Transnational medicine mafias are exploiting the differences between the economic and healthcare models of socialist Venezuela and its free market neighbour Colombia to run a thriving trade in contraband pharmaceuticals.
Every year, networks of smugglers, corrupt officials and shady businessmen move millions of dollars’ worth of contraband, expired and fake drugs between the two countries, undermining the legal pharmaceutical sector and posing a grave health threat on both sides of the border. ‘Nearly every day we seize medicines – it is an attack against life,’ said Lt Colonel Rodolfo Carrero, Head of Colombia’s customs and tax police (Policía Fiscal y Aduanera – POLFA) in the smuggling hotspot of Cúcuta. ‘These criminals are playing with the lives of human beings.’
In 2014, the POLFA seized more than 770,000 units of contraband medicines, worth more than US$1.5m – 24% of which were discovered in the Venezuela border region. But police believe this is just a fraction of what makes it through.
The trade is fuelled by the gulf between the two countries’ approaches to healthcare and exacerbated by the Venezuelan government’s currency controls
Contraband is now one of the principal concerns of the pharmaceutical sector. In a poll conducted in February 2014 by the National Business Association of Colombia (ANDI), 25% of the country’s pharma companies listed contraband as the biggest problem facing the industry. The trade is fuelled by the gulf between the two countries’ approaches to healthcare and exacerbated by the Venezuelan government’s currency controls, which together have created a huge price differential in the cost of pharmaceuticals.
In Venezuela, the government strictly controls the price of medicines, which have been frozen for more than a decade. In contrast, Colombia has removed price controls and deregulated the healthcare market, leading to skyrocketing prices: between 2005 and 2010 the price of high cost medicines rose by 847%, according to government figures.
Smugglers’ profit margins are also boosted by Venezuela’s artificially fixed exchange rate. There are currently three exchange rates for Venezuelan Bolivares (VEF) which are applied depending on who is buying what. Bolivares are traded at VEF10.50 and VEF50 to the dollar, but also at VEF6.3 for importing essential goods – including medicines. On the border, 2,000 Colombian pesos – COP – roughly one dollar – buys 89 Bolivares.
According to the POLFA, the mark up on contraband medicines is usually between 500% and 1,000%
The result is huge profits for smugglers. According to the POLFA, the mark up on contraband medicines is usually between 500% and 1,000%. Smugglers look for two types of medicines; either low cost but widely used medicines such as common painkillers, which can be sold quickly and in large quantities, or expensive drugs used to treat serious ailments such as heart disease, cancer, AIDS, epilepsy and diabetes, which are moved in smaller quantities but fetch a much higher price.
The smuggling trail goes in both directions and involves not only contraband but also fake drugs. Drugs smuggled into Colombia are usually genuine, although they are often damaged in transit or out of date. Once over the border, the networks repackage the drugs with new boxes and markings, and change the dates on expired medicines before distributing them. The same networks also manufacture fake medicines using corn starch and colorants, which are smuggled back across the border into Venezuela to disguise the shortages.
While economic policies have created the incentive, the trade relies on official complicity to function. ‘The decisive factors in the smuggling of medicine between Colombia and Venezuela are corruption and organisations that specialise in penetrating the health systems,’ said Rodrigo Arcila Gomez, Head of ANDI’s Pharmaceutical Industry Chamber.
While economic policies have created the incentive, the trade relies on official complicity to function
According to the POLFA, the smugglers source drugs from contacts in Venezuelan medical centres, health service providers and pharmacies. While non-prescription drugs are usually sold in Colombia in neighbourhood shops, high cost treatments are sold to health service providers and doctors. They are often moved through legally registered drug companies that act as fronts for the trade, but there is also evidence that at least in some cases the providers are aware of the drugs’ illicit origins.
The Colombian private sector and the government are now working on several initiatives to confront the trade, including awareness campaigns to help local authorities, pharmacies and healthcare providers identify contraband products, a project tackling the manufacturing of fake products and a body to collect unused and expired medicines.
You capture the boss, and another one takes his place
The Colombian and Venezuelan security forces are also co-operating to tackle the trade, and last year dismantled a cross-border network dubbed ‘the Internationals’. However, police believe while the trade remains profitable, it will continue regardless. ‘You capture the boss, and another one takes his place, then another one, and another,’ said Lt Colonel Carrero.
