufacturers is the company’s already meager profits. Reinvesting profits in capital improvements is not a quick or reliable path to develop a modern manufacturing infrastructure (UNDP, 2004). In developed countries small- and medium-sized firms might mortgage their assets to raise money, but mortgage laws and bank policies often disallow this in low- and middle- income countries (UNDP, 2004). The equipment and supplies needed to observe good manufacturing practices must be bought on foreign markets with hard currency, which banks in poor countries may only have at certain times of year (McCabe, 2009). Manufacturers in developing countries often have to absorb their cus- tomer’s debts, further reducing their working capital (McCabe, 2009). Therefore, small- and medium-sized companies are risky investments. Their national banks find the costs of the initial risk assessment both too costly and too complicated to make loans attractive (UNDP, 2004). Barriers to ac- cessing capital hold back small- and medium-sized businesses, the “engines of job creation,” in the parts of the world most desperate for more and better jobs (Economist, 2012b; UNDP, 2004, p. 4). When these enterprises are drug companies, there is an added drawback. For want of investment capital, the poor pay higher prices for substandard drugs (UNDP, 2004). The IFC and OPIC The IFC and OPIC both promote private-sector development as a means to reduce poverty. The IFC’s goals include promoting open markets and jobs that deliver essential services in developing countries (IFC, 2012c). To this end, it provides investment services to help promote private-sector growth in developing countries. Through investments, advisory services, and asset management, the IFC aims to reduce poverty and encourage eco- nomic growth (IFC, 2012d). The IFC works with the World Bank Group, but with financial and legal autonomy. Its membership is made up of 184 developed and developing countries (IFC, 2012f). The IFC accepts applications for ventures in member countries, often when a company cannot access the requisite capital in its home country (IFC, 2012a,d). The organization serves a wide range of industries, includ- ing health, education, infrastructure, agribusiness, and manufacturing (IFC, 2012b).

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CAUSES OF FALSIFIED AND SUBSTANDARD DRUGS 143 There is precedent for the IFC working with pharmaceutical companies in developing countries (IFC, 2012e). Alongside investment in upgrading pharmaceutical standards, its membership structure could be used to set up partnerships between pharmaceutical companies in developing countries and those in countries with strict regulatory authorities. The IFC does not lend directly to small- and medium-sized enterprises but can invest in orga- nizations that will in turn lend to smaller companies (IFC, 2012a). OPIC, the U.S. government’s development finance agency, does make loans to small businesses (OPIC, 2012a). Its loans and guaranties for small- and medium-sized business financing range from $350,000 to $250 million (OPIC, 2012a). OPIC often finances capital costs such as equipment and construction (OPIC, 2012a). It also funds national lenders to expand their lending capacity to small- and medium-sized enterprises (OPIC, 2012a). Although the agency does not grant requests that are solely for acquisitions or working capital, it will support the expenses if they are part of a larger project (OPIC, 2012a). OPIC creates ways for investing in developing countries, to the benefit of both development abroad and private firms in the United States (OPIC, 2012a). OPIC’s investment policies promote sustainable development and human rights; investment in medicines manufacture is well aligned with these priorities (OPIC, 2012b). Investment in upgrading pharmaceutical manufacturing standards ad- vances the goals of both organizations; there is also precedent for such in- vestments. In August 2012, the IFC invested $47 million in Fosun Pharma, a leading Chinese drug company that makes, among other products, anti- malarials for aid organizations (Yu and Hindenburg, 2012). OPIC sup- ported the development of generic drug manufacturing in Afghanistan in 2005 (OPIC, 2006). The committee commends these projects and encour- ages OPIC and the IFC to make more similar investments in a wider range of companies. Investment in pharmaceutical manufacturers in low- and middle-income countries has immediate benefits to the manufacturers trying to upgrade their production. There are also spillover benefits to a cohort of workers trained in good manufacturing practices and the use of modern equip- ment. These workers may eventually find new positions in other industries, sharing their knowledge about manufacturing, and contributing to a more competent workforce. IFC and OPIC investment will help buyers identify manufacturers who are serious about running a responsible business and willing to make expensive changes to their methods. Firms that make these investments are clearly trying to eliminate substandard production. Building responsible firms gives procurement agencies that are forced to buy locally produced medicines a high-quality alternative to the status quo. Governments in low- and middle-income countries can complement investments in the private sector by encouraging partnerships between for-

