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The author discusses strategies for preventing cargo theft.
A rise in the incidence of cargo thefts in the pharmaceutical industry requires a cross-functional response from individual companies, the industry, law-enforcement organizations, and other stakeholders. The author discusses strategies for an proactive cargo security and antitheft program, including best practices used by Pfizer.
Cargo theft, for many years, was a problem that largely plagued the electronics industry, but criminals have recently shifted more attention to the far more lucrative pharmaceutical trade. In March 2010, thieves masterminded a heist of $75 million worth of cancer, psychiatric and blood-thinning drugs from a Connecticut warehouse by cutting a hole in the ceiling and dismantling alarms during a severe storm that masked their activities from the local authorities (1). To curb future cargo theft, it is imperative that pharmaceutical companies develop solid, globally applicable conveyance security programs.
A clear and present danger
The Connecticut incident drew a lot of attention to the level of sophistication used by organized crime when targeting pharmaceutical cargo. Soon afterwards, FDA issued a letter expressing its concern over the growing frequency of cargo and warehouse theft, the threat these activities pose to patient safety, and the need for manufacturers and others in the supply chain to take proactive, preventative measures (2). More important than the loss of property, when criminals reintroduce to the supply chain stolen medication that was not stored, refrigerated, or distributed as required to maintain product quality, unknowing consumers can receive tainted or ineffective drugs that could hurt or even kill them.
The rise in cargo theft is largely being fueled by the fact that penalties for stealing and distributing stolen pharmaceuticals are far less than dealing in illicit drugs, and the value of a single pharmaceutical shipment can be far greater than electronics, cigarettes, alcohol, or even firearms shipments. Surprisingly, in many cases, cargo theft is reported as "vehicular theft," a crime that carries a relatively low bond, which allows thieves to be quickly released to return to their work. Furthermore, a charge of vehicular theft also does not take into account the full value of the cargo. A top-of-the-line refrigerated truck costs about $500,000, but a pharmaceutical shipment could easily contain $20 million of product. The truck is most often recovered, but empty of its cargo.
Until criminal penalties are increased to reflect the cargo's real value and the potential risk to public safety, it is unlikely that this growing illegal activity will subside any time soon. Attention is growing in this area, with the FDA's Office of Drug Security, Integrity and Recalls (ODSIR) targeted to specifically deal with counterfeiting, cargo thefts, and supply-chain threats in 2012 and legislation proposals such as the Safe Doses Act. For example, amendments introduced to the Safe Doses Act in May 2011 specifically addressed penalties, proposing increases of up to 20 years for pharmaceutical thefts.
Developing a cargo security and antitheft program
To develop a proactive cargo security and antitheft program, the first step is to understand how criminals work today, so newly installed systems are not protecting against yesterday's threat. Criminals are not restricted by corporate or governmental processes and are quick to adapt to changing preventative strategies. Recent trends observed in Brazil, for example, include the use of fake police checkpoints to intercept shipments (3).
The factors for cargo in transit vary, depending on the location around the world. Most cargo-jackings in the United State are nonviolent in nature and often occur when the driver goes into a rest stop and returns to find the truck gone. In other parts of the world, such as Latin America, cargo theft is more prevalent and can be more violent. Drivers are often kidnapped at gunpoint and later dumped in an isolated place. To complicate the situation, local police are sometimes complicit in the crime. Such conditions require out-of-the-box but potentially simple solutions. For example, to protect its employees and products, Pfizer sends only smaller shipments into these high-risk regions to make each cargo shipment less valuable and less desirable to potential thieves.
Freightwatch provides a succinct summary to the state of cargo theft globally in its 2011 report. "The volume of cargo theft grew throughout the Western hemisphere, with the United States, Mexico, Brazil, and other South American countries reporting substantial increases in theft," said the report. "By contrast in Europe, overall reporting of cargo theft rates were down while the average value per loss rose sharply, most notably in the United Kingdom, France and Germany" (4).
Despite appearances, these are not crimes of opportunity. Organized crime rings stake out facilities over time to gather information about the types and timings of shipments. Unfortunately, large-scale distributions systems cannot easily avoid routine schedules. There are other means of protecting cargo, however, some of them as simple as backing up a truck closer to the loading deck so those surveying the site cannot see what is being loaded and patrolling property perimeters to discourage unwanted observers.
