Chain gang

Good Distribution Practice in rural Indonesia. Photo: Elizabeth Pisani

Getting medicines to patients across Indonesia’s 13,000 islands: what could possibly go wrong?

Medicine supply chains are more of a tangled web at the best of times. In Indonesia, with its 13,000+ islands scattered across three time zones, more so than most. Add to that a complex mix of pharma regulations designed to apply uniformly across one of the most diverse countries on earth; a rapidly-expanding but underfunded national health insurance system; and a fiercely competitive medicine market with hundreds of producers and thousands of small distributors. What could possibly go wrong?

This was the implicit question behind our recent research into incentives in the medicine supply chain in Indonesia (pdf). It built on an earlier, but recently-published study, led by Amalia Hasnida, which looked at the factors that create markets for low quality and fake medicines in Indonesia. We interviewed distributors, medicine company sales staff, procurement officials, doctors, midwives and pharmacists, in shops as well as hospitals and primary care centres, in two quite different areas of Indonesia. Relmbuss Biljers Fanda talked to people in the remote eastern Indonesian district of Timor Tengah Selatan, only a stone’s throw from the north coast of Australia. Aksari Dewi, meanwhile, interviewed people in Malang district, in the heartland of Indonesia’s most populous island, Java. (Both also collected information on sales prices, both directly from supply chain actors, and through mystery shopper surveys).

The market dynamics were actually quite similar in both areas — the nature of business is that more or less anyone in a for-profit enterprise will try to maximise those profits by keeping spending and other costs low, while selling at the highest prices the client will bear. Similar market regulations, on the other hand, impact different areas rather differently. For example, rules that restrict who can buy and sell medicines are designed to protect patients from medicines that might have been handled improperly and thus be degraded, or even fake. But in remote areas, enforcing those rules would effectively mean that patients have no access to any medicines at all. So the rules get bent, often for very good reasons.

If the profits from expensive products sold to rich patients subsidise cheaper quality-assured medicines for poor patients, great. If they only subsidise private jets for pharma shareholders, not great.

It’s hard to reduce something as complex as the medicine supply chain to a few bullet points. But if we had to, we’d note the following key lessons from the research:

  • Regulators protect product quality, while manuacturers, distributors, pharmacists and many hospitals and health care providers protect profits. If a rule meant to protect quality eats into profits, the market will probably find a work-around.
  • The price charged by one actor in the supply chain obviously affects the profits made by the next link in the chain. Where the loss-avoiding incentives of Actor 1 (say, a producer) enhance the profit-making incentives of Actor 2 (perhaps a distributor), the product will fly through the supply chain, whatever its quality. A great pathway for substandard medicines. If the two are in conflict, the more likely result is shortages. A market opportunity for fakes.
  • In a diverse country, rules must be applied flexibly. In under-resourced areas, sticking too closely to the rules can reduce patients’ access to any medicine at all.
  • Prices for similar products vary hugely. That’s not a problem, as long as poorer patients can afford the medicines they need. If the profits from expensive products sold to rich patients subsidise the production of cheaper quality-assured products for poor patients, great. If they only subsidise private jets for shareholders of pharma companies, not great — it means the cheaper drugs may well be substandard.
  • Institutional incentives are also important in shaping behaviour in medicine supply chains in Indonesia, especially in the public sector. Sometimes, well-intentioned efforts to curb corruption or increase oversight makes civil servants and others risk-averse in ways that leave patients without medicine.

If you’re interested in what we think this means for policy-makers, please read the full report. We’re keen to hear your thoughts, especially on how similar or different the dynamics are in other countries.

We thank the Global Health Supply Chain Summit for funding the bulk of this research. Thanks are also due to Australia’s Australia’s National Health and Medical Research Council/The George Institute for Global Health, which supported Aksari Dewi, and USP Quality Institute, which supported Amalia Hasnida.

This report is a first draft; we aim to finalise it after getting feedback from a number of supply chain actors in Indonesia. An Indonesian language version will be available soon. Terima kasih atas kesabaranya.

Garbage in = garbage tracked

Barcoded tracking systems are being touted as a great protection against fake COVID-19 vaccines. But they don’t protect against substandard products.

(DoD photo by Lisa Ferdinando)

As more countries start receiving shipments of COVID-19 vaccines, concern about theft and falsification is also growing. So I was really pleased to see the issue is on the radar in countries such as South Africa, which is just now receiving its first batches of vaccine from the Serum Institute of India.

This I learned (like so much else) from the always excellent health reporting from Bhekisisa. Their report explains how end-to-end track and trace systems can safeguard medicine quality. It also makes it clear that in the case of South Africa, the potential of barcoding won’t be fully realised just yet.

As South African pharmaceutical policy researcher Andy Gray said: “It’s truly bizarre to think that every single item in a supermarket has a barcode on it, and yet we don’t have barcodes on our medicines.” Well, yes and no. Barcoding is technically easy (though according to Bhekisisa the Serum Institute isn’t doing it for COVID-19 vaccines because they are in such a rush to get the vials filled and shipped). But however simple it is technically, implementing a nation-wide system that clocks medicines at every point in the supply chain is politically very hard to achieve. In fact, as far as I know, only one country — Turkey — has managed it, although several others, including China and the US, have tried and failed.

How did Turkey succeed? For the full story, read this interesting paper from MedsWatch colleague Koray Parmaksiz (disclosure: I’m a co-author).
To summarise, Turkey had:

  • a government whose credibility was tied up with achieving universal health coverage
  • a national health insurance system beset by fraud which undermined that goal
  • a huge and growing market for medicines, which manufacturers were keen to access
  • a generous single payer health system, which reimburses medicines against proof of sale

Together, those factors add up to a government with a strong political incentive to impose an initially expensive system on reluctant but ultimately willing producers; strong incentives for everyone within the legitimate supply chain to play ball; and no incentive for patients to buy outside of the legitimate supply chain, because they get all the medicines they need for free. Not many countries have that constellation of factors; in countries where incentives are not so neatly aligned, it’s a lot harder to ram through end-to-end barcode tracking systems.