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144 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS eign and local manufacturers who upgrade their production. Partnerships can continue the cross-fertilization of ideas that direct investment sparks. Manufacturing staff in developing countries who work with their counter- parts abroad learn about regulatory science and business management, for example. This exposure benefits all parties and advances an international network of high-quality drug manufacturers. Tiered Production In practice it is difficult to distinguish the quality failures that are to blame on a manufacturer’s inability to meet international best practices from those which come from a decision to cut corners and produce inferior products for poorly regulated markets. When a producer capable of meet- ing international standards fails to do so consistently and only in product lines sold to the poor, one may conclude that the noncompliance is part of a more insidious system. Rich countries enforce high quality standards for medicines, and manu- facturers recognize the need to use good-quality ingredients and good manufacturing practices to sell in these markets. United Nations (UN) agencies and the larger international aid organizations will also refuse to do business with companies that cannot meet stringent regulatory author- ity quality standards. Manufacturers are aware, however, that low- and middle-income countries are less likely to enforce these standards. Some companies exploit this and produce drugs of lower quality for the loosely regulated markets (Caudron et al., 2008). When a manufacturer produces medicines of inferior quality for less exacting markets, it is known as tiered or parallel production (Caudron et al., 2008; World Bank, 2007). Tiered production is a complicated problem, in part because some kinds of tiered production are legal. International manufacturers may sup- ply to multiple markets which use different legal product quality standards. For example, the British Pharmacopoeia monograph for amoxicillin gives no dissolution standard (British Pharmacopoeia, 2012); the U.S. Pharma- copeia does (USP-NF, 2010). Assay limits may also be different, making a product illegal by one pharmacopeia but legal by another. A manufacturer may supply to one country that stipulates a uniformity of dosage at 90-120 percent of declared dosage and to another country that stipulates 85-115 percent, for example. Both these standards aim to correct for the fact that drugs such as antibiotics degrade quickly, making a high initial dose accept- able. However, manufacturers could technically aim to fill only the lower bound of the dosage requirements and be within the letter of the law. A study of amoxicillin samples in Arab countries found that most samples’ ac- tive ingredient concentrations were bordering the U.S. Pharmacopeia lower limit (Kyriacos et al., 2008). The authors admitted, however, that many of

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CAUSES OF FALSIFIED AND SUBSTANDARD DRUGS 145 the problematic samples would have been judged acceptable by the wider British Pharmacopoeia standard (Kyriacos et al., 2008). Participants at the public meetings for this study mentioned concerns with parallel production, but evidence for it is largely anecdotal. There is reason to suspect tiered manufacturing when the dose of active ingredient is consistently lower, never higher, than the label claim (Bate et al., 2009b). Drugs, especially tablets, of less than half the labeled potency before the ex- piry date are particularly dubious. In a hospital dispensary in rural Nepal, a bottle of pediatric amoxicillin from a WHO-certified producer with many obvious labeling and packaging defects also suggests either parallel manufacturing or diversion, a problem discussed in Chapter 5 (Brhlikova et al., 2007). Tiered manufacturing is a rising problem in emerging manufacturing nations. A 2006 Lancet report described a shift in Russia from most bad medicines being falsified drugs made “in basements and small backroom enterprises” to ones coming from legitimate companies running “a ‘night shift’ to produce extra quantities of a certified drug that does not pass quality control, or sophisticated copies of well-known drugs . . . often with reduced levels of expensive active ingredients” (Parfitt, 2006, p. 1481). The United Nations Office on Drugs and Crime (UNODC) described a similar case in India. The U.S. Food and Drug Administration (FDA) revoked market authorization from an Indian drug manufacturer found to be pro- ducing antibiotics with no active ingredients (UNODC, 2010). After losing its license, “the factory continued to operate at night, until an evening raid by police uncovered an underground cellar in the factory, where exact look-alikes of several popular, fast-moving, high-cost medicines were being manufactured, most of which contained no active ingredient” (UNODC, 2010, p. 187). Jiben Roy reported on a similar case: A Bangladeshi company delib- erately kept the active ingredients in paracetemol, ampicillin, and cotri- moxazole below the labeled concentrations after repeated warnings from the regulatory authority (Roy, 1994). In the same paper he attributed the manufacturer’s quality failures in their cheaper product lines to negligence alone. Their B-vitamins, for example, contained the proper ingredients, but in erratic doses (Roy, 1994). This paper was able to make distinctions between the deliberate quality failures and negligence because the author had close knowledge of the manufacturer and its history. Usually only the national regulatory authority could have the information needed to make this distinction. In many countries, even the regulatory authority would not have that information or the political will to act on it (Christian et al., 2012b). Pinpointing cases of deliberate tiered manufacturing is difficult to do, though it is easier to see practices that allow it happen. Poor oversight of

