Counterfeit goods impacted everyone. Directly and indirectly it impacts legitimate manufacturers, exchequer and by large consumer and society.
a) Counterfeiting, Tampering, and Diversion Harms Consumer
- Illness or loss of life — Poor quality counterfeit drugs or drugs that are tampered with can cause death and serious illness, as seen in connection with several incidents of counterfeiting in the developing world. According to the New York Times, “estimates of the deaths caused by fakes run from tens of thousands a year to 200,000 or more. The WHO estimates that a fifth of the one million annual deaths from malaria could be prevented if all medicines for it were genuine and taken properly. In Nigeria, 100 children died when a cough medicine was diluted with a poisonous solvent; in Haiti, at least 59 children died after taking counterfeit syrup labeled to treat fever.
- Higher costs for pharmaceuticals — As a result of lost revenue, exposure to huge damage claims, and higher insurance rates, consumers are faced with higher prices for drugs targeted by counterfeiters and diverters.
b) Counterfeiting, Tampering, and Diversion Harms Manufacturer
- Lost revenue — Counterfeit products are made at the direct expense of drug manufacturers who spend millions of rupees developing and promoting their products.
- Liability —Manufacturers can face potentially crippling lawsuits as incidents of counterfeiting, tampering, and diversion pose increasing health and security problems for the public. Plaintiffs hold drug manufacturers accountable for the authenticity of the products they manufacture and the safeguards in place to prevent tampering.
- Brand Integrity — Brands owners / Companies invest huge amounts of resources, time, and money to develop, promote, and maintain their brands. But that investment can be undermined by a single incident or a perception that the product may be fake.
c) Counterfeiting, Tampering and Diversion Harms Governments
- Public health crises — Consumption of counterfeit products can cause widespread illness that may overwhelm the healthcare system or create a healthcare crisis worldwide. These incidents eroded consumer confidence in systems and government agencies.
- Increased liability — Greater risk of harm to consumers results in greater liability for healthcare providers. In the event of litigation following a consumer illness or death from counterfeit or tampered drugs, healthcare providers must prove they have taken every step possible to protect the integrity of the products they administer.
- Lost tax revenues — Sales of counterfeit or diverted drugs bypass traditional sales channels, thereby depriving governments of tax revenues.
- Increased enforcement costs — As counterfeiting, tampering, and diversion grow, governments need to allocate a greater portion of their security budgets toward efforts ensuring the integrity of pharmaceuticals.
- Funding of criminal enterprises — The people that benefit most from counterfeiting, tampering, and diversion are criminals who then use their proceeds to fund other criminal activity or to further their own enterprises.