Good track and trace systems have the potential to reduce (even eliminate) falsified medicine within the regulated supply chain. But they don’t garantee the quality of medicines in that supply chain at all. Substandard medicines — those that were bad when they left the factory, or that are poorly formulated or packaged so that they degrade before reaching the patient — will travel through each barcoded gateway in the supply chain quite happily, a classic case of garbage in = garbage out. And of course barcoding systems don’t protect against even falsified medicines if you buy them outside of the regulated supply chain. In countries with very poor or inequitable health financing systems, such as the United States, many people can’t afford to buy medicines from hospitals or pharmacies, and end up taking their chances on the internet. There, all bets are off.

So yes, let’s be positive about the potential that technology offers to protect against fake medicines sneaking in to the supply chain. But let’s not under-estimate the political capital needed to make that happen, or forget that you will still have to assure the quality of medicine before they ever leave the factory.

Political persuasion: data alone won’t do the job. So come help us do better.

Tertarik tentang ekonomi dan politik kesehatan? Mau interaksi dengan pejabat, pengusaha, toko politik? Ayo, megabung dengan tim peneliti kami, untuk membangun koalisi yang peduli mutu obat di Indonesia.

For all the endless talk of “evidence-based policy” and “listening to the scientists”, we know that data presented by researchers doesn’t lead directly to political action. Different interests (poltical, economic, societal, cultural) have to be taken into account in setting research questions, and when collecting and interpreting data, if the research is to lead to action. So you really need to involve those different interests right from the start of your research. If you “get” that, and you are Indonesian, interested in the politics of public health and, especially, the quality of the medicines Indonesian patients take; if you also have great social skills and the patience to work with multiple government agencies, please consider joining our research team.

Job decription: Policy Engagement Manager for Medicine Quality Estimates Study

You’ll be employed by Univeristas Pancasila, Jakarta, and working with an interntational research coalition that includes Imperial College London and Erasmus University Rotterdam. You’ll work 70% (about 4 days a week). You speak fluent Indonesian, and good English. Start date: immediate. Appply by February 15, 2021


Protecting society from poor quality medicines is a formidable task for national medicine regulatory authorities, especially in a resource-limited setting such as in Indonesia. Indeed, there are no globally recognised methods for estimating the prevalence of substandard and falsified medicines in a country, or for assessing their impact on health or the economy. Although post-market surveillance is a routine activity for medicine regulators, even this is done differently in different countries. With support from the UK government’s National Institute for Health Research, the Faculty of Pharmacy at Universitas Pancasila (UP) will collaborate with Imperial College London and Erasmus School of Health Policy and Management (ESHPM) to pilot a sentinel surveillance system for medicine quality, and to develop methods for estimating the prevalence, health and economic impact of poor quality medicines.

The concept arose from earlier research into the factors that incentivise the production, trade or consumption of falsified or substandard medicines. While the medicine regulator bears primary responsibility for assuring quality, this work reveals that many other institutions, actors, regulations and practices also have a profound effect on shaping risk. Understanding which medicines are most likely to be of poor quality thus involves the collection of secondary data from a large number of public and private sources, a process which involves active engagement with a number of institutions.

Over the next three years, we plan to work actively to develop, maintain and/or expand engagement with other institutions whose decisions and behaviour shape the quality of medicines. We believe their early involvement will contribute to policy-relevant analyses, improve research uptake and improve inter-actor communication in the ongoing effort to ensure that Indonesian patients are not exposed to fake or substandard medicines. We hope that they will contribute data, interpretation, policy suggestions and methodological improvements to our work.

Working with key governmental partners under the guidance, for example, of the Coordination Ministry for People’s Welfare, we will invite participation in a high-level consultative group known as the PokJa Estimasi Mutu Obat or PEMO [Working Group on Medicine Quality Estimates] Under the consultative group will be three Technical Working Groups, comprising the prevalence, health, and economic impact estimates working groups. The PEMO will include representation from institutions whose decisions and actions shape the quality of medicine in Indonesia; several of these are listed below. Membership of Technical Working Groups (TWGs) will bring together sub-sets of institutions with more specialised expertise. Ad-hoc members may also be called to contribute knowledge and experience as needed. The research team, including the Senior Policy Advisor, has existing relationships with some, but not all, of the institutions we hope to involve.

We seek to appoint a Policy Engagement Manager to guide and administer the establishment and functioning of the PEMO and technical working groups, to establish and maintain relationships with members, to provide technical inputs, and to help integrate PEMO advice into the programme of research.

Scope of work

The selected candidate is expected to provide the following work:

  • In consultation with the research group’s Senior Policy Advisors, develop a strategy in approaching and engaging the PEMO members
  • Develop communication materials to introduce the study to potential PEMO members including expected support from each stakeholder
  • Maintain relationship with PEMO members and the key opinion leaders from PEMO member institutions throughout the study, including disseminating study progress
  • With the support from the policy assistant, undertake administration (e.g. formal letters, invitation letters) necessary for effective engagement with government and other institutions
  • Develop and maintain a systematic monitoring tool (in Excel spreadsheet) to monitor interactions and communication with all the PEMO members, engagement milestones, and actions plans relevant to each of the interactions
  • Provide a short monthly engagement report for internal use, and participate in a monthly meeting with the research team to monitor and review the PEMO process
  • From the research team, gather and organise data and other material needed for PEMO/TWG meetings; prepare briefing summaries ahead of meetings
  • With logistics support from the policy assistant, plan, manage, and attend all of the PEMO/TWG meetings, and provide a written summary from each meeting
  • Work closely with policy researcher to systematically collect or gather relevant information for policy learning e.g. meeting minutes, internal working group memo, other technical documents

Eligibility criteria

  • Master degree, preferably in Public Health/Health Policy/Public Policy/Health Administration/Pharmacy or other related fields, or equivalent experience
  • Familiar with the roles and responsibilities and political dynamics of actors that influence the Indonesian health system in general – and especially pharmaceutical markets – is an asset
  • At least 5 years experience in working in the area of health policy or policy engagement, and with a broad network in Indonesian health sector
  • Proven record of interaction with senior figures in government or business
  • An active listener and communicator, with excellent people skills
  • Has good management skills
  • Good command of English

For interested candidates, please send your CV and cover letter to:, cc: no later than 15 February 2021.

