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 1 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 2 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. 3 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) 4 Cargo Theft – A Global Problem Source: www.cargosecurityinternational.com, Global Cargo Theft Trends 2011 2014 PDA/ FDA Pharmaceutical Supply Chain Conference 5 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 6 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 7 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 8 Working Model Outline • • • • • • • • • 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 9 9 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 10 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 11 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 12 Procedural Security • Protective Measures • General Security Procedures • Carrier Commitment • Load Value Limitations • Domestic/International Supply Chain Security Programs • CTPAT • AEO 13 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 14 Product Receiving Standards • General Requirements • Damage, Incident and Deviations • Documentation of issues • Insurance Requirements • Overages and Returned Damaged Products • Warehouse and Storage Facility Standards 15 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) 16 Rx-360 Cargo Theft in High Risk Area Mitigation Options Matrix Page 1 17 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 18 Rx-360 Cargo Theft in High Risk Area Mitigation Options Matrix Page 2 19 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 20 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 21 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
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