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The political economy of substandard and falsified medicines: an evidence-informed risk-
assessment framework based on a multi-country study
Corresponding Author:
Elizabeth Pisani,
The Policy Institute,
King's College, London
22 Kingsway,
London, WC2B 6LE
UK
Tel: +44 207 2541654
Mob: +44 7722 510762
elizabeth.pisani@kcl.ac.uk
pisani@ternyata.org
Adina-Loredana Nistor
School of Health Policy & Management Health Care Governance
Erasmus University
Rotterdam
Netherlands
Amalia Hasnida
Migunani Research Institute
Sleman, Yogyakarta
Indonesia
Koray Parmaksiz
Department of Health Sciences
Vrije Universiteit
Amsterdam
Netherlands
Jingying Xu,
Department of Global Health and Development
London School of Hygiene and Tropical Medicine
London
UK
Maarten Kok
School of Health Policy & Management Health Care Governance
Erasmus University
Rotterdam
Netherlands
Keywords: Counterfeit medicines; falsified medicines; substandard medicines; political factors;
health planning organizations. (Please note that falsified medicines and substandard medicines are
not yet MeSH headings, but a group of academics has advocated for their inclusion following the
2018 review.)
Word count excluding summary: 5096
Word count with summary: 5380
Reference count: 36
1
Abstract
Introduction
Substandard and falsified medicines promote antimicrobial resistance and undermine progress
towards universal health coverage. We investigated the political and economic factors that
incentivise and facilitate the production, trade and consumption of these products.
Methods
We conducted in-depth case studies in China, Indonesia, Turkey and Romania. We reviewed
academic papers and press reports, developing a preliminary coding structure and semi-structured
questionnaires. We interviewed regulators, policy-makers, pharmaceutical manufacturers,
physicians, pharmacists, patients and academics. Using critical interpretive synthesis, we developed
an analytic framework to assess national risks for substandard and falsified medicines. We tested the
framework against cases reported to the World Health Organization.
Results
Substandard medicines are likely where aggressive cost-cutting displaces quality assurance,
sometimes in response to public procurement policies. Falsified medicines are produced by those
seeking to profit illegally from shortages of clinically indicated, cost-effective products, or from
unmet consumer demand, sometimes for clinically unnecessary products.
Supply shortages often result from market withdrawal, arbitrage and other legal measures taken by
profit-driven pharmaceutical companies responding to low prices. Irrational demand can be driven
by physician/provider incentives as well as by marketing by legitimate and illegal suppliers.
Shortages, irrational demand and high prices push consumers outside of the regular supply chain,
providing an easy entry point for falsifiers.
The framework describing these interactions was able to explain cases reported to the WHO from
high, middle and low income settings.
Conclusion
Market incentives are as important as product regulation in influencing medicine quality. Unless
quality is explicitly included in procurement policies, cost-containment measures can incentivise the
production of substandard medicines. Meanwhile, industry's quest to maximise profit globally
creates local shortages and irrational demand, providing opportunities for falsifiers. A system-wide
analysis of incentives can flag risks and pinpoint actions to protect medicine quality, and global
health.
2
Summary
What is already known?
Institutional reports, based on field experience and case reports, say that poor quality
medicines are found where there's a shortage of affordable, quality-assured medicine, and
one or more of the following: weak legislation and sanctions; under-resourced regulators
with poor technical capacity; complex supply chains; and corruption.
No systematic research we know of investigates how these factors relate to one another, or
the mechanisms through which they encourage the production, trade or consumption of
either substandard or falsified medicines.
What are the new findings?
Substandard medicines are most likely to be found where aggressive measure to reduce
prices (often in response to political commitments to achieve universal health coverage, or
UHC) coincide with environmental, industrial and tax policies that push up costs for
producers and distributors.
Falsified medicines are most likely to be found where a desirable product at an affordable
price is in short supply, and where consumers step outside of the regular supply chain.
Supply shortages (and thus market opportunities for falsifiers) are most often the result of
legal and economically rational responses by global and national producers and distributors
to local market conditions.
What do the new findings imply?
There is a price threshold below which it is not economically desirable for for-profit
companies to produce quality-assured medicines; this reality must be taken into account
when considering efforts to achieve UHC.
Policies relating to trade, industry and procurement do more to influence the market for
substandard or falsified medicines than actions by medicine regulators, so system-wide risk
assessment and planning is vital.
Regulators in consuming countries are currently responsible for quality assurance; more
focus on quality assurance in producing countries would be more efficient in this globalised
industry.
