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29 September 2016Big Pharma

Fake drugs cost EU pharma €10.2bn, says report

Fake drugs cost EU pharmaceutical companies up to €10.2 billion ($11.4 billion) annually, a new report from the European Union Intellectual Property Office (EUIPO) has revealed.

Finding that 4.4% of legitimate sales are lost every year to counterfeits, “The Economic Cost of IPR Infringement in the Pharmaceutical Industry” report said that 38,000 jobs have been lost as well.

According to the report, the enforcement of intellectual property rights has been less effective due to the “lack of knowledge in relation to the precise scope, scale and impact of IPR infringements”.

It further explained that many attempts to determine the scale of counterfeiting and its consequences for business, consumers and society as a whole have suffered from the absence of a consistent methodology for collecting and analysing data on counterfeiting and piracy across various sectors.

The direct costs to industry consist mainly of lost sales due to counterfeiting, but according to the report counterfeit drugs also have an impact on public finances.

It was stated in the report: “Since the activity in question is illegal, it is likely that those engaged in manufacture of counterfeit goods do not pay taxes on the resulting revenues and incomes.”

It further stated: “Therefore, an additional impact of counterfeiting is the resulting losses of tax revenue by government, specifically income taxes and social contributions or corporate taxes.”

The total yearly loss of government revenue as a result of counterfeit pharmaceuticals in this sector across the 28 EU countries is estimated at €1.7 billion.

The most affected countries are Italy, losing €1.6 billion, and Spain, missing out on €1.2 billion.

António Campinos, the EUIPO’s executive director, said in a press release: “We know through analysis done by the World Health Organization that both generic and innovator medicines are falsified, from cancer treatment products to inexpensive pain treatments.”

He added: “These fakes can be toxic and pose a serious danger to health. Our report shows that they also have a serious impact on the economy and on jobs. Our aim is that our data and evidence-based studies will help policy makers as they devise responses to the challenge of combating fake pharmaceuticals.”

Different approaches have been used in the methodology of the report, such as surveys, mystery shopping and monitoring of online activities.

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