Join the MedsWatch crowd

We’re looking for researchers to join the team in Indonesia and the UK

“Substandard and falsified medicines are a growing problem….” Most reports on the subject start with something like that, before going on to tell us that fake and crap medicines damage health, waste money, and undermine confidence in health systems. But ARE they a growing problem? We actually don’t know, because no-one has been measuring medicine quality in a systematic way over time. DO they damage health and waste money? Yes, obviously, but how much, we’ve no idea, because no-one has been measuring or even estimating impact systematically at a national level .

We’re going to try to do exactly those things, in Indonesia, and we’re looking for people to help us, in Indonesia and the UK. The work on prevalence of poor quality medicines will be based in Indonesia; it will be led by Universitas Pancasila, under Yusi Anggriani and Elizabeth Pisani. Though the health and economic impact measures will be applied to Indonesian data in collaboration with institutional partners in Indonesia, methods development for these parts of the work will be based at Imperial College in the UK, and will be led by Kalipso Chalkidou and Adrian Gheorghe. Imperial is already hiring a research assistant for a London-based post; at UP, in Jakarta, we’ll be hiring research assistants, data managers, engagement managers and others in September.

For administrative reasons, the Imperial job description is quite generic. To give a bit more background, here’s what we’ll be trying to do over the course of what we expect to be a three year project:

  1. Bring together data from a wide variety of instructional sources relevant to medicines available to Indonesian patients  (data regarding procurement, market, regulation, reimbursement, trade etc.)
  2. Analyse the data using a flagging system which helps indicate which products are most at risk of being falsified or substandard, and develop a sentinel surveillance framework.
  3. Conduct sentinel surveillance of medicines in 9 districts across Indonesia, and test the selected medicines to ascertain their quality.
  4. Combine the results with market and other data to develop national estimates of the prevalence of substandard and falsified medicines.
  5. Combine the results with reimbursement, burden of disease and other data to develop national estimates the health impact of substandard and falsified medicines.
  6. Combine the results with market, procurement and other data to develop national estimates the economic impact of substandard and falsified medicines.

Throughout this work, we’ll be working in consultation with the national medicine regulator and people from Indonesian institutions and companies with an influence on policies that affect the quality of medicines. We also hope to engage with the World Health Organization Member State Mechanism on falsified and substandard medical products, which is currently working to improve risk-based post market surveillance for poor quality medicines.

If you have good quantitative data skills, are not afraid of hard work, and are interested in medicine quality, public health surveillance, incentives in pharma procurement and/or the political economy of decision-making in health, we want to hear from you. If you speak Indonesian and have any inside knowledge of the pharma industry or medicine markets, and/or know your way around public procurement/ JKN policies and BPJS data, we are even more keen hear from you (including if you are based in the UK). You won’t get rich working with us, but you will get to work (hard!) with a bunch of curious people from different backgrounds who try to keep research grounded and useful, and who believe that learning new stuff should be fun.

Disclaimer: The information provided in this note is entirely informal, and aims only to try to make sure that the people who are likely to be most interested by the work know about it. It has no binding influence on Imperial’s recruitment process. To apply for the Imperial research assistant post, please take note of the requirements in the formal job ad, including full pdf job description. These over-ride the extra information given in this note. The deadline for applications is August 13th. End of disclaimer.

Untuk yang di Indonesia: kalau tertarik gabung sama tim kami di Universitas Pancasila (mulai September/Oktober 2020), tolong hubungi dengan CV. Nanti, kalau jobdes yang resmi sudah keluar, kami akan kontak kembali.

Quality-by-association? The knock-on effect of sloppy regulation in rich countries

With COVID-19 diagnostics, “stringent regulatory authorities” are anything but stringent. Opportunistic companies (and DJs) profit, while poorer countries are hoodwinked.

School children are not generally allowed to grade their own homework, for fear that they’d give themselves a 10 for work that really only rates a 4. In the US and Europe, however, makers of COVID test kits can give themselves any grades they like: tests are being waived through on a self-certified basis.

That’s obviously potentially dangerous for patients, because sometimes the tests aren’t really up to scratch. A case in point is the rapid antibody tests made by Chinese company Hangzhou Alltest Biotech Co Ltd. While they claim that the tests are 92.9% accurate for early-developing markers, and 98.6% for later antibody markers, a careful validation in a clinical setting in Spain (yet to be peer reviewed), showed that the test was very good at spotting uninfected people – it gave no false positive results. But it was only able to correctly identify infected people around 47% of the time two weeks after onset of symptoms, though the proportion did climb further after about a month. And there’s no information at all about how the test performed among people who never had symptomatic infection – the very people we’d need to identify if we were testing to selectively release people with some immunity from lockdown. Oxford University, which tried to validate the Hangzhou Alltest test kits among others, said that none of the rapid diagnostic kits they tested was good enough to use widely. No surprise, then, that both Spain and the UK sent back test kits they had bought from Hangzhou Alltest and other Chinese manufacturers.

Find it hard to believe that companies get to just self-declare the accuracy of their tests? Actually, it’s worse than that. European and American distributors can buy tests made by other companies in other countries — China, say, or India — rebrand them to look like they were made in Europe or the US, and then send them through the system based on declarations about effectiveness made by the original manufacturers, even giving themselves the coveted “CE” mark of quality, without anyone ever checking whether the tests work or not. Some do this enthusiastically, because they know that masking the product’s origins — and making it look like it comes from a country with a strong regulator — works really well as a marketing ploy, both at home and in export markets.