3
Background
Substandard and falsified medical products1 undermine the prospect of achieving effective universal
health coverage (UHC).1 They waste money, fail to cure sick people, and sometimes even kill them.
Anti-infective medicines that deliver sub-therapeutic doses because of poor formulation or
degradation also encourage drug-resistant infections.2,3 A recent analysis of 1,500 cases of suspect
medicines reported to the World Health Organisation Global Surveillance and Monitoring System
for substandard and falsified medical products (the WHO GSMS database) showed that they exist in
all regions of the world and affect all classes of medicines. A meta-analysis of studies published
since 2006 suggested that 10 percent of anti-infective medicines in low and middle income countries
might be substandard or falsified. 4,5
The recommended language surrounding the issue has changed; in May 2017 WHO dropped the
term "substandard/spurious/falsely-labelled/falsified/counterfeit"; adopting "substandard" to refer to
medical products that do not meet quality standards and "falsified" to describe those that deliberately
misrepresent identity, composition or source.6 The problem, however, is not new. In 1999, WHO
outlined factors facilitating the manufacture and trade in poor quality medicines, recommending
measures to tackle the problem.7 In 2013, WHO set up the GSMS case reporting system for suspect
products, and is supporting countries in preventing, detecting and responding to potentially risky
medicines in the supply chain. However, the challenge of responding effectively grows as access to
medicines and consumption in low and middle income markets increases. WHO's 2017 report
reiterated the challenges identified 18 years earlier, adding e-commerce. It grouped factors that
facilitate the production and circulation of falsified and substandard medicines into three broad
areas:
1. access-related: shortages of affordable, accessible, acceptable, quality-assured medicine;
2. governance-related: weak legislation and sanctions, corruption;
3. limited technical capacity: limitations among regulators, investigators, prosecutors,
laboratories etc., as well as among producers and throughout the supply chain.
Other reviews have cited similar factors, and have similarly underlined the need to strengthen
national medicines regulatory agencies. 8 However, we found no detailed analysis of the way these
factors interact to drive the availability of substandard and falsified medicines within or across
markets, nor do we know of any systematic investigation of the political or economic factors
influencing the likelihood that proposed policy responses will be successfully implemented in
specific countries.
We thus conducted detailed, qualitative case studies in four middle-income countries which are
significant producers and consumers of pharmaceuticals. Our aim was to identify specific
mechanisms through which political, economic and other systemic factors influence the availability
of substandard and falsified medicines and vaccines, and the ways in which they enable or obstruct
policies aimed at reducing the production, trade and consumption of those products. We further
aimed to develop and validate a framework that could be used to identify the risk of substandard and
falsified medicines at different points in the supply chain in different communities. Here we present
and discuss the analytic framework that emerges from the comparative cases. Detailed country case
studies will be reported elsewhere.
1 For brevity, we sometimes use the term "medicines" to cover prophylactic products such as vaccines and
hormonal contraception as well as point-of-service diagnostic devices.
4
Methods
Our team consisted of specialists in epidemiology, criminology, medicine marketing and regulation,
economics and public policy. We used WHO's 2017 definitions for substandard and falsified medical
products, which exclude considerations related to patent.
To inform our initial coding structure we reviewed academic and institutional literature. Ontologies
that allow for systematic searching are not well established. (The PubMed MeSH heading that most
closely describes the subject matter is currently "Counterfeit Drugs", a term that many now avoid
when describing out-of-specification medical products because of its association with patent-related
issues.) We began by searching in English for evidence related to the causes and consequences of
substandard and falsified medicines. We searched PubMed, MEDLINE, the WHO Essential
Medicines and Health Products Information Portal and Google Scholar using the keywords
"counterfeit", "substandard", "falsified" or "poor quality" in combination with "medicines", "medical
products" or "pharmaceutical*". We identified further publications, including in French and Spanish,
from bibliographies.
We reviewed resulting publications using critical interpretive synthesis - an iterative method
designed for analysing heterogeneous qualitative data and developing theory.9,10 Initial codes based
on the literature review were entered in NVivo software. 11 The coding structure centred on factors
that created a market opportunity for poor quality medicines, as well as factors that motivate,
facilitate, or deter their production or trade. It was refined inductively as reading progressed,
reaching near-final form before the country case studies were conducted. We provide the final
coding structure along with a log of changes to coding during iterative analysis:
https://doi.org/10.7910/DVN/ZSCLQA, file: Medicine_quality_coding_structure.docx.
