This is the clear implication of a new industry funded study, even if USA Today essentially ran an ad for the pharmaceutical industry by headlining its piece: “growing problem of fake drugs endangers consumers’ health.” The article highlighted the fact that unauthorized copies of drugs sometimes do not meet the same standards as the official version, but also notes that: “counterfeiters are now able to fake drugs so well that even experts find it hard to distinguish the copies from the real deal.” This implies that often the unauthorized versions will be every bit as good as the brand drugs.
According to the article, the study finds that the unauthorized drug market is between $75 billion and $200 billion a year, but adds: “the market is likely much bigger because many cases are hard to detect.” If we assume an average prescription price of $2 (many of these drugs are sold in the developing world), then this implies that the unauthorized market involves sales of 37 billion to 100 billion prescriptions year. If 1 in 1000 of these prescriptions saves a life (because the patient could not afford the authorized version), then unauthorized drugs save between 37 million and 100 million people a year.
In an act of unbelievable sloppiness this article fails to distinguish between unauthorized copies, where the buyer knows that they are not getting the brand drug, and genuine counterfeits, where the buyer is deceived about the drug they are buying. It also would have been helpful to include a discussion of alternatives to patent support for prescription drug research.
Government-imposed patent monopolies are the root cause of the high prices that create a huge market for unauthorized copies of drugs.
Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of False Profits: Recovering from the Bubble Economy. He also has a blog Beat the Press, where he discusses the media’s coverage of economic issues. This article was first published in CEPR’s Beat the Press blog on 12 September 2010 under a Creative Commons license.