Online Extra: Pfizer vs. the Counterfeiters

Its suit against an Indian man alleging that he sold fake Viagra shows how hard it is to shut down online drug marketers

By Arlene Weintraub

As the pharmaceuticals industry comes to grips with the growing ranks of shady online pharmacies, Pfizer's efforts to go after one alleged counterfeiter from India illustrates the challenge posed by the proliferation of counterfeit medicine.

Pfizer (PFE ) sued Ashok Agarwal in 2005 in federal court in New York, alleging that he had sold fake Viagra on the Internet. The often-copied erectile-dysfunction treatment is one of the most valuable components of Pfizer's $52 billion drug portfolio.

The allegations against Agarwal included trademark infringement, unfair competition, and deceptive trade practices. "Financially, counterfeits are costing the industry hundreds of millions of dollars," says John Theriault, Pfizer's vice-president for global security.

A Secretive World

  The company discovered potentially valuable evidence in e-mails saved by Jim Neebling, a shipper who picked up Agarwal's products after they arrived at JFK airport in New York and delivered them to customers around the U.S. The e-mails, provided to BusinessWeek by Pfizer, offer a rare look into the world of online drug marketing. Repeated efforts to reach Agarwal were unsuccessful.

Neebling says he first became suspicious in February, 2004, when he received an e-mail from Agarwal declaring that his packages "will not have doctor's prescription and pharmacy invoice" and that the "drugs are not FDA approved." Neebling says he alerted the Drug Enforcement Administration but couldn't elicit much interest in investigating Agarwal.

"I questioned the stuff, but when [the DEA] said no harm, no foul, I went ahead. This is what we do—we ship packages." A DEA spokesman says the agency doesn't recall hearing from Neebling.

Fearful Messages

  Numerous problems cropped up with Agarwal's shipments: customer complaints about receiving the wrong medications or the wrong quantities. One man told another shipper that his 14-year-old had mysteriously received Viagra.

By early 2005, just a few months before Pfizer filed suit, Agarwal's e-mails appear to indicate that he was worried about being investigated. In February he wrote to Neebling's then-employer, Systrans: "There are lots of inquiries going on all over the world for supply the online drugs. We need to take precautions for the same. So ask Jim [to] delete all the data till 31st of January from all the systems in his office. We do not want any more data back up. Even e-mails can also be deleted."

Agarwal also suggested that another Systrans employee should be asked to "destroy all the undelivered/return packets." Instead, Neebling handed the evidence over to Pfizer.

Starting Over

  In March, 2006, the company won a default judgment that said Agarwal couldn't market anything resembling Viagra or claim his products are linked to Pfizer. Agarwal never appeared in a U.S. court to face the claims against him, and as long as he remains in India he may be beyond Pfizer's reach.

Lately the company has shied away from filing similar suits against other online drug sellers, choosing instead to take narrower and less expensive administrative actions outside of court that can stop Web pharmacies from infringing on Pfizer's trademarks in domain addresses.

While Agarwal's original site was shut down, Pfizer's Theriault says there's little the company can do to prevent Agarwal, or other operators of online pharmacies, from continually starting over. "These Web sites pop up every day, and they go away every day," he says. "If I shut one site down today, nothing keeps that guy from opening another site within 15 minutes. It's frustrating."

With Brian Grow in Atlanta

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