Remarks
Robert D. Hormats
Under Secretary for Economic Growth, Energy, and the Environment
Omni Shoreham Hotel
Washington, DC
November 29, 2012


Thank you Tom for the kind introduction. And, thank you to Reconnaissance International and the organizers of this Global Forum for the opportunity to come speak with you about counterfeit and substandard medicines.

Pharmaceutical safety is an issue of vital importance.

I’m pleased to see so many faces from so many different regions here today—it’s an indication of how seriously we as a global community regard this threat.

I won’t belabor the extent of the problem because I know others will cover the statistics in much greater detail.

The problem we face is not new. Until the early-20th century, medicines were neither safe nor effective. There’s a quote by a famous 19th century physician, Oliver Wendell Holmes, Sr.—who was also Dean of Harvard Medical School—that highlights this point. Holmes commented that: “if all medicines in the world were thrown into the sea, it would be all the better for mankind and all the worse for the fishes.”

Over a century later, we have the science, technology, and wherewithal to do better. The United States—and indeed, all of you—are doing better. But there are certain areas that require improvement—especially regarding counterfeit and substandard medicines.

I’ll focus my remarks on three themes related to this problem:

(1) why the United States and, specifically, the Department of State have taken an active role to stop the spread of counterfeit and substandard medicines;

(2) activities in which we are engaged to promote pharmaceutical safety; and

(3) areas where you—as drug manufactures, supply chain experts, health ministry officials, and medical regulators—can continue and reinforce your leadership.

As I mentioned earlier, unsafe medicines were rampant in the United States until the early 20th century. Recognizing that governments have an important and inherent role to protect their citizens from harm, President Franklin Roosevelt signed the Food, Drug, and Cosmetic Act in 1938, which created the Food and Drug Administration.

The FDA has done a tremendous job ensuring that the medicines we take are safe and efficacious. But, the world has changed since the agency was created. Today, approximately 80 percent of manufacturers of active pharmaceutical ingredients used for medications marketed in the United States are located overseas. Because of this interconnectedness, unscrupulous or criminal manufactures in any country can threaten the well-being of Americans and, indeed, citizens of many other countries.

Governments must now look beyond their own borders to protect their citizens from harm. That’s why I meet regularly with my friend and colleague FDA Commissioner Peggy Hamburg to find ways for the FDA and State to work together to improve regulatory capacity abroad. Our goal is to improve the ability of foreign governments to regulate their pharmaceutical supply chains. This protects their citizens from harm. This also helps ensure that unsafe medicines do not enter the U.S. pharmaceutical supply chain.

To improve pharmaceutical safety around the globe, the Department of State is working with, and fully supporting, the FDA. And, together, we’re engaging USAID, Homeland Security, Justice, Commerce, and other USG agencies. We do so because the problem is vast and multi-faceted.

The Department of State’s safe medicines strategy has three prongs.

Raising awareness is the first component of our approach. Broadcasting the dangers of counterfeit and substandard medicines and is critical to safeguarding pharmaceutical supply chains in the United States and in other pharmaceutical supplier and consumer countries.

Over the past two years, the State Department has funded 24 outreach efforts throughout Africa, Asia, Europe, the Middle East and South America. Projects include workshops, seminars, discussion groups, media campaigns, and publications. These public diplomacy projects rely on the involvement of health industry stakeholders, including educators, pharmacists, hospitals, industry associations and foreign government officials.

For example, we’re currently working with the Partnership for Safe Medicines and Project HOPE (based out of Virginia) on a pilot project in India. The goal is to identify all of the suppliers of medicines coming into two villages and to provide training for patients on how to distinguish between legitimate and counterfeit medicines.

Counterfeiters prey on the ignorance of the public. Our outreach projects bring together relevant stakeholders to make it harder for counterfeiters to sell their illicit wares.

The second pillar of our safe medicines strategy is focused on stopping counterfeiters themselves. These criminals sell their wares without regard for patients who may be harmed in the process.

