OPINION: Pharmaceutical cargo theft plays big in mass media--but industry has already responded

June 2, 2011
Pharmaceutical Commerce, Pharmaceutical Commerce - May/June 2011,

An issue of Business Week magazine in late May had a feature story on trucking cargo theft—particularly of pharmaceuticals; in March, Fortune magazine ran a similar feature. Numerous data points, and a select number of incidents, highlight the problem, which is real. In mid-May, Pfizer experienced a theft when a trailer was stolen from a trucklot in Memphis; the value of the shipment is estimated at $66,000. But it’s also important to keep a sense of perspective about what problems are being managed, and which are out of control. The repercussions of the March 2010 warehouse burglary of Eli Lilly pharmaceuticals—valued at $76 million and arguably one of the most costly thefts of all time—still dominates many such discussions. But a Lilly source says that the company has far overreacted to the incident, driving up supply chain transportation costs to high, and unsustainable, levels. There’s a risk of an industry-wide overreaction.

FreightWatch International, one of the organizations that collect incident data and do trends analysis, issued a five-year report in April showing that, while incidents involving pharma theft have quadrupled through 2010 (from a dozen in 2006 to nearly 50 last year), the 40-50 range has been a constant for the past three years. “Since 2008, the rate of growth has been almost flat, likely due to intense efforts by the Pharmaceutical industry to harden the supply chain,” summarizes the report’s author, senior director Dan Burges. No little credit should be given to Chuck Forsaith, director of corporate security at Purdue Pharma, who has bootstrapped a Pharma Cargo Security Coalition (pcscpharma.net) into being almost singlehandedly. FDA is now monitoring the drug-theft situation more closely, and is encouraging manufacturers to be forthright in sending notifications when thefts have occurred. These thefts, when the stolen products reach patients, become official “adverse events” that could harm the products’ viability. (The seriousness of drug theft, and the relatively minor penalties, have led to a new bill, S.1002, being introduced into Congress that essentially double the prison time for violators. HDMA’s president, John Gray, calls the action “an important step forward to further enhance the safety and security of our nation’s healthcare supply chain.”)

The risks of pharma theft are not to be minimized: besides the economic loss itself, products trickle back into legitimate distribution, and into retail or hospital pharmacies, there to put patients’ lives at risk. The Fortune and BW articles document stolen products later showing up in retail pharmacy shelves; other incidents involving glucose test strips or other products have been documented. Manufacturers’ usual recourse, when a shipment has been stolen, is to recall the entire lot (and hope that the recall actually works; they are seldom 100% effective).

There are two takeaways from the current situation: pharma security and supply chain managers need to be listened to when they identify security gaps in product distribution; ditto for the transportation managers at distributors, and the receiving personnel at retail and hospital end points. Secondly, while the industry overall appears to be dealing with the problem effectively, it’s never going to go away entirely. Stolen or diverted product will continue to show up, whether or not it travels through the “normal distribution channel” that some authorities claim protects the American consumer. All this is occurring at a time when thousands of “prescriptions” (which frequently do not involve a licensed medical professional operating according to industry standards) are being mailed from Internet pharmacies to woefully naïve individual buyers. Product serialization, effective track-and-trace systems, and usable authentication methods need to be part of the picture.