The second in a multi-part series: Road Crime
By Advance Business Capital

In the 1990s, electronics were the high-dollar cargo sought by thieves. But today's pharmaceuticals make very attractive targets. They're expensive, they're hard to trace, and they're easily sold to a ready market in the U.S. and Latin America. In the most high profile cases – think of thieves rappelling into an Eli Lilly warehouse and making off with $75 million in prescription drugs – members of theft rings are part commando, part spy and part logistical engineer.

High Dollar Crime
Some experts say that by volume, pharmaceuticals make up only about 5% of all cargo thefts. Nonetheless, by dollar amount they are very big and getting bigger. Dan Burges of FreightWatch International, a supply-chain security firm, says that in 2009 there were 46 drug cargo thefts valued at $184 million. Add to that the inherent dangers that improperly stored pharmaceuticals pose to the public, and the problem is serious.

A recent, low-profile event could be a textbook example of pharma theft: In early March a truck left Michigan loaded with $400,000 worth of nicotine gum and lozenges, minoxidil hair-growth treatment, vitamins and nutritional supplements. The goods were made by Perrigo, a major supplier of prescription and over the counter store-brand pharmaceuticals. The truck was headed for the central Texas distribution center of a regional grocery chain.

But the load never reached its destination. The driver said he left his rig unattended to take a shower at a rest stop near Dallas, and came back to find it gone. The story didn't make the news, just a statement on the FDA advisory site and mention in a couple of industry-related blogs. By late March, sources said the police were pursuing theft charges against the driver and another person.

The Lessons - #1
Despite the drama of a few warehouse heists, most pharmaceutical cargo is stolen in transit. Theft is more likely to occur in some locales than in others, and Dallas-Ft.Worth is one of the hot zones. Many companies tell their drivers not to make rest stops there.

The most common M.O. is to steal an unattended tractor-trailer from a truck stop or parking lot. Very likely, the rig had been under surveillance by thieves who'd earlier scouted out the target, or the driver was part of an inside job. Either way, most U.S. pharma thefts are meticulously planned, quickly executed and rarely violent. Thieves simply want to get the goods and get gone. There is no minimum mandatory sentence for cargo theft, but add a violent encounter to the incident and you're facing serious criminal charges.

The Lessons - #2
It's puzzling, but security experts say that among local law enforcement and the general public, cargo theft has been viewed as a victimless crime. Only the most spectacular cases ever make the news. And of course none of the parties involved – whether the end retailer, the transport company or the manufacturer – wants that sort of negative publicity.

In our example, multiple points of distribution also add to the risk. So do “virtual companies,” entities that outsource both the manufacturing and distribution of products and use multiple subcontractor carriers. Speaking at a security conference, Chuck Forsaith of Purdue Pharma said the situation was safer: "Twenty years ago, when you not only made the product, you moved it as well. You had hands-on responsibility for that product, from its inception all the way down to the end user."

The Lessons - #3
To date, the fate of the items in our example is unknown. Sometimes new labels are slapped on goods and they re-enter the legitimate supply chain via gray marketers. Sometimes they are shipped to markets in Latin America or, less commonly, Asia. They might be sold directly to consumers online.

Stolen pharmaceuticals can be the haul that keeps on giving. Criminals may separate the product from its packaging, sell the real stuff, then put bogus goods in the original packaging and sell that, as well. It’s a lucrative, low-risk endeavor – just the opposite of how pharma theft affects the public.

The monetary costs are multiple. First, recovered drugs are always destroyed as a simple safety measure. Next, even when only part of a lot number is stolen, the FDA usually requires the manufacturer to destroy the entire lot number. These costs ultimately show up in what the public pays.

The Consequences
And if improperly stored or otherwise compromised stolen products reach consumers, the costs can be even higher. Last year a truckload of insulin, which must be refrigerated at all times and was valued at $11 million, was stolen from Novo Nordisk. A few months later, diabetic patients wound up in the hospital after taking insulin traced back to that haul.

* A Note on the Numbers: The more you look into truck cargo theft, the stranger the numbers seem. That's because some are measured in volume, some in dollars, some in frequency of events and so on.Furthermore, there is no single, uniform reporting authority or system for collecting and tracking cargo theft numbers.  And many cargo thefts are simply not reported.

Among the sources for this article are The Wall Street Journal, The Examiner, Secure Pharma Chain and Inbound Logistics.

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