A particularly enthusiastic rebrander is Dutch company Inzek International Trading, which sells tests under the brand Biozek. Its website declares “Biozek medical is a Netherlands based manufacturer with wide ranges of IVD products…” What it does not say is “…which we buy from Chinese companies, rebrand, and re-sell to other countries, encouraging them to believe that these products have been validated by European regulators”. But, as this great piece of investigative journalism from OCCRP reveals , that’s exactly what they do.

The trick works brilliantly. Biozek is reported to have sold 1.5 million COVID-19 test kits to over 20 countries. These include Indonesia, where state-owned pharmacy giant Kimia Farma has bought 300,000 repackaged Hangzhou Alltest kits. In the Indonesian media, Biozek staff and their local distributors were absolutely brazen in puffing out smoke and flashing mirrors to create an illusion of “European-made” quality. In a press release, Biozek’s Mustafa Hamid lied said “The test was developed and produced under the regulations of the EU and the Netherlands, which are very tight.” Meanwhile, the distributor in Indonesia, Erro Verschoor of MACH-E, had the gall to accuse other manufacturers of taking advantage of the current crisis. “We’ve seen many tests, even certified ones, go to market and then fail to meet regulated standards. In the end those products get sent back, or their use is prohibited in Europe. We’ve noticed that many governments and organisations don’t want to take the risk, so in the end they decide to collaborate with us to buy our test kits.”

In my school days, that would have been referred to as “bare-faced cheek”, though these days my choice of words might be stronger. Not least because it does seem that Biozek went to considerable lengths create the illusion that the tests they were selling to Indonesia were European made. According to OCCRP:

Andi Prazos, a director at Indonesia’s Kimia Farma, said the state company had been convinced the tests were Dutch made. Kimia staff were even given a tour of Inzek’s production facility in the Netherlands before placing their order, he said.

Other savvy marketers have been playing the same game on a smaller scale. According to the UK’s Sun newspaper (not one I regularly quote, I admit) London-based DJ Enay has been pimping Biozek products through social media channels, using the fantasy European badge of quality.  

I leave you with the Sun’s screenshot of the DJ’s promotional Snapchat, and the deliciously ironic possibility that the low accuracy “mentioned by the Spanish government” actually refers to the very kits that he is flogging.

DJ Enay's Snapchat ad for COVID tests

Journal Club: The tricky business of research on medicine quality

Hodges and Garnett describe the tricks academics use to tell stories about fake medicines, though evidence is slim. (They use all the same tricks in their own paper.)

Journal Club: The tricky business of research on medicine quality

Catching up on reading about medicine quality, I today ploughed through a paper by Sarah Hodges and Emma Garnett, about evidence gaps in research around fake drugs. It’s got a lovely title: “The ghost in the data: Evidence gaps and the problem of fake drugs in global health research“, and it’s a fascinating read, on many levels.

The paper claims that:

  • Most academic and grey literature relating to fake drugs underlines that the evidence base is very poor;
  • After recognising the poor evidence, most of those same papers nonetheless go on to assert that fake drugs are a major problem;
  • Most people who do academic research on fake drugs spend very little time thinking about sources of evidence other than the academic literature and the media (for example data held by industry), let alone about why they can’t get hold of those data. (“In particular, we note that global health scholarship is not, in the main, asking questions about the conditions that foreclose access to data.“)

I agree wholeheartedly with all of these points, which form the core of the paper. I think it is really important to understand how “facts” are created and circulated, and how the construction of facts (by whom? to answer what need or serve what interest? at what point in time? when what other things are happening in the world?) shapes the global health landscape. So important, indeed, that I once wrote a whole book about it (Chapters 1, 6 and 9 of The Wisdom of Whores are especially relevant to this discussion), as well as academic papers on the subject, like this one, co-authored by MedsWatch’s Maarten Kok.

 But I’m also fascinated by the way the authors, in this paper, play every single trick that they criticise others for. Some of these they acknowledge, others not. To see what they are doing, you might have to brush up on social-science-speak (SSS), a language that the authors didn’t see fit to tone down for a global health audience. A prize example of SSS:

“We trace how the material discursive work of scholarly practice constitute wider rhetorical patterns and are part of a rich discursive ecology that structures research of the contemporary global circulation of pharmaceuticals…. Based on a review of published findings we apply the methodological tools of ‘close reading’ and ‘reading against the grain’ that characterise much research on what has come to be seen as the ‘politics of knowledge’”

Tentative translation: “The way academics think about their research influences their findings about the medicine trade…. Like other academics who think about research, we read a bunch of papers critically.”

They also actually bothered to follow up references to see how robustly they supported the assertions in the paper that quoted them – a vital and underused strategy in gauging the bollox-factor in peer reviewed articles. Their paper provides an elegant illustration of why it’s important to do that.

Contention: researchers imply that, because there is antimicrobial resistance, there must be fake drugs. Supporting quote:

‘Scientific theory and common sense thus both suggest an inevitable link with [fake drugs and] antimicrobial resistance’ (Pisani, 2015, p. 12).

Actual quote, from Pisani, 2015, p 12:

The laboratory analyses described below confirm that falsified and substandard medicines — including those with sub-therapeutic levels of API and/or formulations that inhibit dissolution and restrict bioavailability — are common in countries with weak regulatory systems. Many of those countries also have high prevalence of infectious diseases. Scientific theory and common sense thus both suggest an inevitable link with antimicrobial resistance.

