Britain is facing a growing threat from fake medicines as counterfeiters have begun targeting the UK's pharmaceutical supply chain, according to the Government's drug safety watchdog.

The illegal trade carries lower risks and higher profits than smuggling hard drugs and is putting NHS patients at risk, the Medicines and Healthcare Products Regulatory Agency (MHRA) says.

Instead of selling small quantities of fake drugs to individuals over the internet, the traditional target, the counterfeiters are switching their attention to pharmaceutical wholesalers who supply the NHS, where drugs worth thousands of pounds are traded in a single transaction. Five incidents have been detected in the past two years in which counterfeit medicines have reached patients through high-street pharmacies after the NHS supply chain was penetrated, the regulatory agency says. Prior to that there had been no incidents since 1994, the agency says.

Naeem Ahmed, the head of intelligence at the MHRA, said the agency was investigating 25 cases of medicines counterfeiting, twice as many as five years ago. "We have clear evidence that counterfeiters have now diversified into fake medicines," Mr Ahmed said.

"If you trade over the internet the risk of detection is low but you only sell a pack here and a pack there. If you penetrate the supply chain there is a higher risk but you can make a lot of money." In November, Allen Valentine, of Harrow Weald, lost an appeal against a £1.2m confiscation order imposed after he was found guilty of supplying fake Viagra from a drug factory in Wembley, north London.

Twenty-four hours before he was arrested, he offered £1.25m in cash for a mansion in a sought-after area and arranged the delivery of a new £26,500 Jeep Cherokee.

Valentine, 46, was jailed for five-and-a-half years in October 2004. Police estimate that his factory was capable of producing 500,000 tablets a day and up to £6m worth had been sold but could not be traced.

The growth in counterfeiting was being driven by the rise in blockbuster drugs, with sales worth billions of pounds, and the growth in demand for lifestyle drugs for obesity and impotence, Mr Ahmed said. Genuine drugs are priced to reflect the huge research and development costs, amounting to hundreds of millions of pounds, invested by the pharmaceutical companies but counterfeiters could make them for a fraction of the cost. "From the source countries such as China and India it is possible to purchase the active ingredients incredibly cheaply," Mr Ahmed said.

"In the past couple of years the counterfeiters have become more confident. They have realised the profits to be made."

Mr Ahmed added: "When these people penetrate the NHS supply system that is a direct risk to the public. If someone chooses to buy their drugs over the internet then it is a case of buyer beware. We try to discourage that. But if a patient has gone through the NHS and been prescribed drugs, the last thing we want is for them to be put at risk."

In the incidents detected so far, in which counterfeit drugs had reached the NHS supply chain, no patients had suffered detectable harm, he said. "We have been lucky that the active ingredient was only marginally below the required amount."

But harm could be difficult to detect as doctors would not be looking for it. "It may be being missed."

The agency is soon to publish its anti-counterfeiting strategy, developed over the past three years, said Mr Ahmed. It will set out priorities for Customs officers and other enforcement agencies, including a list of the most commonly counterfeited drugs and the commonest routes used into Britain.

The threat to patient safety from counterfeit medicines was highlighted when a heart drug seized by European Union customs last year was found to contain brick dust coated with yellow paint and was covered with furniture polish to give it a glossy finish.

In the developing world, one in four medicines sold in street markets is estimated to be counterfeit, according to the World Health Organisation. One study showed more than half of packs of an anti-malarial drug, artesunate, sold in south-east Asia contained no active ingredient at all. Thousands of patients die each year as a result, says the WHO.

"People don't die from carrying a fake handbag or wearing a fake T-shirt. They can die from taking a counterfeit medicine," Howard Zucker, the assistant director general for health technology and pharmaceuticals at WHO, said.

Counterfeits intended for the UK and Europe can be bootleg versions of the active medicine but in different doses from those on the label and produced without quality control.

Writing in the British Medical Journal last year, two doctors from Sunderland said counterfeits contained a "concoction of compounds" that often bore "little resemblance to the drug named on the bottle".

Drugs most commonly counterfeited

It is illegal to buy or sell prescription drugs without a consultation with a qualified doctor

* VIAGRA, made by Pfizer, for impotence. Internet price is around £20 for four tablets. Most widely sold prescription drug on the net.

* LIPITOR, made by Pfizer, for high cholesterol. About £40 for 30 tablets. The world's best-selling drug.

* REDUCTIL, Made by Knoll, for weight loss. About £120 for 28 tablets (one month's supply). Marketed as a potential panacea for the obesity epidemic.

* CIALIS, made by Eli Lilley, for impotence. About £5 a pill. Later rival for Viagra.

* PROZAC, made by Eli Lilley, for depression. About £20 for 30 tablets. The best known anti-depressant.

* VALIUM, made by Roche, for anxiety. About £50 for 30 tablets. Known as "mother's little helper", it is effective but addictive.

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