[Ip-health] What is a Counterfeit?

[James Love]

http://www.keionline.org/index.php?option=3Dcom_jd-wp&Itemid=3D39&p=3D119

What is a Counterfeit?
May 21st, 2008 by James Love

On Tuesday, 20 May 2008, the United Arab Emirates, Nigeria, Ghana,
Gambia and Tunisia introduced a draft resolution (A61/A/Conf. Paper No
1) on counterfeiting.

While counterfeiting medicines is an important public health problem,
and as traditionally defined, is a criminal enterprise that should be
subject to tough legal sanctions, the resolution is problematic.

Specifically, the resolution may create the impression that substandard
medicines (brand or generic) can usefully be described as counterfeits.
What is wrong with this? First, the larger issue of substandard
medicines is not confined to counterfeits. There are substandard
products sold by brand name and generic drug manufacturers, where there
is no criminal intent to deceive anyone about the contexts or origin of
the products. Second, not all counterfeits are of low quality.

The word counterfeit is highly emotive, and can be misleading if used to
describe issues that have nothing to do with counterfeits.

There is also sometimes a mistaken impression that all infringements of
intellectual property can be characterized as counterfeits. Disputes
about the infringement of intellectual property rights are broader than
those limited cases involving counterfeits. A recent example of
confusion over this topic was a recent assertion that Switzerland was a
major source of counterfeit medicines. According to Swiss officials,
this assertion actually referred to a case involving a dispute over
alleged patent infringement, an area of much complexity and controversy,
not usefully described as counterfeiting.

In 1992, the WHO defined a counterfeit medicine as: =E2=80=9Ca medicines wh=
ich
is deliberately and fraudulently mislabelled with respect to identity
and/or source. . . . According to WHO definition, what makes a
drug/medicine counterfeit is the deliberate or intentional (criminal)
nature of the mislabelling of a product.=E2=80=9D[fn1]

=E2=80=94=E2=80=94=E2=80=94-
[*fn1] =E2=80=9CCounterfeiting can apply to both branded and generic produc=
ts
and counterfeit products may include products with the correct
ingredients or with the wrong ingredients, without active ingredients,
with insufficient active ingredients or with fake packaging.
(http://www.who.int/medicines/services/counterfeit/faqs/05/en/index.html)
=E2=80=94=E2=80=94=E2=80=94

Although the term counterfeiting has different definitions around the
world, it is often defined as a TRADEMARK INFRINGEMENT.

For example, the United States Federal Food, Drug and Cosmetics Act
defines a counterfeit drug as

    =E2=80=9Ca drug which, or the container or labelling of which, without
authorization, bears the trademark, trade name, or other identifying
mark, imprint, of device or any likeness thereof, of a drug
manufacturer, processor, packer, or distributor, other than, the person
or persons who in fact manufactured, processed, packed, or distributed
such drug and which thereby falsely purports or is represented to be the
product of, or to have been packed or distributed by, such other drug
manufacturer, processor, packer, or distributor.=E2=80=9D

A drug manufacturer (brand or generic) that does not=E2=80=9D deliberately =
and
fraudulently mislabel with respect to identity and/or source=E2=80=9D is no=
t a
counterfeiter, even if there are other concerns over product quality or
possible infringements of intellectual property.

The WHO should contribute to efforts to ensure that medicines meet
appropriate standards for quality. This will include cases of
substandard brand, generic, or counterfeit medicines. Normally, this
would focus on measures to improve and strengthen national regulatory
programs. There is also an important role for the WHO pre-qualification
program, which at present is under resourced and limited to only
medicinal products used for HIV/AIDS, malaria, tuberculosis and for
reproductive health.

The role of the WHO in policing counterfeits is an area that should be
distinguished from the more general role of ensuring the quality of
medicines. However, whether intentional or not, the resolution in some
ways suggests the term counterfeit is a unifying term for addressing
concerns over the quality of medicines.

While there are cases of counterfeit goods being placed in commerce, and
it is important to curb such activity, the term =E2=80=9Ccounterfeit=E2=80=
=9D should not
be used to describe all activities that may constitute an unauthorized
manufacture or use of a medicine.

Items which are similar to other goods, including goods of inferior
quality which are sold for a lower price, should not be considered
counterfeits, unless there an intent to deceptively represent the
content or origins.

Generic drugs that do not falsely use another firm=E2=80=99s brand name or
trademark are not counterfeits. Unauthorized uses of a product that are
allowed by law, such as products made under legitimate limitations and
exceptions to patents, or generic medicines that are off-patent or
legitimately licensed under voluntary or non-voluntary licenses, are not
counterfeit products. Not all infringements of patents or other
intellectual property rights can be usefully described as counterfeits,
and often the issue of what constitutes infringement is a matter of
controversy, particularly, but not only, in the area of patents, where
issues concerning patent validity and relevance are quite difficult, or
where the relationship between rights and exceptions to rights are
complex.

It is important to differentiate between counterfeiting (i.e fake goods)
and the importation of legitimate stock at a lower price, as =E2=80=9Cgrey
market=E2=80=9D parallel traded goods that are acquired legitimately in one
market, and resold legally under under the exhaustion of rights doctrine
in another market. There is a tendency by some to conflate the two
issues in order to stigmatize the practice and ignore the benefits of
parallel trade. Restrictions on parallel trade can lead to
anti-competitive behavior, and by facilitating market segmentation and
price discrimination, lead to higher prices for consumers in markets
that have a lack of competition.

The resolution could be improved by providing a paragraph that outlines
in concrete terms the acts that are not covered by the term counterfeit.
It also could be improved by language that says that not all quality
issues involve counterfeiting, and that the WHO needs to do more in
*other* areas to ensure that medicines are of appropriate quality,
including (1) strengthening national drug regulation efforts and (2)
expanding the WHO qualification program, which now is limited only to
AIDS, TB, Malaria and family planning products.