We are all familiar with counterfeit money, but what happens when your vaccine supply is counterfeit? In this episode, Diane and I interview Dr. Karl Henson from The Medical City hospital in Pasig City of the Philippines. He shares their story of both identifying the counterfeit rabies vaccines that were injected into patients and the steps they took to prevent it from happening again.
To read their report: Counterfeit Rabies Vaccines: The Philippine Experience https://pubmed.ncbi.nlm.nih.gov/32855990/
We are also joined by Daniel Stanton, President and Co-Founder of SecureMarking and author of Supply Chain Management for Dummies, and Mark Manning, Founder and CEO of iTrace Technologies. We discuss the impact of counterfeit goods on company revenue, and in the case of counterfeit pharmaceuticals and medical devices, the potentially dire consequences to patient health. Daniel and Mark educate us on how counterfeit products enter the supply chain and what technologies are available to help manufacturers, including biotech companies, prevent it.
To reach out to Mark or Daniel:
http://itracetech.com/
We are all familiar with counterfeit money, but what happens when your vaccine supply is counterfeit? In this episode, Diane and I interview Dr. Karl Henson from The Medical City hospital in Pasig City of the Philippines. He shares their story of both identifying the counterfeit rabies vaccines that were injected into patients and the steps they took to prevent it from happening again.
To read their report: Counterfeit Rabies Vaccines: The Philippine Experience https://pubmed.ncbi.nlm.nih.gov/32855990/
We are also joined by Daniel Stanton, President and Co-Founder of SecureMarking and author of Supply Chain Management for Dummies, and Mark Manning, Founder and CEO of iTrace Technologies. We discuss the impact of counterfeit goods on company revenue, and in the case of counterfeit pharmaceuticals and medical devices, the potentially dire consequences to patient health. Daniel and Mark educate us on how counterfeit products enter the supply chain and what technologies are available to help manufacturers, including biotech companies, prevent it.
To reach out to Mark or Daniel:
http://itracetech.com/
Hi, I'm Aaron Harmon.
Diane Cox:And I'm Diane Cox Welcome to Inside Out quality.
Aaron Harmon:both Dan and I build and implement quality systems in the biotech and medical device industry. But we often get asked, Is this really necessary? Do we know if we are doing too much too early? Or do we even need a quality system?
Diane Cox:Our goal is to explore questions like these through real life events and experiences shared by our guests from various regulated industries. We will show you why quality is not just about compliance and how when it's done right, it can help your product and company improve lives and make a difference.
Aaron Harmon:In September of 1982, a Chicago Mom gave her sick daughter Mary Kellerman, Tylenol to help her sore throat. What she gave her daughter was not Tylenol, but potassium cyanide. She had no idea that someone changed the pills in the bottle on the shelf at the drugstore. Seven people in total died from that crime. Johnson and Johnson issued a massive recall, the Federal anti tampering Act was passed in 1983. The CFR was updated by the FDA to include a requirement for tamper proof packaging of over the counter drugs. So that's all history. We're all in the clear, right? Unfortunately, we are not probably tampering continues counterfeit drugs and vaccines still make their way to patients. As a recent example, in December of 2018, the Medical City, one of the largest tertiary hospitals in the Philippines discovered the rabies vaccine supply had been infiltrated with counterfeits ViroRAB is a vaccine produced by Sanofi Pasteur, which was counterfeited when demand increased due to supply chain issues. There are lessons we can learn from this example. But I'm no expert in what happened in the Philippines with fear Rab, Dr. Carl Henson is he is an infectious disease doctor with the Medical City Hospital in Pasig City, Manila, and is the author of the publication detailing what happened and how they responded. He is here with us today to tell us more. Welcome to the show. Dr. Henson.
Karl Henson:Thank you. Thank you for having me.
Aaron Harmon:So first of all, we'd love to hear about your work at the hospital, how you got there, and maybe a little information about the Medical City hospital network. Sure.
Unknown:Yeah. So I am an adult infectious disease doctor. I did my training actually in Detroit, Wayne State University. And I came home in 2016. I when I came home, I joined a group practice out here and group practices aren't very common in the Philippines. So but I did join one of the or the only group practice in country. And that happened to be in Medical City. This is the hospital also where I did my residency and my internship. Because this is a relatively small group, I pretty early on had been given pretty huge responsibilities. I was I was assigned to take care of the center that houses both the Antimicrobial Stewardship Committee and the infection control committee. So I oversee both committees, and I personally handle the Antimicrobial Stewardship Committee. And then one of my other colleagues does infection control, said, I think that my involvement in this whole rabies thing was because of my specialty in infectious diseases, but also because of my role in as director of the center. So the Medical City is, like you said, one of the largest hospitals in Philippines. We are accredited by the Joint Commission. So we do follow almost the same standards you guys follow in the US. We are we have 500 beds plus 120 is what I know from last count, but that's only for the main center, the main campus, we have four other local hospitals spread out across the country, and about 50 satellite clinics, again, spread out over the all over the country, but mostly in the in the northern biggest island, which was on and then we have a hospital in Guam. They're also part of the net, the Medical City brand, that's the company in terms of health care companies. This is one of the larger ones in the country. So having had to deal with this counterfeit issue, I think was a big headache for us.
Aaron Harmon:Need help? Your role has led you to take out a lot of responsibility and really get involved.
Unknown:Um, yeah, this was this was really, I think, a baptism of fire for me. I came home in 2016, passed my boards here, started practicing almost immediately after it came home. And then by towards the end of December, I was already being told that I'd be given this center to take care of that was and then I took the job in early 2018. And that was The year of our joint commission re accreditation. So right off the bat, it was like, a huge responsibility that I had to inherit, and then the very issue happen. So it was one one thing after another for me with this job. So
Aaron Harmon:it's also kind of a unique experience, which is I think that's a good thing, too.
