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17 Pac. Rim L. & Pol'y J. 439 (2008)
Counterfeit Pharmaceuticals in China: Could Changes Bring Stronger Protection for Intellectual Property Rights and Human Health

handle is hein.journals/pacrimlp17 and id is 445 raw text is: Copyright © 2008 Pacific Rim Law & Policy Journal Association

COUNTERFEIT PHARMACEUTICALS IN CHINA:
COULD CHANGES BRING STRONGER PROTECTION
FOR INTELLECTUAL PROPERTY RIGHTS AND
HUMAN HEALTH?
Dina M. Bronshteint
Abstract: 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.
I.      INTRODUCTION
The World Health Organization (WHO) defines a counterfeit drug
as a medicine, which is deliberately and fraudulently mislabeled with
respect to     identity   and/or source.'        China    is one    of the     world's    top
producers of both legitimate and counterfeit pharmaceuticals.2 In 1980,
China took initial significant steps to improve its IP climate when it joined
t Juris Doctor expected 2009, University of Washington School of Law. The author would like to
thank the editors of the Pacific Rim Law & Policy Journal.
' INT'L FED'N OF PHARM. MFRS. & Assoc., COUNTERFEIT MEDICINES: AN UPDATE ON ESTIMATES 1
(2006), http://www.ifpma.org/lssues/fileadmin/templates/ifpmaissues/pdfs/IMPACT-counterfeit-estimate
_15Nov06.pdf.
2 See Maria Nelson et al., Counterfeit Pharmaceuticals: A Worldwide Problem, 96 TRADEMARK
REP. 1068, 1089 (2006).

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