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Battle against counterfeit medical devices

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India’s laws to administer medical devices are cryptic, giving enough room for counterfeit products to outwit regulations and corrupt the economy. Experts reveal ways by which India can succeed in its battle against counterfeits medical products

Attention healthcare providers!

Did you know that globally around 8-10 per cent of all medical devices are of fake origin?

Did you know that it is important for manufacturers to have a Unique Device Identification (UDI) to ensure traceability of their products?

And did you know that is important for healthcare providers to check the identification and clinical examinations of medical products while procuring them?

Sadly, ill awareness about counterfeit products amongst healthcare providers is one of the chief reasons for such products to circumvent regulations and corrupt the economy.

Counterfeit medical devices harm patient rights, damage brand equity and cause losses to original equipment manufacturers. According to Aarthi Sivanandh(Partner) and Bhargavi Ravi (Associate) of J Sagar Associates, globally approximately 8 per cent of all medical devices are counterfeit and only 20 per cent of countries in the world have established regulations to counter their spread. Most commonly counterfeit devices include surgical devices such as clip cartridges, mesh, plates and screws.

Dr Milind Antani

Dr Milind Antani, Lead – Pharma & Healthcare, Medical Device & Med-Tech Practice, Social Sector Practice, Nishith Desai Associates informs, “Counterfeit medical devices are not only a threat to public health but also reduce the level of public trust in the healthcare system. Usually, medical devices are required to undergo comprehensive clinical investigations to establish their safety before they can be marketed to the general public. For counterfeit medical devices, no such tests are carried out. Prevalence of counterfeit medical devices in the market also makes it tougher for manufacturers of generic devices to establish their presence in the market as patients are not as comfortable purchasing medical devices manufactured by less prominent companies.

Nakul Pasricha, President Authentication Solutions Providers Association, adds, “The use of non-compliant and counterfeit medical technology devices can seriously injure patients’ health and significantly endanger a medical equipment company’s reputation and business. Firstly, one cannot appraise its quality and safety for the user, since the equipment has never been examined or assessed by the authorised parties in the Ministry of Health. For instance, the dental industry is susceptible to many fake products, ranging from X-ray machines, turbines, drills, and even fake braces. The infection from a fake lead wiring can even endanger the patients’ life. Counterfeit needles could be non-sterile and their use can put the user at risk of infections.Secondly, counterfeit medical equipment could provide the user with a false diagnosis of the patient’s condition. For example, a blood glucose meter could fail to display the true values for a diabetic patient and a pregnancy test may not be accurate. Finally, the use of counterfeit medical devices harms the device’s original registration holder, who invested a great deal of resources to prove the preparation’s safety and efficacy and to register it with the Ministry of Health. Fake and substandard equipment can totally defeat the purpose and intent of medical treatment.”

Charu Sehgal

Charu Sehgal, Partner, Deloitte India, states some of the economic threats associated with fake devices:

  • A clinical threat in the form of a health risk to the patient that could result in injury, permanent disability, or even death. Such devices could also negatively impact the clinician’s reputation
  • An economic threat, as counterfeit devices capture a part of OEM’s market, and this in turn affects the original manufacturers as well as vendors down the value chain
  • Increased cost of production due to investments in preventive security measures (such as holograms and
    barcodes) and awareness campaigns within the medical community
  • Creation of negative perception, as the presence of counterfeit devices can make hospitals and patients lose confidence in the original brand
  • Fees to deal with legal suits in case of counterfeiting instances could pose a heavy burden

International problem

World over, industry experts, governments and regulators face a huge challenge in tackling this menace. Shares Sehgal, “ It has become harder to detect counterfeit devices, as the look and feel of the packaging/labelling, as well as the product, are absolutely identical to the original. Additionally, there is low awareness about the presence of counterfeits in the medical community and among purchase departments of hospitals. Also, there is limited training on how to spot counterfeit products. The presence of externalities also create challenges towards mitigating counterfeits. At times, there is inability to distinguish whether sub-par performance is due to the device being a counterfeit product or because of other issues such as poor clinical facilities or environmental factors (for example, some devices witness poorer performance in tropical climates).”

The Indian problem

According to analysts at the global level, India is viewed with ambivalence on its war against counterfeits. On the pharma front, India is already accused of being a leading source for counterfeit drugs. As per the April 2019 report of the Office of the United States’ Trade Representative, China and India are reportedly the leading sources of counterfeit medicines distributed globally. While it may not be possible to determine an exact figure, the study suggested that up to 20 per cent of drugs sold in the Indian market are counterfeit and could represent a serious threat to patient health and safety. A similar sentiment runs in the surgical and medical devices segment too.

