PharmaLeaks: understanding the business of online pharmaceutical affiliate programs

TLDR

Online sales of counterfeit or unauthorized drugs fuel a robust underground advertising industry that includes spam, black‑hat SEO, and forum abuse. In this paper we exploit a rare opportunity to view three such organizations—GlavMed, SpamIt, and RX‑Promotion—from the inside. We analyze four years of raw transaction logs totaling over $170 million in sales from these programs to empirically examine consumer demand, the role of third‑party advertisers, and the cost structure of the business model. The study finds that consumer demand is high, third‑party advertisers are central to the model, and the cost accounting demonstrates a profitable business structure.

Abstract

Online sales of counterfeit or unauthorized products drive a robust underground advertising industry that includes email spam, black hat search engine optimization, forum abuse and so on. Virtually everyone has encountered enticements to purchase drugs, prescription-free, from an online Canadian Pharmacy. However, even though such sites are clearly economically motivated, the shape of the underlying business enterprise is not well understood precisely because it is underground. In this paper we exploit a rare opportunity to view three such organizations--the GlavMed, SpamIt and RX-Promotion pharmaceutical affiliate programs-- from the inside. Using ground truth data sets including four years of raw transaction logs covering over $170 million in sales, we provide an in-depth empirical analysis of worldwide consumer demand, the key role of independent third-party advertisers, and a detailed cost accounting of the overall business model.