Criteria for selection of country case studies were: middle income country, declared governmental
aspiration to ensure UHC, sizeable domestic pharmaceutical production and market. We further
considered focus areas that allowed for cross-country analysis, advice from an informal study
advisory group (see acknowledgements), and available resources. Once countries had been selected
for case studies, we searched national institutional websites as well as the internet for sources
relating to substandard and falsified medicines in Chinese, Indonesian, Turkish and Romanian.
We developed question guides based on our literature review, with variations for particular sub-
studies. Potential respondents were purposively selected based on their knowledge about the
manufacture, regulation, trade, prescription or consumption of medicines; further respondents were
suggested by participants. We contacted them by e-mail and explained the purpose of the study.
Consenting respondents were provided with further details including around procedures to maintain
confidentiality, then interviewed face-to-face or by Skype for between 60 and 90 minutes. Consent
to record was sought (and, where granted, repeated on tape). Where denied, consent to take written
notes was sought, and written consent obtained. Interviews were conducted in the respondent's
native language.
Recorded interviews were transcribed by the interviewer and translated into English in full or in part.
Where no recording was possible, notes were typed in English. Researchers coded their own
interviews in a shared NVivo project; the principal investigator (EP) coded a subset of interviews in
parallel – differences in coding were discussed in weekly team meetings to develop shared
understanding around key concepts. More details of interviews and data handling, reported
following COREQ guidelines 12, can be downloaded from: https://doi.org/10.7910/DVN/ZSCLQA;
File: COREQ_medicine_quality_study_info_form.docx.
Critical interpretative synthesis continued. A draft framework was developed and presented to an
informal study advisory group in April 2018. It was revised following input from the group. To
5
validate the framework, we tested it against public domain data relating to incidents registered in the
GSMS database from countries not included in the original case studies.
The study plan was submitted to the Medical Ethics Committee of Erasmus University, Rotterdam,
who granted a waiver (MEC-2018-016). Study funders were consulted over final study design;
funders had no role in analysis, manuscript development or decision to submit for publication.
Results
Altogether, we reviewed some 840 papers and documents relating to medicine quality and product
falsification in seven languages. We provide a full downloadable bibliography of all documents
reviewed at https://doi.org/10.7910/DVN/ZSCLQA, file: Medicine_quality_bibliography.ris. The
majority of the academic research papers we found reported surveys of the prevalence of poor
quality medicines. Institutional reports were more likely to provide information about causes and
consequences. The World Health Organisation published guidelines to help countries tackle the
threat of what it then called 'counterfeit' medicines in 1999. A chapter of the guidelines described
factors facilitating the practice of falsification; many of these surfaced again in two subsequent,
more detailed institutional reports. The first, published by the US Institute of Medicine in 2013,
focused on the public health impact of substandard and falsified medicines. The second, a 2017
report from WHO, drew on evidence collected in a database of case reports from all regions. All
three reports outlined circumstances commonly associated with poor quality medicines: shortages of
affordable, quality-assured medicine; weak legislation and sanctions; under-resourced regulators
with poor technical capacity; complex supply chains; and corruption, without describing how these
factors relate to one another. These findings informed our coding structure and interview guides, as
described under methods.
We interviewed a total of 88 people in four countries: China, Indonesia, Turkey and Romania. Table
1 provides key characteristics of each country.
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Table 1: Characteristics of countries studied
China Indonesia Turkey Romania
Population 2016 (million) 1,379 261 80 20
Health spending per capita,
(US$ PPP 2015) 779 383 1029 1128
Annualised growth in health
spending, 1995-2015 (%) 10.1 5.6 3.1 5.9
public or insured % of health
spending (2015) 67 52 83 79
Generics as % of domestic
drug consumption, by volume 80 70 56 60
Value of domestic pharma
production, 2016 (US$ billion) 249 3 (2014) 17 (2015) 3
Health financing model
(with % covered, 2018)
Social health
insurance
Single payer
insurance
(74%)
Single payer
insurance
(98%)
Single payer
insurance
(74%)
Focus of country sub-study Production of
API
Scale up of
national
insurance
Track and
trace
National and
regional
regulation
API: Active Pharmaceutical Ingredient
Sources: World Bank and International Health Metrics and Evaluation databases (available through 13,14)
Table 2 gives a breakdown of interviewee type by country.
