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Plainfield's MD Logistics sued by Bristol-Myers over lost insulin

December 12, 2009
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Sometime during the wee hours of Thanksgiving 2007, two semi trailers containing $30 million worth of insulin disappeared from the back lot of a Plainfield trucking company.

Except for a few vials found in Florida, the insulin hasn’t been seen since.

Now, two years later, Bristol-Myers Squibb wants a federal court to compel its freight forwarder, Plainfield-based MD Logistics, to pay $10.7 million plus interest and other damages for alleged negligence and misrepresentation in the loss of the insulin.

New York City-based Bristol-Myers filed the suit Nov. 20 in U.S. District Court for the Southern District of Indiana. It’s a potentially costly case for MD Logistics, which has about 120 full-time employees and revenue of more than $35 million.

The suit is a reminder of the risks for logistics operators, who often hire other firms as part of fulfilling contracts with customers.

In the case of the insulin, the theft occurred not on MD Logistics’ property but from a back lot of nearby Daum Trucking, which was to have shipped the load for MD.

Daum is not named as a defendant in the lawsuit, however.

“I was a little surprised, I guess,” Mark Sell, CEO of MD Logistics, said of the Bristol-Myers complaint filed in Indianapolis.

Bristol-Myers argues an amendment to the Interstate Commerce Act, and terms of its contract with the freight forwarder, places liability ultimately on MD.

The drugmaker has been a client of MD Logistics since 2003. Bristol-Myers for years had distributed insulin products manufactured by Denmark pharmaceutical firm Novo Nordisk.

According to the lawsuit, Novo notified MD that customers in Ohio and Tennessee sought deliveries of insulin on the day after Thanksgiving 2007. Daum picked up the shipments from MD Logistics’ Plainfield warehouse a couple of days before and parked the three trailers overnight at Daum’s Plainfield facility.

Before Daum’s picking up the shipments, an MD employee allegedly told Novo in an e-mail that the property where the insulin would sit overnight in refrigerated trailers did not have a fence but was in an upscale residential area and that the property was monitored by cameras.

But two of the three trailers were parked in a back lot that had neither cameras nor a fence, and the lot was connected to an unsecured access road, according to the complaint.

Novo sought compensation the following January from Bristol-Myers, which in turn sought a recovery from MD. The logistics firm denied the claim except for $42,330, according to the complaint.

It contends that MD misrepresented the security conditions at Daum’s lot and never disclosed the potential risks of theft.

Sell of MD Logistics declined to discuss the case further. He would not confirm whether Bristol-Myers is still a client. MD Logistics had yet to file a response to the drugmaker’s allegations.

Doug Daum, vice president of Daum Trucking, said his firm stepped up security measures since the 2007 incident.

“We make sure it’s guarded well,” he said.

In the first half of 2009, there were 14 major incidents of stolen pharmaceutical cargo worth $73 million, according to Austin, Texas-based FreightWatch International.

One such load was worth $37 million, though it was later recovered. The average loss was $6.7 million, with a growing trend of theft not at truck stops as in years past, but at unsecured carrier drop lots, FreightWatch said.

Insulin thefts have rung alarm bells at the U.S. Food and Drug Administration, which has received complaints from diabetics who used stolen medicine that didn’t work because it had perished.

Privately held MD Logistics in recent years has expanded its Plainfield facilities that include two distribution centers with more than 750,000 square feet.

Last year, it added a new refrigerated warehouse to store medicines, receiving more than $380,000 in state income tax credits and training grants, plus tax abatement.•

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