Thursday, December 23, 2010

36 Million Americans Buy Drugs Online -- Illegally!

On December 14th, the White House Intellectual Property Health and Safety Forum was held by Victoria Espinel, the first U.S. Intellectual Property Enforcement Coordinator (IPEC) appointed by President Obama.

Intellectual Property Rights Advancement under President Obama

In June the IPEC released the Joint Strategic Plan on Intellectual Property Enforcement, which was released by Victoria's office, with support from the Departments of Agriculture, Commerce, Health & Human Services, Homeland Security, Justice, State, and the Executive Office of the President. One of the strategic parts of that plan was "Identify Foreign Pirate Websites as Part of the Special 301 Process."

The United States Trade Representative is required by Section 182 of the Trade Act of 1974 (Title 19 USC 2242) to produce an annual review of the global state of intellectual property rights, which is called the "Special 301 Report." One portion of that annual review is the "Notorious Markets List." Listed in the 2010 Special 301 Report as Notorious Markets are Baidu (China) for music piracy, TaoBao (China) and Alibaba (China) for game piracy, TV Ants (China) for sporting event piracy, (Russia) for music piracy, Webhards (Korea) for many types of illegal content,

In the December 14th forum, the focus was not so much on "general" Intellectual Property or piracy, but Intellectual Property rights violations that have the capacity to impact the health and safety of Americans.

This focus area, especially with regards to the Internet portion, has been under development for several months, with President Obama calling for a meeting between ICANN and other stakeholders back in September. See Obama seeks action on online pharmacies domain names as reported by the Securing Pharma website. This action expands from a previous report back in May by LegitScript, a company working to verify online pharmacies. After blasting the industry in general, and eNom in specific, for failing to respond to domain names registered through their company, (See Knujon report: Audit of the gTLD Internet Structure, Evaluation of COntractual Compliance and Review of Illicit Activity by Registrars, and the LegitScript/Knujon report: Rogues and Registrars: Are some Domain Name Registrars safe havens for Internet Drug rings?), eNom came full circle and entered an agreement September 21, 2010 with LegitScript and the National Association of Boards of Pharmacies to ensure that rogue pharmacies are not able to use eNom to register their domain names. (The criminals responded to this news by registering hundreds of horrible porn and bestiality websites using the name and contact information of LegitScript founder John Horton, as reported by Brian Krebs.)

The Forum

In case you missed it, CNN Image Source has a One hour video of the panel, chaired by Victoria Espinel. What a panel - Attorney General Eric Holder, DHS secretary Janet Napolitano, and John Morton, Director of Immigration and Customs Enforcement.

"We need more data to inform our policies and ensure that we are making smart decisions."

"The Alliance for Safe Online Pharmacies estimate that there are between 30,000 and 40,000 active online drug sellers operating at any one time."

(09:43:35)"The Partnership at announced the results of a suvey of consumers of online drug purchasing behavior. The survey's results? 1 in 6 adults, approximately 16% of adult population have bought or currently buy medications online without a doctor's prescription."

The report was sponsored by the Alliance for Safe Online Pharmacies and sponsored by The Partnership at

The survey was conducted by CARAVAN Survey. 1,015 adults were contacted by telephone from November 4-7, 2010. The margin of error is +/- 3%.

(09:45:30) A group of founding private sector partners announced today that they will form a non-profit to work with each other and the US Government to rid the Internet of illegal online pharmacies. Today they have issued priniciples that will guide those efforts.

(09:46:00) The list of eleven companies participating in the initiative was invited to stand and be recognized: American Express, eNom, Go Daddy, Google, Mastercard, Microsoft, Neustar, Network Solutions, PayPal, Visa, and Yahoo!

In case any of them are reading this, UAB Computer Forensics Research Laboratory is ready, willing, and able to help!

The next speaker was Attorney General Eric Holder, who has posted a transcript of his remarks on the Department of Justice website. He pledged his support to the Strategic Plan, and shared some recent successes, including a counterfeit cancer drugs case in August, a Texas case involving he seizure of 6,000 counterfeit pills that actually contained ground-up sheetrock as an ingredient, and a groundbreaking $100 million case in Richmond Virginia. (That last would be the case against Chong Lam, and Siu Yung Chan, who were found guilty on June 11. They were arrested back in January 2008 for smuggling more than 300,000 counterfeit handbags from China. Eric Yuen was actually found not guilty.

Holder was praised during his introduction for re-establishing the DOJ Intellectual Property Task Force, which he announced in February 2010.

Secretary Napolitano spoke next (09:59:40), stressing that both CBP and ICE are seizing more counterfeit goods than ever (seizures increased 97% over 2009), and pledging support for IPEC's Strategic Plan. The National Intellectual Property Rights Coordination Center (which I was able to visit December 7th, and which I blogged about recently regarding their Cyber Monday Operation in Our Sites enforcements.) ICE initiated more than 1,000 IPR cases in 2010, and criminal charges increased 79% over 2009. DHS also participated in Operation Pangea and Operation Mercury this year, coordinated through the World Customs Organization. Her full remarks are transcribed by LexisNexis.

