March 23, 2015

Pharmaceutical Theft is a Big and Bitter Pill to Swallow

Pharmaceutical theft in the United States is a story of dichotomy. A small number of high-value thefts from warehouses and of full truck loads (FTL) perpetrated by organized criminal enterprises contrast with more frequent, loosely planned or opportunistic thefts by street criminals of “last mile delivery” vehicles. The 2010 theft of $80M in prescription drugs from the Connecticut warehouse of a global pharmaceutical company remains the largest in the state’s history and the biggest of its kind in US history. Robberies – thefts in which delivery drivers are confronted and threatened – are more frequent in the last mile segment of the pharmaceutical supply chain. And they are on the rise.

According to the 2013 Global Cargo Theft Threat Assessment from the FreightWatch International Supply Chain Intelligence Center, the pharmaceutical industry has a history of some of the highest average loss values in cargo theft. The report states, “In recent years, however, the average load loss value in this sector has dropped dramatically from $3.78 million in 2010 to $168,219 in 2012. Pharmaceuticals are enjoying both the lowest number of incidents as well as the lowest average value per incident recorded by this industry since the beginning of FreightWatch data collection.”

Chuck Forsaith is Chairman of The Pharmaceutical Cargo Security Coalition (PCSC), an organization comprised of pharmaceutical industry professionals, law enforcement and government entities, cargo insurers, carriers and risk management advocates dedicated to preventing theft of pharmaceutical products in transit. He is also Director of Pharmaceutical Supply Chain Security at Purdue Pharma Technologies. Forsaith concurs with the FrieghtWatch findings. “PCSC members have seen a significant drop in FTL and greater than $1M losses over the past several years; down from more than 40 in 2009.” The reduction in high-value thefts is attributed to several factors: Cooperation among industry and local, state and federal law enforcement agencies; the dissolution of many organized crime rings responsible, and;  adoption of enhanced security procedures, technologies and services by the pharmaceutical industry.

Last mile deliveries remain vulnerable and incidents are trending up, more than doubling in some parts of the United States. Poor procedures and lax policies are contributing factors. Vehicles left unattended while the operator takes a rest or meal stop are soft targets. “Common sense dictates that a vehicle containing controlled substances should never be unguarded. But some transportation providers use solo drivers. These people will, of course, need breaks. That is understandable, but is also problematic,” said Forsaith. “Two-person teams are recommended so that the vehicle and cargo are always under visual surveillance. Uniformed, armed teams are visual deterrents and are being considered by more parties in the pharma supply chain.”

Emerging Developments

Forsaith identifies four industry trends in 2015 and 2016:

  • Wider availability of climate controlled cargo areas to protect the quality of drugs during shipment. “Many members of the PCSC and others in pharmaceutical logistics are aware that that the FDA will eventually require more stringent monitoring and reporting of environmental conditions to which prescription drugs, OTC drugs and raw materials were subject during transport. I think we will see an increase in demand for and availability of transportation services that provide multiple climate options within one vehicle,” he said.
  • Rising value of drug shipments. The production of high-value biopharmaceuticals, in particular, has increased.
  • Closer scrutiny of transportation services providers, including deeper background checks and an increasing importance on certifications from regulatory bodies such as US Customs and Border Protection and Transportation Security Administration (TSA).
  • Pharmaceutical manufacturers, wholesalers and retailers investment in long-term relationships with preferred transportation service providers. “We will see a continuing move to treat transportation companies as part of the team, commensurate with their integral role in the pharmaceutical supply chain,” said Forsaith. “There will be more information sharing between the industry and companies that move our products. This is critical as shipment values increase, new regulatory requirements emerge, and transportation providers cope with a shortage of drivers.”

These trends underscore the need for more advanced pharmaceutical transportation services that better protect the security and integrity of increasingly valuable and fragile pharmaceuticals. Dunbar Armored is expanding services to meet the pharmaceutical industry’s requirements for technology-driven secure transportation partnerships. Please subscribe to receive the Dunbar blog via email or check back next week to learn about Dunbar Armored Pharmaceutical Secure Shipping.


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