1:46am

Fri January 11, 2013
Planet Money

Black Market Pharmacies And The Big Business Of Spam

Originally published on Fri January 11, 2013 6:35 am

An apparent feud between two black market pharmacies has shed light on a shady global industry.

"Rx-Promotion and SpamIt probably are responsible for upward of 50 or 60 percent of spam that you and I got in our inboxes over the last five years," said Brian Krebs, a cyber-security reporter who chronicled the alleged feud on his website. "It's just a ridiculous amount of problems that these two guys cause for everybody."

As part of a dispute between the pharmacies' owners, the digital files of both companies — once two of the largest black market pharmacies in the world — were hacked and ended up in Krebs' hands.

"We're talking about the contact information, the bank account information, the email addresses, phone numbers, sometimes passport information for many of the biggest spammers in the planet," said Krebs. "Not only that, but all the personal information of all the people who ever bought pills through these spam sites over four years."

This information offered a unique look at an industry that's typically shrouded in secrecy. Overwhelmed by the amount of information, Krebs shared the data with academic researchers, including Stefan Savage, a professor of computer science and engineering and University of California, San Diego.

Savage used this data to analyze the industry's business model and co-wrote a research paper this summer with his findings.

At the center of these operations are these international pharmacies, often in countries like Russia.

Because these sites operate in the black market, selling prescription drugs without prescriptions, they've historically turned to spam and other shady advertising practices to get the word out about their medications.

"We wouldn't call what they're doing legitimate; it's illegal in this country," said Savage. "But the fundamental practice is, they are trying to advertise this product."

The spammers are typically independent contractors paid on commission by the pharmacy for the sales they generate — something like 30 or 40 percent of the purchase price.

But once a customer goes to the pharmacy site and chooses his or her drug of choice, the pharmacy takes over. It finds someone to process the credit card payment, which is difficult given the nature of the transaction. Then, it has to get the drugs to the customer.

"They don't actually typically warehouse any drugs themselves," Savage said. "So they'll contract with third parties who have access, usually, to generic drug manufacturing in India and China."

In the course of Savage's research, he and his team placed over 800 test orders and typically received their chosen medications in a timely fashion.

"We've maybe only had one time where we didn't get anything," said Savage. They tested some of the drugs they received, and all had the proper amount of the active ingredient.

Savage says the vast majority of customers are ordering erectile dysfunction drugs. Others order painkillers or stimulants for recreational use. But up to 15 percent of orders come from people seeking medications to treat chronic health conditions, likely because they can't afford to purchase them through legal avenues.

Dave Keck turned to an online pharmacy when he was dropped from his parents' insurance and decided his acne needed prescription-strength help from a medication called Accutane. He researched different international pharmacies and chose one in Latvia that didn't require a prescription.

"I called Walgreens, and they said it was going to be about $600 for a month's supply of what I researched is what I should take," said Keck. "And on this online pharmacy, I think it was like $40 for the same amount, so that was a no-brainer."

Keck knew the risks, both of taking a very strong anti-acne drug without a doctor's supervision and of ordering drugs from abroad. It's technically illegal in the U.S., and he worried it might be a scam. But he decided to place an order. He watched his credit card for extra charges, and then three weeks later he received a padded yellow envelope from Turkey.

"What I got from this pharmacy was in kind of a binder," said Keck. "And they included one [box] of the actual medicine, but the rest was taped down to the inside of this binder. It looked pretty suspicious."

But the pills were all in sealed blister packs with branding that looked more legitimate, though the writing was in Turkish. Keck decided to try taking the medication. He figured it was either real Accutane or a sugar pill.

"After I'd taken it for about a week, I was 100 percent sure it was the real deal, just based on the side effects," said Keck.

His skin dried up, his lips got really chapped, and his acne went away.

Not all online pharmacies operate in the black market; the Food and Drug Administration says Americans should only order from sites that are licensed and located in the U.S. Otherwise, there may not be proper oversight or quality control on these medications. And if these drugs wind up making customers sicker in the long run, it's actually not such a bargain.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

STEVE INSKEEP, HOST:

A lot of the email spam that winds up in people's mailboxes promises cheap medicines online. Viagra is among the drugs for sale this way. Many people who receive these emails may wonder who's selling this stuff and if anybody is really buying. Turns out the emails come from partnerships between spammers and rogue online pharmacies.

Tracey Samuelson of NPR's Planet Money Team reports on the dark side of the Internet.