John Morton, whose full title is "Assistant Secretary of Homeland Security for Immigration and Customs Enforcement", also has his remarks transcribed thanks to LexisNexis. He stressed that we needed to speak in plain English and get our message out, and the message is that "counterfeiting spells trouble for America." It robs Americans of jobs, innovation, and creativity. It is organized crime, and creates a risk of harm to consumers. He mentioned counterfeit toothpaste, heart medicine, and air bags, and discussed counterfeit engine parts and ball bearings, not just in cars, but in aircraft with GE Engines. Fake kevlar in Iraq, fake baby formula, fake CISCO routers, and counterfeit Christmas lights were also on his list. One case he went deeper on was the Kevin Xu case in Houston that AG Holder also mentioned.

Xu imported more than $9 million in counterfeit medicines, including Plavix (heart medicine), Casodex (cancer medicine) and Zyprexa (schizophrenia and bipolar medicine). He was arrested in 2007 and sentenced in January 2009 to 78 months and $1.28 million in restitution. Xu was arrested when he flew to Chicago to meet with undercover agents. Forensic Chemists working for the FDA determined that his drugs had less of the active ingredient than claimed on the label and had countless impurities of unknown origin. Some of the drugs had no active ingredient at all. He had managed to get his counterfeits into the real supply chain in the United Kingdom, prompting massive recalls of the drugs in June 2007.

First Panel: Dangers of Counterfeit Pharmaceuticals

The First Panel was moderated by Tony West, Assistant Attorney General, Civil Division, including enforcement of the Food, Drug, and Cosmetic Act.

Panelists included:
John Clark, VP of Global Security at Pfizer (former assistant deputy at ICE)
Tom Kubic, President of the Pharmaceutical Security Institute
Carmen Catizone, President of the Natioanl Association of Boards of Pharmacies
and John Taylor, Counselor to Commissioner of the FDA

After introductions, John Clark of Pfizer did a presentation about counterfeit drugs.

One counterfeit's ingredients were shown: roach powder, powdered brick, road paint, and floor wax. Clark showed slides of the difference between a real drug manufacturer and a fake one. He played a telephone interview where a drug maker was counseling his undercover agent on what he would need to set up his own manufacturing facilities.

John Taylor shared information on how FDA provides consumer alerts, which are also a means to gather further information for investigators.

(continues in part 2 CNN Image Source )

Tom Kubic of PSI has been investigating and measuring counterfeits since 2002. There has been a 700% increase in drug counterfeiting from 2002 to 2009. They have identified at least 800 unique medicines that were counterfeited worldwide just in 2009. (In 2002, there were around 250.) The ones they have reviewed "are neither safe nor effective."

Carmen Catizone made several points. Quoted (with a slight paraphrase):

When you obtain a medication that has been approved by the FDA, [prescribed] by a licensed practitioner, [dispensed] by a licensed pharmacy, that product is safe.
When you go out of the system, you are dealing with criminals who have found it is easier to sell drugs online than to sell crack or heroin on the street. Consumers and legislators don't understand that this is a serious consumer health risk. Carmen says several years ago he was told by legislators they would not take action until they were shown the dead bodies.

John Taylor follows up on Carmen's comment showing that the fakes don't have to produce death in order to be harmed. In one case the supplier of an active ingredient component TO the manufacturer caused an effective epilepsy drug to be suddenly ineffective. Patients around the country began to have seizures!

A guest from the audience joined the panel to share his story. As an AIDS patient, taking nearly 10,000 pills a year, found that his injectable medications were now giving him pain that had not been previously present when injecting. It turns out that his medicine, obtained from a national pharmacy chain, with a prescription, was a counterfeit. For six week period, he has no idea what he was injecting into himself.

Second Panel: Health and Safety Risks of the Counterfeiting of Trademarks

The Second Panel was moderated by Lanny Breuer, Assistant Attorney General, Criminal Division. This panel focused more on computer and electronic components. A bit off topic for today's blog post.

Panelists include:
Neal Rubin, VP and Director of Litigation at Cisco
Keith Williams, President of Underwriter Laboratories
Robert Barchiesi, President of the International Anti-Counterfeiting Coalition
Brett Brenner, President of the Electrical Safety Foundation International

(continues in part 3 CNN Image Source)


CNN Image Source

Prior activities

Many of the companies named in the new announcement have already been taking strides to reduce the sale and advertising of online drugs. In October, the National Assocation of Boards of Pharmacies released their report Internet Drug Outlet Identification Program: Progress Report for Federal Regulators which shared some of the findings of the International Internet Week of Action (IIWA). During October 5-12, 2010, the Food & Drug Administration, Interpol, and agencies in 45 countries took a concerted week of enforcement actions. Interpol calls the enforcement actions Operation Pangea III.

During the operation which saw the 45 participating countries send intelligence to a dedicated operations centre at INTERPOL's General Secretariat headquarters in Lyon, Internet monitoring revealed 694 websites engaged in illegal activity, 290 of which have now been shut down. In addition, some 268,000 packages were inspected by regulators and customs, almost 11,000 packages were seized and just over 1 million illicit and counterfeit pills were confiscated - including antibiotics, steroids, anti-cancer, anti-depression and anti-epileptic pills, as well as slimming or food supplement pills. Some 76 individuals are currently under investigation or under arrest for a range of offences, including illegally selling and supplying unlicensed or prescription-only medicines.

Operation Pangea III featured a series of YouTube videos themed "Don't Be Your Own Killer". Here are two examples:

Other organizations and actions

In 2009, US Customs & Border Protection (CBP) and Immigration and Customers Enforcement (ICE) seized over $260 million worth of couterfeit goods arriving at US ports.

The International AntiCounterfeiting Coalition (IACC) President, Robert Barchiesi, attended the forum as well.

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