A World of Fakes
Counterfeit goods threaten firms, consumers, and national security
The high reward-to-risk ratio attracts not just entrepreneurs but organized crime like the Italian Mafia, which produced illegal CDs in the mid-1990s. Counterfeiting has also helped finance terrorist groups, including the Irish Republican Army and Lebanon-based Hezbollah. And a counterfeit T-shirt ring linked to the Egyptian cleric Sheik Omar Abdel Rahman helped pay for the 1993 attack on the World Trade Center.
Lethal weapons. When a substandard replica is passed off as a well-known medicine or aircraft part, "people can die," says Lewis Kontnik, coauthor of Counterfeiting Exposed: Protecting Your Brand and Customers. Fake drugs make their way onto pharmacy shelves through a chain of shady middlemen in the secondary market. Counterfeit pills also abound in the drug-by-mail trade, booming because of the Internet. Some 14 percent of drugs coming through the mail have something wrong with them, says the customs bureau. "We fear it's getting worse," says William Hubbard, associate commissioner for policy and planning at the FDA. Since October 1996, the FDA has opened 71 counterfeit drug cases; 30 of them originated in 2002 alone. Expensive name-brand drugs like Lipitor and Viagra are especially popular with counterfeiters. "Just like you would counterfeit a Rolex instead of a Timex," says Hubbard.
As counterfeiting and its costs grow, says Kontnik, the practice "is being rebranded from a ho-hum issue to a major concern." Manufacturers are cooperating to fight it with groups like the Global Business Leaders Alliance. Law enforcement agencies like Interpol are creating task forces to hunt down counterfeiters. And there's greater pressure on nations where fakes originate to beef up and enforce anticounterfeiting laws.
The FDA is still investigating how the batch of fake Lipitor found its way to Arons's pharmacy and others, including the Rite Aid chain. Arons, who is suing several drug distributors, says she was furious when her pharmacist told her she would be fine. "Would you be fine," she demanded, "if I paid you with counterfeit money?"
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