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Counterfeit Medicines and Criminal Organisations

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Study report COUNTERFEIT MEDICINES AND CRIMINAL ORGANISATIONS - All rights reserved to IRACM - 2 Eric Przyswa, Research Fellow Mines ParisTech in the Centre for Research on Risks and Crises, wrote this report under the leadership and initiative of the Institute of Research against Counterfeit Medicines (IRACM). The author writes in many French and foreign academic reviews (Hermès, Futuribles, Tribune de la santé, Information and Society, etc.) and conducts research on the human safety. The report is available in its entirety on: www.iracm.com. Institut de Recherche Anti-Contrefaçon de Médicaments 54 avenue Hoche 75008 Paris - France [email protected] IRACM – September 2013 - All rights reserved to IRACM - 3 - All rights reserved to IRACM - 4 COUNTERFEIT MEDICINES AND CRIMINAL ORGANIZATIONS IRACM and Eric Przyswa - All rights reserved to IRACM - 5 Table of contents Foreword __________________________________________________________________________ 9 Introduction _______________________________________________________________________ 11 I. Medicine counterfeiting, criminal organisations and cybercrime __________________________ 13 I.1. Counterfeiting, falsification and medicines ___________________________________________ 13 I.2. State of play __________________________________________________________________ 16 In light of this assessment of counterfeit medicines, how can a more specific analysis be made of the criminal organisations involved in this ever-growing illicit trafficking? __________________________ 23 I.3. Criminal organisations and counterfeiting ____________________________________________ 23 I.3.a. Definition of criminal organisations ______________________________________________ 24 I.3.b. Criminal organisations and counterfeit medicines: a ‘structural hole’ logic ________________ 26 I.4. Cybercrime and counterfeiting ____________________________________________________ 30 I.4.a Definition __________________________________________________________________ 30 I.4.a Types of cybercrime _________________________________________________________ 31 II. Realities of the « counterfeit medicines and criminal organisations » combination __________ 35 II.1. Small-sized criminal organisations (two to five persons) ________________________________ 36 II.2. Medium-sized transnational criminal organisations (about 10 persons) _____________________ 37 II.2.a. Wuppertal case ____________________________________________________________ 37 II.2.b. Arnaud B. case ____________________________________________________________ 38 II.2.c. Peter Gillespie case _________________________________________________________ 38 II.3. Large-scale and transnational criminal organisations __________________________________ 39 II.3.a. RxNorth case ______________________________________________________________ 40 II.3.b. The ‘Jordanian-Chinese’ network ______________________________________________ 42 II.3.c. The ‘Avastin’ network _______________________________________________________ 46 II.4. Crime in China ________________________________________________________________ 49 II.4.a. Crime and exports from China ________________________________________________ 49 II.4.b. The case of mainland China __________________________________________________ 51 II.4.c. Evolution of criminal organisations in China ______________________________________ 52 II.5. Mafia groups, terrorism and financing ______________________________________________ 54 II.5.a. Mafia organisations _________________________________________________________ 54 II.5.b. Terrorism _________________________________________________________________ 57 II.5.c. Money laundering __________________________________________________________ 58 II.6. Cybercrime and counterfeit medicines ______________________________________________ 59 II.6.a. Cyberspace and criminality ___________________________________________________ 59 II.6.b. Cybercrime techniques ______________________________________________________ 60 II.6.c. Online pharmacies __________________________________________________________ 66 II.6.d. Concrete cases to illustrate the ‘cybercrime – counterfeit medicine’ combination __________ 70 II.7. A summary of the criminal organisations involved in counterfeiting medicines: organisational challenges _______________________________________________________________________ 76 II.7.a. ‘Real’ criminal networks and medicine counterfeiting _______________________________ 76 II.7.b. ‘Virtual’ criminal networks and counterfeit medicines _______________________________ 79 III. Criminological issues and recommendations _________________________________________ 85 III.1. Shaking up criminological concepts _______________________________________________ 85 III.1.a. A partially suited theoretical view ______________________________________________ 85 III.1.b. The novel nature of criminological concepts linked to medicine counterfeiting ___________ 87 III.2. Considerations to counter this phenomenon _________________________________________ 94 III.2.a. The issue of assessing the ‘crime – counterfeit medicines’ combination ________________ 94 III.2.b. Improving the analysis of the problem through centralised intelligence _________________ 96 III.2.c. The issue of law enforcement _________________________________________________ 98 III.2.d. The issue of prevention ____________________________________________________ 100 - All rights reserved to IRACM - 6 III.2.e. The importance of whistleblowers and experts __________________________________ 102 III.2.f. Internet specificities ________________________________________________________ 105 Conclusion _______________________________________________________________________ 111 APPENDICES _____________________________________________________________________ 115 Glossary of acronyms _____________________________________________________________ 116 List of interviews (in alphabetical order) _______________________________________________ 117 Bibliographic references ___________________________________________________________ 118 - All rights reserved to IRACM - 7 - All rights reserved to IRACM - 8 Foreword Today, drug counterfeiting is a rapidly growing phenomenon in both developed and developing countries. The number of victims is rising, as is the income derived - almost with impunity - from transnational organized crime. The International Institute of Research against counterfeit Medicines (IRACM) intends to devise measures to better understand the phenomenon, educate and motivate leaders, rally public opinion, warn potential victims and to facilitate the implementation of strategies related to these issues, both from governments and the international community. This is the IRACM’s very reason for existing. Drug counterfeiting is primarily a ‘dark figure’, and most likely a considerable one. The effectiveness and credibility of the solutions are subject to a systematic and comprehensive understanding of the phenomenon, all its aspects, its mechanisms and the strategy of organized crime, which, in many parts of world, has become a leading activity. This is why the IRACM decided to support the creation of an in-depth study and instructed a particularly competent researcher in the field, Eric Przyswa, to conduct it. The work he has achieved is substantial and we now know more thanks to him. He has written a very full report, which, once published, will no doubt be a milestone in the understanding of the role of organized crime in drug counterfeiting and the implications and effects of these truly transnational crimes. Transnational because they thrive in the wake of globalization by exploiting the destitution in poor countries and the credulity of the people in rich countries. Through this report, the IRACM wishes to inform as many citizens of the world as possible of the dangers and threats it has revealed, and to ensure that policymakers take them into account to implement the necessary action, contain organized crime, protect society and safeguard the rule of law in our countries against the power these criminals have gained. Bernard Leroy, Director of IRACM - All rights reserved to IRACM - 9 - All rights reserved to IRACM - 10 Introduction The combat against counterfeiting started during the 1980s and, at that time, was limited to sectors where it was frequently the consumer who asked for the product, and was even party to the purchase. Above all, it is only since the start of the 2000s that the situation expanded substantially particularly with the liberalisation of the WTO1, technological developments, containerisation and the significance of China as the world's factory. On the other hand, it was only later that counterfeiting seemed to affect the pharmaceutical sector, at least from the industrial point of view. Studies and reports have covered the involvement of organised crime in ‘traditional’ counterfeiting, particularly in creative industries (luxury goods, audiovisual). Nevertheless, even if there are more and more discussions on the topics of ‘counterfeit medicines’ and ‘organised crime’, very few researchers have analysed the relationship between the two phenomena. Consequently, it appeared that such a report should be written and a dual objective was decided: - To take as objective and as rigorous a view as possible on the reality of the "counterfeiting – criminal organisations" combination in the area of medicines. - From a criminology and strategic standpoint, to give some consideration to what could be done to guide current actions. What about
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