When others do it, Hodges and Garnett describe that trick as “refashioning data” — the selective re-interpretation of facts that can happen, almost by implication, when you take something out of its original context and mash it up with other information. They recognise that the unclear use of definitions is a problem in research around medicine quality. Then, conveniently supporting their own narrative, they take a reference to medicines that actually do contribute to antimicrobial resistance (i.e. antimicrobials that don’t deliver enough medicine to kill all pathogens, thus allowing the resistant strains to survive and multiply), and refashion it into a claim about “[fake drugs]”. In fact, most fake drugs contain no active ingredient or the wrong active ingredient, and are thus unlikely to contain sub-therapeutic levels of API and/or formulations that inhibit dissolution and restrict bioavailability in ways that directly drive antimicrobial resistance. Using information about fake medicines instead of information about substandard medicines to help explain antimicrobial resistance is like using the score of football matches instead of data on footballers salaries to help explain inflation in the sports industry. I have to agree with Hodges and Garnett: refashioned data can be badly misleading.

Another great example of using the tricksters’ tricks: the paper correctly criticises researchers’ tendency to point to limited or extreme cases (what they call “small cases”) to make a more generalizable point. They make the case against small cases with a single small case:

“rather than reflect on the problem-definition or methodology of research into fakes, the small-case was often framed as evidence in the absence of better evidence. Indeed, one major briefing report referred to a survey of medicines on sale at a large bazaar in New Delhi which found that only 7.5% were genuine but where this percentage came from was unclear (Stevens & Haja Mydin, 2013).”

Snippiness aside, I think this paper raises important issues. It’s certainly true that the small community of people who try to better understand the potential effects of poor quality medicines are making a lot of claims about the potential threats posed by fake drugs, without sufficient evidence. (The same is true for substandard medicines, which in my opinion are potentially even more of a threat in many low and middle income settings, but then we’re part of the small community making those claims.) It’s true, too, that the evidence may be limited because the problem really isn’t that big after all, so there’s nothing much to provide evidence of. But I would not be as dismissive as Hodges and Garnett are of the conclusions I and others draw from the evidence gaps. (“Instead of treating ‘evidence gaps’ as evidence of a lack of evidence, gaps themselves also became evidence of the need to generate more evidence.”)

For clarity, I’m reading this as Instead of treating ‘evidence gaps’ as evidence of a lack of a major problem…” If that reading is correct, two responses. Firstly, some academic groups, including that led by Paul Newton at Oxford, are developing lot quality assurance methods for post market surveillance, which basically work precisely on the principle of demonstrating that there is no problem (or at least not one big enough to hyperventilate about). Secondly, we are required to draw on academic evidence when writing academic papers if we want to avoid sniffy comments such as “demonstrating the presence of fakes involved the inclusion of undocumented sources, particularly with media reports and various journalistic accounts of fakes“. However, lack of academic evidence does not necessarily translate into a lack of evidence to inform our thinking, only to a lack of evidence that can be verified through close, against the grain reading of published academic literature. Some of us have access to other evidence bases, ones that we can’t publish in the academic literature, but which are certainly robust enough to signal a significant problem. These data encourage us to do more of the type of research that we will be able to publish.

Why don’t we just publish what we have and be done with it? The answer lies, perhaps, in the discipline of public health research, which is (and in our opinion should be) more wrapped up in the vicissitudes of politics and action than in epistemology. Yes, we aim to conduct rigorous research. But we also want the results of our research to be used, where warranted, to improve people’s lives. That means working with the potential end users of research, including policy makers, regulators and sometimes even (sharp intake of breath) industry, to identify which questions are most urgent and most potentially actionable, and to generate politically robust evidence to inform that action. It’s not smart to blow the trust of the very people who could use our research, just for the sake of another academic paper for the cv. So we can’t publish all the data we have, but we can use it to guide the design of research that we can publish.

As the authors of the Ghost paper point out, testing medicines is fiendishly expensive. Though they claim that “fake drugs have become a widely accepted concern in global public health research”, research funders invest remarkably little in well-designed studies that would allow us to produce the sort of knowledge that would allow us to put questions around fake and substandard medicines to bed. That’s certainly one reason that people who do know of data indicating there’s a real problem tend towards hyperbole in describing the likely impact of poor quality meds: we want research funders to share our sense of urgency, so that they’ll support the generation of evidence that is not wrapped up in non-disclosure agreements. Ugly, but true.

The MedsWatch family is planning a couple of field studies using new methods (one tries to develop measures of patient exposure to medicines, another uses market data to predict which products are at highest risk of being substandard or fake), and we’re trying to find cash for a couple more. If that rigorous research discovers that all is well in the medicine markets of the low and middle income countries where we work, we will say so loudly and clearly, and move on to researching something with more potential impact. And we shall certainly reference the Hodges and Garnett paper as a prescient harbinger of a world less worrisome that suggested by undocumented sources, (including those that pop up across the Medicine Quality Globe).

This post is a trial balloon for a MedsWatch Journal Club: We’d like to invite other academic or public health groups working on topics related to medicine quality, access, supply chains etc to take the lead on a rotating basis on picking a paper and scrutinising it every now and then. If you’re up for it, please contact us at

Indonesia, USA: medicine pricing causes common headaches

The US and Indonesia are very different, but medicine reimbursement policies in both countries sometimes encourage pharmacies to limit stocks of cheaper drugs

As COVID-related news, research reports, papers, blog-posts and general pontification flood across my desk, I’ve been trying to fish out the bits most likely to signal existing or up-coming assaults on the quality of medicines. And one of the things I find most interesting is that the same risk-indicator fish seem to be swimming in very different bodies of water.

One example: reimbursement policies that incentivise legitimate pharmacies not to dispense the most affordable medicines, thus potentially sending patients to dodgier outlets where they are more likely to get fake medicines.