Table 2: Number of people interviewed, by country and respondent type
China Indonesia Turkey Romania Total
Manufacturers/ Pharma
industry groups 5 4 2 3 14
Brokers/distributors 5 2 1 4 12
Health care practitioners - 8 1 5 14
Ministry of Health - 4 3 2 9
Medicine regulator 7 2 * 1 10
National insurer - 1 2 1 4
Technical agencies 2 2 6 3 13
Academic - 2 1 3
Patient, media, civil society - 6 - 3 9
Total 19 31 16 22 88
* In Turkey, regulators are part of the Ministry of Health
7
Factors influencing market demand
Political promises and high level market effects
Politicians in all four countries studied have committed to increasing access to affordable health
services. The expansion of national health insurance schemes in Indonesia, Turkey and China
resulted in increased volumes of publicly-procured medicines, together with intense downward
pressure on prices. Cost-containment can have unplanned outcomes. In Romania, a promise to
deliver the cheapest prices within the European single market, combined with other factors (detailed
under "Supply side" below), created market shortages.
"In order to gain political capital, they kept saying “we’ll give you the cheapest medicine in
Europe.” Wow, how great they are! We’ll vote for them. Without thinking that you won’t have access
[to the medicines]. Because no one brings them anymore, because it’s not economically justified
anymore, it’s not a business anymore. And those that are economically viable leave the country
through parallel export. Romanians end up without medicine in one case or the other."
Patient advocate, Romania
Actors, motivations and actions: health authorities
Ministries of health are concerned principally with ensuring that effective medical products match
the health needs of the population, and thus typically forecast demand, while the national medicine
regulator aims to ensure that those products are registered and safe. Through procurement practices
and market authorisation, both of these health authorities typically shape the mix and price of
products available in the regulated supply chain nationally. Where insurers and health services
feedback use information, these processes should result in adequate supplies of cost-effective,
clinically indicated products. In Indonesia, however, private hospitals are largely unregulated.
Though they must procure drugs for insured patients through the public platform, just 50% of them
contributed data to inform demand forecasting in 2018.
"Some [health care facilities], mostly private hospitals … don't submit their demand plans, but
suddenly they procure masses of drugs through the public procurement platform. That disrupts
supply."
Government official, Indonesia
Even within the public sector, forecasting is not an exact science. In 2017, public sector purchases of
paracetamol in Indonesia were just 30% of the forecast amount, while for iron folate, they exceeded
forecasts by over a quarter.15
Meanwhile, Romanian regulators require daily reporting of exports to guard against shortages, but
given recurring medicine shortages, especially in 2017, it is unclear whether data are analysed.16
Q: Isn’t there a plan in place to prevent shortages [caused by parallel exports or market
withdrawal]?
Respondent1 laughs uncontrollably.
Respondent2, laughing: "If there is such a thing, it obviously serves no purpose."
National technical agency advisors, Romania
Respondents in China, Indonesia and Romania also described revenue-seeking and other practices
which led to inefficiencies in the award of authorisations or contracts. These practices sometimes
diverge from official regulatory and procurement policies, for example involving informal
negotiations before an auction. Official channels are also sometimes bypassed by global health
actors (multi-lateral organisations as well as NGOs) who secure regulatory waivers for products that
they supply to vertical programmes, a dynamic evident in the Indonesian case study. This accelerates
8
access to needed products but reduces transparency in the supply chain, sometimes undermining the
authority of the national regulator.
Public health insurers are tasked with maximising health benefits equitably and sustainably; they
thus make decisions about which medicines will be covered. Respondents said political pressure to
provide coverage often overrode concerns about sustainability, especially ahead of elections.
Actors, motivations and actions: health care providers and patients
Insurer decisions in turn affect choices made by health care providers and patients. Patients are
sometimes denied the option of reimbursable products because physicians choose to prescribe "off
plan" drugs to make money. Before 2016, some physicians in Indonesia maximised profits by
charging patients for expensive imported vaccines, some acquired at cut price from roving salesmen,
rather than provide domestic vaccines for free. This created an easy entry point for falsifiers; in
2016, thousands of children were injected with falsified "imported" vaccines, though quality-assured
domestic products were widely available.
Physicians also sometimes step outside the regular supply chain to access medicines that are locally
unavailable. A Romanian doctor, showing researchers vials of magnesium sulphate with no expiry
date, imported informally in response to shortages, said:
What do I know about this vial? When it expires? I tell you that I know for how long I have it and if
it turns yellow than for sure it’s not good anymore…. How much does it cost? Probably under 1 leu
[US$ 0.20]. What does it do? It saves two lives. Of the mother, and of the baby…. [But] it may be
plain water or poison.
Doctor, Romania
Patients take advice from healthcare providers, and may consider a medicine's reimbursement status,
and price. Informants in all study countries reported growing internet-facilitated self-diagnosis and
"self-prescription". When selecting both products and sales outlets, patients also consider
convenience, price, perceived quality, and brand familiarity.
