Sep 1, 2008 12:00 PM, By Sandra Kay Miller
According to the World Health Organization, more than $40 billion in counterfeit pharmaceuticals enter the supply chain annually. That's a lot of fake Viagra and other popular brand-name drugs.
Saving a few bucks might appeal to consumers who struggle to cover prescription costs out-of-pocket. However, in essence there is a three-fold negative impact. Goods are stolen from the drug companies, which can drive other criminal activities. Most importantly, the purchaser is put at risk since fake drugs are often nothing more than benign candy lacking the formulary to treat the condition for which the medication was prescribed in the first place.
In 2006, a Food and Drug Administration report from the Counterfeit Drug Task Force recommended that drug manufacturers “work cooperatively to continue to expeditiously implement widespread use of electronic pedigrees across the drug supply chain.”
Paul Kocher, president and chief scientist at Cryptography Research Inc. (cryptography.com) in San Francisco, points out that cryptography has begun to play a significant role in deterring counterfeit products, including pharmaceuticals, thanks to an overall decrease in cost for the technology. “We're finding encryption in all sorts of new places, and the driver for this is largely that the chips are getting cheaper so you can put sophisticated data processing capabilities in places where you couldn't before. We're seeing use in a lot of applications where five years ago it would have been too expensive, three years ago it was just starting to be rolled out and now it has become really mainstream. The decrease in costs is making available things that were previously off limits to us simply because the price per device was too high. We can now roll out with new technologies.”
Kocher explains that, traditionally, encryption was used to protect high-value data that was being transmitted; however, today it is used to develop products that can authenticate themselves to users to verify they are indeed genuine.
The first wave of products incorporating encryption have a common denominator — manufacturing costs are only a small portion of the costs actually paid for the product. “The price that you pay for a pharmaceutical isn't tied to the manufacturing cost; it's tied to the research and development cost,” Kocher says.
Companies are working on a variety of methods that use encryption to protect drugs — from RFID on bottles right down to micro-dots on the tablets and capsules themselves.
NanoInk (nanoink.net), Chicago, specializes in NanoEncryption technology, which is a layered pharmaceutical brand solution based upon their proprietary nanolithographic encryption techniques that delivers complete traceability down to the individual unit level. Using NanoEncryption, each pill can be identified with batch-specific information, including serial number, manufacture date and location and supply-chain destination.
Cryptography is being employed to confirm the authenticity of a product elsewhere. “There's a big problem with counterfeit airplane parts because the bolts that you buy at the hardware store may appear identical to the bolts that costs several thousands of dollars and have undergone rigorous safety testing. Someone who can substitute one for the other can make a significant amount of profit by doing so,” Kocher says.
The Federal Aviation Administration (faa.gov) estimates that approximately 2 percent of the 26 million parts installed on airplanes annually are counterfeit. According to an unapproved aircraft parts investigation report filed by the Joint Depot Maintenance Activities Group of Wright-Patterson Air Force Base in Ohio, over the last few years, the Department of Transportation, the Inspector General and the Federal Bureau of Investigation have jointly achieved 136 indictments, 98 convictions, nearly $50 million in criminal fines, restitutions and recoveries in cases involving unapproved aircraft parts.
In a March 2008 article, Inside Defense, a news service covering the defense and aerospace industries, reported, “military safety officials who wished to remain anonymous worry that the potential of fake parts in the inventory is so high that some aircraft may contain numerous counterfeit parts, ranging from microprocessors to fasteners.”
Lower-value items, such as printer ink cartidges, are also turning to encryption to ensure their veracity. Kocher explains that in addition to counterfeiters, many companies will sell compatible cartridges with the logo of the printer brand, but which have low quality ink and don't print very well. “We're trying to make it [so that] when you buy a consumable, you can tell if you are buying an authentic product or a knock-off.”
“Cryptography is used today in Blu-Ray. It's turning up in the most amazing places and we're continuing to see that grow,” says Bill Lattin, chief technology officer at Certicom (certicom.com), a company that offers device security, anti-counterfeiting and product authentication.
The Motion Picture Association of America (mpaa.org) estimates that major movie studios are losing more than $6 billion every year because of piracy, and the International Federation of Phonographic Industry's (ifpi.org) Digital Music Report for 2008 claims that the ratio of illegally to legally downloaded music tracks is 20 to one. In July 2008, MPAA announced it was examining a 2048-bit “military strength” anti-piracy encryption technology to protect content streamed online. Content would be able to be viewed, but not stored.
Not everyone is enamored of the security encryption offers. The music industry continues to be muddled in ongoing frustrations thanks to the addition of encryption in its digital rights management (DRM) programs. Yahoo! Music and the now-defunct MSN Music services have had to bear the brunt of public ire this year when they announced they would no longer release cryptographic keys to unlock digital rights management on music. Without the keys, customers who purchased music are unable to move the files to different digital music players or computers. These moves are generating questions as to whether or not Apple, the largest distributor of music in the world, would follow suit with its digital music program iTunes. Unlike traditional hard-copy music media, DRM-wrapped music files are never truly “owned” by anyone other than whoever controls the encryption key.
“Long-term, the trend that I'm seeing is the techniques that were built for protecting networks and data over the Internet are starting to be applied in the physical world,” Kocher says. “The expected evolution is to go from mature physical world analogies into the electronic realm. But it actually seems to be going the other way. The Internet has forced development of robust security systems because anyone can anonymously attack your computer unlike your physical world where you could not be attacked without personal risk to the attacker. Encryption technologies that were developed for the virtual world are now being applied to the physical world.”
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