However, domestic manufacturers from India despise this accusation.

An AIMED source had written to Express Healthcare stating that the India does not suffer much from the counterfeit medical devices problem. “We have negligible complaints from our Members on Counterfeit Medical Devices as that was earlier a bigger problem in Pharmaceutical Industry but we do get complaints of Licensed Manufacturers of Orthopedic Implants having to compete unfairly with unlicensed lower priced products which may be look alike non branded implants but may not be having the required grade of stainless steel etc. In fast moving disposables products like syringes etc., access to technology / high cost of packaging acts as a detriment to most counterfeits in India. But, we do face problem of counterfeiting from China e.g. for our disposable syringes in Sudan and Morocco which were excellent copies of our Dispo Van Brand and we had to complain to their regulators. In the long run, regulating all medical devices under a separate medical device specific law to address patient safety concerns on quality and counterfeits etc., is the solution”, said the AIMED source.

“Such a damning international reputation not only affects credibility of legitimate players in India’s drugs and medical devices sphere but also taints the desirability of India as a trading partner and as a potential investment destination. This will be particularly detrimental to India’s legitimate generic industry. Therefore, on every front – ethical, consumer, health and safety, industry, and global reputation – it is the duty of the State, and of every player in the field, to create and implement the highest standards of quality control and checks to weed out the menace of counterfeit medical products”, assert Sivanandh and Ravi of J Sagar Associates.

They further list down some factors that exacerbate the counterfeit drug problem in India:

1. Multiplicity of regulators – While the Central Drugs Standards Control Organisation (CDSCO) is the organisation placed in-charge of medical devices under the Drugs and Cosmetics Act and Rules, there are other regulators who also control medical devices – the Department of Pharmaceuticals (Ministry of Chemicals and Fertilisers), Customs Department (to punish illegal imports), authorities under the Essential Commodities Act, 1955 (under the Drugs (Price Control) Order, 2013). This leads to diffused power.
2. Poor enforcement – multiplicity of regulators adds to India’s per-existing problem
of inefficient enforcement of regulations.
3. Low cost of labour and relatively low cost of production make it easy to create counterfeit devices
4. Unchecked online sale of medicines and medical devices facilitate the spread of these counterfeits – easy access to online platforms and one needs to check as online retail pharma grows, the extent of quality checks that are in place before accepting stock for sale
5. India provides the cheapest data connection in the world – affordable and reasonably efficient data make it easy to create and access websites and complete transactions online. To the non-discerning customer this could be dangerous.
6. Illiteracy, poverty and lack of awareness among the people – Poverty instigates people to spend less even on life-saving medical devices.
Illiteracy and lack of awareness often results in people being unable to differentiate between genuine products and counterfeits. Further on, medical device sector in India for a long time has been import-dominated. And because most products do not have a UDI, keeping track of the devices and instruments becomes extremely difficult, inform experts.

Learnings from EU MDR

Having said that, EU’s new Medical Device Regulation (EU MDR) which will come into effect in May 2020 is said to bring hope to those who have been combating against counterfeit medical devices for a long time. According to the new EU MDR, Unique Device Identification (UDI) will be enforced to help track devices throughout the economic operator supply chain and will be added to all labels. The EU MDR has, among other measures, introduced stricter ex-ante control for high risk devices, expanded the coverage of medical devices to include some aesthetic devices and has revised its classification systems to introduce an “implant card” to be carried by patients who have an implanted medical device. It has enhanced post-market surveillance and promised greater inter-agency cooperation.

Well this move is critical to all medical device manufacturers globally, as Europe is an important market both from a trade and regulatory point of view. The new regulation will positively impact operations from one end of the supply chain to the other, from manufacturing to distribution. With the implementation of the new EU MDR, there will be an increase in demand for more information related to clinical data, technical documentation, and labelling by regulators. This will make it mandatory for manufacturers to have meticulous clinical evidence for their products.

As per industry analysts, this move ensures traceability of devices as well as sensitises patients, brands and policymakers to create awareness around solutions. This new regulation also opens avenues for regulators in India to learn new strategies and legal frameworks.

