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American ShipperWarehouse

Bitter pill

Bitter pill

Theft continues to plague pharmaceutical supply chains.



By Eric Kulisch



      Historically, there have only been a few cargo thefts greater than $10 million, and the Eli Lilly break-in now tops the list.

      It's the second time in less than a year that the pharmaceutical maker has been the target of a huge heist.

      The drug industry was the target of 46 incidents last year, four times the number in 2006, according to security specialist FreightWatch International.

      But Chuck Forsaith, director of corporate security for Purdue Pharma Technologies, said theft from drug makers' distribution networks isn't necessarily rising, but rather is a function of new mechanisms for reporting incidents and more willingness among companies to publicly disclose when property has been stolen.

      Large pharmaceutical companies, in particular, have made great strides in the past 18 months to secure their networks 'and a lot of past victims of large-scale in-transit thefts are not repeat victims,' he said.

      Forsaith credits the Pharmaceutical Cargo Security Coalition with improving supply chain security within the industry. PCSC was formed about five years ago after a several high-profile drug thefts in New Jersey.

      PCSC is a forum for drug makers, wholesalers, retailers, insurance companies, freight forwarders, transport providers, and law enforcement to share best practices and intelligence on cargo crime. It started with 40 security directors and now boasts more than 400 members.

      Many of the recent cargo theft incidents, Forsaith said, occurred at smaller pharmaceutical companies that have not been hit by crime syndicates before.

      PCSC continues to expand its education efforts to inform the rest of the industry and law enforcement about the criminal threat and risk management techniques, he said.

      The Eli Lilly case, however, suggests that not all big pharma companies have yet immunized themselves from follow-on attacks.

      A sophisticated group of thieves scaled the walls of the company's distribution center in Enfield, Conn., cut a hole in the roof, repelled to the floor, disabled the alarm system and loaded several dozen crates full of drugs into a waiting truck, said Ed Sagebiel, director of corporate communications.

      Stolen drugs included the antidepressants Prozac and Cymbalta, the antipsychotic Zyprexa, a blood thinner and cancer treatments.

      The $76 million loss, up $1 million from original reports after further inventory checks revealed two more stolen lots, represents the wholesale price of the drugs.

      Indianapolis-based Eli Lilly cautioned consumers to purchase products only from well-established and reputable retailers and recommended they inspect the product and label for signs of tampering before opening. Pharmacists and health care professionals were instructed not to use the product or container if it appears to have been disturbed in any way.

      Consumers also are at risk because products may not be stored or handled properly by criminals. Last year a shipment of Novo Nordisk insulin stolen in North Carolina turned up at a medical center in Houston where some patients could not control their blood sugar because the insulin lost its potency due to poor handling, according to the Food and Drug Administration.

      'The U.S. pharmaceutical distribution system is tightly controlled and monitored, making it extremely difficult for stolen product to make it to patients through legitimate channels,' said Fionnuala M. Walsh, Eli Lilly's senior vice president of global quality, in a statement. 'However, we will continue to work closely with local and federal law enforcement authorities, the FDA and our distribution partners to maintain the integrity of our drug supply chain.'

   The company stopped distributing the product with the affected lot numbers the day after the break in.

      One of the largest previous cargo theft incidents occurred last May and also involved Eli Lilly. A South Florida gang followed a shipment 450 miles from Eli Lilly's Plainfield, Ind., distribution center to a truck stop in Somerset, Pa. The thieves grabbed the truck when the driver went inside to pay for diesel fuel. The $37 million load of insulin was recovered within 45 minutes after the driver quickly alerted state troopers stationed nearby, but no arrests were made.

      The criminals had parked the truck to make sure there were no tracking devices inside the cargo that would attract police. Dan Burges, director of intelligence for FreightWatch, said it is common for professional thieves to destroy any external Global Positioning System tracking devices and then wait in another vehicle to see if police show up.

      Novo Nordisk, a medium-size drug maker, also was the victim of a big heist in 2007 when two tractor-trailers carrying $30 million worth of insulin were stolen from a Daum Trucking storage lot.

      FDA officials say it is important to get the word out quickly about a drug theft to make the products too hot to sell. The agency last year began to issue public notices in response to the rise in pharmaceutical thefts from the supply chain.

      Since April 2009, the FDA has issued 19 public alerts and 13 special notices to pharmacies and wholesaler organizations about cargo and warehouse thefts of medical products and infant formula.

      The industry received a bit of good news on March 31 when the FBI, assisted by state and local police in Indiana and Illinois, recovered a truckload of Mead Johnson Nutrition infant formula, according to an alert issued to members by the PCSC. Authorities were alerted several days before by reports of suspicious activity near Mead facilities and those of trucking companies that transport its products. Law enforcement officials conducting surveillance observed a Mead shipment being followed by suspects, who stole the rig when the driver parked and went inside a truck stop. The two criminals pulled into a nearby truck stop to swap out the stolen tractor with one of their own when they were surrounded and arrested.

      The shipment was never disturbed and remained marketable, the alert said. (Earlier in March, cases of Mead Johnson infant formula were stolen from a Kentucky truck stop, according to the FDA.)

      Perishable items such as food, drugs, and biological supplies require special handling and environmental conditions to maintain their safety and shelf life.

      Pharmaceutical companies, however, often incur millions of dollars in additional expense recalling products made under the same lot number in response to a cargo theft. The cost of the recall can dwarf the cost of the actual stolen product. It's a practice the industry does not publicly discuss much, but is a precaution taken to ensure stolen material doesn't reenter a legitimate supply chain.

      Production lots vary in size and may not all fit on the same trailer, or may be shipped over a number of days. A company that loses track of a shipment will have difficulty telling customers which products they receive are legitimate or stolen.

      Uncertainty about whether regulatory or industry standards were maintained while a load was in criminal custody also means these products sometimes have to be destroyed even when recovered.

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