Returns Process Proves Presence of Counterfeits in US Supply Chain

July 5, 2009
Pharmaceutical Commerce, Pharmaceutical Commerce - April 2009,

XStream Systems’ X-ray technology finds fakes in the returns stream

Saying that it has “confirmed” the estimated 1% counterfeit rate in US pharmaceutical distribution (a figure that has been bounced around for nearly a decade without reliable verification), XStream Systems (Sebastian, FL) is also busy in building out a network of technology resellers and services for pharma distributors. Most recently, the National Coalition of Pharmaceutical Distributors (Miami, FL) has agreed to provide the technology at a preferential basis to its members (who, with no little irony, are the non-authorized distributors that are commonly thought of as a source of counterfeit product). Armada Healthcare, a Short Hills, NJ, GPO for specialty pharmacies, has made a similar deal for the members of its network. XStream has also announced client wins with Cumberland Distribution (Nashville, TN) and RDC Inc (Rochester, NY), a member-owned pharma distribution business.

XStream has developed a desktop-sized device, the XT250 analyzer, into which a sample of a pharmaceutical can be entered and then analyzed. The X-ray diffraction pattern thus generated can be compared with a stored profile of that product, revealing its authenticity. (XStream claims greater than 99% accuracy in this measurement.) Based on tens of thousands of such analyses performed to date, XStream says that the counterfeit rate runs between 0.67 and 1.4%.

A main source of counterfeit hits, it turns out, are returned products that have been filled with jelly beans, candy or other products—in effect, retailers gaming the returns system to earn credits for products falsely returned. The danger here is that in some cases, those products can legitimately (if they were authentic) be returned into distribution. Further XStream says that whole lots of fake products have occasionally been found.

“It is vital for pharmaceutical distributors to have an effective process to verify and authenticate their products as they receive and ship them to their customers,” notes Alan Clock, XStream SVP. PC