Counterfeiting poses a significant threat to brands. The presence of fake goods in a global market means genuine brands face loss of revenue, diminished customer trust and negative impacts on reputation. Consumers are also negatively affected, buying lower quality goods and being duped into buying counterfeits in the first place. In a recent MarkMonitor report, Global Online Shopping Survey 2018: Facts, figures and fakery, it was found that 30% of consumers have unknowingly bought a fake product online in the last five years.
The impact of counterfeiting also extends to the economy. The counterfeiting market is booming; according to the Organisation for Economic Co-operation and Development (OECD), trade in fake products comprises 3.3% of global trade. In the European Union (EU), this equates to 5% of all imported goods being fake, resulting in 800,000 job losses and 14.3 billion euros lost to the economy.
But more than that, for markets such as electronic goods, cosmetics and pharmaceuticals, the risks to consumer health and safety are immense. While many think of counterfeit goods in terms of knock-off handbags, luxury clothing brands and affordable watches, counterfeiting extends into every industry.
Counterfeit goods such as electronics, healthcare items and medication aren’t manufactured to the necessary safety standards, are made from subpar materials, and can even contain toxic components, especially in the case of fake drugs.
Consider that according to an article published in the American Journal of Tropical Medicine and Hygiene, more than 250,000 children die each year as a result of fake drugs. The World Health Organisation (WHO) has found substandard and falsified medical products from all therapeutic categories, across both generic and innovator brands. These types of products may contain little or no active ingredient, the wrong ingredients, or are contaminated. The body estimates that one in every 10 medical products in low and middle-come countries is below standard or fake.
Comprehensive protection against counterfeits
While protecting consumers from fake and potentially harmful drugs is paramount, pharmaceutical brands also need to safeguard themselves, in terms of their revenues and reputation.
The proliferation of the internet has made it quicker and simpler for counterfeiters to reach their target markets. It is easier for them to sell their fake goods and it is easier for consumers to stumble upon them in the first place. There is a raft of sites selling unregulated drugs, as well as sites selling prescription drugs under the guise of being an 'online pharmacy'.
The rise of the online pharmacy
Globally, there’s been an increase in the number of online pharmacies in operation. While it is not clear how many consumers buy their medication online – according to The Lancet, some predict it is as many as five million people in the US, and two million in the UK – what is clear is that they do pose a risk.
In the UK, online pharmacies have drawn attention from the pharmacy regulator, who has issued new guidance, including changes to regulating access to additive medication, general operations and putting additional checks and safeguards in place.
This is especially concerning considering that in the US, the Food and Drug Administration (FDA) released figures showing that only 4% of online pharmacies actually meet state and federal laws.
While the reasons for buying drugs online may vary – from convenience, cost or embarrassment – the threat of buying fake drugs remains.
Consumers don’t want to intentionally put their health at risk but according to a recent survey that was carried out on behalf of The Independent Pharmacy, 83% of respondents (UK adults) didn’t know how to verify if medication bought online was genuine. It is likely the risk to consumers will only rise, with the global online pharmacy market predicted to be worth $128 billion in the next four years. As it stands, it has never been more important for pharmaceutical brands to protect their customers and their brand.
Even the UK’s NHS has published guidelines on its website for patients buying drugs online or considering using online pharmacies. One of the main areas for concern is that some of the medication on offer should only be used in consultation with a medical professional who can discuss dosage, side effects and ask about other medication that the patient is taking.
Protecting the consumer
Educating consumers is just one of the things that brands can do as part of their protection strategy. They are most at risk when buying online and need to be made aware of the potential dangers. For those who do buy medication online or wish to check the legitimacy of their drugs, there are a few things to consider:
- Is a prescription needed? If an online pharmacy advertises that no prescription is necessary, this should be a red flag to consumers'
- Where does the pharmacy ship to? If an online pharmacy says it ships worldwide, or to multiple countries, this can also be a warning it may not be legitimate. Pharmacies need to be licensed to operate in every region they ship to, and simply can’t sell drugs to anyone, anywhere;
- Where is the medication sourced from? If the package insert is in a different language, this presents a massive concern as consumers need to understand what they are reading in terms of usage, dosage, side effects, etc. Many sites will clearly indicate if they source products from one country and ship to another. But if the language is different, the odds are that the pharmacy isn’t legitimate;
- What contact information is provided? Legitimate online pharmacies should provide the contact details of a licensed pharmacist; and
- What does the online pharmacy sell? Importantly, legitimate online pharmacies do not sell unapproved / unregulated drugs. If the site does, it is clearly not a legitimate site.
Protecting the brand
When it comes to safeguarding the brand itself and its intellectual property, pharmaceutical firms should have a comprehensive plan in place to deal with brand abuse and counterfeiting, while mitigating the risk posed. As part of this strategy, they should look at the following elements:
Brand protection starts before launch. When a new drug is set to hit the market, the pharmaceutical company should monitor for the availability of relevant active pharmaceutical ingredients (APIs), as well as online chatter about off-labelling, i.e. using the drug for unapproved indications, age groups or dosages.
Cast a wide net. It is vital that multiple online distribution channels are monitored, from online pharmacies and e-commerce marketplaces, to social media posts. Brands should pay particular attention to diversion activity in social media posts that redirect traffic to fraudulent sites.
Look at the whole brand protection picture. Brands should develop an end-to-end attack strategy that includes working with third-party organisations and law enforcement to help with takedowns, evidence collection and prosecution.
Monitor specific regions. Pharmaceutical brands should concentrate on specific areas of geographic concern, such as China and India, where historically, the majority of unauthorised drugs originate from. They should also monitor potential grey market activity in any regions where the drug achieves early approval.
Use data to focus resources. Brands should monitor all data sources related to illegitimate drug distribution. This can help identify networks behind suspicious online pharmacies, including payment sites. Brands can better focus their resources where the risk is greater.
The future of brand protection
Brand protection plays a critical role in business today, but nowhere more so than in the pharmaceutical industry where the stakes are considerably higher. Brands need to work that much harder to protect consumers and themselves as we become even more digitally reliant and the counterfeit problem becomes ever greater.
In protecting consumers, there needs to be a better understanding of counterfeit drugs, and the difference between legitimate and illegitimate buying channels. When it comes to safeguarding their own reputation and revenue, it is about having a comprehensive plan in place to protect new and existing products, monitoring globally, and establishing relationships with law enforcement and third-party experts to help with takedowns and prosecution.
Chrissie Jamieson is VP of Marketing at MarkMonitor