We see this in both the US and Indonesia, even though the two countries differ on virtually every health-care related measure. The US, one of the richest countries in the world, accepts that it’s fine to allow tens of millions of citizens to live without health insurance. Those that are insured have to choose between thousands of different private plans, each with different reimbursement policies. Meanwhile, lower-middle income Indonesia (which comes right after the US in population size, with close to 300 million citizens) has been working to provide at least basic health care to the whole population through one, mighty, national insurance system. The purchasing power that that confers has allowed Indonesia to do much more to bring down the price of medicine in the public sector (to the point where some medicines are arguably dangerously cheap). The fragmented US market seems to accept that, in general, medicine manufacturers should be allowed to charge whatever they can get away with; insurers and patients then decide what they can afford.

This very interesting analysis of variation in reimbursement rates in the US, from 3Axis Advisors [full report available at link], highlights the amazing range that insurance plans are willing to pay for the same medicine. For the same dose of generic azithromycin, for example, some insurers pay as little as US$0.11 while others pay $3.53 — over 30 times as much, for a product that consistently cost pharmacies between 53 and 69 cents to buy (HT @EdSilverman via Pharmalot).

A fair bit of the time, the reimbursement rate is less than the pharmacy paid for the medicine. Pharmacists may make up the loss with cross-subsidisation from other insurers (recouping the underpayment of the 11 cent insurers with cash sloshed their way by the three-dollar plans) or from other medicines. But where reimbursement is consistently below cost price, pharmacies don’t have much of an incentive to stock a medicine. And, as 3Axis observed (and we noted in our earlier blog post about the effect of COVID on medicine quality) the pandemic will likely exacerbate the problem, because producers will push up the price of medicines more quickly than payers will raise their reimbursement rates, making it even more unprofitable to dispense those meds.

The effect of this may be to push pharmacies to simply “short” the medicines which cost them money to dispense, offering patients instead the medicines they make money on. “Sorry, we’ve no generic azithromycin in stock, but I can offer you Zithromax, for cash…”

This is a dynamic we also see in Indonesia (though it will only apply to the handful of medicines which are reimbursed). The net effect of pushing patients towards out of pocket payment for more expensive medicines is to push them to buy medicines online, or in other unregulated outlets. That makes them easier prey for falsifiers.

In their blog post summarising the research, 3Axis listed some of the ways in which COVID-19 will push up the prices of generic medicines:

(Sound familiar?)

But nowhere do they address the question of reasonable or fair prices for generics, or any other kinds of medicines. The list price to pharmacies of 250mg azithromycin in the Indonesian market ranged from 29 US cents to two dollars in 2019 (compared with the 53-69 cent range actually paid by US pharmacies, according to 3Axis). The public procurement price for a pill with twice as much active ingredient (500 mg) was half as much — just 1778 rupiah, or 11 cents. Yet in the Indonesian market, Pfizer’s Zithromax 500mg sold to pharmacies at US$4.00 a pill — close to 40 times the public procurement price, and about the same as the “regular” cash price in the US, after applying the 90+ percent discount from the list price, according to the price comparison site Good Rx. But just take a look at the list price for something Good Rx describes as “an inexpensive drug” — US$ 434.65 for a product that the Indonesian government buys for 66 cents.

That’s an insane difference, and one that threatens quality from both sides. The Indonesian price is probably too cheap — it’s really hard to make and distribute a good quality antibiotic for 11 cents, even when you’re guaranteed a really big market. (New Zealand, which is notoriously good at driving a hard bargain for quality-assured medicines, pays 28 US cents for the same product.) But pricing medicines too high attracts falsifiers (who think just like pharma companies: why sell something cheap when you could sell the same thing more expensively?) And it drives patients who can’t afford the regular pharmacy list price into unregulated on-line stores, where everything is negotiable.

Of COVID and condoms: knock-on effects in supply chains

COVID-19 continues to slash through international supply chains that were previously much lauded for playing to the comparative advantage of different economies, increasing efficiency, and generally laying rich offerings on the altars of shareholder value.

The pandemic has underlined not just the fragility of our supply lines, but their interdependence. So I couldn’t help but smile at the juxtaposition of the shelves either side of me, as I walked through the aisles of a large chain pharmacy in the suburbs of New York last week.

Condoms in stock on drugstore shelves
Photo: Elizabeth Pisani

On my right, despite panicked reports from Malaysia that coronavirus will cause a global shortage of condoms, a dizzying array of rubbers to suit every taste. With the bars empty and even Tinder warning people off meeting in real life, demand for condoms (at least in the suburbs of New York) seems to be slowing.

Meanwhile, on my left, directly opposite the shelves groaning with condoms:

Shelves with stockouts of nappies
Photo: Elizabeth Pisani

Supply chains for baby products are clearly struggling to keep up with demand, even now. That rather begs the question: if there’s no run on condoms and other contraceptives, will it mean that nine months from now, the shelves that should hold nappies will be swept barer still ? It seems likely that the reverse could hold equally true: shelves and pharmacies cleared of contraceptives might reinforce the pressure on wet-wipes and baby powder. Data analysed by The Economist, which offset the birth rate by nine months from the time of a major epidemic, suggest an “N” curve: major epidemics seem to lead to a fall, then a rise.

The shutdown will probably also have a knock-on effect on demand for treatments for other sexually transmitted infections. My own guess is that COVID will lead to a rapid fall in STIs, followed by a rapid rise the moment restrictions on movement are lifted. Unless, of course, the shelf on my right very quickly begins to look like the one on my left.

The COVID pandemic increases the chance that your other medicines won’t work.

For a couple of years now, the World Health Organization has been warning that fake and substandard medicines are on the rise globally. Until recently, the problem has been concentrated largely in countries where most people pay cash for medicines, and where medicine regulation is weak or non-existent. But the hyper-globalised pharmaceutical market is changing that. And the Coronavirus pandemic, an equal-opportunity screwer-up of business-as-usual, is about to bring poor quality medicines to your medicine cabinet, wherever in the world you live.

Not just COVID-related meds, you understand. Rising demand, falling supply, public panic, knee-jerk nationalism and distracted regulators will increase the risk of getting bad medicines for diabetes, heart disease, depression, rheumatism, cancer and virtually everything else. In virtually every country.

