The government is set to pass a raft of new measures to better regulate the pharmaceutical industry.
Legislation, currently under review, will charge anyone caught selling counterfeit medicine with up to five years in prison and a Dh1 million fine.
The laws will also serve up to a year in jail and a Dh500,000 penalty to those found guilty of peddling poisonous substances.
Pharmacies caught overcharging for products could be fined up to Dh100,000, with fees doubled for repeat offenders.
Speaking to The National on Tuesday, Mona Al Moussli, chief executive and co-founder of PRA health regulation consultancy , said she welcomed the tighter regulations.
“New laws have to be introduced because Dubai has become a hub for pharmaceutical companies and this increases the chances of counterfeiting," she said.
“If they don’t introduce stricter penalties the high standards we enjoy here won’t last."
Existing UAE legislation for the pharma industry dates back more than 30 years to 1983.
Authorities said laws were in need of a substantial upgrade to keep pace with the strides made in the development of medicine.
On Tuesday, the Federal National Council said the draft laws would shortly be referred to the Cabinet.
The council said any pharmacist found to have faked a licence would be fined up to Dh200,000 and sent to two years in jail.
It also said efforts continued to combat companies supplying medicines which were failing to store products safely.
Earlier this year, medics writing in the American Journal of Tropical Medicine and Hygiene said "falsified and substandard medicines" had become a "public health emergency".
The paper said up to 10 per cent of drugs in low and middle income countries were substandard or outright fakes, costing local economies between $10 billion and $200bn a year.
Last year, pharma giant Pfizer identified 95 fake products in 113 countries, up from 29 fakes in 75 countries in 2008.
"It is very simple, the law is 34 years old," said Abdul Rahman Al Owais, the UAE Minister of Health and Prevention.
“We have to have a new law to accommodate the changes, it’s not just about increasing punishments.”
Ms Al Moussli who also consults for the healthcare sector, said: “Developing the law is essential.
“Counterfeit drugs exist everywhere in the world but because Dubai stands [as a hub for trade] between Asia, Africa and Europe, the risk is very high [in the UAE]."
Instances of fake or counterfeit medicine discovered by the US Food and Drug Administration have included 17,000 vials of Chinese Sensorcaine – a form of anaesthetic – which were found to be tap water.
In February, the World Health Authority had issued an alert about a fake cancer drug on sale in Europe and America.
The counterfeit medicine, which was supposed to treat adults with chronic myeloid leukaemia and acute lymphoblastic leukaemia, contained only paracetamol.