Unknown:Yes, I've actually. So I'm sure we'll be talking about this later on about the details. But I've really learned a lot about, you know, having had to deal with an issue like this. And looking back, I think it was sort of a practice run for me, because I was also well, I'm still director now. And we have had to do a lot of work with COVID. So this came like, I think we were dealing with this issue a year before COVID happen. I think of it as sort of a practice run for the events that transpired in 2020. And now, this year, what we're going to deal with is vaccination rollout. So that's another exciting thing that I'm looking forward to tackling in my role as as director,
Aaron Harmon:keeping you busy. Yes,
Unknown:very busy.
Aaron Harmon:So how did your team discover the counterfeit vaccine?
Unknown:It was actually a patient had reported, it was December, I distinctly remember the date. I was walking out from from seeing my patients. And I saw the head of pharmacy. And I he's he's one of my friends in the hospital. And he's actually a co author in the paper. Mr. Santiago. I saw him on a Sunday. And I told him, why are you here in the hospital and he just said casually that there was an issue that cropped up. By that afternoon, he called me and said that a patient had reported he had been given counterfeit vaccine. So what had happened was he was on vacation somewhere in the country had gotten, I think, either a monkey bite or a monkey scratch. So he went to the local clinic and got rabies shots in the Philippines. Any animal bite, because of the number of rabies cases that we have. Most animal bites will be given rabies vaccines. Even pet dog bites from pet dogs and pet cats. We will vaccinate with rabies vaccine. So this guy went to the clinic got, I think, to two or three shots. And then he went back to Manila and got a rabies vaccine shot with us. And then he went home to his home country. But because I guess he was one of the more curious more suspicious types. He was actually very concerned about the rabies vaccine products that he received from the province. He wasn't very concerned about the products that he received from us, seeing as we're one of the more reputable centers. I think he communicated with the with the manufacturer with Sanofi. He was told that the vaccines that he received from the province had checked out. But he was he was persistent. He showed them showed them the vaccine card. And that's when Sanofi checked our lot number. And he was told that that was our product that had problems. So that was also what how Sanofi alerted us. It wasn't actually the patient directly. But we did reach out to him eventually. So Sanofi alerted us to the problem. And that's when the investigation started. That was what happened on that Sunday, in 2018.
Aaron Harmon:Probably pretty rare to have customers contact the vaccine manufacturers the double check,
Unknown:I considered serendipity to be to be honest, you know, for some reason, he was very persistent about checking out the products. Yeah, I guess, you know, it was a blessing for us both a blessing I think, and a huge challenge that we that we had to face this.
Diane Cox:Once the counterfeits were discovered. Could you tell us what steps were taken both to notify the patients and to also figure out what happened? Where did this stem from
Unknown:one of the earliest decisions that we made after we had discovered this was that we had to inform the patients who were involved? I don't think anyone actually had a thought of concealing it. Because we were very concerned about well, these were rabies vaccines if it were counterfeit, and they weren't protected. And you know, rabies can come up, you know, even years after an initial bite. We were very concerned about suddenly having a rabies outbreak of our patients down the line. So we knew from the get go, that we had to contact all these patients and tell them about the problem.
Aaron Harmon:The counterfeits must have looked very authentic.
Karl Henson:Yeah. So on first glance, you know, the wit to the untrained eye. They are they look, they look very, very authentic. So after we had identify the problem, what the Mr. Santiago algen, quarantined all the products from so he traced a supplier, where did we buy these vaccines from? And we he identified all the products that we had purchased from that supplier and quarantine them. And then we started tracing who had received these products, okay. Now, it was also here that I personally discovered that we had not been very good with our record keeping. For patients who visited the ER and had received vaccines, we hadn't been routinely recording the lot number, had we been recording it, we would have had an easier time to trace which patients were which, right. But because we didn't have the records for all the patients, we had to assume that anyone who had received rabies vaccines from us at that time period corresponding to you know, the time that we were using the products from this manufacturer, we had to consider them all as possibly being affected. When we traced back, we found so we discovered this in 2018 December, we discovered that we had been buying products from this company since December of 2017. That was our period of interest. And that's how far we went back. We looked at our logs from December of 2017, to the time that we discovered the counterfeit. And then we got a list of all those patients. And that's how we determined that 1700 people quite possibly had received counterfeit from us. When we actually look back and interviewed these patients, some of them had received authentic vaccine so and then we found two clusters of vaccines. And I described this in the paper when we compared the list of lot numbers that we had against the list from the distributor, which is zuellig Pharma. So we gave them all the large numbers that we had received from this company. Company X is what we called them in the paper, they returned the list to us and said that there were two large numbers that were not on Sanofi's legitimate or authentic list. Okay, this was the N one e 353. M. And we had received those vaccines in early 2018. There was a second cluster with a lot number of eight for H 1833. And we had received that, or we purchased that from the company sometime late 2018. So there was a period where we could safely consider these patients as having received authentic vaccine. We dealt with like two distinct groups of people. We wanted to know what the what the vials contain exactly, because it'll help us to whether to say, you know, did this really contain toxic products? What did the vials get? Because we expected the patients will ask what the vial vials contain, you know, it's something that you would just naturally ask someone telling you, you know, what did you inject into me? That's also one of the things that we decided to do, we wanted to get the virus tested. And that's how we also found out that the Philippines doesn't have the capacity to do analytical studies on the on the on the vials, right. And we had to send those vials out. After we identify the patients. We said we need to assume they had received counterfeit vaccines and therefore did not have protection against rabies. So we therefore need to read vaccinate them. And that's why we call these patients that we set up a special clinic. We asked our legal team and our customer service specialists to help train some nurses so that they will be equipped, you know making calls handling irate patients because we were expecting that patients will be very mad, you know, very angry out of the blue you tell them that, you know they had received counterfeit products. So we set up a special clinic For these for just for this, and then we started calling patients, that was in December of 2018. And then we realized that we could not just cold call a patient's, because you call them in the middle of their day. And then you start talking about counterfeits, so we decided to switch strategies, we wrote them letters instead, and then waited three days. So we sent the letters out by courier, we waited about three days before calling them. So by that time, they had already read our letter. And either they had already called us or they were expecting our call. So that was sort of a mitigating strategy. When we talked to them, they were a little bit calmer. That's also how that's also how we discovered that people in general respond to stress in very different ways. Some are, some are rather cool. And you know, Oh, I understand, you know, it's not your fault. And, you know, they would go to the clinic get vaccinated. And that's the end of it. But it's really, especially the parents of kids who had received counterfeits that were the most difficult. Yeah, it's very understandable. We, we, it's just human nature, they were very irate, and that we had to calm them down and reassure them, and that we, you know, we would, we would provide the vaccines, and then we would monitor etc. So that was what we did. Almost all of 2019. We were we were calling back patients. In some cases, I had to sit down and talk to the more difficult ones, those who had a lot of questions or those who we thought might bring in some legal people. So yeah, that was that was my 2019.
