Over the Virtual and Geographic Borders: Understanding Importation and Counterfeit Drugs

Abstract:     
US citizens depend extensively on medications for their health and to maintain their quality of life. Yet a major problem attends the drug supply: the presence of counterfeit medicines. Although currently the US has a relatively safe, closed system, it has not been immune to counterfeits; harm associated with counterfeit drugs has occurred in this country. Further, because terrorist activities have been associated with counterfeit drug production, and perverse legal incentives through light if any punishment, terrorists and drug lords have shifted production to this highly lucrative, but less expensive and lower risk activity. Coupled with this situation, through secondary wholesaler and provider purchase and sale of drugs in the "gray market," US drugs may pass through many parties' hands before reaching the consumer. This complex distribution process has allowed fake drugs to enter the supply chain and subsequently harm consumers. Similarly, Internet drug purchases also are a tremendous source of counterfeit drug importation that harms unsuspecting patients. Broad scale importation may result in opening the US domestic gray market to scrupulous and unscrupulous suppliers from all over the world and, as has happened in other countries, may significantly increase the number of fake medicines introduced into the drug supply. Public policy should ensure that safe, affordable drugs be the goal, with safety as the emphasis. Consumers should use available tools to protect themselves against harm associated with counterfeit drugs.

Keywords: importation, counterfeit drugs, distribution

JEL Classification: I18

Accepted Paper Series