Tech Solutions Can Fight the Surge in Counterfeit Medicine

When Americans purchase a potentially life-saving medical device or prescription drug, they should be able to trust that what arrives is safe, effective, and authentic. Unfortunately, that trust is under threat from counterfeiters exploiting online retail platforms, jeopardizing public health, and eroding trust in healthcare systems. This problem is most visible through the fentanyl crisis, which is the leading cause of death for Americans between 18 and 45. Yet fentanyl is not the only counterfeited drug. There is a deeper structural vulnerability in how counterfeit medical products sneak into U.S. supply chains through third-party sellers, and addressing this problem will require leveraging new technological solutions.

Pharmaceutical crime has steadily grown since 2020. According to the National Association of Boards of Pharmacy (NABP), drug counterfeiting and online distribution are a $75 billion annual business and the largest form of organized crime. The problem spans from over-the-counter (OTC) to prescription medication and reaches consumers through illegitimate and legitimate online marketplaces as well as physical pharmacies.

In 2022, Gilead uncovered counterfeit HIV medications in a nationwide scheme involving shell companies and diverted pharmaceuticals. In 2024, an international criminal network sold counterfeit prescription pills that were made from fentanyl and methamphetamine. Also, last year, Americans purchased counterfeited Roche diabetes test strips online—complete with U.S. trademarks.

Spurred by the ongoing fentanyl crisis, the federal government has recognized the growing danger of counterfeit medical goods. The topic was the 2024 issue focus of the U.S. Trade Representative’s annual Notorious Markets List, which summarized the main enforcement issue: “illicit online pharmacies are based outside of the United States, limiting [U.S.] regulatory and enforcement abilities.”

In Congress, the proposed BUST FENTANYL Act has bipartisan co-sponsorship and some legislative movement. It contains new ideas on international enforcement, such as establishing Drug Enforcement Administration (DEA) offices in China, where many illicit fentanyl supply chains originate. However, neither it nor related proposals offer any ideas on technological solutions that can mitigate the problem.

There are four critical vulnerabilities in pharmaceutical supply chains that are currently being exploited: A lack of product-level traceability making product origins a black box, lightly vetted third-party seller systems, drop-shipping logistics that bypass inspections, and insufficient oversight of online pharmacies.

Policy solutions should start by modernizing how regulators trace pharmaceuticals through the entirety of the supply chain. This means translating the principles of chain-of-custody into technical safeguards in logistics. Technological solutions should act as digital guardrails through the value chain and complement messaging and other public education efforts like the Food and Drug Administration’s (FDA) BeSafeRx campaign. Furthest upstream, better data provenance tools, including blockchain-based solutions that offer an immutable public record of chain-of-custody, can allow regulators to detect suspicious activity.

Congress passed the 2013 Drug Supply Chain Security Act (DSCSA) to deter the movement of illegitimate products through U.S. pharmaceutical supply chains by mandating full product traceability by 2023. The FDA later pushed that deadline to 2024, with enforcement starting later this month, but survey data from 2023 indicated that pharmaceutical dispensers were not at all ready to meet DSCSA serialization and data requirements. Blockchain technology here can help by offering immutable logs of product origin and custody. FDA, along with Customs and Border Protection (CBP), should build on a 2019-2021 pilot project program that explored some of the benefits of blockchain to enhance pharmaceutical tracing.

Improving digital traceability is not enough. Radio-frequency identification (RFID) tagging at the bottle level can ensure traceability is not lost when drugs are repackaged or resold. Without RFID, tracking a product’s authenticity through the last-mile delivery becomes unreliable. FDA’s pilot project program recognized the benefits of using RFID, writing that it “allows us to better solve many of the supply chain problems that may have inspired DSCSA in the first place,” but the DSCSA does not require the use of RFID. Congress should direct the FDA to promote or require bottle-level RFID tagging for high-risk or high-volume drugs in the next phase of DSCSA implementation.

Equally important is safeguarding the physical packaging of drugs. DSCSA focuses on traceability, not packaging integrity, leaving an enforcement gap. Tamper-proof solutions like secure blister packs can help prevent counterfeits from entering supply chains at the vulnerable stage of bottling and packaging pills. Congress should direct the FDA to issue new rules requiring secure packaging for all high-risk drug classes, not just some OTC medications.

Failing upstream measures, solutions closer to the consumer level have to date included projects spurred by the NABP, such as creating the “.Pharmacy” Top-Level Domain (TLD) Program—a program which only allows approved pharmacies to receive an associated domain name. Companies like Google, Microsoft, and Snap require pharmacies to be on NABP’s approved list before they will display their online ads, and Visa and Mastercard require this for pharmacy merchants.

NABP additionally maintains a Not Recommended List of rogue Internet pharmacies that potentially present consumer risk. Yet the ecosystem is likely bigger than NABP’s approved and non-approved list. FDA should work with NABP to better classify, maintain, and promote the usage of both of NABP’s lists. FDA should also work with the Department of Justice to audit and take legal action, including seizing domains, against pharmacies on the Not Recommended List found to be selling counterfeit drugs.

To win the fight against counterfeit drugs, the United States should leverage tech solutions and match criminal innovation with regulatory innovation. That means moving beyond warnings and enforcement toward a smarter, tech-enabled pharmaceuticals supply chain that protects Americans.