All of these things can create specific demands that are divorced from clinical need for an effective
product. In Turkey, for example, the breast cancer drug Tamoxifen was acquired through unregulated
channels by bodybuilders wanting to counteract side-effects of steroids, threatening the supply for
cancer patients. 17,18
Factors influencing market supply
Political promises and market effects
In our case studies, political promises and policies affecting trade, environment and the promotion of
domestic industry were most likely to affect the supply side. China's growing attention to the
environmental impact of chemical production, for example, has increased costs for pharmaceutical
manufactures and resulted in unexpected factory shut-downs. In Indonesia, protectionist legislation
threatens to restrict competition and push up prices, while policies that favour local industry have
undermined regulatory rigour in Indonesia and China.
“Sometimes regulation can be difficult. For example, we are not encouraged to impose tough
regulation on some enterprises which are highly valued by local governments. Local governments
will step in and protect those enterprises.”
Medicine regulator, China
Quality standards may also be lowered to promote local production.
“The Chinese Pharmacopeia is … not a high standard. It sets a bar that basically allows the
majority of enterprises to pass.”
9
Pharmaceutical industry association official, China
Joining the European Union (EU) single market promised prosperity for Romania. However,
compliance with European GMP regulations pushed the price of domestic medicines up by over
30%.19 Meanwhile, European trade legislation allowed for the free export of price-controlled
imported medicines to more expensive markets.
Political promises related to national security and border control can also affect the supply side.
Zealous implementation of customs procedures in Indonesia, for example, delayed entry of imported
drugs. Technical advisers report this increased the risk of degradation because storage at ports does
not always comply with GDP.
Actors, motivations, actions: pharmaceutical manufacturers and distributors
The main actors on the supply side are commercial companies that manufacture, trade in, or
distribute pharmaceuticals. They aim to maximise profits, including through innovation, marketing,
and lobbying for favourable regulations.
While demand drivers are largely country-specific, multinational companies on the supply side wish
to protect profits globally. If the regulatory and other costs of competing in a particular market
exceed likely revenue, manufacturers withdraw or cease production. A multinational firm shut down
their generic production lines in Indonesia when the new auction procedures were introduced, citing
commercial pressures.20 In Romania, low prices and claw-back tax intended to supplement the health
budget cut margins for producers, contributing to withdrawals. In the three years after Romania
effectively capped prices at the EU minimum, manufacturers withdrew around 2,000 of 6,200
products. 21 Many of these were lower-priced generic medicines.
"Authorities [explaining supply interruptions] say 'No, no, you've had production problems'. But the
truth is that it's very simple to explain the decision not to produce a drug as long as it brings you
losses."
Technical agency advisor, Romania
The price-capping also created arbitrage opportunities for higher-priced items, including many
innovator drugs. Distributors maximised profit by buying medicines in Romania and reselling them
in more expensive European markets such as Germany. This sort of arbitrage can lead to shortages
directly, or by discouraging participation in lower-priced markets. Multinational manufacturers also
withdraw from low-priced markets to avoid being benchmarked by countries that use external
reference pricing to establish domestic prices.
Innovative medicines do not come…. because they know the Turkish market will pull down prices [in
other markets], unfortunately. [Manufacturers] do not want to get themselves into something like
that.
Academic pharmaceutical market analyst, Turkey
In Indonesia, authorities turn a blind eye when distributors protect margins by withholding products
from remote islands, where distribution costs are high:
"Most important for the authorities is that there's no nationwide stock-out. They just let [a shortage]
go for remote regions, because they recognise [the government] auction prices are very low."
Pharmaceutical manufacturer, Indonesia
Manufacturers also respond to low margins by cutting corners in manufacturing or distribution,
leading to substandard production or degradation respectively.
Q: Is there an effect, where, because of the low offering prices, the components of medicines are
compromised?
10
A: Yes, definitely. Starting with the raw materials. That's the first thing, manufacturers are going to
look for the very cheapest API, they're going to look for a cheaper supplier. Next is the way they
make the medicines available. For example, they might have started with blister packs, but they'll
change those to strips, something cheaper. Basically, they're looking for ways to make more profit.
Pharmaceutical manufacturer, Indonesia
Chinese manufacturers of bulk active pharmaceutical ingredients (API) confirmed that price was
closely linked with quality, reporting price decreases of 20% for a 0.4% fall in purity. Export prices
per kilogramme vary by destination market; importers in the United States pay approximately three
times as much per kilo on aggregate as do importers in Africa.22
“If the requirement is 0.1%, a good manufacturer would refine up to 0.07-0.08% in case of any
deviation in testing. But some manufacturers would want to save cost and just reach the borderline
point at 0.1% or 0.09-something%. It happens when test result from our clients shows 1.1% and they
can’t accept the product. …What happens next would depend on the status and bargaining power of
both sides. If we supply [a top-10 multinational pharmaceutical firm], no doubt the product will be
returned and we will have to make new ones for them. If we supply middle-end customers whose
downstream markets are not well regulated, for example the African market – we are not
discriminating Africa, but it’s true their state regulations are not so strict – in that case, we may be
able to persuade the client to use the product, by offering for example 5% further discount.”
