Monday, December 17, 2007

Drug bust in free zone: Just how big was it?

Sunday's New York Times has a long article on free zones around the world, and the way they are used to move counterfeit drugs and cleanse their provenance. It's not all about the UAE (Dubai and Sharjah are conflated by the author of the article), but it is used as the example.

Three months ago, when the authorities announced that they had seized a large cache of counterfeit drugs from Euro Gulf’s warehouse deep inside a sprawling free trade zone here [Sharjah], they gave no hint of the raid’s global significance.

But an examination of the case reveals its link to a complex supply chain of fake drugs that ran from China through Hong Kong, the United Arab Emirates, Britain and the Bahamas, ultimately leading to an Internet pharmacy whose American customers believed they were buying medicine from Canada, according to interviews with regulators and drug company investigators in six countries.

The seizure highlights how counterfeit drugs move in a global economy, and why they are so difficult to trace. And it underscores the role played by free trade zones — areas specially designated by a growing number of countries to encourage trade, where tariffs are waived and there is minimal regulatory oversight.

The problem is that counterfeiters use free trade zones to hide — or sanitize — a drug’s provenance, or to make, market or relabel adulterated products, according to anticounterfeiting experts.

The article continues (emphasis added):
Dubai is particularly attractive to counterfeiters because of its strategic location on the Persian Gulf between Asia, Europe and Africa. Records show that nearly a third of all counterfeit drugs confiscated in Europe last year came from the United Arab Emirates. “Three or four years ago, Dubai did not even appear on the radar screen,” said an investigator for a major American drug company who is based in China and requested anonymity because he did not have authority to speak for his employer.

Dubai is vulnerable because of the huge volume of goods that move through its free trade areas, and because of what is perceived by some in the pharmaceutical industry to be a murky line of authority for rooting out counterfeits there. “It is not clear that the normal Dubai customs authorities have jurisdiction,” said Rubie Mages, a director of global security for Pfizer.

The authorities in Dubai do show a willingness to act when drug company investigators tip them to possible counterfeits, as they did in the raid announced earlier this year. “Dubai has taken a big step in fighting the counterfeiters,” said Ahmed Butti Ahmed, director general of Dubai customs. But significant quantities of fake drugs are still getting through, international health officials say.
In July, the authorities in Dubai said fake drugs from Mauritius had been seized at a free zone next to the Dubai airport. There were more than half a million pills of counterfeit Plavix, a blood-thinning drug made by the French company Sanofi-Aventis. The Dubai health authorities say they do not know who made it. Some pills, a government official said at the time, contained cement powder.
There has been punishment and regulatory progress:
In Dubai, seven officials associated with Euro Gulf were convicted recently and sent to prison, customs officials said. “We have been successful in getting customs authorities to work with us to inspect and to seize questionable goods, but we still have a long way to go,” Ms. Mages said.
[T]here is no shortage of Chinese companies making fake, subpotent or adulterated drug products.

“Some of them in the morning, they manufacture good drugs and in the afternoon and evening they manufacture counterfeit medicine,” said Dr. Mohammed Abu Elkhair, a health official in Abu Dhabi who helped organize a conference last month in the capital city to educate United Arab Emirates officials on how to combat counterfeit medicine.

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