Trent, C., & Moyer, D. C. (2013). Assessing the risks of counterfeiting and illicit diversion for health care products.

Counterfeiting and illicit diversion are problems that affect a wide variety of industries on a global basis. A counterfeit is a product designed, dressed, branded, and/or packaged in a manner intended to be indistinguishable from that of the genuine original and that is manufactured and/or distributed without the authorization of the legal brand owner. Illicit diversion refers to goods that are redirected from the manufacturer’s intended area of sale or destination to a different geography or distribution channel. Illicit diversion is also referred to as the secondary market, parallel trade, gray market, and third-party importation. Industries such as luxury goods, garments, electronics, and software have a long history of battling counterfeits. Governments have long battled illicit diversion within and across borders for commodities subject to excise taxation such as spirits, tobacco and gasoline. Ultimately, any product for which profit may be made by successfully introducing cheaper, falsified versions into the supply chain or by taking advantage of differential pricing in the marketplace is at risk for counterfeiting and illicit diversion.

The health care industry is not immune to the problems of counterfeiting and diversion. In fact, the risks for the health care industry are often greater than other industries due to the inherent risks to patients from many health care products, complex and opaque supply chains, price controls that exist in many countries and the vast revenues these products can generate. In order to combat this threat, and select the appropriate anti-counterfeiting or anti-diversion strategies, an evaluation of the potential risks must be conducted. Such evaluations create better understanding of the potential risks that may arise from a counterfeiting or diversion incident as well as the potential likelihood for such an incident to occur. The output from this process can help to drive anti-counterfeiting and anti-diversion strategies for specific products. This paper will discuss some areas to address and possible questions to ask when developing a risk assessment tool for health care products.