Diane Cox:I guess, really quick. I just wanted to clarify the timeframe here. So how did you scope out the timeframe? I guess, what was the time frame that you scoped out for when those lots were received from that vendor?
Unknown:So we use the product logs from our purchasing department. Okay, we trace back all the products that we got from company X, and discovered that the first shipment of vaccines with this light number arrived in December of 2017. About a year of Yeah, about a year, but we had been dealing with this company, apparently even before that. But the first shipments, the first products that they had sold to us, were actually a authentic vaccine. And then, and by then we weren't really checking, you know, they were a legitimate company, they were registered with the Food Drug Administration in the Philippines, the FDA, we also call it FDA here. So they had, you know, a license to operate, they were legit. So there was no reason to suspect any of their products. And one of the things that I learned from our lawyer, because I had also worked with her, and she's actually the third author on the on the paper, we had all the regulatory requirements in place. You know, so if this if we were following the bare minimum requirements, this could still happen. So, and that's how I think we realized that the bare minimum requirements, you know, does doesn't cut it, we need to put extra measures in place.
Aaron Harmon:So just out of curiosity, we ever able to figure out is this like, some kind of little setup shop somewhere where they're making the counterfeit vaccines, like how, who's doing this
Unknown:work? So we actually in the very early part of the investigation, we had, we had actually invited the the owners of company X to come to the Medical City, because we wanted to get their side. Unfortunately, they weren't very straightforward with where they got their products. So apparently, what happened was, they were, I don't know if the right term is sub distributor. So the the usual, the usual flow of the product is the manufacturer. Sanofi will bring in the products to the Philippines, and then they have a one single distributor. And that's zuellig pharma, and Zoellick, pharma can either directly sell to hospitals, and that's usually how we got our products. We bought it directly from from Zulily. Like I said in the paper, because there was a shortage zuellig pharma was out of stock of rabies vaccines, they didn't, they just didn't have the amount that we needed to give to our patients. So we had to look for smaller vendors, who still had stocks that they had, most likely they had purchased that these also from Zulily. Because it's the zoellick's the only source in the country. We had initially found some smaller vendors who had these leftover stocks or just had stuff that they had been able to dispose, which they had also gotten from Zulily. And that's how we knew that the earliest batches of vaccines that was given by Company X, they were legit, you know, they got them from Zulily directly. However, sometime, I guess, 2017 and this is just conjecture. They had been mixing their legitimate or authentic supply with supplies from somewhere else. They wouldn't tell us where. But sometime earlier, in 2017, the Philippine FDA had actually put out another advisory that there were counterfeit rabies vaccines in another part of the country. in Cebu, we were told by the FDA people, or maybe it was Sanofi people, they told us that the lot numbers seem to match or something like that. I'm not entirely sure. But so the suspicion is that there could have been a, you know, a ring of counterfeiters that were smuggling in these products, and then distributing it all over the country. This is the products that were being mixed into the legitimate supply of company X. But again, this is all just our suspicion, they didn't really tell us about this thing actually would tell us where they got their other products. And it might be true that they were also as surprised as us that the products they were peddling were counterfeit, but then, you know, they shouldn't, they should have also checked their sources,
Diane Cox:what analytics were performed on those vials and what was determined to be in those vials.
