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Top 10 Pharma Cargo Thefts by Value, 2009/2010
Drug Cargo Theft: The New Goldmine
Big pharma means big money, especially for thieves. In a much publicized and spectacular heist, burglars made off with $75 million worth of drugs from an Eli Lily warehouse in Connecticut last March. That's one high-value hit. But it's just one incident in a growing crime wave targeting pharmaceuticals.
Although warehouse thefts like Lilly's are on the rise, cargo theft mainly occurs in transit as thieves make off with unattended tractor-trailers at truck stops or parking lots. Violent hijackings are rare because of the severity of criminal charges. Advanced reconnaissance is the tactic of choice, with thieves conducting field ops to find vulnerable and valuable targets.
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Stolen drugs are most often shipped to Latin America or to illegal online pharmacies. Sometimes they also make their way back into the legitimate supply chain with new fake labels. This poses a potent public health risk that keeps the FDA involved, issuing recalls and investigating cases through its Office of Criminal Investigations.
U.S. pharma cargo thefts, 2009
Aside from the appealing pay-off, cargo theft has gained momentum in the U.S. because of the relatively light penalty thieves risk if caught. As reported in Security Director News, cargo theft in the past has been viewed as a victimless crime, leading to slow response from law enforcement. According to Keith Lewis, task force agent for the major theft unit of the Georgia Bureau of Investigation, "This is a very easy crime to commit and get away with. Law enforcement does not understand the nature of this crime." Click here for a map 2009 U.S. pharma cargo thefts (pictured, left), courtesy of FreightWatch International.
Greater industry efforts to combat the crime are already having an effect, however. The Transported Asset Protection Association (TAPA) offers a snapshot of cargo-theft in its 2009 incident information report, noting, "With an insight into the industry, the data signify the beginnings of a trend toward improvement--and a greater adherence to supply chain security practices throughout the pharmaceutical supply chain."
Cooperation is improving between industry and law-enforcement. Companies like FreightWatch and the newly minted CargoNet offer loss control services, including compiling crime data and coordinating with law enforcement. CargoNet managing director Maurizio Scrofani told us, "There is a problem in fragmentation [of data]. You need a central database to tie in regional databases, which is a common way of pulling in law enforcement."
Comments
Maybe they should drop their prices so people wouldn't want to rip off the items. I'm sure they put the market value on this article and not the actual chemical value. Hopefully the insurance companies don't pay the market value. If so, maybe these companies are ripping off their own items.
My concern is not the the market value but how are those drugs going to show up in our supply chain. Will these drugs be cut are they going to be mixed with conterfits. There are ways to prevent these drugs getting back into the supply chain, I am just wondering why the pharmas aren't more involved with technology to do it. There is an incentive for insurance companies to drop their rates if technology is employed to prevent theft. If a drug kills someone because it is cut or it is a fake the pharma still has to prove it isn't theirs. This causes higher costs and can pharma continue to lose $75M?
It cost clost to $1B to bring a chemical to market, so yes the actual chemical value is extremely high. The reason for high drug costs is because it takes about 8-12 years once the patent is offered for the chemical. Therefor it leaves 3-5 years for the companies to recoup the cost of developing the medicine, which is potentially saving your life or at least prolonging it. Its a free market so generics can develop the same medicine once the patent is over ultimately driving down the cost of that medicine. So what other choice do the drug companies have to recoup their intial cost than to charge the premium for their products during that 3-5 yrs they are on the market. If you dont like the high price of drugs, eat well, work out, dont stress, and don't take the medication.
Patents last 20 years. If it takes 8-12 years to get FDA approval then the company has 8-12 years to exploit the patent, not 3-5! During that time the company may develop a strong trademark that would allow them to charge significantly more than generics, if not maintain their monopoly price, for many years after the patent expires.
Actually, the 20 year clock starts on the day you file for the patent - not from the day you get it granted. It can take 4-5 years for the grant. Pharma companies tests thousands of chemicals a year, take a percentage of those that look promising (not sure, maybe 10-20%). Then they do animal studies. Then there are safety studies in humans. Then full blown clinical trials for efficacy & safety. I believe pharma companies start filing patent applications after the first cut of chemical are tested. So after all those steps, they often do not have 8-12 years of patent protection on the drug. Probably more than 3-5, but certainly not in the double digit range. If the iPhone, iPad or iPod had to go through those kinds of hoops and costs to get developed you would still be using public payphones and sending letters through the post office.
Why would they not install GPS trackers in the cargoes of all of these shipments? Not just the trucks but also the cargo.
I don't completely buy the "$1 billion to bring a chemical to market". When I was younger I knew friends who made GHB in the kitchen for mere pennies. It was a simple reaction between gamma butyrolactone and sodium hydroxide (two very common and cheap chemicals). Additionally it was tested in sleep labs for it's benefit in narcolepsy patients.
Then the FDA cracked down on gamma butyrolactone, followed by it being marketed as a narcolepsy medication (Xyrem) for which the company (Jazz Pharmaceuticals) charges top dollar to recoup their "research" costs.
Perhaps sometimes they spend a lot for research, but I know for a fact that this is not the case in this instance. I'm wary of pharmaceutical companies who claim "research costs" yet sell the exact same meds for pennies on the dollar in every country but the U.S.
You are right that GHB has been around for a long time and people can make it pretty easily and cheaply. That is if they don't need to be sure it remains stable, doesn't degrade, and has protection to alleviate adverse effects due to the need for high dosage levels in order for the drug to be effective. Jazz Pharamceutical's patents (acquired thru the purchase of Orphan Medical) are targeted towards those issues. Jazz Pharmaceutical is not an angel, as evidenced by their troubles stemming from off-label marketing, but the initial costs for developing safe, stable forumlations, ongoing costs for adhering to the FDA's Good Manufacturing Processes and ongoing clinical research costs for other indications are very real.
While I now work for an engineering firm, I used to work for a biomedical - pharma company and will readily admit that they are not always shining examples of ethical behavior. However, I am wary of people who used to hang out with friends who were cooking up date rape drugs in their kitchen. I'm pretty sure they weren't supplying sleep labs for clinical research.
Next they'll probably steal a truckload of my blood pressure medicines and sell that as something other than "the ones that mother gives you that don't do anything at all". One of them's totally boring, and the other's a diuretic...
Just to clear up two factual misunderstanding present in the comments. First, the idea that US pharmaceutical cost any more than EU pharmaceuticals is based on false data. The assertion was based on looking at US list prices versus EU actual prices negotiated with government. But in the US prices are highly discounted at sale. Recent systematic academic studies comparing the real wholesale price of US pharmaceuticals to EU pharmaceuticals indicate a price difference of about 25%. Second the reason for the 25% is that the US has a rapacious generics market so after 15 years and $1.5B developing a pharmaceutical you have about 5 years of patent life to make your investment back. In the EU they don't have nearly as aggressive a generics industry so as a consequence there is a longer lower tail of earnings. Hence the pricing system in the US provides higher revenue up front - encouraging innovation - while the EU system promotes life cycle management. This is why innovation resides mainly in the US and why the industry has largely migrated to the US. Second, pharmaceuticals are 10% of the cost of the healthcare system and are the 10% that actually get you well. The other 90% are bricks and sticks, doctors and nurses who preside over you getting well and support you but are not the actual tool that gets you well. For all the people who are glad the pharma are ripped off or hate the industry, perhaps they should have the courage of their convictions and just boycott our products.
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