Fighting Fake Medicines With Codes and Cellphones

In India, a pioneering medication-authentication scheme gains momentum

When sick people in India seek out medicine, there’s a chance that they’ll come back from the pharmacy with official-looking packages containing pills made of nothing but chalk. Counterfeit medications have become a major concern in the Indian pharmaceutical industry, the third largest by volume in the world. So a company called PharmaSecure has devised a system to give drugmakers an edge and give customers peace of mind.

PharmaSecure, a seven-year-old company with offices in New York City and New Delhi, sells a system to pharmaceutical companies that allows them to stamp each package of pills with a unique serial number as well as a phone number. When consumers buy the medicine, they can text or call that phone number and enter the serial number, and they’ll receive a verification message stating that the medicine is authentic and unexpired. The drug companies hope that consumers will learn to seek out these verifiable medications and that their brands will be thought of as trustworthy.

Indian consumers benefit from this direct communication line to the manufacturers, says Jay Kunin, chief technology officer of PharmaSecure, because retailers in India can be unreliable. “You’ll find some drugstores that look like a pharmacy here in the U.S. Some are small storefronts, and some are just the back of a donkey cart,” he says. “And the supply chain is always a big question.”

Already, PharmaSecure has signed up 5 of the 10 biggest Indian pharmaceutical companies in addition to a number of smaller firms. Sometime this summer, the company expects to issue its one-billionth serial number. It recently expanded its business to Nigeria, another country where counterfeit drugs are a pressing concern, and there is plenty of potential for further growth, Kunin says. While estimates of the global counterfeit-drug market vary widely, from conservative calculations of around US $10 billion to an industry estimate of US $75 billion, it’s clear that legitimate manufacturers are missing out on a lot of sales.

Most companies that sign up with PharmaSecure don’t have to change their manufacturing processes. They simply install software on their existing printing tools and use an online system to order a batch of unique codes to go with a batch of drugs. PharmaSecure handles the rest: They run the call center for consumers who call in their codes and the automated system that replies to texts. One challenge, admits Kunin, is spreading the word about the program so that consumers know to look for the numbers and use them.

Pharmaceutical companies in India are highly motivated to do something about the counterfeiting problem, says Roger Bate, author of a recent book on black market medicines, because they know the Indian regulatory agency will do little on its own. Bate says that the agency doesn’t have the resources to combat the fake drug epidemic and also cites episodes of corruption. “The assumption is that the government will do nothing to help you,” he says. “You have to monitor the whole supply chain yourself, from securing the materials to watching sales at the pharmacy.”

Bate says the companies using PharmaSecure may benefit because counterfeiters will find it less profitable to copy their specific drugs. “But they’ll just copy something else,” he adds. He isn’t convinced that such a program can combat the larger problem and reduce the overall amount of counterfeit drugs in India. “You can only be sure of doing that if you start using PharmaSecure or some other technology across the country in all therapeutic categories, because then the counterfeiters will have nowhere to go.”

Nathan Sigworth, a cofounder and the CEO of PharmaSecure, acknowledges that it’s hard for his client companies to measure success when it comes to counterfeiting; even if sales of a drug go up, it’s hard to attribute that rise to PharmaSecure’s service. That’s why his team created a secondary business that utilizes the direct communication channel that PharmaSecure establishes between the manufacturers and consumers.

When patients call or text the verification hotline, PharmaSecure can ask if they want to take a survey in return for some perk, such as a free phone consultation with a doctor. The survey asks questions about patients’ usage of the drug, and the results go back to the manufacturer. Sigworth says these results provide valuable consumer data. “The client is able to see on a dashboard: Of the patients taking the drug, this is the percentage that dropped the treatment, this is the reason why, this is the competitor they switched to,” he explains.

While PharmaSecure has worked with only a handful of clients on this data-mining system so far, Sigworth sees it as a valuable and growing part of his company’s business. In a recent case study of a hypertension drug in India, PharmaSecure determined that most patients who stopped using that brand did so because their doctors recommended a competing product, which gave the drugmaker a clear target for improvement: doctor loyalty. “On the data side, success is fairly easy to track,” Sigworth says.