Attitudes to Covid vaccines range from those who won’t countenance them under any circumstances to those so eager to be vaccinated they are willing to bypass official channels and purchase a vaccine on the black market. Covid vaccines have joined pharmaceuticals on the counterfeit list.  

Vaccine fraud is now gripping China, with the leader of a multi-million-dollar scam recently arrested for passing off saline solution and mineral water as Covid-19 vaccines. This is just one of 70 similar arrests. 

An international network for distributing fake Covid vaccines has also just been dismantled in South Africa. Interpol said 400 ampoules, equivalent to around 2,400 doses of the fake vaccine, were found at a warehouse in Germiston, Gauteng. Officers also recovered a large quantity of fake 3M masks and arrested three Chinese nationals and a Zambian national. 

Similarly, the European anti-fraud office OLAF advised that several cases have been reported of fraudsters offering to sell vaccines to European governments struggling with the slow roll-out of vaccines. 

In the Philippines, a presidential advisor admitted to receiving shots of a Sinopharm vaccine smuggled into the country.  

In early 2020, organized crime networks in the US were already professing to sell vaccines when no vaccine yet existed. By late November U.S. Immigration and Customs Enforcement had seized more than $26 million in illicit proceeds.  

But fake Covid vaccines are just the tip of the pharmaceutical counterfeit iceberg. The World Health Organization estimates the world’s fake medication market is worth around $200 billion a year.  

While most counterfeit products originate in Asia, Interpol warned in December that the coronavirus pandemic was spurring a growth in the illicit medication trade in East Africa. The UN Office on Drugs and Crime says there has been an alarming rise in fake or falsified medicines detected in Southeast Asia, including rabies vaccines, anti-cancer medications, antimicrobial treatments, anabolic steroids, sleeping pills, pregnancy test kits, and drugs for infertility and weight loss. 

The Organisation for Economic Cooperation and Development says the most frequently counterfeited medications are antibiotics, which account for 35.4% of the value of all seized counterfeit drugs, followed by male impotence pills (15.6%), painkillers (10.4%) and anti-malaria pills (8.9%). 

Obviously, the counterfeit market extends well beyond pharmaceuticals. The EU-ASEAN Business Council estimates the counterfeit goods market in ASEAN countries was worth $35.9 billion in 2018, with $3.3 billion in tax revenue lost annually from smuggled cigarettes alone. 

Recent growth in the counterfeit market has been attributed to e-commerce, with criminal networks targeting online channels as more people stay at home. Unemployment and reduced purchasing power due to Covid have accelerated demand.  

While all counterfeit products cause harm, such as through lost sales by legitimate businesses or decreased tax revenue by governments, counterfeit pharmaceuticals also have a human cost. Consumers buy them in the belief they are legitimate and effective. An antibiotic that fails to control an infection in a sick child, or a Covid vaccine that fails to generate immunity in a loved grandparent, can have tragic consequences.  

Needless to say, the counterfeit market exists because there is a mismatch between supply and demand. Indeed, they would not exist if consumers were able to readily buy the products at prices they were willing to pay. The fact that they cannot is sometimes a result of suppliers preferring to sacrifice volume for margin, but in the case of pharmaceuticals is more often a consequence of onerous and ineffective government policies.  

These can include unnecessarily high regulatory barriers, which compel suppliers to increase prices to recover the cost, high taxes relative to other markets, or because of import restrictions.  

Australians are somewhat insulated from the risk of counterfeit Covid vaccines due to the absence of cases and the fact that the vaccines are being provided to consumers at no cost. This at least removes the financial incentive to smuggle them into the country, fake or real.  

However, consumers are permitted to import approved pharmaceuticals from overseas for personal use. Provided they have the appearance of being genuine, which they normally are, there is not much to prevent them from unwittingly purchasing counterfeit products.  

The fact is, nobody has a clue as to how much that occurs. Consumers may not even realise the product they ordered from overseas is not genuine, and have no recourse even if they do.  

With the International Chamber of Commerce predicting that global counterfeit trade will reach $4 trillion by 2022, driven by e-commerce, there is a clear need for industry and governments to work together on this issue. 

In a world of convergence, the illicit trade in pharmaceuticals is following a well-trodden path that was once the preserve of narcotics, arms, people trafficking, illegally harvested timber, endangered wildlife, gold and other natural resources, alcohol and illicit cigarettes. 

That the counterfeit market is so big outside of Australia should serve as a warning to authorities to be wary of creating incentives for it to grow within the country; regulatory barriers and taxes have consequences. Experience with the illicit tobacco market, now massive due to excessive taxes, is a prime example of what can happen. 

David Leyonhjelm is a former Liberal Democrats senator.