With mass-storage firmware, the PIC18F4550 functions as a flash drive itself; it doesn't interface to one. Microchip also has USB host chips.
I don't know how the USBcipher works but possibly it contains a mass-storage device (the plug interface) that attaches to a PC along with an embedded host (the receptacle) that encrypts/decrypts the mass-storage data and writes the data to/reads the data from an attached drive. The firmware would need to manage the two hosts (embedded and PC) that are accessing the embedded mass-storage device so only one host accesses the device at a time. One way to find out would be to obtain one and hook it up to a protocol analyzer.
BitLocker and other software can also encrypt flash drives.