The continuing fight against

counterfeits in the U.S.

Bruce Longbottom Assistant General Counsel – Trademarks Eli Lilly and Company October 10, 2014

Drug Quality and Security Act

(DQSA) (signed into law Nov. 2013)

• Track & Trace law requires pharmaceutical manufacturers to: – Begin capturing and reporting product transaction

histories by January 1, 2015

– Implement systems to report suspect or illegitimate products by January 1, 2015

– Serialize individual products by 2017

• However, when a patient goes online to acquire medicines (with or without a prescription) they are relying on an unknown supply chain… – It is the opposite of “Track & Trace”…

– …It is “Lost in Space”

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Overview of the problem

• The Internet is the largest marketplace for counterfeit drugs

• At any one time, there are approximately 35,000 – 50,000 active online drug sellers operating worldwide

• 97% of online drug sellers operate illegally, peddling counterfeit, substandard, adulterated, unapproved, or otherwise illegitimate products

• 50% of the prescription medicines sold online by websites that hide their physical address are counterfeit

• 1 in 6 Americans – 36 million people – have bought medication online without a valid prescription

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Headlines from August and September 2014

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Examples of some problem sites

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Examples (continued)

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Examples (continued)

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Examples (continued)

•

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Examples (continued)

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What US Laws govern online

pharmacies? • Ryan Haight Online Consumer Protection Act of 2008

– For controlled substances, requires online pharmacy to:

• Display specified information on website (e.g., pharmacy contact info/certification, pharmacist qualifications, contracted physicians)

• Comply with pharmacy licensure laws in each state in which it operates or sells

• Provide 30 days notice to the Attorney General and relevant state boards of pharmacy prior to offering to sell

Practical effect: to drive suppliers of controlled substances offshore, but they still have online reach to US market

Does not apply to pharmaceuticals that are not controlled substances

• State laws/regulations (varies by state)

– Prohibit questionnaires

– Define “valid prescription”

Practical effect: very little impact

• Non-Internet laws still apply: Drug must be approved by FDA, cannot be counterfeit, misbranded or adulterated, and must be dispensed only with valid prescription by a licensed pharmacist.

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Google settles with US Dep’t of

Justice (2011)

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https://www.youtube.com/watch?v=VszCf4Tehko

August 24, 2011 - U.S. Attorney Peter Neronha and

Kathleen Martin-Weis, acting director of FDA/OCI (Office

of Criminal Investigations) hold a press conference

announcing the forfeiture of $500 million by Google for

allowing online “Canadian”

pharmacies to place ads

through its AdWords program

targeting US consumers.

Before settlement – Sponsored Links

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After settlement – Sponsored Links

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State attorneys general vs. Google

(2014) • December 2013: 24 state attorneys general sent Google a grievance

letter – Alleged Google profits off “dangerous and illegal content” through its

“promotion of illegal and prescription-free drugs”

• January/February 2014: Attorneys general met with Google executives on two occasions; Google said it would: – Increase spending on policy enforcement by 10% this year, to

$114.5M

– Hire 120 people this year to flag rogue ads and videos

– Eliminate 1,200 predicted search phrases that led people to potentially illegal sites

• Summer 2014: Some AGs, including NAAG president Jim Hood of Mississippi, are demanding more from Google – Want Google to “delist” sites that promote illegal activities and

products

– MS will subpoena “documents and e-mails about how they screen or don’t screen videos and ads” and “how they place ads beside videos”

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Google settles shareholder

derivative litigation (August 2014)

• Shareholders sued Google’s directors in August 2011 (after Google’s $500 million settlement with DOJ), alleging breach of fiduciary loyalty, corporate waste, and unjust enrichment

• Google settled litigation in August 2014, agreeing to spend $50 million per year for five years to fight rogue online pharmacy ads (not organic results)

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Will Google ever clean up 100%?

• Pressure from US federal government

• Pressure from US state governments

• Pressure from US FDA Office of Criminal

Investigations (FDA-OCI)

Stay tuned……..

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UPS settles with US Dep’t of Justice

(March 2013)

• UPS agreed to forfeit $40 million in payments from illicit online pharmacies for shipping services

• United States agreed to forego prosecution in exchange for forfeiture and implementation of strong compliance program

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FedEx indicted by US Dep’t of

Justice (July 2014)

• FedEx was charged with distribution of controlled substances and misbranding of drugs

– Faces a potential fine of twice the gains from the conduct, which are alleged to be at least $820M

• In August, the government added money laundering charges to the indictment

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US House Committee Hearing (Feb.

2014)

• On February 27, 2014 the House Energy and Commerce

Committee held a hearing on “Counterfeit Drugs: Fighting

Illegal Supply Chains”

– Testimony from FDA, IPR Center, GAO, Pfizer and Novartis

Security, Me , Institute of Medicine, and Pew Charitable Trusts

• My message: need FDA-approved drugs and need

pharmacist licensed by state authority

– Blessing by FDA and blessing by state licensing authority equals

“Sanctity of the pharmacy”

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FDA authority to destroy small

packages (2014, still pending) • If imported drugs appear to be adulterated, misbranded, or an

unapproved drug, the owner or consignee of the detained drug is issued a notice of detention and has an opportunity to respond to FDA’s intended refusal

• If FDA does indeed refuse the drugs:

Under current rule – The owner or consignee is issued a Notice of Refusal and the drug

must then be exported or destroyed within ninety days of the refusal

Under proposed new rule – FDA has authority to destroy any drug refused

entry without providing the owner or consignee of the drug with the opportunity to export the drug (provided that the drug is valued at less than $2,500)

• i.e., the drug would no longer be re-exported if it was refused entry.

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• ASOP is a nonprofit organization with the mission to protect patient safety globally

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CSIP Members include: PAYMENT SERVICE PROVIDERS:

American Express

Discover

Mastercard

Paypal

Visa

SEARCH ENGINES AND ADVERTISING NETWORKS:

Yahoo

Microsoft (Bing)

Google

Facebook

DOMAIN NAME REGISTRIES, REGISTRARS, AND WEB HOSTING COMPANIES:

Enom

GoDaddy

Neustar

SHIPPERS UPS

CSIP’s mission is to promote and encourage

safe online pharmacies through education,

enforcement, and information sharing.

Center for Safe Internet Pharmacies (CSIP)

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Options for low income / uninsured

1. Patient assistance programs (PAPs), such

as Lilly TruAssist

2. Seniors have Medicare Part D coverage

3. Low-income and disabled have state

Medicaid coverage

4. Affordable Care Act (Obamacare) provides

coverage for enrollees

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Questions?

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