Founder and Principal Consultant at 1st Line Partners.

Sean O’Hearen, 1st Line Partners

One of the objections I sometimes hear when discussing counterfeiting and diversion challenges with pharmaceutical manufacturers, particularly smaller ones, is that they just don’t know enough about the problem. They may suspect they have a problem and/or they may have seen some evidence of a problem, but they feel they lack sufficient data or knowledge to take concrete steps to address it—beyond doing the minimum required by law, of course, such as serialization. This knowledge gap may also lead them to conclude that even if a problem exists, the risk is likely to be low, and additional investment in product integrity is not warranted.

My response to this challenge is always that you probably know more than you think—you just need to know where to look. And, as for the risk, it may be greater than you perceive it to be—for your patients, your reputation, and your business. My best advice is to take proactive steps to gather the available data, which will enable you to better understand the issue and make an informed decision about what illicit trade risk management should entail for your business.

How do you know more than you think? Because your existing internal data and business intelligence, when viewed through a product integrity lens, can provide a trove of relevant and useful information. Digging into this data can begin to shed light on the issue and provide actionable insights. Your colleagues working in the commercial, quality, and supply chain areas may also be able to provide valuable information to help you begin to formulate a clearer picture of the risk. Consider the data sources in the below table and what they can tell you about illicit trade risk (click to enlarge). 

Knowing where to look and what the data can potentially reveal is, of course, just the first step on your data-driven journey to becoming better informed about illicit trade risk. Armed with a list of the relevant data sets and the questions you’re trying to answer with the data, that’s when you invite your data and analytics team to the table. They’ll need to understand the problem you’re trying to solve, then prepare the data and apply the appropriate analytical tools and techniques, such as machine learning, natural language processing, statistical analysis, and AI techniques, to obtain answers and actionable insights that will inform your decision-making.

The global threat of illicit trade continues to grow every year. If you wait to take additional preventive measures until a counterfeit product turns up online or in your legitimate supply chain, then it’s probably too late. It’s a lot more challenging to be in a reactive mode, trying to address patient safety and customer concerns, versus taking proactive steps now to conduct a rigorous assessment, followed by an informed leadership decision about what level of risk is acceptable and implementing a program that meets your objectives. It’s a risk you can’t afford to ignore.

Sean O’Hearen is Founder and Principal Consultant at 1st Line Partners.

Articles

Why taking proactive steps—and combing the right data sources—is critical to informed decision-making in risk management.

What Your Data Can Tell You About Illicit Trade Risk

Illicit trade activity (ITA) in the pharmaceutical industry has been on a steady rise globally since the Pharmaceutical Security Institute (PSI) began reporting annual incident statistics more than 22 years ago. According to PSI data, in 2023, pharmaceutical crime hit an all-time high, with 6,897 incidents reported.

 Over the five years of 2019-2023, incidents climbed about 8% yearly. These incidents cut across every therapeutic category and every region of the world. Risks related to ITA include activities such as counterfeiting, diversion, tampering, theft, and trademark infringement. As the problem grows, both the pharma industry and the public sector continue to direct more attention and resources toward dealing with this challenge and protecting patients, along with the integrity of our drug supply chains.

is introducing this new column to address issues related to ITA and to promote a dialogue regarding what we, collectively as an industry and through collaboration with the public sector, can do to combat the problem and protect patients and product integrity.

Unsurprisingly, criminals and bad actors involved in ITA prioritize profits over patient safety and health. They operate in the shadows, clandestinely, seeking to avoid detection, exposure, and accountability for their crimes. They comprise the “dark side” of pharmaceutical commerce, which we will aim to shed light on, stimulate discussion about, and help readers understand best practices, both proactive and reactive, for managing and controlling ITA risk.

It's important to understand that ITA risk, to varying degrees, touches virtually every phase of pharmaceutical product development, manufacturing, and distribution—from “make to take”—and every segment of a product’s lifecycle—from “launch to legacy.” Bad actors spot market opportunities and exploit vulnerabilities throughout the system with alacrity, ingenuity, and sophistication, not to mention greater agility than those of us who play by the rules. Their fraudulent schemes and methods are innumerable and dynamic, and it’s difficult for the good guys, the protectors, to prevail.

To effectively oppose the dark side, we have to think differently than we do when thinking about our legitimate business activities. We have to view our manufacturing and distribution system holistically and through a “product integrity lens,” meaning we have to ask ourselves: how can bad actors exploit and/or circumvent the regulated delivery system to achieve their nefarious aims?

Thus, the objective of this column will be to broaden the aperture of our product integrity lens and look at this problem and solution set from various angles, through case studies and exploration of current events, hot topics, and themes raised by the 

On that note, this issue covers topics such as retail pharmacy closures, pharmacy deserts, and third-party logistics (3PLs). To emphasize my point, all three topics have significant product integrity concerns related to them, which we don’t have the column space to get into now. However, I’ll briefly highlight some of the issues as an example of more to come in this space.

A key knock-on effect of pharmacy closures and subsequent pharmacy deserts is that people turn to the internet for their medicines. From a product integrity perspective, this is generally a bad idea. As the Alliance for Safe Online Pharmacies states on its home page,

 “At any given time, there are around 35,000 active online pharmacy websites—about 95% of which do not comply with applicable laws and pharmacy standards.” Online pharmacies are rife with illicit products, and manufacturers must invest significant resources in online monitoring and enforcement.

In terms of third-party logistics, this is an area that can keep pharmaceutical security leaders up at night. 3PLs are a key area of focus of product integrity programs, mainly due to cargo theft risk, especially in certain parts of the world, such as Brazil, Mexico, and South Africa. Proper vetting, auditing, and oversight of 3PLs is critical, as well as having processes and procedures in place for route planning, incident response, and regulatory compliance, to name a few.

I’m excited to have this forum and opportunity to raise awareness and understanding of product integrity challenges, which should concern everyone in this industry, not just those responsible for mitigating and managing ITA risk. I look forward to engaging with the 

 community going forward, and appreciate any feedback, questions, or suggestions readers have for future topics.

1. Latest publicly available PSI data at 

2. Alliance for Safe Online Pharmacies home page. 

Introducing a new Pharma Commerce column focused on combating illicit trade and protecting product integrity—and ultimately patients.