India’s efforts to regulate medical devices

While India, already has a Medical Device regulation that covers 23 broad categories of devices, yet the existing law covers only a small portion of entire spectrum. Sehgal informs, “With the introduction of Medical Device Rules 2017, all companies interested in importing, manufacturing, and selling medical devices in India have to adhere to regulatory framework laid down by the rules, which are harmonised with the Global Harmonisation Task Force framework (GHTF).”

Early this year, the Central Government, in consultation with the Drugs Technical Advisory Board, published a Gazette Notification notifying eight additional categories of medical devices under the regulatory framework. This will be effected from April 1, 2020. The following medical devices (intended for human use) would be considered “drugs” under the DCA, namely: (a) all implantable medical devices; (b) CT scan equipment; (c) MRI equipment; (d) defibrillators; (e) dialysis machine; (f) PET equipment; (g) X-Ray machine; and (h) bone marrow cell separator.

Moreover, the Ministry also notified that all implantable medical devices, CT etc., should register their devices on the CDSCO’s e-governance SUGAM portal (a single window interface for stakeholders to access the online services ).

Sivanandh and Ravi of J Sagar Associates inform about some penalties under the Indian MDR for those not meeting the standards:

1. For the manufacture, distribution and sale of unlicensed or adulterated medical products (where such adulterated medical products are not likely to cause death or grievous hurt) – imprisonment of 3-5 years and a minimum fine of Rs 1 lakh or three times the value of the confiscated drugs, whichever is higher.
2. For the manufacture, distribution and sale of spurious medical products (where such spurious medical products are not likely to cause death or grievous hurt) – imprisonment of seven years to life and a minimum fine of Rs 3 lakh or three times the value of the confiscated drugs, whichever is higher
3. For the manufacture, distribution and sale of spurious or adulterated medical products which are likely to cause death or grievous hurt – imprisonment of 10 years to life and a minimum fine of Rs 10 lakhs or three times the value of the confiscated drugs, whichever is higher
4. For all other manufacturing, distribution or sale in contravention of the DCA, DCR and MDR – imprisonment of one-two years and fine of not less than Rs 20,000.
5. For the import of any prohibited medical products, including those which are misbranded, adulterated or spurious – penalties under Customs Act, 1962 will apply.

Anti-diversion law needed

Now, with counterfeit medical products also comes another problem- illicit diversion of medical products. Sehgal explains, “Illicit diversion refers to the process of goods being redirected from the intended region of sale to a different country or destination. This could be done to take advantage of price differential or for other reasons. Illicit diversion is also referred to as the secondary market, parallel trade, gray market, and third-party importation. Anti-counterfeiting measures also act as an effective deterrent to diversion. Often, counterfeits get introduced into the supply chain at the local distribution hubs. Controlled print stations/ unique serial numbers ensure that counterfeits are not introduced at the re-labelling stage. This can also prove to be a deterrent for potential diversion.”

Nakul Pasricha

Hence, it is vital that any anti-counterfeiting mechanisms also take anti-diversionary steps. Experts reveal that the Indian law is currently not very clear on this point and does not have explicit provisions concerning anti-diversion. But this can be resolved if manufacturers adopt innovative packaging solutions, UDI, barcoding and more.

Key tools to tackle counterfeits

Ensuring that the medical devices at the point of use is the right one ultimately increases the awareness amongst end users. Therefore, it becomes a pressing need for manufacturers to take ardent steps to improve track and trace mechanisms as well as secure packaging and supply chain.

Pasricha urges manufacturers to focus on solution such as holograms, barcoding, UDI and more to thwart fake products.

Secured Packaging – Medical devices usually have three levels of packaging-the primary packaging (usually a pouch), which then goes into a secondary packaging of a product box and finally packaged into a shipper where there will be multiple products stored in one package. To avoid counterfeiting, manufacturers can apply deterrents to each of these items of packaging. Solutions such as hologram, UV identification code, 2-D barcode with unique numbering/ serialisation or hidden text printed using security or magnetic ink can be used. These are not intended as end-user checks but as deterrents to the counterfeiter.

A trained personnel can quickly establish if the product is authentic and can take things further by referencing the unique numbers used in the security marking via an authentication site, making it easy to identify fakes that might have sneaked in.

