By Guest Author: Marv Shepherd, Ph.D., Professor Emeritus Center for Pharmacoeconomic Studies, College of Pharmacy, University of Texas
Several years ago, I worked with Sensitech Inc.’s SensiGuard™ Supply Chain Intelligence Center (SCIC) to explore how much of a concern cargo theft is to European pharmaceutical companies. We surveyed executives involved in the distribution of products in the pharmaceutical supply chain and discovered:
- 91% of the executives consider pharmaceutical cargo theft to be the top threat to their business.
- Over 80% feel that the risk of theft had increased over the previous three years.
- 36% thought there was a significant increase in cargo theft during that time period.
These opinions clearly indicate that a) pharmaceutical cargo theft is a big threat to business, b) the threat of theft is increasing, and c) it’s increasing significantly.
One of the key ways that pharmaceutical companies protect themselves from this threat is through global intelligence education, which includes numbers on reported cargo thefts. It also includes alerts on specific hotspots, modus operandi, and types of theft that are occurring where their company’s products are moving throughout the world.
However, there is an increasing issue with getting this intelligence, because for a variety of reasons, there is significant underreporting of pharmaceutical thefts globally.
A recent case in the United States is a perfect example of this. A large food and drug retailer was required to pay a $3 million settlement for failing to report the theft of drugs. A U. S. Drug Enforcement Administration official said that this kind of reporting delay is “alarming.”
To gain a better understanding of the extent to which cargo theft underreporting occurs, the SensiGuardTM SCIC and I once again surveyed this segment. We solicited opinions from European pharmaceutical manufacturer security personnel, risk managers, product security representatives, supply chain distribution specialists, insurance experts, and law enforcement.
We explored how much underreporting these executives believe occurs in the pharmaceutical industry from a global perspective and here’s what we found out:
- Across the board, almost all the executives surveyed agree that underreporting is a significant occurrence. In fact, over 80% of these industry experts believe there is a major-to-moderate problem in the reporting of pharmaceutical thefts. Less than 3% believe there is no problem.
- To put this in perspective, consider there were 52 reported thefts of pharmaceutical cargo in Europe in 2017. Almost all (93%) of the executives surveyed believe that the actual number of unreported thefts was at least twice the number of reported crimes reported that year.
- Drilling down deeper, over a third of the respondents stated that the number of unreported thefts was most likely three to five times greater than what was reported.
- Even more concerning, there were over 20% of respondents that believed the actual number of thefts could be five to ten times greater than the 52 reported crimes.
- Based on these findings, a conservative estimate for the actual number of pharmaceutical cargo thefts in 2017 could be anywhere from 260 to 520 incidents.
Are the risks worth it?
The results of our underreporting research show that people who work in the pharmaceutical industry in Europe believe that cargo theft underreporting is a problem and it is very prevalent. By not reporting any type of theft, especially significant ones to law enforcement and data monitoring companies, pharmaceutical companies contribute to misinformation and a sense of false security within the industry and to other interested parties (such as insurance companies).
This kind of misreporting may help with short-term goals, but in the end, the costs could be exorbitant. Given these insights, it would be wise for pharmaceutical companies to reconsider their security measures, especially as criminals are becoming more sophisticated and the theft of pharmaceuticals is more lucrative.
To learn more about this issue, read the full report on this topic: Pharmaceutical Cargo Theft in Europe: Insights into the Severity of Potential Underreporting. For more information, you can also access Pharmaceutical Cargo Theft: Uncovering the True Costs.