API manufacturer, China
Chinese authorities do not oversee API export quality, except products destined for the EU, which
require certification from provincial regulators. Other nations conduct factory inspections in China,
but may tailor outcomes to meet domestic needs. An API manufacturer in China described the
outcome of a factory inspection by the United States Food and Drug Administration:
"The USFDA [issued an import prohibition] for all our products at first. But for a few of our
products, [we] are the unique producer, and the US often faces shortages of these products, so FDA
very soon released the prohibition on these products."
API manufacturer, China
Figure 1: Framework to assess the risk of poor quality medicine in a national market
(For a version of this framework that prints better in black and white, please see
https://doi.org/10.7910/DVN/ZSCLQA, Medicine_quality_Figure1_BW.pdf)
System-wide risk assessment framework
Figure 1 brings the actors on the supply and demand sides together into a single framework, and
illustrates the combination of factors that may drive the manufacture of substandard medicines or
degradation, and that facilitate the production and trade of falsified products. (A narrated video
walking through the framework step by step, describing the actions of different groups and their
effect on medicine quality, can be seen at https://doi.org/10.7910/DVN/ZSCLQA file:
Medicine_quality_risk_assesment_narrated_video.mov, or
https://vimeo.com/user89345981/medicinequality)
Procurement practices that press prices below the threshold at which quality medicines can be
sustainably produced and distributed incentivise the production of substandard products, and can
contribute to degradation.
Falsified medicines by definition involve criminals or criminal intent, which is introduced on the
right of the framework. The actions of institutions, companies and individuals on the supply and
demand side, described above, combine to create unmet consumer preferences and shortages of
clinically necessary products. These gaps provide a market opportunity for falsified products.
11
Shortages are sometimes exacerbated by unexpected interruptions to production or surges in
demand, for example following a natural disaster. Criminals will step in to take advantage of those
opportunities if the likelihood of profit outweighs the risk of retribution. Criminals also actively
create demand, marketing to patients directly over the internet or targeting unethical healthcare
professionals.
"Freelance" salespeople go from door to door, including to hospitals, offering drugs sometimes at
rather low prices…[The buyer] doesn't think about the improbable price, only about the profit.
Pharmaceutical industry association official, Indonesia
To profit from unmet demand, criminals use unregulated channels such as the internet or street
markets, or insert products into opaque supply chains, including those facilitated by parallel trade
and regulatory waivers. This greatly reduces the risk of detection or successful prosecution.
Appropriate actions to minimise risk
We extended the framework to include the approaches and actions that different authorities can take
to protect against poor quality medicines, illustrating the point at which they align incentives or
disrupt pathways that encourage falsification or substandard production. These are shown in Figure
2.
Figure 2: Framework to evaluate the national response to the risk of poor quality medicines
(For a version of this framework that prints better in black and white, please see
https://doi.org/10.7910/DVN/ZSCLQA, Medicine_quality_Figure2_BW.pdf)
Countries structure regulation differently. Broadly speaking, however, the actions in boxes outlined
in dotted lines are the responsibility of the national medicine regulator; the majority of these focus
on the product itself. Actions in yellow/grey, solid-outline boxes are taken by other authorities;
principally other parts of the Ministry of Health, but including also professional associations,
customs/law enforcement and the judiciary. These "grey-box" actions, including procurement and
supply/demand planning, are the primary determinants of pricing (which can drive substandard
production) and of market gaps (which create the opportunity for falsification).
In both Indonesia and Romania, system-wide planning that might effectively balance the demand
against supply of quality-assured products at a fair price was poor, and procurement practices
disincentivised investment in quality, increasing the quality-assurance challenge faced by the
regulator.
Of the countries we studied, Turkey has the most rigorous mechanisms to control the regulated
supply chain, including a barcoding system that tracks every transaction involving a medicine, from
manufacture to dispensing. This was implemented in response to widespread reimbursement fraud,
estimated at one billion US$23, that threatened the government's ability to deliver on its political
promise of UHC.
The system imposed significant costs on manufacturers, requiring those that wished to sell in the
Turkish reimbursed sector to adapt production lines. Manufacturers complied because of the size and
consolidation of the market.
