Fake drugs and failed governance

Interpol co-ordinated some 200 raids and seized more than US$6.65 million of counterfeit medicines in November across Cambodia, China, Laos, Myanmar, Singapore, Thailand and Vietnam: the second massive strike in the area in three years. Governments in developing countries frequently promise “crackdowns,” enact new laws, propose stricter punishments and so on — yet counterfeits remain widespread.

Developed countries, by contrast, have counterfeit levels below one percent. Some suggest this is due to strong regulators such as the U.S. Food and Drug Administration (FDA) yet millions of drug consignments pass through U.S. customs every year to 9,000 wholesalers. The FDA does not and cannot monitor all this, so why don't more counterfeits slip into such a lucrative market?

Part of the answer lies in the foundations that underpin the economies of richer countries such as strong protection for trademarks, which allows consumers to be confident of the origin of products.

Some claim that brands are only important to expensive, patented medicines. The opposite is true. Most medicines consumed in poor and wealthy countries alike are “generics,” drugs whose patents have expired, which should create a thriving market of branded generics, competing not just on price but on quality too. But a lack of respect for trademarks in developing countries means that patients can rarely be certain that the generics they buy are the genuine item: off-patent drugs are among the most commonly counterfeited medicines.

Rich countries' civil liability law, meanwhile, ensures that injured consumers can obtain redress through the courts, discouraging the production of fakes and those who peddle them.

This can only happen with efficient legal systems, free of corruption or political influence. Sadly, the courts and police of most developing countries are a long way from this ideal and they allow criminals to bribe their way out of trouble, making new laws futile.

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