We’ve funded a series of government-to-government training programs—in collaboration with other U.S. government agencies, the private sector, and NGOs. These programs help foreign law enforcement, customs, and judicial officials catch and prosecute traffickers of counterfeit medicines. Foreign law enforcement capacity-building is essential to stop increasingly sophisticated transnational organized crime groups. These criminals are increasingly incorporating counterfeit medications into their criminal activities.

While many of these programs are part of our intellectual property rights or IPR crime training and technical assistance package, counterfeit medicines are, first and foremost, a public health threat. The enforcement of IPR is one legal mechanism we use to catch these counterfeiters.

We need every tool available to confront increasingly sophisticated trans-national organized crime groups that have turned to counterfeit medicines as part of their criminal enterprise.

The third pillar of our safe medicines strategy is multilateral engagement. As I mentioned earlier, over 80 percent of the manufacturers of active ingredients for genuine drugs sold in the United States are located abroad.

A substandard batch in one country can adversely impact dozens of countries. And, in the case of counterfeits, criminals capitalize on legitimate trade to sneak fake medicines across international borders. Therefore, a global approach is necessary.

That’s why, as this year’s chair of the G8 summit, the United States successfully encouraged heads of state meeting at Camp David to acknowledge the threat of counterfeit medicines to public health and consumer safety.

Following-up on the Leaders’ Statement, we’ve requested G8 countries to produce a public report on efforts they’re taking to combat counterfeit medical products. We also asked G8 members to report on recent enforcement actions they’ve taken against producers and importers of bogus medical products. We will work with the United Kingdom—the 2013 G8 chair—to continue these efforts.

The State Department also pushed for cooperation against the spread of counterfeit and substandard medicines at the Asia-Pacific Economic Cooperation, or APEC, Forum. Over the past two years, the United States has sponsored a number of programs for APEC economies, including a “Dialogue Combating Corruption and Illicit Threats” and a “Workshop on Drug Safety and Detection Technologies”.

And, the United States is active in the World Health Organization on this matter. We participated in the WHO’s working group on substandard, spurious, falsely-labeled, falsified, or counterfeit medical products meeting last week in Argentina.

The U.S. government is using a number of different approaches. We’re increasing awareness, helping build enforcement and regulatory capacity, and working through international organizations to develop global solutions.

We’ve made significant progress over the past few years but there is much left to do, which is why we need your help. I’ll mention just a few areas where people in this room can help lead the way.

First, counterfeiters are criminal opportunists. They target markets in countries where the capacity to detect defective products and the penalty for engaging in counterfeiting are low. The relatively low sentences for those who traffic in counterfeit medications make counterfeiting an attractive alternative to trafficking in narcotics.

That’s why, the Food and Drug Administration Safety and Innovation Act—which President Obama signed into law in July—raised penalties for trafficking counterfeit drugs. The legislation also required a series of improvements to reinforce the pharmaceutical supply chain. It’s critical that other governments similarly strengthen and enforce their laws to deter counterfeiters.

Second, it’s critical that we share information with one another. The United States—in large part, through the tireless work of the FDA—takes great pride ensuring the safety and efficacy of our medicines. Yet we’re not immune to the threat of counterfeit and substandard drugs.

Everyone here is aware of the recent Avastin incident. Once detected, the FDA immediately issued a warning to healthcare professionals and patients about the counterfeit drug and began an investigation. They acted quickly to protect lives.

Last, we need creative solutions from the private sector. I’ll share one excellent example. Several prominent payment processors and Internet intermediaries recently launched a non-profit group called the Center for Safe Internet Pharmacies. They combat illegal online pharmacies by de-registering Internet domain names, withdrawing payment services from fake pharmacies, and refusing to advertise fake pharmacies.

These companies banded together to protect the wellbeing of consumers and their respective brands. We need more companies to do the same.

I’ll close with one final point. Events like today’s Global Forum are an opportunity to make connections between different countries and companies. These connections are critical because no single nation or entity can stop the spread of unsafe medicines on its own.

So, I hope this Forum has provided all of you with new contacts and new ideas. Collaboration and collective action—on a global scale—is needed to protect our citizens from the dangers of counterfeit and substandard medicines.

Thank you.