Prescription medications are not the only target. Over-the-counter drugs and baby formula are at risk as well because they are relatively easy to resell. In general, most consumers do not think twice about buying a brand-name product at a flea market as long as the seal is intact. Few people stop to think about why the price is so low or consider that the product was probably stolen. If they did, they might also realize that the product was probably not handled in a manner designed to preserve quality or ingredient integrity.
Systems, relationships, and improved awareness
Cargo theft is committed by criminals that also poison the supply chain with counterfeiting, diversion, and economically motivated adulteration. Pfizer addresses these threats holistically through a comprehensive supply-chain security program. Conveyance security is one of the key pillars of the overall program. When a logistics or transportation system is strengthened against cargo theft, the touchpoints across quality, security, procurement, and other functions also are strengthened. Cross-functional systems linkages will prevent and detect more than one system alone.
As with most security systems, layered defenses are required to prevent cargo theft, and no single device or approach can be effective against all potential threats. Each situation is unique, and the level of security should result from a comprehensive risk assessment of all factors involved. Lower risk solutions include options, such as panic buttons, specially designed trailer and truck locks, satellite tracking, documentation controls, and background investigations and probationary periods for drivers. As the level of risk exposure increases, other techniques, such as door alarms, remote temperature monitoring, roof markings on trucks that can be identified from the air, and using two drivers, can be added to (not used in lieu of) the lower-risk prevention methods.
Focusing effectively on cargo theft requires a detailed and organized set of protocols. For example, Pfizer created and implemented global, regional. and site conveyance security policies and standards called Conveyance Product Care Requirements (CPCR) to ensure the safe and secure transport of its products. These requirements are clear and concise and acknowledge that transporting pharmaceutical products and materials throughout the manufacturing, packaging, storage, and distribution processes from raw-material acquisition through delivery to the customer is an integral aspect of supply-chain security.
Transporting processes must also be in compliance with all applicable regulations and be performed in a manner that ensures the safety, identity, strength, purity and quality of products during all transit activities. To this end, Pfizer has a designated Conveyance Security Council that oversees the following:
Conveyance activities are coordinated externally and across any in-house function that touches cargo conveyance, including global security, import compliance, legal, quality, risk management, business continuity, and other key functions. In addition to the CPCR, Pfizer functions work together to tighten security for warehouse standards and ensure the safe distribution of products to consumers in the marketplace. These processes are designed to protect the integrity of the legitimate supply chain against counterfeit goods getting in and to prevent legitimate product from being diverted or stolen.
Site and conveyance security also requires that companies develop close relationships with governmental agencies sponsoring supply chain security programs, such as the Customs-Trade Partnership Against Terrorism (C-TPAT) and Transportation Security Administration (TSA), to ensure compliance with regulations and to leverage current thinking and guidelines.
In addition, industry organizations such as the Technology Asset Protection Association (TAPA), the Pharmaceutical Cargo Security Coalition (PCSC), and Rx-360, the international supply-chain consortium, are important sources of practical information and best practices. At the local level, intelligence networks and a regional knowledge base need to be nurtured so reliable information can be shared with logistics managers, allowing them to better plan and improve transit and logistics operations.
Regardless of where in the supply chain a theft occurs, it is ultimately the manufacturer's responsibility–if not legally, then certainly in the equally important arenas of ethics and public opinion–for assuring that all parties fulfill their duties for delivering safe and effective medicines to customers.
A large part of the solution lies in raising awareness of the problem and currently available solutions. Much has already been published and discussed about counterfeiting, but little has been said publicly about cargo theft. Criminals tend to aim for the weakest link in a supply chain; once a crime such as cargo theft has been committed, the security system has already gone wrong. In today's environment, the pharmaceutical industry cannot afford to be complacent. Manufacturers need to stay one step ahead of organized crime by developing and coordinating top-notch conveyance and logistical security practices throughout their organizations to assure product and patient safety worldwide.
Brad Elrod is director of global conveyance security for Pfizer Global Logistics Compliance at Pfizer.
1. A. Efrati and P. Loftus, "Lilly Drugs Stolen in Warehouse Heist," The Wall Street Jrnl., Mar. 7. 2012.
2. FDA, "FDA Urges Industry to Take Additional Steps to Prevent Cargo Theft" Press Release (Rockville, MD, Apr. 28, 2010), www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm209911.htm, accessed July 18, 2012.
3. P. Taylor, "Brazilian Thieves Make off with 760 KShipment," Securing Pharma.com, Mar. 2, 2012.
4. Freightwatch International, Global Cargo Theft report (Austin, TX, Feb. 21, 2011).