Hartford Courant: Rx Warehouse and Cargo Thefts on the Rise

In the March 28th issue of the Hartford Courant, Janice Posada reports in excellent detail about the rising trend of prescription drugs thefts and the rapid emergence of the lucrative criminal activity of cargo and warehouse theft of prescription drugs.

Presumably the break-in of the Eli Lilly & Company warehouse in Enfield, Connecticut, where over $75 million dollars of prescription drugs (without taking any narcotics and painkillers) was the impetus behind this story. In this act, the thieves made off with pallets of anti-cancer, schizophrenia, depression and prescription drugs to sell in foreign or black markets.

Until this most recent incident, many were not aware of this entire subset of criminal activity. The black market for stolen brand name prescription drugs has become one of the more lucrative parts of the illegal drug trade, once the stolen product is secured it can be shipped to a foreign country, re-sold into the legitimate supply chain or re-packaged for sale directly to consumers for extraordinary profit.

In the article, Ms. Posada details the financial motivation, sophistication, health risk to consumers and the easy money to be made in the theft and resale of prescription drugs. There were some great quotes in article from several industry and regulatory experts.

Marvin D. Shepherd a Professor at the University of Texas College Of Pharmacy at Austin and an expert in prescription drug theft and diversion:

• The theft of prescription drugs, from blood thinners to insulin, "has exploded in the last five years," The types of drugs thieves go after also has changed. Until recently, the most sought-after drugs were narcotics and prescription painkillers,”


• "It used to be small-scale stuff where some guy walked into a pharmacy with a gun looking for OxyContin. Now they're looking for brand-name prescription drugs.”


• "A couple years ago in Florida, they were stealing Procrit. From the records they found, police estimated the thieves made $40 million."


• "We haven't found a lot of these stolen drugs, which leads me to believe they're either going out of the country or they're being cleverly relabeled."

John Burke, President of the National Association of Drug Diversion Investigators, a nonprofit group that coordinates drug theft investigations comments on the Lilly theft:

• "These are very expensive drugs, it’s likely these thieves didn't just drop in and start grabbing stuff. It's almost as though they had an order for it. It's too well-planned. This is the biggest heist I can think of in many, many years.”


• "They'll make at least $20 million on the black market with these drugs. That's my guess. If a pill sells for $10, they'll get $3 or $4 for it."


• "It's all about the money. These drugs won't be peddled on the street in the same way you would peddle addictive drugs.


• "There are lots of options. They could go to a foreign market. They may be distributed by an unscrupulous wholesaler to U.S. pharmacies, in particular, independent pharmacies."


• "If you're a wholesaler and you get these drugs for an extraordinarily lower price than what you normally pay for it, and re-sell it to a pharmacy, you can make a lot of money. In fact, thieves are likely to make more money from the sale of stolen cancer drugs and antidepressants than from a similar cache of narcotics, such as OxyContin or Vicodin.

Ilisa Bernstein, the FDA's Director of Pharmacy Affairs, comments in the article about the theft of prescription medicines, over-the-counter drugs and medical devices:

• "Cargo and warehouse theft is an increasing problem that threatens the public health. And is one that the "FDA and law enforcement cannot solve ... alone. Participants in the supply chain must step to the plate and ensure that their security practices are as solid as they can be."


• Stolen drugs can deteriorate or lose their medicinal properties if they're improperly stored, creating a public health threat. And thieves do not abide by the storage recommendations for drug products.”


• "Patients can be harmed if these products are not stored or handled properly, or have been tampered with. We have received adverse reports of patients taking stolen insulin who could not control their blood sugar. The insulin probably was not stored and handled properly and lost its potency.”

This is an excellent article for those not in-the-know as it relates to this major criminal issue within the pharmaceutical supply chain. XStream Systems endorses the concept of verification and authentication at each step of the pharmaceutical supply chain to combat theft, fraud, adulteration and counterfeit medications and protect the healthcare consumer.


To read the article in the Hartford Courant, visit: http://www.courant.com/news/health/hc-stolen-drugs-0328.artmar28,0,5569692,full.story.

Are Counterfeit Drugs in the U.S. Supply Chain?

The general consensus has always been that only a small amount of counterfeit drugs are in the domestic supply chain. True relatively speaking, the percentage of counterfeits found in the United States is lower (estimated at around 1%) than some underdeveloped countries (estimated as high as 50%).

However, this does not paint the whole picture… The U.S. has almost 43% of the market share, which means there are still thousands of counterfeit pills in our distribution cycle. To the consumer that is a victim, it matters not whether he is in the company of many fellow victims or only a few.

Furthermore, the frequency of counterfeits is increasing in more developed countries such as the U.K and the U.S. Now, incidents are showing up in the regular supply chain as you can see from the following news items:

First Foreign National Extradicted For Importing And Distributing Counterfeit Pharmaceuticals Drugs In U. S. Sentenced To Prison
Randy Gonzales, 40, a citizen of the Republic of the Philippines, was sentenced to prison for his role in a scheme to manufacture, import and distribute counterfeit pharmaceutical drugs in the United States.

Gonzales was extradited to the United States from Bangkok, Thailand on March 26, 2008 and indicted four days later. Special agents of the Immigration and Customs Enforcement (ICE) and the Food and Drug Administration Office of Criminal Investigations (FDA)seized more than 60,000 counterfeit Viagra pills and 15,000 counterfeit Cialis pills. The counterfeit drugs were valued at more than $776,000.


Miami Man Sentenced To 20 Years For Massive Drug Diversion Operation
A Miami man has been sentenced to 20 years in prison for running a massive drug diversion operation that made millions of dollars in illegal profit. Jose Luis Perez, 52, had illegally bought expired, counterfeit or adulterated medicines, relabeled them and shipped them through a series of his own pharmaceutical firms in order to sell them to mainstream suppliers.

Investigators were tipped off by a Cincinnati pharmaceutical wholesaler who, while filling a prescription, noticed that the wrong pills were inside and the accompanying paperwork was for a different drug.

At Perez’ Hialeah warehouse, law enforcement officers found $500,000 of prescription pills used for the treatment of HIV-related illnesses, Schizophrenia and erectile dysfunction. Law enforcement also found counterfeit labels and prescription paperwork for more that $8 million-worth of pharmaceuticals.


Local pharmacist, businesses disciplined by state
(Nov. 30, 2008; The Telegraph) In 2006, Hudson resident Richard Minasian, owner of Nashua-based Armin Medical LLC, pleaded no contest in a Florida court that he and a Miami man had sold drugs with fake pedigrees.

That same year, the New Hampshire Board of Pharmacy revoked Minasian's license to sell drugs for at least 10 years, and he was assessed a $29,000 fine, but $20,000 of it was stayed for two years pending good behavior.


As these stories indicate, government intervention is gearing up and we at XStream Systems applaud the increased authority given to FDA and law officials to seize products and prosecute criminals. But the reality is that these undercover operations often take a year or more to complete. During this time consumers, wholesalers, and repackagers are exposed.

Now is time for businesses to protect themselves and their customers by effectively securing their on-site inventories. It is too late to hide our heads in the sand and deny that counterfeits exist – they do and what are the implications for you if they unknowingly pass through your hands!