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146 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS contract manufacturers is one such practice. A combination of technologi- cal sophistication and low labor costs in some developing countries attract drug companies, both innovator and generic, to contract with manufactur- ers abroad (PWC, 2010). Setting up a drug factory in India, for example, costs companies about 40 percent of what they would pay in North Amer- ica or Europe (PWC, 2010). Companies provide contract manufacturers with the materials, includ- ing packaging, to make their products. As Dilip Shah, Secretary General of the Indian Pharmaceutical Alliance, explained to a committee delegation in India, “Very few companies, foreign or domestic, monitor the [contract manufacturer’s] process loss of raw materials, active ingredients, and pack- aging materials. I have known of cases of 15 to 20 percent packaging mate- rial losses and companies are not bothered.” These contract manufacturers have established distribution channels; it is not difficult for them to intro- duce falsified drugs into the market. Because the contract manufacturers have the processes and materials needed to produce a proper drug, they will sometimes sell perfectly made drugs outside of the licit distribution system. More often, they will use legitimate packaging to disguise a false product. Pharmaceutical exporting countries can also unintentionally facilitate tiered manufacturing by not requiring the same evaluations for exported drugs as for those sold domestically (Caudron et al., 2008). In general, regulatory agencies are responsible for protecting their country’s domestic medicine supply; ensuring quality for exported products is often beyond their mandate and budget. Importing countries’ regulatory agencies have the right to inspect producers abroad, but the breadth of international supply chains makes this a difficult job even for the most mature agencies (IOM, 2012). It is more difficult for low- and middle-income countries to ensure checks on drug quality during manufacture, a problem discussed later in this chapter. Procurement and Substandard Medicines When regulatory checks on production are inconsistent, procurement practices can help ensure that quality medicines get the largest market share. The Global Fund explains the goal of good procurement as supplying medicine “meeting agreed quality standards at the lowest possible price and in accordance with national and international laws” (Global Fund, 2009, p. 6). Government agencies procuring medicines have to reconcile a tension between quality and price (Torstensson and Pugatch, 2012). The WHO Operational Principles for Good Pharmaceutical Procurement discusses the hidden costs of cheap drugs, including poor shelf life and health threats (WHO, 1999, 2002a). The firms that offer the cheapest prices may do so by buying impure ingredients or cutting corners in formulation. Good procurement dictates that the cheapest tenders are not accepted

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CAUSES OF FALSIFIED AND SUBSTANDARD DRUGS 147 if they are of dubious quality, but it is difficult not to be swayed by price, especially for provincial health offices and other small procurement agen- cies (Bate, 2007; Harper et al., 2007). Chinese provincial procurement, for example, is known for “pressuring manufacturers to produce the lowest cost possible while preserving their profits” (Burkitt, 2012). These agencies face pressure to supply medicines for entire populations on tight budgets; sometimes there is added demand to support local manufacturers (Dickens, 2011; Torstensson and Pugatch, 2012). Openness in procurement can bal- ance these pressures by exposing unnecessarily high costs or bad quality, but transparency, which also includes vetting procurement officers for con- flicts of interest, auditing suppliers, documenting decisions, and scrutinizing procurement agents, adds costs to the process (Torstensson and Pugatch, 2012). For these reasons the Organisation for Economic Co-operation and Development (OECD) recommends “an adequate degree of transparency in the entire procurement cycle to promote fair and equitable treatment for potential suppliers” (OECD, 2009, p. 11). Over the longer term, more openness is a good investment. In Argen- tina, for example, a health transparency program brought down the pro- curement costs of medicines (Lewis, 2006). Reducing costs of procurement would be especially helpful in the poorest countries, which tend to spend a higher proportion of their health budget on drugs and where medicines are often expensive (Torstensson and Pugatch, 2012). In a study of 36 low- and middle-income countries, Cameron and colleagues found that public procurement agencies in the western Pacific, Africa, and the former Soviet bloc pay an average of 34 to 44 percent above the international reference prices (Cameron et al., 2008). Donors may attempt to cover unmet demand for drugs, though donor procurement also has problems. Methods for assuring the quality of do- nated medicines vary by donor. The United States Agency for International Development (USAID) requires FDA, or other stringent regulatory agency, approval on donated medicines. It also has a prequalification process to vet the wholesalers it works with (GAO, 2012). USAID contractors are often responsible for implementing these rules in the field (Moore et al., 2012). The Global Fund will accept WHO prequalification, the approval of stringent regulatory authorities, or the review of an expert panel, espe- cially for finished pharmaceuticals that are not prequalified by the WHO (GAO, 2012). Many European donors ask their recipients to assure quality of medicines procured with donated funds (Moore et al., 2012). Table 4-1 gives an overview of different agencies’ quality assurance policies. Proper precaution in the medicines procurement process can prevent poor-quality products from infiltrating the market. Good procurement involves separating the various steps of procurement process identified in Table 4-2. Good procurement also puts a strong emphasis on controlling corruption and promoting transparency. The WHO’s Model Quality Assur-