Unknown:Like I said, we really wanted to know the contents of the vials, because it was going to be a way for us to reassure patients, you know, that, that they hadn't gotten anything very toxic, or we, we would have injected something completely toxic or would have been in, in the Yeah, so we wanted to know the contents. And that's why we looked for ways to test the vials. Initially, we had initially done microbiological studies, like we did cultures of the product to see if it was sterile, that was all available in our in our lab. Initially, we thought maybe if we do a spectrophotometric assay, we can compare, you know, the curves of the counterfeit with an authentic vaccine. And they turned out to be different. That's how we were able to so our search for someone to test the vaccine led us to the who, the who had been working with us through from the very beginning, because everyone knows that this is a global problem. So through the help of the W H O, the Philippine representative, we were able to arrange for the H 1833 bio, and this was the vaccine that was in the later 2018 cluster. And we got it sent to Japan. And that's where it got tested. Now, the requirements of the Japanese lab was that we had to send a lot of files, they needed a lot of sample. So and we had plenty of the H 1833. Now, because the N one e 353. vials were given sometime early 2018, we thought that we had run out of it, even if we wanted to test when there was no more product to test. i But you know, by some form of miracle of some sort, there was one n one E that was found left over, I think from one of the clinics, and then it was returned to the pharmacy. And we had to quickly figure out what to do with it. We had one vial and we wanted, you know, maximum maximum benefit of testing with that one vial. And that's why we decided to return it to Sanofi because they had all the equipment they will be able to quickly tell us what the vial contain because I'm sure they if you know they manufactured it, they're going to know what to look for. Right. So after much deliberation, we We decided, okay, let's return it to Sanofi. We worked with the FDA, we said, we're going to return the vial. We asked permission from the FDA director to do this. And he agreed. He said that, well, let's get Sanofi tested. Sanofi set the vial to friends. I guess that's where their analytic lab is. And then we had, we didn't hear from them for a while, we followed up with the FDA. And then we found out that the testing had been completed, but they wouldn't release the results to us, which we thought was unfair. So we talked to the FDA director again, and we said, you know, our patients really need to know what the vials contain, will you please help us to get the results released. And so, to Synovus credit, they did release the report after some intervention by the FDA. So the results of the testing showed that the N one E, which was the first vaccine, you know, the February to March vaccine, turned out to be genuine, authentic product. We had found out earlier on in the investigation that the lot number was actually a legitimate like number. But that lot number was not supposed to be marketed in the Philippines. I think it was supposed to be sent to South Africa, or some other African countries, because they didn't expect the Latin number to be here. They considered it counterfeit, Sanofi did considered it counterfeit. So we considered it counterfeit as well. You're not sure about cold chain, etc. So what the initial suspicion turned out to be correct, in file itself was authentic. But the packaging it came in was counterfeit. The boss itself was comfortable. And that sort of gave us a sigh of relief in the sense that if Sanofi manufactured it and it was sealed properly, then the contents were safe, it just probably wasn't very effective. And so what we did with the patients turned out to be correct. We had we that we vaccinated and gave them protection. But as far as toxicity was concerned, you know, we were we were in the clear is what we thought. So and I wrote that in the paper. Now the second vaccine is the more interesting one. It was definitely counterfeit. The lot number did not conform to the usual pattern that's used by Sanofi. So it definitely was fake. The testing from the testing from the Japan lab showed that it had active anti rabies ingredients, but it was 95 times the expected value of anti anti rabies vaccine. There was no bacterial and the toxin that they found in the in the vial. So it seemed to be you know, if you remove the label, it seemed to be an anti rabies vaccine. It's just that it had too much of it. And they're you know, the labeling was purporting to be Sanofi Pasteur. So it was through and through counterfeit, what we were what we were suspecting was, maybe this was another brand of anti rabies vaccine with not much quality control, because if you have 95 times in one vial, then maybe the vial next to it contained, like, you know, point five of what's expected, and it might have been manufactured somewhere else. And then just to sell it off at the price of Sanofi vaccine, you know, they manufactured the labels and the box, etc.
Aaron Harmon:I was gonna say, I find it really creepy to think that there is somebody out there with capacity to print pharmaceutical labeling, and using it to package the VA using it for one vaccine. There's probably using it for others as well. In my
Unknown:review of literature, one of the most striking statements that I read was the counterfeit in counterfeit industry is more profitable than the illicit drug industry, because it's passed off as authentic product. People buy it, and they trust it because it's, it looks legit. About 10% of the world's pharmaceuticals, apparently are counterfeit. I don't know how they got that number. But that's, that's what's in the literature about 10%. And most of this is in Asia, in Africa, where the health systems aren't as robust. When we, when we were reviewing the thing with the FDA, this whole issue. One of the things that the FDA discovered was that this same company Company X was peddling another brand of anti rabies vaccine. That was also counterfeit. But the problem this time, so the vaccines that we had, we knew they were counterfeit, because they were problems with the lot numbers, right? For H 1833. You know, it was just an invalid format and it was not in their logs. The N one E, the pattern, the wave the lot numbers were were formatted, was consistent with how Sanofi did it. But it wasn't expected to appear in the Philippine market. And that's how we also knew there was now this other brand, speeder, the lot number was exactly the same as the authentic one. So how then do you determine what's authentic from what's not right? I think at some point, the FDA just said, Alright, all the all the products of speed with this large number, they are counterfeit, even so they had to count even though authentic ones as counterfeit. So we already knew that there was there were count, there were a lot of counterfeits that have had flooded the market. But it was only our hospital that had made a recall. And we knew that we had to do it. We also knew that some of our patients that we had seen in the clinic, they showed us their vaccine cards, and they had the same H 1833. But it wasn't dispensed from our hospital. They had gotten it from some other clinic. But none of the other facilities had owned up to it. I guess for various reasons that our hospital is blessed in a way that we had the resources to buy rabies vaccines and give it to these patients at no cost to them. I do not think that, you know, the smaller vaccination clinics would have had the same amount of resources to do what we did.
Diane Cox:So you ended up re vaccinating those those folks to who were vaccinated from other places. Other clinics,
Unknown:yes, but we only because we also had to save on resources. If we had given them say, one vaccine that was considered counterfeit, we gave them one for free. And if they wanted to complete the series with us, then we gave the rest of them at the at the usual price. Sure.
Aaron Harmon:Yeah. So this is a topic for another episode that I'm kind of planning for the podcast. But I worked with lady from the USDA, and her role was in fetal bovine serum. And that's something used to make vaccines, and there's counterfeiting there as well. So she had seen counterfeit, lots of fetal bovine serum working its way into manufacturers'. Wow. Remember, there's dollar signs
Unknown:there? Well, that's true. Yes. The main question for me that I have not been able to answer to this day is how do you really determine a counterfeit from one that isn't the solution that our hospital came up with, just to be on the safe side was to only get products from that one legal manufacturer or distributor in the field, it was maybe the easiest way to make sure that you know, we were getting legitimate products, that logic will fail. If the supply chain of zuellig gets contaminated with counterfeits, but then you'd have multiple other hospitals having to deal with a problem. But you know, zuellig will probably have very secure supply chains and arrangements with the with the manufacturers. And that's why the question and we also we also asked this in the paper as one of the bigger hospitals in the country, we are in a position to say we're going to cut out the smaller suppliers. Okay, we're going to just focus on getting our products from slowly. But the smaller suppliers actually have a role they fulfill the supply chain needs of the smaller hospitals in the rural areas. And if you can't trust the products from the smaller suppliers, you know, how are these smaller hospitals in the far flung areas of the country going to survive? And that I think there's no there's no good answer there. It's going to be left to the regulatory agencies of the country to answer that question. We've been dealing with this for you know, for decades, and as you said, it's also present in the United States. So I guess nobody really has a good answer to this question.