TRACEY SAMUELSON, BYLINE: The inner workings of these industries actually emerged from a feud between two competing black-market pharmacies. In their heyday, they were two of the biggest rogue pharmacies in the world. Then someone hacked their digital files and they ended up in the hands of Brian Krebs, who reports on cyber security for his own site, Krebs on Security.

BRIAN KREBS: We're talking about the contact information, the bank account information, the email addresses, phone numbers, sometimes passport information, for many of the biggest spammers on the planet.

SAMUELSON: Plus the order history and credit card information of over a million customers of these two black market pharmacies, Rx-Promotion and SpamIt.

KREBS: These two programs, Rx-Promotion and SpamIt, probably are responsible for upwards of 50 or 60 percent of the spam that you or I got in our inboxes over the last five years. It's just a ridiculous amount of - of problems that these guys caused.

SAMUELSON: Stefan Savage, a professor of computer science and engineering at U.C. San Diego, also got a look at this data. And he used it to study the business model behind this usually hidden industry. At the center are these international pharmacies, often in places like Russia. But because they're in a shady business, selling prescription drugs without prescriptions, they can't simply run ads on TV. They need some other way to get the word out about their product, their pills. And historically, that's meant spam.

STEFAN SAVAGE: We wouldn't call what they're doing legitimate, it's illegal in this country, but the fundamental practice, is they are trying to advertise this product.

SAMUELSON: The spammer is like an independent contractor, they get paid on commission. And in these leaked documents, you can actually read conversations where an online pharmacy employee tries to recruit a hot new spammer to his team.

Hey. How about spamming for us? The employee asks in instant message. What are the payment conditions, the spammer replies? Well, the employee says, most people get to keep about 30 percent of their sales. But the spammer, he counters that he's really good at his job, that he has the ability to send 500 million spam emails in a single day. Eventually, the spammer and the online pharmacy employee, they agree the spammer will keep 40 percent of his sales.

So that's the advertising piece. But once a customer has chosen their drug of choice, then the pharmacy takes over. They find someone to process the credit card payment. And then, they actually have to get the drugs to the customer.

SAVAGE: They don't actually, typically, warehouse any drugs themselves. So they'll contract with third parties who have access, usually to generic drug manufacturing in India and China.

SAMUELSON: So now one question you might be asking is, are these drugs actually real? A guy named Dave Keck had that question as well when he ordered an acne medication called Accutane from a pharmacy in Latvia.

DAVE KECK: I called Walgreen's and they said it was going to be about $600 for a month's supply of what I researched is what I should take. And on this online pharmacy, I think it was like 40 bucks for same amount. So that was a no-brainer.

SAMUELSON: Keck knew the risk - both of taking a very strong drug without a doctor's supervision and of ordering drugs from abroad - it's technically illegal and he worried it might be a scam. But he decided to give it a go. He watched his credit card like a hawk for extra charges and then a few weeks later, he got a package from Turkey.

KECK: What I got from this pharmacy was in like kind of a binder. And they included one packaging of the actual medicine, but the rest was just kind of taped down to inside of this binder. So it looked pretty suspicious.

SAMUELSON: But the pills were in a sealed blister packs with branding that looked more legitimate. Just in Turkish. So Keck wondered whether the pills were real medicine or not. He figured no one would go through all this effort to just poison him.

KECK: No. I was thinking poison was going to be more expensive. These people probably just want to make money. So it's going to be a sugar pill or the real deal. And after I'd taken if for about a week, I was 100 percent sure that it was the real deal, just based on the side effects.

SAMUELSON: His skin dried up, his lips got really chapped, and his acne went away. So a lot of people who order from these pharmacies are ordering erectile dysfunction drugs like Viagra, but Stefan Savage, the researcher, says up to 15 percent of orders come from customers like Keck - people who turn to these sites to treat everyday health problems, likely because they can't afford legal avenues to buy their medications. And according to Savage, people seem to mostly get what they pay for.

SAVAGE: I'll say, over 800 orders, we've maybe only had one time when we didn't get something. For legal reasons, we can't buy every drug and we're not equipped to test everything. I will say the drugs that we have tested, the right active ingredient has appeared in the right amounts.

SAMUELSON: Not all online pharmacies operate in the black market, but the Food and Drug Administration says Americans should only order from sites that are licensed and located in the U.S. Otherwise, there might not be proper oversight. And if these drugs wind up making you sicker in the long run, it's actually not such a bargain.

Tracey Samuelson, NPR News.

(SOUNDBITE OF MUSIC)

INSKEEP: It's MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.

Related program: