Fake Pharmacies and Brand Jacking on the Rise

On Tuesday, brand protection firm MarkMonitor released its latest "Brandjacking Index," a study that tracks the online presence of six major drugs to determine if the products are being sold by shady pharmacies, used in spam e-mail, or being counterfeited outright.

The numbers aren't pretty. In June 2008, MarkMonitor found more than 20,000 Web sites abusing drug trademarks. That included 2,986 suspicious online pharmacies delivering 60 million spam e-mails.

Of the pharmacies documented, only two are certified to sell drugs by the National Association of Boards of Pharmacy. Yet the pharmacies in the study had estimated annual sales at nearly $13 billion based on an average transaction of $70, according to the report.

While the six drugs are not named, they include a lifestyle drug, a sleep aid, anti-cholesterol, and an ulcer medication.

"The brands are not the only victims of these types of abuses," said Te Smith, vice president of communications at MarkMonitor. "There's a very real effect on consumers of these brands. Consumers' health could be at risk. You might think that you are taking a life-saving medication form a major pharmaceutical brand, yet someone is out there prescribing a diluted or fake version."

The biggest increase, year-over-year, is an 87 percent boost in offensive content on sites that are marketing pharmaceuticals. More worrisome is a 66 percent spike in e-commerce sites marketing pharmaceuticals, which jumped from 3,052 in the second-quarter of 2007 to 5,070 in the same period this year.

While the number of bogus online pharmacies is growing, so is the traffic at the sites and the deep discounts being offered. Smith also noted that these sites are engaging in paid advertisement to draw consumers.

In terms of search engine advertising, MarkMonitor only used the brand names in the search filter, which isn't exactly how most consumers search for drugs. Patients often search for a condition rather than a brand name. The survey found almost 11,835 search ads using the six drugs, representing $26 million in average annual ad spend. None of the links connected to sites certified by the National Association of Boards of Pharmacy's Verified Internet Pharmacy Practice Sites (VIPPS) certification program, and none went to the relevant pharma company.

Hometown Disadvantage
Think these sites are all overseas? Think again. While the actual location of the pharmacy is unknown, 49 percent of the companies are using US hosting facilities and services. The next highest location is the UK, with only 12 percent. Smith notes that many of the pharmacies are working through different countries with billing done from one country, hosting from another, and shipment from somewhere else.

For example, one online pharmacy allegedly based in Canada uses a Web hosting service in Russia, and has a phone number with a Texas exchange. The site only sells single doses and has false accreditation.

"That said, if the location is in the US, brand holders would have a much easier time taking legal action than trying to do something across national jurisdiction," Smith said.

The average drug at a non-VIPPS site is $2.54 compared with an official site that has prices at $10.54 on average. MarkMonitor purchased a number of products from the online pharmacies that it profiled, and plans to test the efficacy of the drugs if and when it receives them.

FDA recently said that it was doing everything in its power to stop illegal pharmacies. In June, it sent 25 warning letters to online companies engaging in fraudulent marketing of fake cancer medication. The agency also posted a list of signs that consumers could use to denote a potentially illegal Rx dealer.

"It's going to take a combination of both industry and government working together to clean this up," Smith said. "Gone are the days of Web sites with spelling errors and sloppy grammar—these sites look real. As a result they are prolific and are going to target brands that aren't aggressive in stopping them."

In related news, a new report issued in July by the European Alliance for Access to Safe Medicines (EAASM) found that 62 percent of medicines purchased online were counterfeit, while 95.6 percent of the pharmacies were operating illegally.