Originally Published MDDI January 2003

NEWSTRENDS

Gregg Nighswonger

Despite closer scrutiny by government and industry, the counterfeiting of electrical products in North America is believed to have grown in recent years. According to the IEC, most counterfeit products are shipped from China, Russia, Hong Kong, and Taiwan. The U.S. Customs Service believes that at least 5% of products coming to the U.S. are counterfeit. Although counterfeiting is perceived as a problem for consumer goods, some medical markets are also affected.

Both finished goods and device parts have been successfully faked. For example, intra-aortic pumps worth $7 million were recalled after malfunctioning components were found to be counterfeit. The problem has also attracted the attention of the World Health Organization (WHO). More than 2000 kits containing stethoscopes and sphygmomanometers were seized during transport from China to Greece in 1999. WHO reported that every part of the shipment had been counterfeited—packaging, instructions, all devices, and European standards marks.

Aside from compromising the safety of device users and patients, manufacturers are adversely affected by loss of sale and loss of reputation when counterfeit parts fail that have been branded with their company's trademark. Commenting on the problem of counterfeiting, Sandy Gentry of Underwriter's Laboratory says, "UL has not yet come across any medical devices bearing counterfeit marks. You can imagine the severity of the situation if, say, a defibrillator bore a bogus UL label. We're quite relieved that we have not had to deal with this type of situation with medical products."

Part of the problem, in fact, is the lack of specific data on how widespread the problem is within the medical industry. "It's quite difficult to come across just industrywide, countrywide, or globally," says Darren Pogoda of the International Anticounterfeiting Coalition. "It's obviously difficult to get facts and figures on a black market." He acknowledges that counterfeiters are definitely growing more sophisticated. "The rule of thumb among pessimists like myself is if you can make it, they can fake it," he says. "The counterfeiters have become more sophisticated as they've come to realize that counterfeiting is a good business to get into: it has very low risk of getting caught, very low risk of getting punished severely if you do get caught, and very high reward in terms of profit with low overhead."

How is the problem being dealt with by government and industry? Action is being planned and taken on several fronts. Clark Silcox of the National Electrical Manufacturers Association (NEMA) says "NEMA is in the process of working with its members on the counterfeiting issue. The program is in the development stage, but is expected to focus initially on wiring devices, dry batteries, circuit breakers, and wire."

"There are a number of fronts," says Pogoda. "Obviously, to get the government involved on the criminal side of things and actually prosecuting these guys is really the way you want to go. You want to let them know you mean business. Another way to do it is for companies themselves, the rightholders, to become more aggressive with their own investigative teams and their own inhouse people dedicated to anticounterfeiting measures." He adds, "Of course, there's also the technology answer. That is something that has become really big within the past five years." Given the limited resources of government and industry, Pogoda says, "the technology route is probably the most promising in terms of having an immediate impact."

Another aspect of efforts to combat counterfeiting is dissemination of information. CSA International, for example, published a white paper in November 2002 discussing the threat of counterfeit products and counterfeit product approval marks. The white paper provides examples of counterfeit products, use of fake product approval marks, and describes both safety and liability risks presented by the products. The publication also describes how CSA and the IACC are collaborating on anticounterfeiting measures. Copies can be downloaded from www.csa-international.org.

Copyright ©2003 Medical Device & Diagnostic Industry