Free Trade Zones and Counterfeit Drugs: An Interview with PSM’s Bryan Liang and Netherlands Antilles’ Chief of Staff of the Inspectorate of Public Health

Following our update on the announcement of Google’s elimination of PharmacyChecker.com as a certifying authority for U.S. and Canadian pharmacies, we were contacted by Norbert C. Bernardina, from the Inspectorate of Public Health in Netherlands Antilles.

“Every year Pharmacy Checker asks the Inspectorate of Pharmaceutical Affairs for a declaration that Pharmaceutical Services International functions according to the laws and regulations for pharmacies in the Netherlands Antilles,” wrote Bernardina. “What must our interpretation as certifying authority be? Pharmaceutical Service International is situated in the free trade zone.”

The Partnership for Safe Medicines’ (PSM) Vice President Bryan Liang MD, PhD, JD responded to Bernardina, reiterating information from his 2009 paper, “Searching for Safety: Addressing Search Engine, Website and Provider Accountability for Illicit Online Drug Sales,” noting that “Google’s decision to stop using Pharmacy Checker for pharmacy verification services points to something we have been saying for a while now and mentioned in the paper: [t]he PharmacyChecker.com verification program allows for foreign and suspect online sellers to advertise on these primary search engines with virtual impunity.”

The exchange led to an open dialogue between Mr. Bernardina and our own Bryan Liang about the opportunities and challenges involved with free trade zones and pharmaceutical products.

PSM: Antilles has a free trade zone. Most Americans aren’t familiar with this concept. How does it work in Netherlands Antilles?

Norbert Bernardina: The intention of the free trade zones—also termed the Airport Economic Zone—in Curacao and in the Netherlands Antilles was to spur job growth. The objective was to allow raw material or semi-finished products to enter the zone under a very low tax regime, have workers turn them into finished products, and then re-export the finished goods outside the Netherlands Antilles. The law allows for a certain amount of goods (a maximum of 25 percent) to pass into Curacao, but only after paying normal customs fees.

In practice, free trade zones are today used for bringing finished goods into the free zone, showcasing them and subsequently selling to buyers in the Caribbean region. More information about this can be found on the Curacao Industrial and International Trade Development Company NV (CURINDE) website.

PSM: What sorts of companies work in the free trade zones?

NB: The majority of companies established in the Airport Economic Zone are trading companies that distribute products from the United States, Europe and Eastern Asia to the Caribbean and Latin America. Clothing, textiles, cosmetics, shoes, electronics, cigarettes and other consumer goods are the items most frequently sold, though there is a slowly growing business in higher value products, such as pharmaceuticals and industrial products. In addition to trading companies, there are also distribution companies offering services to third parties, such as warehousing, distribution and invoicing.

PSM: Are there companies that sell pharmaceuticals?

There is one company established in the Airport Economic Zone that acts as the regional distributor for a major multi-national pharmaceutical manufacturing company. Via a locally established and licensed pharmaceutical wholesaling sister-company, medicines are imported into the Netherlands Antilles (through customs) and distributed locally at a maximum of 25 percent of total year turnover.

We also have a company in the Airport Economic Zone whose main business is the repacking of contraceptives for further regional distribution, as well as one pharmaceutical wholesaling company that began as an Internet pharmacy but has since been converted to a licensed operation, intended for regional distribution of medicines and limited distribution within the Netherlands Antilles (where medicines have to be registered/approved and are subject to import duties).

Currently, we have one licensed, so-called Internet/mail order pharmacy established in the Airport Economic Zone in Curacao.

PSM: You mentioned some of these companies sell pharmaceuticals in-country?

NB: Yes. A company established in the free trade zone is allowed to sell a maximum of 25 percent of its total stock in country. To sell pharmaceuticals in our country, the medicines must be registered (approved) by the Netherlands Antilles. Importation of medicines by Internet pharmacies is not allowed in our country.

Bryan, what role do free trade zones play in the counterfeit trade?

BL: Unfortunately, free trade zones provide the opportunity for unscrupulous traders to whitewash counterfeit and illicit drugs. These illicit actors ship through free trade zones around the world to avoid regulatory oversight by countries.

Once illicit drugs arrive in free trade zones from other illicit sources, they can be repackaged and have fraudulent documentation added, or other changes or additions made before they end up in patient’s mailboxes. Yet from their illicit origins, through free trade zones and onto the patient, no one regulates these drugs. They can come from an unsanitary, poor quality and dangerous source and end up in the body of a patient.

PSM: Norbert, have companies operating in the free trade zone ever tried to gain recognition as a pharmacy by the Netherlands Antilles government?

NB: Yes. The one Internet pharmacy established in the Airport Economic Zone is licensed, as are the pharmacists and pharmacy technicians. Thus, the pharmacy is recognized by the Netherlands Antillean government. All laws and regulations on pharmaceuticals and on the practice of pharmacy do apply. The Inspectorate for Pharmaceutical Affairs has full jurisdiction and authority in these matters, including in the free trade zone.

The Internet/mail-order pharmacy is not allowed to dispense any controlled substance. Furthermore, the responsible pharmacist has been given specific instructions on how to stop any counterfeit medicine that enters the country and is subsequently re-exported. For example, the pharmacist is supposed to have a pedigree system in place, by which the source of all medicines can be traced and verified. Medicines can only be imported from reputable (licensed) pharmaceutical wholesalers and/or manufacturers abroad (applying the “know your supplier” principle).

The national government is contemplating whether to make the trade (import, export or transshipment) in counterfeit medicines a criminal offense, regardless of whether the trade occurs in a free trade zone.

More information on the free trade zones in the Netherlands Antilles can be found on the CURINDE N.V. website at Curinde.com. To learn more about the Partnership’s international goals for drug safety, visit the International Principles for Drug Safety.