For a couple of years now, I’ve been working with researchers based in universities and data firms in Indonesia, Singapore, and the Netherlands to figure out why legitimate pharma companies make bad (substandard) medicines, and why people buy and take them. We look at fakes, too. How do the criminals that make them choose what to imitate, and who to sell to? What we’ve learned allows us to predict how Coronavirus will affect medicine quality globally.

It’s no great surprise that the answer to most of the questions above boil down to money, though political pressures have a role to play, too. The details in academic format here (or in this short video). To summarise:

Criminals thinking about making falsified medicines are looking for opportunities to make profits, while minimising their risk of getting caught and punished. Market opportunities are richest when there’s a local shortage of a legit product that people desperately want.

The likelihood of getting away with selling fakes is greatest when:

  • buyers (at any point in the supply chain) deviate from tried, trusted and effectively regulated sources, or worse, buy online.
  • the regulator in the country of sale doesn’t look too closely at medicines once they are already out in the market
  • the judicial system is not good at prosecuting or jailing offenders.

Legitimate pharma companies (from big-name multinationals to small generics producers in poorer countries) are also in the business to make money. Squeezed profit margins encourage legitimate manufacturers to cut costs, compromising quality and leading to substandard production.

These substandard meds are most likely to reach patients if:

  • the regulator in the country where they are made doesn’t do a good job of overseeing production (sometimes because politicians care more about promoting industry than they do about assuring quality, especially of medicines that will go to patients in other countries);
  • the regulator in the country where they are consumed doesn’t do a good job of checking product quality (sometimes because politicians care more about being seen to provide affordable medicines than they do about ensuring that the medicines actually work).

Most better-off countries are subject to some of these factors, but rarely all of them at once. COVID-19 is changing that. We believe the pandemic is going to put all these risk factors on steroids, for lots of products, in lots of markets. Here’s how it will happen:

Falsified medicines

Shortages will create new market opportunities because…

Demand will rise…

1. Demand for products needed for critical care, or that have actual or rumoured therapeutic effects against COVID-19 will rise rapidly in all areas (indeed, it already is!). For critical care products and (hopefully soon-to-be-)proven prophylactics/therapies, this demand will come from institutional buyers (including global health and national procurement agencies) as well as retailers and patients. For products rumoured to be effective, demand will rise more rapidly in the retail sector.

2. Both institutions (possibly including national medical stores) and individuals will buy and stockpile medicines not related to COVID-19. Medicines for life-threatening, chronic conditions, including HIV, diabetes and cardiovascular diseases are especially likely to be affected.

… while supply will fall (at least for some markets)

3. Wherever your medicines are made, the chances are they contain at least some ingredients that come from China, or a very small handful of other countries. For a few active ingredients, there’s only one producer, supplying every manufacturer of finished product worldwide. The supply of active ingredients is threatened by the pandemic (and the quality may be, too.) China’s Zhejiang province, the world’s largest producer of active ingredients, was second worst hit by COVID-19. The impact of COVID-19 related disruption was likely delayed because stocks are routinely built up before the Chinese New Year holiday, when the shut-down began. Northern Italy, another major centre of active ingredient production, has also been very badly hit.

4. China and other exporters of active ingredients will restrict exports to meet their own national needs, further restricting supply to manufacturers in other countries. These restrictions may be applied selectively for political reasons. The US is particularly vulnerable because of the ongoing trade dispute with China; the products that are in highest demand domestically in China, India and other active ingredient-producing countries will be worst hit.

5. Countries that manufacture finished medicines will also restrict exports of medicines in order to meet national demand. India, which is the world’s largest exporter of finished medicines, has already started restricting exports. That’s in part because India, which imports around two thirds of its active ingredients, is having a hard time getting the raw materials it needs. Last year, about 70% of its raw pharma imports came from China, and a further 11% from Italy. Export restrictions from India and other low-cost manufacturers will have a huge knock-on effect in the US, Europe and elsewhere.

6. Countries and large institutions will rebuild stockpiles, and profiteering distributors might hold on to medicines too, trying to drive the price up. This will cause localised shortages. In some countries, where public budgets are especially strained, medicines may be drained out of the public health systems to fatten the cushion under the private sector.

7. Manufacturers may face political pressure to switch production capacity to COVID-19-related medicines, disrupting the supply of other essential medicines. We’ve already seen car companies pressed into service to produce ventilators, but that’s fine, we can still drive last year’s car. When a maker of cancer drugs switches to making antivirals, the cancer patient dies.

8. A system-wide focus on COVID-19 coupled with disruptions to normal workflows will derail routine public procurement systems in some countries, leading to auction failures and shortages in the public sector.

9. Supply restrictions will push prices up. Countries with limited budgets for health may cut the number of medicines they buy, leaving patients to pick up the tab. Faced with buying more, higher-priced medicines, families may choose to “go cheap” — to buy medicines on the internet or from less reputable sources, contributing to risk 14, below.

10. Restricted transport, especially air traffic, will push up the cost of distribution, and reduce the timely delivery of medicines, creating localised shortages. Products such as vaccines, which need to be kept cold and transported quickly, will be especially at risk.

Meanwhile, profits for falsifiers will rise

11. The cost of making a fake pill is more or less the same, whatever you’re pretending is in it. Falsifiers usually target higher-end meds, because they make more money per pill, for roughly the same amount of risk (though they avoid hospital-only products, as well as those they know are most effectively policed by manufacturers). As shortages push prices up, the profit margin for falsifiers will rise on lower-priced medicines, encouraging more falsification of high-volume items that people are desperate to get hold of. These include medicines for high-prevalence chronic conditions, including diabetes and cardiovascular diseases, and in some markets HIV, TB and malaria medicines.