The customer is king. I pay the money, I determine the conditions. Turkey has such an advantage.
[The national insurer] buys more than 80% of the market. They say: “If you are willing to give them
under these conditions, then you can give your drugs. Otherwise, I’m sorry, go sell them in another
country, don’t sell them to me.”
Multinational pharmaceutical manufacturer, Turkey
12
Reimbursement data matched with data from the track and trace system provides an early warning
system for low stocks nationally and locally, allowing for rapid procurement where and when
necessary. Well-managed stocks and an adequate benefits package reduce the likelihood that patients
will step outside of the regular supply chain in Turkey, and falsified products are now rare in the
nation's regulated supply chain. Most respondents underlined the unusual combination of political
commitment, comprehensive insurance cover and market size and consolidation that made it
possible to impose this technological solution in Turkey.
Validating the framework
We provide annotated versions of the framework describing the pathways to poor medicine quality
from our own case studies (https://doi.org/10.7910/DVN/ZSCLQA, File:
Pisani_medicine_quality_Country_Annex). In consultation with colleagues at WHO, we further
tested it against cases from all regions reported to GSMS, and found that it encompassed the
underlying causes of cases in both high-income and low income countries. We provide brief
annotated versions of the framework for GSMS cases with data in the public domain, including
cases in the United States, Pakistan, and Democratic Republic of Congo.
(https://doi.org/10.7910/DVN/ZSCLQA, File: Pisani_medicine_quality_GSMS_Annex).
Discussion
Substandard and falsified medicines have increasingly been identified as a neglected challenge to
global health.24 Efforts have been made to describe the causes of poor quality medicines, and to
identify appropriate responses to the threat they pose.4,8,25,26 However, none has provided a
comprehensive, evidence-based framework which simultaneously:
elucidates the system-wide policies that incentivise and facilitate the production, trade and
consumption of poor quality medical products;
differentiates those that drive substandard production and degradation from those that
create opportunities for falsification;
maps specific policy and regulatory responses on to specific pathways, highlighting the
likely effects of different investments and policy choices.
By comparing detailed case studies in four countries, and testing the results against recorded cases in
other countries, our work has provided a framework which disentangles the many factors previously
grouped under broad headings such as "limited access to quality medicines", "poor governance" and
"restricted technical capacity". We provide granularity to help guide national plans to prevent, detect
and respond to substandard and falsified medical products.
The study shares the limitations common to qualitative research regarding subjects involving illegal
or unethical behaviour. The four middle-income countries studied shared characteristics that are not
reflective of all nations. While we worked hard to include a wide range of participants and to stress
that data would be anonymised, some potential respondents declined interview while others,
particularly from government institutions, gave normative responses. However, we were able to
capture a wide range of opinions and experience, including detailed descriptions of unethical
practices, giving us confidence that our results are sufficiently comprehensive. The annotated cases
show that the draft framework proved robust in elucidating cases of falsification or substandard
production from countries across the economic spectrum. However, the database we tested them
against comprises case reports rather than random samples, and thus also suffers from sampling bias.
Our results suggest that when the incentives driving demand for affordable, cost-effective medical
products are aligned with the rewards for producing and distributing those products at assured
13
quality, substandard medicines will be rare, and there will be little opportunity to profit from the sale
of falsified products. However, it is currently hard to align production incentives with rewards,
because the forces shaping demand are largely determined by national governments aspiring to
maximise access to affordable care, while suppliers are motivated by profit, often calculated
globally.
We find that unless quality is explicitly included in pricing and procurement policies, downward
price pressures can actively incentivise the production of substandard medicines, and facilitate
degradation. No country can hope to achieve sustainable, effective UHC without quality-assured
generic products, yet low profit-margin generic products are especially vulnerable to corner-cutting
in response to price pressures.
A key safeguard is to ensure that prices cover quality production and distribution, as well as fair
profit. This is an unpalatable message. "Fair profit" is hard to determine, since manufacturers rarely
disclose real costs.27,28 Further, profit is often conflated with profiteering in discussions of
pharmaceutical pricing, while the fear that innovator producers hope to undermine public confidence
in generic products discourages discourse around quality-assurance for low-cost products. 29–32
A further safeguard against substandard production is close regulation of manufacturing practice. We
find evidence, however, that a political commitment to the promotion of domestic manufacturing
may put pressure on regulators to lower standards for GMP or product quality inspection. This is
worrisome in a climate of increasing economic nationalism in many middle-income countries. These
include countries needing to find new sources for medicines previously supplied by the Global Fund
for AIDS, TB and Malaria, an organisation which has shaped procurement practices and supply
chains for its own commodities but has so far invested minimally in strengthening medicine
regulators.33
The current global system concentrates the burden for quality-assurance on medicine regulators in
over 190 consuming countries, rather than in a handful of major exporting nations. Adequate quality
assurance of products made for export would increase efficiency in a globalised pharmaceutical
market. This is a political rather than a technical challenge, but models exist in other sectors, such as
aviation.34 More cost-effective, streamlined regulation would reduce costs for quality manufacturers,
reducing the risk of product withdrawal and shortages.
