Catch Me if You Can: Counterfeit Medical Schemes Persist a Year Into the Global Coronavirus Pandemic

By Brett W. Johnson and Claudia E. Stedman

Even before COVID-19, counterfeits within the healthcare industry and military supply chains were a significant issue. COVID-19 may only exacerbate the issue for legitimate suppliers and desperate end-users. On February 18, 2021, U.S. Customs and Border Protection (CBP) seized over 100,000 counterfeit 3M surgical masks in Cincinnati, Ohio. CBP determined that the products were imported into the United States from a company in Hong Kong—a country where 3M does not manufacture its N95 respirators.¹ Companies like 3M have tried to stay ahead of criminal enterprises that target the public health emergency (PHE) by inducing consumers in fraudulent schemes, selling counterfeit personal protective equipment (PPE), and price gouging. Unfortunately, outsmarting these criminals has proved a daunting task.

Access to PPE has been a major issue in combatting the spread of COVID-19—and now its variants—since the virus emerged in the United States last spring. Fraudsters and criminals have adjusted schemes as supply of PPE was bottlenecked while demand remained high. Because demand for PPE has remained so high over the past year, hospitals and healthcare systems have attempted to go outside regular (and approved) supply chains to procure medical equipment for their providers. CBP has found that the vast majority of counterfeit products are shipped from China, Hong Kong, South Korea, Turkey, Saudi Arabia, Nigeria, Senegal, Germany, and the United Kingdom.² Healthcare entities purchasing PPE for their employees should be wary of buying protective supplies from these locations.

As more virulent strains of the virus are popping up across Europe, South Africa, and now the United States, some countries are mandating that individual citizens, in addition to healthcare providers, utilize medical-grade PPE—like the N95 mask—to protect against the spread of these variants.³ These directives may result in greater opportunity for fraudsters to inject counterfeit PPE into the global supply chain in the coming months.

Over the course of the pandemic, counterfeiters have taken advantage of the already overly burdened global supply chain. Too frequently, counterfeit materials evade detection until after they have made it through CBP and are already distributed to healthcare facilities and frontline workers. In the first few weeks of 2021, the Department of Homeland Security seized over 10 million counterfeit 3M N95 masks.⁴  

On February 17, 2021, roughly two million counterfeit N95 masks were distributed to more than 40 hospitals in the state of Washington.⁵ While the masks were seized before most were used, the Washington State Hospital Association and other hospitals in Washington spent approximately $8 million to procure the PPE. In addition to the financial burden placed on healthcare systems already strapped by the cost of the pandemic is the reality that providers and personnel who use counterfeit PPE could unknowingly contract the virus, exposing healthcare entities to serious potential liability. As the pandemic persists, fraudsters have also developed schemes manufacturing and distributing fraudulent COVID-19 test kits in addition to PPE.⁶

Now that the worldwide distribution of the vaccine is underway, schemes have emerged of criminals selling fake COVID-19 vaccines as well. Just last week, six individuals were arrested in Mexico for trafficking fraudulent vaccines.⁷ These criminals were able to profit roughly $2,000 per dose of the vaccine. Similarly, the U.S. District Attorney’s Office for the District of Maryland filed federal charges against three Baltimore-area men for conspiracy to commit wire fraud in “connection with a scheme to allegedly sell purported COVID-19 vaccines.”⁸ In late January, a man was arrested in Seattle for vaccinating between 50-100 people with fake coronavirus vaccines, charging the individuals anywhere from $400 to $1,000 per dose and officials investigating the scheme are still uncertain what was actually in the “vaccine” that the individuals received.⁹

Recently, Chinese authorities arrested more than 80 individuals who assembled and distributed saline vials and sold them as fake COVID-19 vaccines.¹⁰ Chinese authorities seized over 3,000 fake vaccines from this enterprise. The criminals have been operating and distributing these saline vials since September 2019 and it is not publicly known how many people were given these fake COVID-19 vaccines.

There is serious financial cost associated with tracking, preventing, and prosecuting the criminal enterprises which traffic and distribute fake COVID-19 products. However, the more serious concern is that consumers—both frontline healthcare workers and the individuals who they care for—will rely on fake PPE or COVID-19 tests and vaccines. The danger here, of course, is that individuals might take stock in the results of a fake coronavirus test or believe that they are properly vaccinated against the virus and not take proper precautions to protect themselves or others, thereby contracting the virus themselves or spreading it to others.

Reliance on fake PPE, tests, or vaccines also is a concern to healthcare entities and their compliance officers and counsel. Healthcare facilities and their counsel should stay abreast of changing guidance from the State Department and the Department of Homeland Security regarding counterfeit PPE. Entities may also want to consider adhering to alerts published by manufacturers themselves regarding characteristics of counterfeit products. Additionally, healthcare systems should consider developing a list of counterfeit characteristics, developing a protocol for screening PPE when it comes into a hospital or physician office, or considering third party testing entities to confirm legitimacy before the products enter the United States. Entities should also consider conducting internal compliance and audits of equipment to ensure that counterfeit PPE has not been distributed to its employees. Finally, in the event that counterfeit materials are discovered, compliance officers and counsel should consider having policies and procedures to notify employees or other end-users who may have received the fake PPE and potentially report the materials to state and federal authorities.