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186 COUNTERING THE PROBLEM OF FALSIFIED AND SUBSTANDARD DRUGS TABLE 4–7 Penalties for Trademark Infringement* Maximum Civil Monetary Penalty Maximum Prison (Quantified Penalties in U.S. Sentences Country Dollars) No imprisonment Cambodia, a Germany,b Damages are recovered for infraction India,c Pakistan,d Philippines, e Singapore, f South Africa, g Uganda,h United States, i Korea j Up to $47,000 China, k Taiwan l Infringer must pay the trademark owner profits earned from the infringement or the amount of losses that the trademark owner has suffered Jordan m Up to $8,500 Up to 3 days Mexico n Up to $70,000 Up to 1 year Switzerland o Up to $110,000 Brazil p Monetary penalty not disclosed Up to 2 years Argentina q Up to $30,000,000 Up to 3 years Lebanon r Up to $0.40 Up to 5 years Japan s Up to $60,000 with labor Indonesia t Up to $105,000 *Additional penalties and fines may be associated with specific infractions. a The Law concerning Marks, Trade Names and Acts m Abu Ghazaleh Intellectual Property (2008). New of Unfair Competition. (Cambodia). Chap. 8, Art. amendments to Jordan’s trademark law. Retrieved 27. December 28, 2012, from http://www.ag-ip-news. b Germany Trademark Law (as amended on July 16, com/news.aspx?id=24580&lang=en. 1998). (Germany). Chap. 3, Sec. 14 (6). n Arenas, A. (2012). Country correspondent: Mexico, c The Trade Marks Act, 1999. (India). No. 47 of 1999. Olivares & Cía. Chap. XIII, Sec. 135 (1). o Federal Law of August 28, 1992 on the Protec- d Trade Marks Ordinance, 2001. (Pakistan). Chap. V, tion of Trademarks and Indications Source (as last Sec. 46 (2). amended on March 24, 1995). (Switzerland). Tit. 3, e Intellectual Property Code of the Philippines. (Phil- Chap. 2, Art. 61.1 (a); (b). p Industrial Property Law No. 9.279, of May 14, 1996 ippines). (June 6, 1997). Part III, Sec. 156. f Trade Marks Act (Chapter 332). (Singapore). Part (as amended by Law 10.196 of February 14, 2001). (Brazil). Chap. 3, Art. 189. III, Sec. 31. q Law on Trademarks and Designations (No. 22,362 g Trade Marks Act No. 194 of 1993. (South Africa). of December 26, 1980). (Argentina). Chap. III, Tit. 1, Part VIII, Sec. 34, (3) c; d. Sec. 31 (b). h The Trademarks Act, 2010. (Uganda). Part VIII, Sec. r Resolution No.2385/1924 issued on January 17, 79 (4). 1924, (amended by the law of 31/1/1946). (Leba- i U.S. Trademark Law of 1946. § 32, 15 U.S.C. § 1114 non). Part 6, Chap. 2, Art. 105. (2012). s Trademark Act (Act No.127 of April 13, 1959). j Trademark Act. (Korea). Chap. VI, Art. 67; 67-2. (Japan). Chap. IX, Art. 78-2. k Trademark Law of the People’s Republic of China. t Law of the Republic of Indonesia, No. 15/2001 (China). October 27, 2001. Chap. VII, Art. 56. Regarding Marks. (Indonesia). Chap. XIV, Art. 90. l Kuo, Y., and J. Wong (2012). Taiwan overhauling the trademark law, Formosa Transnational.

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