Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Risk Management and How to Prevent
Cargo Theft Point to Consider
Brad Elrod
FDA Letter to Pharma Industry
Select quotes from the FDA Letter
Department of Health and Human Services
FDA Cargo/Warehouse Letter to Shareholders
April 28, 2010
• FDA is very concerned about the increase in cargo and warehouse thefts of FDA regulated
products.
• These crimes threaten the public health.
• The best intervention is to prevent these thefts from occurring in the first place.
• Firms engaged in providing medical products to the public have a fundamental responsibility to
continuously review their warehouse physical security and security practices for transporting
products to ensure that measures are in place to minimize the risk of warehouse and cargo theft.
• Promptly notify FDA's Office of Criminal Investigations (OCI) as soon as possible when a theft has
occurred.
• Prompt public notification of the theft is a critical step in protecting the public health.
Full text of the letter is available at:
http://www.fda.gov/ICECI/CriminalInvestigations/ucm209979.htm
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Emerging Supply Chain Security Regulations
Compliance Drivers
Timing (Estimated)
Business Implication
● Effective April
US ‐ FDA Letter to Industry • Emphasizes each firm’s responsibility to review and strengthen their conveyance security practices; Requires firms to contact the FDA promptly when a theft occurs
US – Secure Supply Chain Pilot
• Magnifies accountability for security practices across the end‐to‐end • Pilot in 2013
US – FDA Safety & Innovation Act
• Drug supply chain safety provisions such as unique facility identifiers and import requirements
• Passed 2012; US ‐ Drug Safety & Quality Act
• Primarily associated with serialization, these requirements will raise the bar of the business for tracking and GDPs
• Jan 2015, 2017, China ‐ Ministry of Health GDPs
• Published Jan • Applies to manufacturers, distributors, and wholesalers. 2013, effective Jun • Much more extensive than current Good Supply Practices, regulating EU – Falsified Medicines Directive & GDPs
•Emphasizes that integrity of the product during transport needs to be • Update issued 2010
supply chain; trusted importer potential
storage, transportation, and IT well documented •Outlines responsibility of the wholesaler to protect medicinal product against theft. Guidance 2013
and 2023
2013/2016
November 2013; Effective immediately
Regulators worldwide have elevated their attention to supply chain risks
Conveyance Security is being spotlighted as a high risk area for patient safety
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Purpose – Rx‐360 Cargo Risk Assessment Team
Outline the potential factors that a pharmaceutical
company should consider when determining how to
best mitigate the risks faced within the modern global
supply chain in terms of cargo theft prevention and
protection.
Provide guidance on how to prepare programs that
can assist companies with little or no experience in
this area to initiate steps to better protect their
products while in the logistics system.
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Background
Cargo theft is on
the rise globally
To curb future cargo theft, it is imperative that
pharmaceutical companies develop solid, globally
applicable conveyance security programs
Our concerted efforts as an industry are
already demonstrating risk reduction
Thieves are becoming
increasingly ingenious in
how they have attacked their targets
We must remain vigilant
Countries most at risk for cargo theft (in order of threat) are Mexico, Brazil, South Africa, the United States, Russia, India and the United Kingdom (FreightWatch International)
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Cargo Theft – A Global Problem
Source: www.cargosecurityinternational.com, Global Cargo Theft Trends 2011
2014 PDA/ FDA Pharmaceutical Supply Chain Conference
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Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Pharmaceutical Theft ‐ Regional Observations
EMEA •Thefts in transit and on distributor’s premises •Tend to be sporadic • Small quantities
• Some places have a different view of theft to that established elsewhere NORTH AMERICA
• Large thefts with big payoffs
• Sophisticated criminals
e.g. a heist from a Eli Lilly warehouse resulted in $75 million of stolen medicines
LATIN AMERICA
• Criminal gangs are well organized
• Incidents are often violent and significant in scale e.g. trucks being hijacked at gunpoint
• Infrastructure challenges
• Corruption • Law enforcement is ineffective
ASIA‐PAC
• Tends to be opportunistic • Small quantities
• Law enforcement is random
• Infrastructure challenges
• Sometimes experience a different view of theft to that established elsewhere
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Building a Comprehensive Risk Based Program – Survey Results
Objective
• To determine what risk factors are most important to companies in determining the risk associated with shipping products/materials from a security perspective.