Aaron Harmon:It reminds me a bit of the early history The US, were we, at one point didn't have regulations, but it was issues that created regulations. And I'm guessing that as these things continue to crop up countries while to take action, and it will lead to more regulations in the Philippines and river ELSS, as
Diane Cox:well. And I was just thinking on the safety side, if there are safety effects from these, I think that's where things would probably start kicking in. Right. So with the 95 times of the, the vaccine, was there any kind of consequence to that from the patient health standpoint?
Unknown:Well, I was looking at the literature and in one of the papers, I read that there was really no upper limit. So vaccine manufacturers are told, there has to be this much at the minimum, but they're not given a maximum level, right. And if we think about, you know, biologically, or physiologically speaking, it's really just going to be an excess of protein, that will stimulate the immune system, so you're probably just going to get a lot of antibodies, and then the body will just get rid of the wrist, I have not come across any vaccine overdose. Well, there have been some instances where they were given a second or a third dose extra, but none with any adverse effects. So we do not expect any problems with the when when when patients had received a too much of a vaccine. And so far, since we discovered this, there hadn't been any patient who came back to us with problems as well. And definitely no rabies cases, for sure.
Diane Cox:Well, that's the flip side to if there were counterfeits with not enough of the vaccine, and those that maybe didn't come in for revaccination to your clinic, that's probably the bigger risk risk in that scenario, right? Where they wouldn't be vaccinated and potentially have contracted rabies.
Unknown:Yes, there there were some patients that despite our best efforts, we couldn't contact. But on the flip side of that to the n one e vaccine was authentic, even if it was, you know, even if we couldn't assure cold chain and how it was stored, etc. At least we know that at the time that we had injected into them, it was an expired, and that, you know, there was good active protein in the in the vials, for the end when he they had a lot of it. So, you know, they would have been protected.
Aaron Harmon:So do you have any tips for other hospitals, healthcare providers that are listening to this and say, gee, you know, how do I know that what we're doing is not putting patients at risk?
Unknown:Like, like I said earlier, I really don't know how to answer or to circle around the question of how do you know, an authentic product from from a counterfeit one, given all of the challenges that we had encountered with, you know, with this issue, now that we know that they're counterfeits with the same lot number as an authentic one, then that takes out large numbers comparing large numbers, right, I guess one of the things that you can do is sort of examine with a fine tooth comb, like random samples from a new arrival from our experience. And what we decided was to just cut out all the other because the root problem here was that we had to switch suppliers because the main supplier had run out. And we had a lot of patients who needed rabies vaccines. Our solution was just tell patients, you know, we're out of rabies vaccines, we're sorry, you just have to find someone else to give it to you, and only buy from from the main distributor.
Aaron Harmon:Another point that I picked up just from what you were describing earlier, is tracking the lat numbers so that there is something you can then go back much quicker. Identify which, which
Unknown:that's true. So that's one of the earliest changes that we did the vaccinations were done at, er, at the outpatient side, you know, the non urgent side of er, and we've instructed our nurses to very, very meticulously document the lot numbers or of which, which of the patients,
Diane Cox:I'm wondering to, if on the manufacture side, if there are things that can be done to prevent, or, you know, to, yeah, to prevent counterfeits from looking so much like their product or you know, being labeled so much like their product if there's something technology wise that they can do to their packaging, something like that to be able to help hospitals identify which ones are counterfeit versus legitimate.
Unknown:There are some security features that the that manufacturers not put in, maybe not as a result of what happened to us, but because of counterfeiting in general. They they have I think the manufacturers have started using security, like, you know what they do with money. So, but one of the other things that I discovered, but I don't really know much about it is the potential use of blockchain technology, you know, for tracking shipments and all that. I'm not sure how it works. But that's that I guess that's something that we're working on.
Aaron Harmon:Well, thanks for being on the show with us. Dr.
Unknown:Hanson. Oh, you're welcome. You're welcome. I really hope that this podcast helps, you know, some poor soul out there having to deal with counterfeits too.
Aaron Harmon:Now we'll take a quick break to hear from one of our sponsors.
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Aaron Harmon:We have talked about counterfeiting from the hospital perspective. But what can be done from the manufacturer side, how do you prevent your products from being counterfeited? To answer this, Dan, I have Daniel Stanton and Mark Manning with us both experts in preventing counterfeiting and supply chain control. Welcome to the show. Danna Mark,
Unknown:thank you much for having us. Yeah. Great to be here. Thank you.
Aaron Harmon:So after the first question, can you tell us a little bit about yourselves? And maybe you know, what you do and how you get involved with this? And maybe starting with you, Daniel?
Daniel Stanton:Yeah. So I am a supply chain guy. I'm actually known as Mr. Supply chain. So I wrote the supply chain management for Dummies books, and I'm a supply chain researcher, and educator. And one of the issues that's increasingly been coming on to my radar, is the authenticity of products, right. So whether the things that we're moving through our supply chains are, what they're supposed to be, and if we really know the history and the provenance of those products, so that that curiosity and that challenge has actually pulled me into the supply chain security industry. And so I'm a co founder of a supply chain security company called Secure marking. And that's how Mark and I have gotten to be friends, could you
Aaron Harmon:give a brief definition of supply chain?
Unknown:Sure, the way I define a supply chain is is a complex system made up of people, processes and technologies that is engineered and managed to deliver something of value to a customer. So if you think about every product, and every service that we buy, and consume, has a supply chain that delivers it to us. And the key is understanding, you know, what's actually happening in that supply chain? And do we understand it? Can we trust it? Are there Are there risks and dangers there that we may not be aware of?
Aaron Harmon:Thanks. And Mark, how'd you get involved in the supply chain field?