Secure Supply Chain – Traceability is one of the most effective tools for anti-counterfeiting. Use of digital technologies over and above the physical solutions takes the anti-counterfeiting features one step further, addressing and curbing supply chain issues. A unique serial number or reference number (URN) is a randomised number printed onto the product’s packaging and as it is unique, it can be used to define exactly who manufactured the item, where it was manufactured and the country or state of origin. This type of serialisation at the item level is vital in the fight against counterfeiting and has proved to be very effective in many cases. Web-based labeling and data management solutions can support one in delivering secure printing for mass serialisation to protect the product and the consumer. Serialisation not only gives one the ability to authenticate the product as genuine, but also offers the ability to track product’s movement throughout the supply chain, improve efficiency and most importantly, protect the end user. Things can be taken up another level by linking logistics systems with the serialisation data, providing a smart active method system that would look for activities and trends based on knowing which serial numbers were assigned to what product, to be sold in which territory. For example, if a shipment of product with serial numbers assigned to the China market were scanned at a customer site in South America, this would be captured as a diverted product and flagged up to the manufacturer/supplier accordingly to engage and investigate. It is therefore a combination of both passive and active methods that ensure true safety of items and consumers.

Aarthi Sivanandh

Sivanandh and Ravi also mention that some packaging players are working to create innovative hi-tech solutions. For instance, TruTag Technologies has developed programmable micro tags which can be embedded into packaging or into the device itself. Made of high-quality pure silica (SiO2) these micro tags can carry large quantities of information which can be used to determine authenticity and traceability.

Need for a clear manifesto against counterfeiting

India’s regulatory framework seem exhaustive and penalties appear to be strict but experts inform that the real challenge lies in its enforcement. Says, Sivanandh, “The challenges ranges from detection of counterfeit medical devices to being able to prosecute those responsible for such counterfeits. Given the complexity of the pharma and medical devices supply chain, this poses a real challenge to State machinery. It will be necessary, above all, to ensure inter-agency communication and cooperation.”

To take proactive measures, in March 2019 regulators raided a wholesale market in Varanasi and Delhi’s Bhagirath Palace – which is one of Asia’s biggest wholesale markets. The raids also included a residence-cum-office in Shahdara. The raid in Varanasi was carried out by FDA with the support of a major medical device company. Over 6,000 units of counterfeit medical devices such as surgical products were found during these raids. On duty officer, Bhagwan, IO, district investigation unit disclosed, “This is one of the biggest raids to bust counterfeit products in recent times.”

Bhargavi Ravi

Another raid in July 2019 was conducted in Agra which uncovered counterfeit skincare products. However, little is known about the trails these offenders will face.

Experts say that surprise checks and inspections of licensed manufacturers (to ensure quality standards) and suspected unlicensed or counterfeit manufacturers and distributors is vital to ensure compliance with laws. But unless it is made manifestly clear that the government considers counterfeiting a serious punishable offense and manufacturers cannot act with impunity, the problem will continue to exist. Nevertheless, India can certainly learn from or even join the WHO and interpol’s operation called the International Medical Products Anti-Counterfeiting Taskforce (IMPACT) that began in 2008. The mission initially began to prune counterfeit medicines by the Permanent Forum on International Pharmaceutical Crime (PFIPC), IMPACT and Interpol initiated Pangea. It was the first international activity targeting illegal advertising, sale, and supply of medicines over the internet. Today, Operation Pangea, an annual operation, has over 123 participant countries. According to Interpol’s website, in 2018 along, Operation Pangea seized 10 million units of counterfeit medical products worth over $14 million. About 859 people were arrested and 3,671 websites were taken off the Internet.

Further, experts emphasise that the industry and healthcare providers must know that counterfeiting is not the same as intellectual property right violations. Explain Sivanandh and Ravi, “Counterfeiting of medical products does not always entail the violation of intellectual property rights (a medical device that does not have the claimed properties or is substandard would also be counterfeit/misbranded/adulterated/spurious). The IP approach identifies the rights holder as the main victim of counterfeiters and litigation is focussed on protecting his rights. For counterfeit medical products, the real victim is the patient and litigation should aim to champion the rights of patients and public health. Protection of public health requires a wider approach than a mere IP-based approach.”

They remind us of the Theranos scandal where a poor idea, fake claims and bad conceptualisation was never shot down. It got regulatory approvals and the company conducted clinical trials on real terminally-ill patients in partnership with pharma giants in the most regulated legal system in the world –USA. Putting several patients’ lives at stake. It took around a decade from regulators to detect the fraud. That alone explains the complexity of the problem world over. With India having cryptic laws for medical devices, it will be tough to clamp down the proliferation of counterfeit medical devices. Nonetheless, today we see immense technological transformations in healthcare that can certainly fix the problem.

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