• Patient Safety
• Service Provider
• Carrier/Logistics
• Market Impact
• Attractiveness of freight to • Regional Considerations
criminals
Risk
Factors
Mitigating/
Prevention Factors • Standard of Care Security Procedures
• Carrier Security Requirements
• Carriers/Logistics Service Providers
As an industry, we face similar concerns and issues
in regard to risk assessment and security planning
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Customizing Risk Factors
 Financial Exposure
 Nature of the Freight
 Cold Chain Shipments
 Attractiveness of Freight to Criminals
 Carrier/Logistics Service Provider
 Mode of conveyance
The top five are a guide. To build
the risk model, detailed risk factors
are weighted to meet the product
specific concerns, in a particular
region, with specific threats
 Brokering / subcontracting of shipment
 Regional Risk Factor
 Routing of freight
 Duration of shipment
 Market impact
 Patient Safety
 Risk Assessment Model
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Working Model Outline
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•
•
•
•
•
•
•
•
Conveyance Responsibilities
Product Shipping Standards
Conveyance Security Measures
Procedural Security
Temperature Control
In-transit Shipping Standards
Product Receiving Standards
Incident Reporting Process
Warehouse and Storage Facility Standards
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Outline of Responsibilities for Conveyance Security
• Company & Site Management
• Logistics Personnel
• Point of origin
• Point of destination
• Conveyance Security Training Program
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Product Shipping Standards
• Carrier Selection and Contracting
• Driver Selection and Identification
• Trucks, Trailers and Containers
• High Value / High Risk Products
• Carrier / Broker Assessment Procedures
• Security requirements
• Frequency of assessments
• Subcontractors
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Conveyance Security Measures
• Physical Security
• Trailer and Container Security
• Locks
• Electronic Security
GEO F5
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Procedural Security
• Protective Measures
• General Security Procedures
• Carrier Commitment
• Load Value Limitations
• Domestic/International Supply Chain Security
Programs
• CTPAT
• AEO
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Temperature Control / In‐Transit Shipping Standards
• Point of Origin Requirements
• Point of Destination Requirements
• Transit Routes and Times
• In Transit Procedures
• Communication and Reporting
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Product Receiving Standards
• General Requirements
• Damage, Incident and Deviations
• Documentation of issues
• Insurance Requirements
• Overages and Returned Damaged Products
• Warehouse and Storage Facility Standards
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Overview of Risk Assessment Model
• Model is used to determine risk level associated
with transporting products/material within a
pharmaceutical supply chain
• Model is flexible and can be customized to meet
each company’s requirements, values and
concerns
• Risk factor categories, definitions, weighting and risk
threshold levels can be modified
• Analyze results for each risk item
• Customize threshold values to determine risk level (High,
Medium and Low)
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Rx-360 Cargo Theft in High Risk
Area Mitigation Options Matrix
Page 1
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Rx-360 Cargo Theft in High Risk
Area Mitigation Options Matrix
Page 1
Continued
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Rx-360 Cargo Theft in High Risk
Area Mitigation Options Matrix
Page 2
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Rx-360 Cargo Theft in High Risk
Area Mitigation Options Matrix
Page 2
Continued
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Concluding Remarks
• The focus of any program should remain centered on patient safety
• Success is dependent on the continued cooperative environment
among companies and regulatory agencies
• It is critical that any conveyance security program be actively
managed and monitored
• The new risk matrix tool to help companies identify the level of risk
in shipping pharmaceutical products in various regions around the
globe
• Link to Conveyance Risk Assessment White Paper:
http://rx-360.org/LinkClick.aspx?fileticket=Bn9LgBboVsc%3d&tabid=209
• Link to Risk Assessment Tool (Attachment 2 to White Paper):
http://www.rx360.org/LinkClick.aspx?fileticket=Z3xrL8gFVFA%3d&tabid=209
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2014 PDA/ FDA Pharmaceutical Supply Chain Conference
Presented By:
Brad Elrod
B1: Supply Chain Security: Cargo Theft
Questions – Thoughts – Ideas 22
2014 PDA/ FDA Pharmaceutical Supply Chain Conference