Mark Manning:Yeah, so I've been working in product security, gray market and diversion prevention and anti counterfeit. Since I think there's around 2003, I got involved with a company out here in Silicon Valley, developing some new technologies to help fight counterfeit and diversion for the brand. And since 2003, I've worked with many global brands to help them secure their supply chains, mostly manufacturing in China and shipping globally, Europe in the United States. And then from the fashion accessory world, we branched out into the medical device space, industrial electronics, automotive as providing, again, similar levels of brand protection, anti counterfeit anti diversion technologies to those kinds of companies. So we have traditionally brought a technology focused approach to something that is, in the most part been legal, or supply chain issues. So we have come along with a number of different technologies that can help companies secure their supply chain all the way from the factory, to the end user. And again, that's how I got involved with Daniel, because we've worked on a couple of projects together to help secure supply chains in aerospace
Diane Cox:parts. With Dr. Henson's case of counterfeit rabies vaccines, they had both supply chain challenges and actual packaging replication. How common is this from your experience?
Unknown:So yeah, let me dump on this one first. This is very common, and it doesn't just happen with packaging. It happens with actual product as well. So what we find is packaging replication can sometimes be from a third party that's not involved in your supply chain at all. But more often, the packaging replication is actually additional packaging that is being put out into the marketplace from your contracted providers of packaging or materials. And we see this in the watch industry where there's, there's been a number of cases, and we've worked with companies to help discover it, and then and then secure it, of contracting a factory in China to produce what is for you, and the brand will get a screaming deal at the beginning of the contract. The trouble is that factory in China has to make up the difference have given you such a screaming deal. And the way they do that is by creating additional product for themselves, that is your product, and then shipping it out the back door. That kind of thing happens with physical products like watches, it can happen with medical devices, it can happen with anything, including packaging, replication, and that kind of thing. So you know, what may seem like a screaming deal on a bargain in the beginning to get your products produced in Asia, can actually mean that you're gonna have a very big canopic problem at some point in the future. Yeah, and I would jump on to that, you know, Mark, and I have done a fair bit of writing, we're, you know, we sat down and we've, you know, tried to document these issues and explain it for supply chain managers and procurement folks and executives to really understand the challenge. And so when we talk about, you know, fakes and counterfeits, that's really a pretty broad term, we can pretty clearly break that into eight individual buckets, right. So one of those is packaging or relabeling their production overruns. There are issues with diversion, right, we're a product that's made for for one market and one purpose gets rerouted into a different market, a different channel, which can can actually create a lot of big problems. There are also issues with products that are legitimate products that maybe didn't meet quality standards and got rejected or expired. And you see those coming back into supply chains, or a legitimate product that gets relabeled or repackaged to make it appear that it's something of a higher value. So there are all these different forms of counterfeiting, that are occurring in our supply chains. And for companies that that aren't thinking about it that don't have a strategy that aren't managing that risk, that can really be a danger to the company and and put their customers and everybody else in the supply chain at risk. Yeah, and traditionally, when we've talked to brands and worked with brands, they less concern about the very cheap, poor knockoffs of their product is the good counterfeit, that they have a bigger issue with, because everyone can clearly see that the poor counterfeits are poor counterfeit, but the where they're losing, you know, the most revenue and their business is most affected, is the really good candidates, because there's a big chance that those really good candidates are actually coming from their contract manufacturer or contractor fight made by the same materials, the same workers in the same facility, they just may not have gone through the same quality control process. And it may be there this slight rejects to them. But you know, that's where the biggest issue comes from these brands, because it's very difficult to identify those and very difficult to identify that that is a counterfeit versus a genuine item.
Aaron Harmon:And so in these cases, you know, they're either getting their profits eaten from, they're having customers get bad experiences and sounds like with their products. And in the case of like the counterfeit vaccines, you can have harmed patients, because they're not getting the right product now.
Unknown:Yeah, that's absolutely right. If you extended into areas like aerospace or defense, and frankly, with with a lot of other businesses that are being concerned about cybersecurity, you know, with some products, you end up with a realization that if you're getting something where you don't really know the provenance you don't know the origin, you don't know how it's been handled, you may actually be making yourself vulnerable to sabotage or to a cybersecurity threat. If you end up with, you know, for example, counterfeit computer boards that have features built in that you did not specify and don't want there.
Aaron Harmon:I hadn't thought about that. Both mark and Dan, you guys have technology that can help out manufacturers. Can you kind of tell us a little bit about you know, what you do and how you get involved.
