Counterfeit goods are fraudulent or adulterated imitations represented as genuine product that may pose a grave threat to consumers as they are produced with little concern for quality or safety standards.
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Explore This IssueDecember/January 2015
Food and Beverage Counterfeits
Valued at a staggering $49 billion dollars a year and growing, the counterfeit food and beverage market presents a significant risk to consumer safety. The counterfeits enter the market by a number of different means. One ploy is to present cheap versions of products as higher quality brands. A second is to introduce cheaper ingredients into authentic products in order to increase profit margins. In both cases the risk to consumer safety is significant.
The U.S. Pharmacopeia Convention, or USP, is the global watchdog group whose food and pharmaceutical standards are enforceable by the FDA. It has logged more than 2,000 incidents of food fraud, impacting a wide variety of food and beverages. Notable cases include the following:
- More than 1,200 tons of fake/substandard food and nearly 430,000 liters of counterfeit drinks were seized as part of Interpol/Europol operation in 2014;
- In 2013, multiple instances occurred in the European meat supply chain where horse meat was presented as beef;
- In 2012, 20 people died in Czech Republic and many others hospitalized and blinded after consuming fake liquor that contained methanol; and
- A two-year study of U.S. fish supplies concluded in 2012 that approximately 33 percent of the 1,215 samples analyzed nationwide were mislabeled.
Counterfeits in Other Industries
The incidence of counterfeiting of pharmaceuticals has also grown dramatically in recent years. While the counterfeit products may look the part, the reality is far from that. They are regularly manufactured in squalid conditions with the incorrect formulation, dosage, or no active pharmaceutical ingredient at all. Some counterfeit pharmaceuticals have been even found to contain household cleaners, heavy metals, and poisons.
The World Health Organization estimates that in the developing world counterfeit drugs can account for between 10 and 30 percent of the market. In developed economies, approximately 1 percent of drugs are counterfeit.
Combatting External Threats
One technique utilized to counteract the problem of counterfeiting and diversion involves the serialization and tracking and tracing of products (STT).
The STT model is predicated on using a product’s origin as a means of preventing counterfeits from entering supply chain. By assigning unique numbers to each product and introducing authentication at various points, the potential for counterfeit products to get through the supply chain undetected is substantially reduced. STT systems also provide improved supply chain visibility so that instances of diversion can be identified and corrected.
The STT architecture is typically comprised of three elements: a method of marking products with a unique number either through direct part marking or on packaging—typically achieved through barcoding or RFID technology; scanning infrastructure to capture specific events related to product movement within the supply chain; and a means of analyzing and reporting on these captured events.
The STT system is considered one of the most effective in combatting counterfeiting and diversion. So much so that pharmaceutical regulators across the world are in various stages of completion in terms of rolling the systems out.
STT in the U.S.
To ensure authenticity as products change custody within the supply chain, the FDA requires all pharmaceutical products sold in U.S. to be serialized and scanned at a unit or aggregate level through the Drug Supply Chain Security Act by 2023.
However, there is no such unifying framework in place for the food and beverage industry. In fact, a recent comparison of global food traceability regulations and requirements focusing on 21 industrialized countries found that the U.S. trails behind most other nations analyzed in terms of basic food traceability.