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Pharmaceutical
companies can no longer ignore the threat of counterfeit
drugs—but are they investing enough time, manpower, and
money into brand protection?
Best
Practices LLC recently conducted a survey through its
Business Excellence Board to determine how top pharmaceutical
companies implement resources and staff to protect against
counterfeit products. Ten companies participated in the study:
3M Pharmaceuticals; Abbott Laboratories; Aventis; Merck &
Co.; Merck, Sharp & Dohme Ltd. (affiliate); Ortho Biotech;
Pfizer (affiliate); Pfizer (affiliate); Proctor & Gamble;
and Solvay Pharmaceuticals.
The study, Safeguarding
Against Counterfeit Products: Developing the Pharmaceutical
Brand Security Function, found that most companies have a
council or task force assigned to brand security, or they
split the function between departments. However, only a few
companies have a permanent department whose primary role is to
protect their brand. Dan Egbert, senior research associate for
Best Practices, notes that the formation of a permanent
department is more of an “emerging trend” at this point,
and companies are just starting to explore the idea of forming
a working group. The study found that, on average, these
companies have a staff of about five full-time-equivalent
employees dedicated to brand security. Two of the companies
have brand security staffs greater than 10, and—as might be
expected—those companies did more than most of the other
companies that had smaller staffs.
In terms of budget, the benchmark average was less than
$500,000 a year. “Most companies are staking out what
they’re trying to accomplish with these organizations,”
says Egbert, “so they haven’t put big money into it
yet.” Two of the companies had a budget greater than $1
million a year, and one had a budget of $3 million to $5 million a
year.
In terms of functional responsibilities, the brand security
groups with the largest staffs were able to accomplish all of
the following: report potential counterfeit incidents to FDA
or other regulatory authorities, monitor the supply chain for
counterfeits, manage external communications on counterfeit
drugs, collect and track data for product complaints, manage
litigation, and develop authentication technology. What was
surprising, says Egbert, is that two of the organizations with
staffs of three people were able to accomplish all of those
functions. The study did not yield enough data to say whether
those companies are more effective at accomplishing all of
those functions with a smaller budget, or if they are
“overstretched.”
In terms of early warning activities, the most important and
most common activity cited was getting feedback from the sales
people who interact with physicians. Only one company
monitored returned goods. The most common first-response
activity was reporting incidents to FDA. In fact, in terms of
communication and outreach, all of the companies communicated
with FDA.
Considering the billions of dollars lost annually due to
counterfeit drugs, the budgets and staffs allotted to
protecting these companies’ products may, on the whole, seem
smaller than one would expect. But the good news is that all
of these companies are taking steps to address this
problem—and all are communicating with FDA. As companies
continue to create programs aimed at identifying potential
threats to their products and devising ways to protect them
against counterfeiters, we can only hope that packaging
employees are involved to the same extent as sales,
manufacturing, distribution, legal, and security personnel.
According to Egbert, one of the survey respondents stated that
his company was focusing on the packaging department as an
important source of expertise. If your company’s brand
protection team isn’t working closely with packaging, it may
have a hurdle to overcome in terms of understanding all the
elements that go into brand protection.
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