Unknown:So, yeah, absolutely. So one of the philosophies that I trade has and I know Daniel supports this with with his technology as well is if you can't secure the manufacturing, you can't build the foundation on which all the other security through the supply chain is reliant upon. And the work that we do with our clients initially is to secure the production of their products. And that includes the things that Daniel was mentioning a little while ago of, you know, how do you secure an account for scrap? How do you secure an account for rejects to ensure those rejecting scrap and not making it out of the scrap bin back into the marketplace from the factory. So the first step that with the brands we work with is to secure the manufacturing. And we've built some software that we install on the machines in the factories, certainly in China or in Asia, that control what is produced on that machine. And without our software, they can't produce an authentic product. So the machines that are producing the product actually apply a either a covert or an overt secure marker to the product itself, that can be authenticated anywhere else in the supply chain. And the factory can only create the authorized number of markers and apply the right number of markers that is required for the purchase order that they've received from the brand. So we start off by controlling the process at the very beginning when the purchase order is issued, and ensuring that the factory is only producing what the purchase order requested. If the factory needs more need to make more product to account for rejection scrap that is then authorized directly by the brand so they can keep control and have visibility into that scrap and reject replacement process. So once you've secured the factory with without technology, then you're providing the track and trace application to ensure that the product that leaves the factory actually arrived at the distribution center. And then when it's shipped out to a third party or an end retailer at that point, you can track who that product was shipped to. So being able to account for the product all the way through the supply chain, without software without track and trace capabilities and with a secure and authenticated product allows the brand to initially identify any diversion or leakage from that supply chain that may be feeding marketplaces like Amazon, Alibaba. And also, you know, being able to authenticate that product to ensure that it hasn't been tampered with hasn't been watered down in the case of pharmaceuticals or the medical device has been correctly handled through our plant life. So that's one of the steps that we bring to the initial problem. And that helps the brand identified divers and gray marketers which are a separate issue to the street counterfeiters. Having the authentication on the product itself allows them to identify a genuine item from a counterfeit item. So those two levels of security on the product is the initial step. As we've Daniel, we've been working on a lot of blockchain applications these days. And one of the applications that Daniel and I worked on together was for Honeywell aerospace, where they're recording the provenance of the aircraft parts that they produce on the Honeywell blockchain. And the important thing about a blockchain is that by itself, it cannot provide an anti counterfeit or anti diversion solution without having some way to secure the product itself. And that's where I trace and secure marking comes in and being able to ensure that the product or the item that was recorded on the blockchain, in the very beginning is the same product, an item that has been authenticated against that blockchain maybe 123 years later. So providing that suite of technologies that secures the production, the product of the factory provides the track and trace and visibility through the supply chain, and then allows authentication of the product in the marketplace by a mobile application or other mechanisms. So that's the piece that I trace brings to the brands that we work with, and I let Daniel take care of the work that he does on his side that we connect with. Yeah, absolutely. And so you know, the part that I'll key in on you know, Mark, Mark talks about blockchain. And there's been a lot of buzz in the last few years about blockchain as an as an anti counterfeiting solution. But, you know, the one of the other buzzwords that you hear a lot these days is digital twin, right? The idea that you'd have a physical object, and then you'd have a digital representation of it. And when it comes to supply chain security, that's really where blockchain fits in, is it becomes the secure digital representation or the digital twin for a physical product that exists in the real world. And like Mark was saying, if you really want to secure a supply chain, you actually need both right? You need to have that secure information system such as a blockchain to track the product, but you need to have ways of securely tying that information to the physical product, our firm secure marking has a very unique nanotechnology solution that allows us to apply marks, including the ones that Mark Manning's company I trace produces, on virtually any product, we have a way of applying these security marks, that is low cost, very, very difficult, I would argue, pretty much impossible to replicate, and doing it using commonly available technologies so that you can integrate it with virtually any product. And that's, that's the key, if we're going to fight this problem, we really need to have robust solutions that are able to not be easily defeated by the counterfeiters by the bad guys, and at the same time, that are versatile enough that we can use them everywhere, right? Because otherwise, whatever vulnerability is we allow to remain. Those are the places that the bad guys are going to exploit it. So traditionally, and you know, Daniel brings up a great point about being able to easily apply these but making them secure. Now, a lot of people ask us, you know, why can I just use my barcode or my data matrix code or my QR code to secure my product, you know, the the falsified medicines directive and the drug supply chain security act, required that a barcode or a data matrix code be applied to the packaging, so as it can be recorded at the pharmacy that it was, you know, had been through the supply chain. The challenge with those technologies is they are just open source technologies. Anyone can create a barcode, anyone can read the information in it. Anyone can create packaging with a range of barcodes on them. There's, there's so much software out there that allows you to create barcodes, data matrix or QR code. Those technologies are not security technologies. They are logistics Technologies, a barcode is meant for just logistics tracking and identification. They're not by themselves, a security technology. So to make those technologies actually secure, allow them to deliver on the promise that that they were implemented for, you need something like secure marking with the little nano ink or eye trace technologies to DMI alongside it, or in addition to it to provide that security layer, allow reliable authentication to a blockchain and ensure that that product that was produced is the same product somebody has in their hand, six months a year later somewhere else in the world.
Aaron Harmon:I have a question for you, Diane. Okay. So when you voted manufacturers in the past, have you ever looked at their scrapped or their rejects to see if they're diverting the product.
Diane Cox:So one of the requirements in the quality system regulation for medical devices is that you have to physically segregate non conforming product, scrapped product, whatever, from your conforming product that will be moved on throughout the operations of manufacturing. So that is one of the things that we check for is to make sure that it is marked and segregated. But now what happens to it after that is, it's really up to the company to make sure it's scrapped properly. And that is really it's a risk that I see that's not covered in our quality system regulation.
Aaron Harmon:Dad had never occurred to me until this conversation now, right? We don't look for that in the quality side.
Diane Cox:Right, exactly. And it actually makes me wonder, I mean, for for manufacturers, do you find that they reach out to you after a security breach or a counterfeit situation? Or do you tend to get manufacturers reaching out to you, both Dan and Mark proactively to prevent these types of things from happening?
Unknown:Everyone I talked to has a problem when they come to me. And they're trying to solve a problem that they have discovered, and they are trying to prevent from happening again. Right.
Diane Cox:Interesting. And are there particular products? Or I should say, are there particular manufacturers of different types of products that reach out to you? Do you see more of one type versus others that are having these problems with counterfeits?
