Google, Microsoft Join Obama to Combat Knockoff Drugs

Google Inc. and Microsoft Corp. are helping to establish a nonprofit organization targeting illegal Internet pharmacies in support of Obama administration efforts, according to the White House Office of Management and Budget.

The group is comprised of companies that serve as Internet choke points and was in response to a call from the administration for private efforts to police illegal pharmacies, said Victoria Espinel, the White House intellectual property enforcement coordinator.

Counterfeit drug sales account for about $75 billion in global sales, according to the National Association of Boards of Pharmacy. An estimated 1 percent to 2 percent of drugs in North America are counterfeit, according to the group’s website.

“It’s important that we act aggressively now before it snowballs into a bigger problem,” Espinel said in an interview. The U.S. aims to “put a challenge to the private sector, rather than have us regulate or mandate.”

Companies participating in the effort include Yahoo! Inc., MasterCard Inc., Visa Inc., American Express Co., GoDaddy.com Inc., Neustar Inc., eNom Inc. and EBay Inc.’s Paypal Inc.

“As the administration has made clear, no one company can solve this problem, so this new cross-industry group is a welcome step forward that we are pleased to support,” Hilary Ware, managing counsel for litigation and regulatory affairs at Mountain View, California-based Google, said in a statement.

Photographer: Dominique Faget/AFP/Getty Images

Counterfeit drug sales account for about $75 billion in global sales, according to the National Association of Boards of Pharmacies. Close

Counterfeit drug sales account for about $75 billion in global sales, according to the... Read More

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Photographer: Dominique Faget/AFP/Getty Images

Counterfeit drug sales account for about $75 billion in global sales, according to the National Association of Boards of Pharmacies.

Drugmaker Losses

In addition to the health risks, legitimate drugmakers are losing business and jobs from consumers buying counterfeit pharmaceuticals, Homeland Security Secretary Janet Napolitano said at a White House meeting on intellectual property theft.

Law-enforcement officials seized chemicals from makeshift factories in Pakistan, India and Colombia that were to be used for counterfeit drugs. Pharmaceuticals advertised as having come from Canada may actually be produced in China and were repackaged, John Clark, Pfizer Inc.’s vice president for global security, said during the meeting.

As part of its effort, the U.S. contacted credit-card payment networks, advertisers and companies that control assignment of Internet addresses, or domain names, that can be used by illegal pharmacies.

“The scope of counterfeiting today is such that much of what you and I take for granted as secure and healthy may not be,” John Morton, the director of U.S. Immigration and Customs Enforcement, part of the Homeland Security Department, said in an interview.

Photographer: Samantha Appleton/White House Photo Office via Bloomberg

Victoria Espinel, the White House intellectual property enforcement coordinator. Close

Victoria Espinel, the White House intellectual property enforcement coordinator.

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Photographer: Samantha Appleton/White House Photo Office via Bloomberg

Victoria Espinel, the White House intellectual property enforcement coordinator.

To contact the reporter on this story: William McQuillen in Washington at bmcquillen@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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