Amazon, Fraught With Counterfeits, Wants To Supply Hospitals

Patient injury and death are the risks of counterfeit products.

February 16, 2018, Los Angeles, CA - Amazon has added another goal in slugging its way to global product distribution dominance; Amazon wants to supply hospitals and clinics with supplies including critical operating and emergency room items.

Having already fumbled its counterfeit enforcement practices for retail goods, and opening the floodgates to an inexhaustible supply of deceptive counterfeit goods, it's an unnecessary risk for unsuspecting patients. Amazon, in recent months, has already obtained approval from several state pharmaceutical boards to become a wholesale distributor, a step necessary for it to sell medical equipment to licensed professionals.¹

Counterfeit OTC drugs, medical devices and electronics can injure, cripple or kill patients and consumers. While the hospitals may be seeking savings, can patients and consumers afford the risk?

• Forbes recently deemed the e-commerce platform a "cesspool of counterfeits and other illegal and potentially dangerous goods" ²
• Birkenstock, the global footwear icon, slammed Amazon as "an accomplice" of the fraudsters, while Apple found that 90% of Apple products it purchased directly from Amazon were fake.
• CNBC reports "In Amazon's quest to be the low-cost provider of everything on the planet, the website has morphed into the world's largest flea market — a chaotic, somewhat lawless, bazaar with unlimited inventory" ³

The Counterfeit Report, an industry watchdog and consumer advocate, found or purchased counterfeit medical devices and OTC drugs from Amazon, and also issued infringement complaints removing over 5,200 counterfeit medical items. The counterfeits included tourniquets that have catastrophically failed during actual life-saving applications, and Lidocaine anesthetic cream. Tested counterfeit Lidocaine cream was found not to contain Lidocaine as indicated, but Tetracaine, a potentially fatal drug. An OTC fungicide, Lamisil®, was purchased from Amazon in a liquid and soap form not in even the manufacturer's authentic product line. Hardly a testimonial for Amazon's ability to keep its websites clean and consumers safe. The Counterfeit Report has removed over 7.2 million counterfeit medical devices and OTC drugs from e-commerce websites.

Equally disturbing is Amazon's successful fight for a U.S. Appeals Court Decision allowing Amazon to disavow responsibility for selling fakes.⁴ Amazon still takes a transaction fee for each item sold.

Amazon allows unvetted global third-party sellers to list just about anything they want, including counterfeits on their websites, implying Amazon's endorsement. However, policing counterfeit activity on e-commerce sites is almost impossible, a complaint common with manufacturers and right holders. Manufacturers also complain that counterfeit products are commingled with authentic items inventoried for Amazon's "Fulfilled by Amazon" service, destroying legitimate retailers credibility and reputations. Amazon also acts as a direct retailer of counterfeits.

Companies that facilitate criminal activity and profit from dishonest sales which impact consumer safety, jobs and public trust create a public perception of deception and impunity. However, their reputation damage is only a small part of the problem: the value of counterfeit and pirated goods is forecast to grow to $2.8 trillion, and cost 5.4 million net job losses⁵ by 2022, while manufacturer's brand integrity is tarnished or destroyed. Are the sick, ill, and injured to continue to be victimized by counterfeits?

Congress can act to protect consumers - will they?

Footnotes:

⁽¹⁾ Melanie Evans and Laura Stevens Amazon's Latest Ambition: To Be a Major Hospital Supplier
Wall Street Journal    February 13, 2018

⁽²⁾ Wade Shepard, "As Amazon And eBay Flood With Illegal Goods From China, Beijing Cracks Down On Foreign E-Commerce"
Forbes (Nov. 22, 2017), available at: https://www.forbes.com/sites/wadeshepard/2017/11/22/as-amazon-and-ebay-flood-with-illegal-goods-from-china-beijing-cracks-down-on-foreign-e-commerce/#7223f1604dfd

⁽³⁾ Ari Levy Amazon's Chinese counterfeit problem is getting worse
CNBC November 2017

⁽⁴⁾ In a devastating blow to manufacturers and consumer protection, the U.S. Court of Appeals upheld a U.S. District Court decision by Judge Ricardo S. Martinez excusing Amazon (NASDAQ: AMZN) from liability in the sale of counterfeit items on its website. (Milo & Gabby, LLC. v. Amazon.com, Inc.)

⁽⁵⁾ THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce Business Action to Stop Counterfeiting and Piracy unit (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.