Fake hepatitis C pills got into supply chain through shady wholesalers: sources

Counterfeit "Harvoni" hepatitis C medication tablets discovered earlier this year were distributed through back-channel, cash-only wholesalers, the Ministry of Health, Labor and Welfare and other sources have told the Mainichi Shimbun.

These wholesalers are predominantly small to mid-size firms, and have long had a reputation for selling pharmaceuticals acquired through unreliable sources. The Mainichi's sources believe it was at this point in the supply chain that genuine Harvoni pills were removed from their bottles and replaced with the counterfeit tablets.

There is no provision in Japan's pharmaceuticals and medical devices law banning buying drugs from an unlicensed company, but observers have pointed out that these back-channel suppliers can become breeding grounds for the distribution of fake medications.

Normally, drug companies sell pharmaceuticals to medical institutions and pharmacies via a distributor, and prices are a few percent below those set by the government. However, cash-only wholesalers buy up drugs outside this usual route, and resell them for slightly lower prices than those paid in the normal distribution system. According to an industry source, the wholesalers buy leftover medication from medical institutions and pharmacies -- which are technically not allowed to resell pharmaceuticals -- and even patients.

"Hospitals, pharmacies and so on can turn their extra drugs into cash, and they can also buy what they need cheaply," the source said. "It's a necessary evil."

According to a senior health ministry official, the counterfeit Harvoni was being distributed through several cash-only wholesalers. One business has apparently revealed that it bought about 10 bottles of Harvoni from individual persons for between 900,000 yen and 1 million yen per bottle beginning last autumn. A bottle of Harvoni costs around 1.53 million yen under the official pricing regime.

The Kansai Medico pharmaceutical chain in Nara Prefecture, where five bottles of fake Harvoni turned up, told prefectural authorities that it had "bought some of the medication through non-standard channels because it could be acquired cheaply."

One former pharmaceutical executive told the Mainichi, "It's very surprising that even a major pharmacy would procure stock this way."

While the pharmaceuticals and medical devices law prohibits non-licensed dealers from selling medication, there are no regulations stopping these unlicensed businesses from buying drugs. The buyer must record the name of the seller, but not their contact information. As such, it is impossible to identify those who introduced the counterfeit Harvoni into the distribution network.

The health ministry is considering beefing up regulations once it completes its investigation into the case.