Unknown:I would make the assumption coming into this naively that, Oh, well. It's going to be the high value stuff, right? The more valuable it is, the greater the risk for counterfeiting. But But actually, that's not true. It's really very opportunistic. And one of the things about counterfeiting, low value products, is there is actually a lower risk that you'll be caught. And that if you are caught that there'll be any kind of penalty for it. There. They're pretty well documented issues now of you know, counterfeit car parts coming into the us all the time on counterfeit toothpaste. Right. I guess the easiest way to say it is it really seems like the bad guys have figured out, they can, you know, acquire sophisticated manufacturing and packaging technologies pretty easily. And that the the margins on fake products are huge. And it's really unlikely that they're going to get caught. And if they do that they'll ever have to go to jail, they just, you know, shut down and start a new company with, you know, another random name. Yeah, it's I think for the organized crime side of it as well, I think, as Daniel said, there's very, very low risk very, very high reward. And it can be as lucrative, as you know, bringing cocaine or other drugs into the country, just bring it in counterfeit products, and you have a very, very low risk of one getting caught. And two certainly getting prosecuted. It's become one of the great moneymakers for organized crime and terrorism, it's just counterfeit products and, and we see products in in all kinds of different verticals from we're working with medical device companies already, that are trying to secure the the consumable components of the medical equipment that they produce, you know, fashion accessory brands, the watch companies, we have a long history with those guys. And then obviously, aerospace, as we've mentioned already, industrial electronics and automotive. So all of these areas, are looking for solutions to help them fight, counterfeit and diversion. Now, we happen to be very well positioned as I trace to be able to secure manufacturing of products like watches, jewelry, medical devices, and aircraft components, that technology lends itself very well to those kinds of applications. But we can also apply it to, you know, packaging and labeling as a security layer for those kind of simple packaging applications as well. And I think part of the problem traditionally, is that brands have not paid a lot of attention to this until they have a problem. And some of them don't even realize they have a problem. And they go to their label company and I said have a label company, I use a security label. And a label company says great, I'll charge you an extra 10 2050 cents a label and we'll put a barcode on there or now you can have a QR code on your label. And look, that's a security label. Now, unfortunately, that doesn't solve the problem. And I think that's the issue that a lot of brands are facing is that the the off the shelf solutions that are low cost and easy to implement, just, you know, are another way of buying a more expensive label as opposed to solving the problem. The other thing that I'd throw in I don't know if any of you noticed it, but two days ago, President Biden issued an executive order focused on improving the resilience of the US supply chain. And if you go and you look at the text of the order, you know, a lot of it is is focused on what supply chain folks would call capability, right? What are the sources of our supply? And do we have enough capacity? And are we overly dependent on other countries for for one thing or another. But if you read between the lines, what you really see is that we need to get a better handle on how our supply chains operate. We need to understand the flows, the provenance where things are coming from, or else you know, we're allowing ourselves to be vulnerable to threats, including counterfeiting of products,
Aaron Harmon:the world that I don't think most people know exists. No, yeah, exactly.
Unknown:I've got a book that I can recommend is a great starting place. Now available on Audible. I do
Aaron Harmon:check this out. Last question for biotech companies, medical device companies, or even entrepreneurs getting into that space. What should they be taking to think about supply chain? Or what steps would you guys recommend?
Unknown:So I think they're gonna have to assume that they're going to get copied or counterfeit. And that's the medical device companies that we're working with. One of them is a start up. And they started off with that assumption that someone is going to try and counterfeit their product, or at least gray market it i diverted and they started off with the goal of making sure they secured the product to prevent that from happening. And that doesn't mean they're going to put a sticky label on there with a barcode or a QR code as recommended by the drug supply chain Security Act of the falsified medicines directive. They were going to put an implement a proper security solution. So I think if they were starting out or they're in that world, the they have to assume their product is going to get green marketed and diverted and counterfeit and then put in the checks and appropriate technologies to prevent that because once you go down the legal path of trying to prevent a counterfeit or legal Usually, one, it takes five or six years to get a conviction, and to the problem has already happened, you're trying to close the door after the horse has already bolted, you know. So really being proactive about it realizing that this is a real issue and a real problem that's facing every company out there today, and then put the steps in place to mitigate it at the beginning. Yeah, you know, one of the things that mark will often tell me is, you know, companies attack the problem of counterfeiting, with lawyers after the fact, which is both the most expensive way to do it. And the least effective because it's too late. Whereas it would actually be much cheaper and much more effective to design security in at the very beginning. But you need to be thoughtful about it. And you need to understand, you know, what it takes to have a robust supply chain security strategy. So, you know, that include that does include serialization, it often includes marking, it includes having, you know, a secure platform, platform for storing the data. It involves having mechanisms to prevent or detect tampering. And also, you know, in many cases, there are things that you can do around the physical features or characteristics of a product that can help you identify whether it's, it's authentic or counterfeit. But if you, if you plan for it from the very beginning, then it's very unlikely that you'll be an easy target. If you wait until after the fact, it becomes very difficult to mop up those problems.
Aaron Harmon:So if someone listening wants to reach out to you, Daniel, or Mark, what is the best way they should do that?
Unknown:They can reach me through the Secure marking website. There's a Contact Us link there and those messages will come to me.
Aaron Harmon:I can I can post that on the show notes so that people can rapidly find it. If there's please, that'd be great. Thank you.
Unknown:Yeah, I missed me by trace, we have a website, I traced tech.com. And then there is the contact us page where you can reach out to us directly and our phone number and email info email box is also on the bottom of the web pages if anyone wants to contact us directly.
Aaron Harmon:Great. I'm sure there's way more that can be said about this. Yeah, absolutely. Let's all look there's the book.
Unknown:Yeah, that has been a great book to help people understand some of these issues and challenges. So it's well worth well worth people picking it up. Thank you. And there is we just released the second edition about a month ago, which includes some updated discussion on on this issue of supply chain security and counterfeiting.
Diane Cox:Great well, I really hope that people in our network and people that listen to this episode, take this seriously because it is a real risk. And we see it happening. We have seen it. We interviewed Dr. Henson, who had a true real life story as it relates to the vaccine. So yeah, this is something that I really hope people take seriously and act upon. So thank you guys for all the information.
Aaron Harmon:Thank you for having us. And for our listeners. Thank you for tuning in.
Diane Cox:We hope you enjoyed this episode. This was brought to you thanks to South Dakota biotech Association. If you have a story you'd like us to explore and share, let us know by visiting www SD bio.org.
Aaron Harmon:Other resources for quality include the University of South Dakota's biomedical engineering department where you can find courses on quality systems, regulatory affairs, and medical product development. Also, if you live in Sioux Falls area, check out quit a local Quality Assurance Professionals Network. You can find out more about pivot by clicking on the link on our website to the end and I would like to thank several people, but a few who stand out are Nate peple for a support with audio mixing Barbara Durrell, Christian or support with graphics design and web. And lastly, the support from South Dakota bio