Monday, February 20, 2012

You can blame criminal elements, but counterfeit products enter markets through stupidity.

Our blog has moved. You will find this blog post and fresh content on our new Talascend IT blog.
The principal of Occum’s Razor is used by most of us in our day to day lives, whether we know it or not. All things being equal, the simplest explanation is most likely to be true.

There’s been a lot of speculation about counterfeit produce in US markets recently, from fake Tiffany rings on e-bay to major influxes of counterfeit drugs into the US pharmaceutical market place.

This is not robbery, it’s not theft – it’s a lesson in false confidence. At some point, someone was taken for a fool in a circumstance where they should have known better. In almost all cases, they were motivated to ignore or downgrade the risk element because they had something to gain. When we ignore the tell-tale signs of fraudulence, it’s almost always because we want to believe.

There’s a reason they’re called confidence scams. The con man doesn’t need the real product; he doesn’t even need any product at all. All he needs is your confidence. This seems like a good deal to me.

As I read these stories, I’m constantly brought back to the same question: How are so many people in this country able to ignore the advice they have been given since childhood by mothers, fathers, teachers and bosses?

If a deal looks too good to be true, then it probably is.

Great deals come with simple explanations. The rent for this apartment seems very cheap, but the owner needs to leave town urgently for 6 months and doesn’t have time to wait around. This hotel seems cheap, but they’ve only been open two weeks and they are attracting customers away from established competitors. Sensible and simple explanations.

If the simple explanation is either missing – or you have cause to doubt its veracity – it’s time to back away.

Most of us have seen it on the streets of major cities. There’s a guy selling designer goods out of a suitcase; the boxes are all top end brands – Calvin Klein, Ray-bans, Gucci. $10 for the 50ml bottle that sells for $70 in Macy’s. Hungry tourists crowd round to get themselves a bargain.

Now and again a furious buyer returns shouting at the vendor. They’ve opened the box and the product is a cheap imitation.

But what are they complaining about? Of course the product is fake. They’re produced for $2.00 and sold for $10.00. No other plausible explanation existed from the beginning. You can hope that they’re stolen if your conscience allows it, but even then – what are the chances?

Some research for this blog threw up some incredible message boards where people complained at length that the Tiffany ring they had bought on e-bay was not the real thing. The price was $6.00. Come on. Seriously?

The perfume is fake. The handbag is not really from Gucci. The sunglasses are not really Ray-bans and yes – the $6.00 ring is not really from Tiffany. If you paid $6.00 and expected a Tiffany ring, then you are an idiot by anyone’s definition.

So when it comes to the healthcare industry’s issue, who is really to blame for the influx of counterfeit drugs into the huge US market? (40% of the world’s prescription drugs are sold in the US.) The answer is simple. At some point the supply chain moves from illegal to legal. It moves from the criminally devious to the honestly stupid. Breaking this link in the chain is the answer to combating counterfeit produce.

At a corporate level, every bit as much as at a personal level, we are responsible for making sensible decisions. We must assess risk, identify things that need explanation and follow a sensible, logical course of action.

In every occurrence of a fake product entering a market, someone is failing to do these things. Someone is chasing a bargain or a glut – and an opportunity to benefit personally – that is blinding them to their obvious responsibility to see things for what they are.

If you don’t 100% trust the source you’re buying from, you have to be 100% sure you have the means to assess the product before you either use it or pass it on.

Buyers across the pharmaceutical supply chain would do well to keep Occum’s Razor close at hand.