All countries around the world have an up growing major problem- counterfeit drugs. The present study has information about how to identify counterfeit drugs in drug supply chain and get 100% accurate data for pharmacovigilance. Most of the pharma companies are data basing the reports from various sources like hospitals, patients, physicians, patient support program and etc. Recent problems noticed by companies were, reports from patients coming due to lack of efficacy as they are using counterfeit drugs. Most of the counterfeit drugs are produced from developing countries like India and China. In recent years, all the big pharma companies like Merck, Eli lilly, Ranbaxy, Pzifer, Johnson & Johnson and Glaxo Smith Kline alone paid about $13 billons as penalties to different regulatory authorities. This money paid as fine could be used for more clinical studies for development of new drugs. Information about factors encouraging counterfeit drugs and how counterfeit dugs are affecting pharmacovigilance and measures taken to eradicate this problem were mentioned. World health organisation plays a key role in eradication of counterfeit drugs. UK and US had very strong network on controlling counterfeit drugs, and MHRA was one of the development by UK government and USFDA also has very strict rules and procedures to be followed for drugs import in US. Unique Identification Code (UIC) would be one of the measure for getting accurate data from patient or any other source about the company genuine drug. UIC would be most economical technique used in identification of counterfeit drugs in developing countries during drug supply chain. Fake drugs generally resemble like genuine drugs but their percentage of active constituents is always question mark. Because of this reason most of the lack of effect cases is noted in pharmacovigilance. Procedures and methods to be followed to get accurate safety data from patient and other sources. Development in facilities provided to the patient (like toll free no, web email, text services) while reporting a complaint against a company drug. Collecting samples of the company drug from the patient once a complaint was lodged due to lack of effect will make company to be sure about manufacturing defect or supply chain or because of counterfeited drug. Governments and regulatory board of different countries are taking certain steps against companies by increasing penalties and imprisonment duration. So, relentless efforts should be made in developing methods in identification of counterfeit drugs and funds should be increased for R&D, so that 100% accurate data will be recorded in pharmacovigilance.