🇺🇸United States

Risk of Counterfeit and Unauthorized Medical Materiel Entering Military Supply Chains

1 verified sources

Definition

DoD medical materiel management policy explicitly lists counterfeit materiel and unauthorized supply chain activities as key risks that must be monitored and mitigated in the medical supply chain, indicating prior or ongoing attempts to inject non‑authentic or unapproved products. Even when detected before patient use, investigation, quarantine, and replacement of suspect product impose recurring costs.

Key Findings

  • Financial Impact: Low millions of dollars over multi‑year periods across DoD due to investigations, write‑offs of suspect stock, and premium sourcing to replace compromised items (signalized by the creation of dedicated supply chain risk management programs and controls).
  • Frequency: Monthly
  • Root Cause: Globalized sourcing, emergency procurement during crises, and use of multiple intermediaries heighten vulnerability to counterfeit or unauthorized suppliers; inconsistent vetting and monitoring practices further increase exposure, necessitating costly risk management and remediation.

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Armed Forces.

Affected Stakeholders

DLA medical contracting and procurement officers, Supply chain risk management teams, Depot and warehouse managers, Investigators and auditors within DoD logistics and law enforcement, Clinical staff when products must be withdrawn or replaced

Deep Analysis (Premium)

Financial Impact

$1.2M - $3.5M annually across Active Duty medical supply chains due to investigation costs, quarantine of suspect stock, premium expedited sourcing for replacement materiel, and potential litigation from use of compromised products • $1.2M-$3M annually (actual counterfeit write-offs, premium expedited replacement sourcing, finance labor for manual cost tracking, audit/investigation labor, potential budget shortfalls mid-year) • $1.2M-$3M annually (vendor selection errors leading to counterfeit incidents, premium costs for emergency replacement sourcing when counterfeit discovered, investigation and remediation labor, potential mission disruption)

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Current Workarounds

Excel spreadsheets, manual logs, email chains tracking suspect/confirmed counterfeit incidents; spreadsheet-based write-off and replacement cost tracking; phone calls to procurement and GIDEP coordinators for incident verification • Manual audit of dependent clinic vendor files, email requests for documentation from clinic staff, spreadsheet audit findings compilation, word document report, phone calls to clarify vendor authorization • Manual coordination via email with VA supply officers, separate investigation files maintained in VA and DoD systems, phone calls for verification, paper-based incident documentation, dual manual record-keeping

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Excess Medical Inventory and Buffer Stock in Military Treatment Facilities

Several million dollars per year across the DLA medical supply chain and Army medical treatment facilities due to over‑stock, obsolescence, and expiry (exact enterprise dollar figure not disclosed, but stock-keeping units were cut from ~1,600 to 1,100 to reduce carrying costs, indicating large recurring savings and corresponding prior losses).

Waste from Medical Product Expiry and Environmental Exposure in Deployed Supply Chains

Estimable at hundreds of thousands to low millions of dollars per year across large deployments due to expired or temperature‑compromised medicines that must be written off (NATO documents treat this as a recurring risk that must be mitigated with quality systems and controls).

Cost of Poor Quality from Substandard or Degraded Medical Products in Military Operations

Recurring losses in the hundreds of thousands of dollars per year across major operations due to product recalls, destruction of compromised stock, and duplicated treatment or diagnostic procedures (precise aggregate figures are not publicly broken out but are material enough to justify detailed quality management frameworks).

Operational Capacity Loss from Inefficient Medical Logistics and Delayed Deliveries

Lost productivity and mission impact equivalent to several million dollars per year across the enterprise when surgeries or treatments are delayed and personnel are underutilized due to missing supplies (queueing and optimization research on military medical logistics is funded precisely because these inefficiencies are material).

Regulatory and Policy Non‑Compliance Risk in Military Medical Distribution

Typically in the hundreds of thousands of dollars per year across large commands for remediation projects, additional inspections, training, and system upgrades triggered by audit and compliance findings in medical supply operations.

Poor Sourcing and Inventory Decisions from Limited End‑to‑End Visibility

Several million dollars per year in avoidable spend and opportunity cost across the DoD medical supply chain, inferred from the scale of optimization initiatives and system‑modernization investments aimed at correcting prior inefficiencies.

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