CSIRO duped global drug firm with generic chemicals as 'secret formula' Pharmaceutical counterfeiting is a major problem globally. Photo: Virginia Star The CSIRO has duped one of the world's biggest pharmaceutical companies into buying anti-counterfeit technology that could be easily compromised - passing off cheap chemicals it had bought from China as a "trade secret" formula. Swiss-based multinational Novartis signed up two years ago to use a CSIRO invention it was told would protect its vials of injectable Voltaren from being copied, filled with a placebo and sold by global crime syndicates. Drug counterfeiting is big international crime. An Interpol strike force last year in 100 countries led to the seizure of 3.75 million units of fake drugs, and the arrest of 80 people. The invention sold to Novartis to protect against such counterfeit attacks - a microscopic chemical powder mixed into the ink that is painted on the neck of its Voltaren ampoules - was being marketed by DataTrace DNA Pty Ltd, a joint venture of CSIRO and DataDot Technology Ltd, a publicly listed company. But a Fairfax investigation has established that senior CSIRO officials and DataDot executives deliberately misled Novartis about the technology in order to close the deal, after receiving explicit internal warnings that the Novartis code could be easily duplicated. The injectable version of the drug is not approved for use in Australia. Three months before the deal was signed, the key ex-CSIRO scientist working on the technology, Dr Gerry Swiegers, warned against proceeding with the deal. "The code which has been offered to Novartis may not be fit for purpose ... because the code material is commercially available from a variety of vendors," he wrote to DataTrace in March 2010. The deal went ahead in July 2010. And despite having promised to supply a unique tracer code specifically for Novartis, DataTrace instead issued the company a cheap tracer it had previously bought in bulk from a Chinese distributor. The bulk tracer originally had been earmarked to sell to mining multinationals for low-risk applications such as sorting high from low-quality iron ore. Warning: Dr Gerry Swiegers advised DataTrace to proceed with caution. Photo: Adam McLean Such applications had no real security concerns, and this tracer formula was widely available at the time. But when DataTrace sold the same agent to Novartis, it told the company the formula was a trade secret, and Novartis is believed to have been contractually forbidden from trying to identify its make-up - a standard industry practice. Damning internal documents seen by Fairfax show DataTrace and some of the most senior officials at the CSIRO knew that Novartis was being misled in a deal believed to be worth $2.5 million. On August 7, 2009, Greg Twemlow, the DataTrace general manager who engineered the deal with Novartis, emailed Peter Osvath, a CSIRO research group leader, and Geoff Houston, a CSIRO commercial manager, with this subject line: "Proposed answer to the question, 'is our Tracer code commercially available'." Having said that, there may well be a possibility that aspects of the code could be simulated with commercially available products. Counterfeiting was such a serious commercial and public health risk that Novartis went to extraordinary lengths to ensure DataTrace and CSIRO had security measures in place to prevent the code being cracked. In August 2009, a team of auditors from Novartis visited CSIRO's Clayton campus. A year later, proposed changes were made to the lab, the Novartis auditors were satisfied by CSIRO's security measures, and in July 2010 DataTrace inked a five-year deal. Just three months after the deal was announced to the market, CSIRO sold its 50 per cent stake in the company, worth $1.3 million, in return for 8.93 per cent of DataDot Technology Ltd.