Counterfeit Pharmaceuticals in China: Could Changes Bring Stronger Protection for Intellectual Property Rights and Human Health?

Although China seeks to improve its image as a legitimate participant in the global intellectual property (“IP”) market, Chinese companies continue to produce more than thirty percent of the counterfeit drugs circulating in the world today. The counterfeit pharmaceutical industry profits from efficient and cost-effective production systems by producing counterfeits at an exceedingly low cost. This poses a serious problem because the production and sale of counterfeit drugs leads to negative economic and social health-related effects. China’s existing penalties for counterfeit pharmaceutical production are considered a mere cost of doing business in China, rather than a deterrent from engaging in counterfeiting. China’s national government has taken several steps to fight against IP infringement, but despite this effort, the growing power and autonomy of local governments has complicated and exacerbated the problem. In order to become a legitimate and reputable force in the international economy, China must take greater steps to limit the production and sale of counterfeit pharmaceuticals. First, China must amend its laws to include penalties that will effectively deter actors from entering the counterfeit market. Second, China must allocate a significant amount of resources to the judicial system to ensure that adjudication is effective and efficient. Third, China must fight localized corruption at its source to increase enforcement of IP rights. Specifically, an agency should be created to target local corruption and to disestablish the counterfeit pharmaceutical market. This agency should have investigative and auditing power and should work to educate both the public and the business community on the problems posed by counterfeit pharmaceuticals and the means used to counter them