Risk of getting caught will fall because…

More buyers will step out of regulated and/or secure supply chains…

12. Shortages (1–10), disruptions to public procurement (8), and strong political pressure to be seen to be providing medicines will oblige more institutional buyers to source medicines from previously untested suppliers. This increases opportunities for falsifiers to introduce products to the supply chain.

13. When products are in short supply, it’s a seller’s market. Quality-assured distributors are going to serve their best clients first, and to them, their best clients are the ones that pay top dollar, on time. In lots of countries, national health systems are strapped for cash as well as strapped up in red tape, and are particularly bad at paying bills on time. They’re going to be dumped by their regular suppliers, and may have to look elsewhere for stocks.

14. With people stuck at home, or going to the health centre or pharmacy and facing empty shelves or sticker-shockingly high prices, sales of medicines on the internet will increase. The internet is an open door for falsifiers.

… and regulatory oversight over supply chains will be eroded

15. As governments concentrate human and financial resources on limiting the spread and impact of the pandemic, regulatory attention and laboratory capacity will be diverted. Together with restrictions on movement, this will disrupt oversight of supply chains, and reduce the already infinitesimally small proportion of products whose quality gets checked on import, or once it’s in the supply chain.

Substandard medicines

Profit margins will be increasingly squeezed because…

Production and distribution costs will rise

16. As we said earlier, the cost of raw materials will rise. They will be pushed up further for importing nations by restrictions on transport, and in some cases by falls in the local currency.

17. Increased illness, absenteeism or death in the workforce will push up costs to producers and distributors, especially in countries hardest hit by COVID-19.

18. Restricted transport, especially air traffic, pushes up the cost of distribution. (There’s also a direct effect on quality, because medicines, especially those which are more volatile, can degrade if they sit around in shipping containers or in poorly-cooled warehouses.

…while income may fall

19. Shortages of active ingredients will reduce production volumes for some producers; this may not be offset by rising prices for finished product. Producers that are locked in to longer-term contracts with large buyers will suffer most.

20. Recession, diversion of health spending to COVID-19-related products, or a general squeeze on public finances may reduce public funding available for other medicines.

21. Export restrictions may restrict sales to clients in higher-paying markets.

22. Political pressure to produce COVID-19 related products for public procurement may divert production from more lucrative products. This will especially be a problem in countries with large, state-affiliated medicine producers.

23. Sale of some relatively lucrative over-the-counter products may be reduced as a result of restrictions on movement, or simply because people don’t have spare cash to buy any medicines that they think are not a matter of life or death.

The squeeze on margins will lead to strong pressure on producers to cut costs where possible. The relatively high and rising price of active ingredients, coupled with shortages, suggest that reductions in the quality and quantity of active ingredient may be a common cost-cutting response.

Technical capacity won’t always be up to scratch

24. In many countries, the pandemic has sparked a lot of political grandstanding about national resilience and self-reliance, and this is in some places being translated into a push for rapid development or scale-up of local pharmaceutical production, even when the expertise, machinery or ingredients available locally are inadequate. That’s a good recipe for substandard medicines (we’re already seeing it in protective equipment).

25. Rapid scale-up of newly-developed COVID-19-specific vaccines or therapies may be especially vulnerable to production errors in the early stages, simply because there’s not much experience making them yet, especially on a large scale. We’ve seen this recently, in the case of substandard test kits shipped from China to Spain.

But errors are less likely to be spotted by regulators

26. The COVID-19 response is likely to disrupt routine regulatory functions. While the spotlight is on medicines and equipment needed to respond to the pandemic, regular inspections of factories and distribution chains for other, more common medicines may be winnowed down. So if any of the factors above are eating into quality, the problem is less likely to be spotted.

27. Political pressure to ramp up domestic production, as well as public pressure to deliver new medicines, may oblige regulators to fast-track products, or discourage them from being too strict on companies that are being called on to help out in a crisis.

What can we do about it?

Most of these problems are rooted in two fundamental (and intertwined) mismatches in the global economy. First, we increasingly look to governments to ensure that demand for affordable medicines is met, while relying on profit-seeking companies to supply that demand. That leads to procurement and production practices that incentivise cost-cutting and undermine product quality.

Second, we want both the price-lowering (and pollution-outsourcing) efficiencies of a globalised supply chain, while simultaneously demanding security of supply at the national level. As the current pandemic is teaching us, you can’t have it both ways.

Fixing those fundamental flaws in the global economic model is way above the pay grade of our research team. But in the meantime, we can use our analysis at least to flag up which medicines are most at risk, right now. None of the factors above is, all by itself, a clear indicator that a particular medicine is overly likely to be substandard or falsified. But when factors 1–15 are combined into an index:

Indicators of rising demand and indicators of restricted supply and indicators of good potential profits and indicators of low risk of getting caught; for a specific product (and sometimes even a specific brand) in a specific market…

… then we have a clear indication that the product might well be a fake. Regulators can use the index as an early warning system to trigger inspections, and to warn pharmacists and the public to view particular products or sources of supply with caution.

Ditto for factors 16–27; if a product ticks a lot of those boxes simultaneously, it’s at high risk of being substandard. If the national regulator is unable to respond by ramping up inspections and closing non-compliant producers, either because they are politically hamstrung or because they don’t have the capacity, a flagging system can at least help buyers to make better choices.

In Indonesia, where some of us are based, we were (before the pandemic struck) working with the national medicine regulator to try out a system that uses market data to flag products at high risk of being substandard or falsified (we call it MedsWatch). We’re still in the early stages, but it looks like it works pretty well. Well enough, indeed, to justify retooling our indicators for the 27 risk factors listed above, to develop an early warning system for the quality of medicines affected by the COVID-19 pandemic.

Watch this space. And in the meantime, please don’t stockpile meds (which will contribute to lots of problems for other people), or buy your pills from unregulated online stores (which may well end up being a problem for you yourself)

Thanks to Steven Harsono

Written by Elizabeth Pisani


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