Product shortages, as well as the quest for affordability or profit, can push patients and health care
providers out of the regulated supply chain, creating opportunities for falsifiers. Again, the primary
solution involves market regulation, not product regulation. Indeed, the results presented in Figure 2
show that the majority of policies and actions that affect the quality of medicines are implemented
by authorities other than the medicine regulator, though ideally often in coordination with them.
Well-resourced national medicine regulators are central to assuring quality, as the Turkish case study
illustrates. However, their work is undermined if the policy choices of other actors fail to consider
medicine quality. It should be noted that the success of Turkey's tracking system is underpinned by
strong political will, good system-wide coordination, and the existence of a consolidated market in
which both patients and producers are relatively well protected against excessive price pressures –
still a rare combination in low and middle-income countries.
Conclusion
As The Lancet Commission on Essential Medicines observed, UHC cannot be achieved with poor
quality pharmaceuticals.1 We thus conclude that organisations and governments aiming to ensure
UHC must consider the potential impacts of procurement rules as well as industrial, environmental
and trade policies on the quality of medicines, and support and implement systemic approaches that
provide fair reward for the production and distribution of quality-assured, cost-effective therapies.
14
There is considerable scope to validate the frameworks in Figures 1 and 2 in different country
settings, and to use them in combination with well-designed quantitative surveys to better
understand the scale of the problem and the locally-specific drivers of vulnerabilities to poor quality
medical products at the systemic as well as the national level.35 Distinguishing between risk factors
for substandard medications and falsified products can also guide choices about post market
surveillance equipment.36 Figure 2, meanwhile, can help prioritise the specific responses most
necessary to reduce risks in a given country.
The framework also functions as diagnostic tool to identify market and regulatory failures that have
incentivised or facilitated a specific case of falsification/substandard production. We encourage its
adaptation to local circumstances, and its use in ensuring that the call for greater "access to
medicines" reliably means "access to medicines that work".
Acknowledgements
An informal advisory panel contributed to shaping the research protocol for this study, and most
members also reviewed early results and contributed suggestions for final analysis and
interpretation. We'd like to thank Roland Bal, Wilbert Bannenberg, Christina Cepuch, Michael
Deats, Hans Hogerzeil, Alice Jamieson, Nancy Lee, Katherine Littler, Paul Newton, Raffaella
Ravinetto, Ioana Ursu, Krisantha Weerasuriya, Ming Xu and Shunmay Yeung for advice and
guidance. Thanks to Pernette Bourdillon-Esteve for thought-provoking discussion and help
validating the framework against cases in the GSMS database, and to Gaetan Bernede for graphic
support.
Authors' contributions
All authors contributed actively to analysis, interpretation and the development of the framework,
and provided improvements to the draft manuscript. In addition:
EP designed the study, led the analysis and wrote the first draft of the manuscript.
AN expanded the literature search and conducted the Romanian case study.
AH conducted the Indonesian case study.
KP conducted the Turkish case study.
JYX conducted the Chinese case study.
MK contributed to the analytic methodology.
Disclosure and disclaimer statements
This work was supported through grant funding from the Wellcome Trust (Grant number
209930_Z_17_Z) and Erasmus University (through the REI grant: WBS number
22070000.014.002).
In 2017, EP received consultancy fees from the World Health Organization for separate contributions
to work on medicine quality.
All other authors declare they have no conflict of interest.
Data sharing statement
The interviews that underlie this study discuss sensitive and at times illegal behaviours. During our
informed consent procedure, we assured participants of anonymity. We are unable to comply with that
15
commitment if we make the recordings of the interviews available. We believe there is an
unacceptably high risk of disclosure in sharing full transcripts, and simply don't have the resources to
redact the interviews fully. However, we do provide our detailed coding structure. (URLs are in the
text.) Researchers are welcome to request specific coding queries by contacting the corresponding
author. We will run the queries as requested, redact the results only to the extent necessary to ensure
anonymity, and pass the results on to fellow researchers.
We also provide a downloadable bibliography of all papers, documents and media reviewed during our
research.
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