Today’s biopharmaceutical supply chains often stretch around the world. Key starting materials (KSM) and API originate more frequently from Asia. Manufacturing is commonly conducted in Europe and North America. And commercial distribution is spread across the globe. This globalization has resulted in increased logistics and global trade compliance (GTC) complexity along with ever-changing import/export compliance requirements.
On a global level, WTO and WCO treaties set the rules and regulations of fair trade and customs for valuation, origin, and tariff classification. Moreover, there are now five US agencies involved in import controls (FDA, CDC, USDA, EPA & CBP) that are governed by CFRs other than 21. Outside the US, each country has its own evolving regulations that cover import licensing, VAT and duties, and intellectual property.
More recently, countries are using global trade to advance national and foreign policy agendas. Trade policies are also playing an important role in ensuring national security. Laws such as C-TPAT (Customs & Trade Partnership Against Terrorism) are an example here in the US. In addition, the past several years include actions that shift the burden of compliance from customs to importers.
All of this increases the importance of GTC for life science companies. While the supply chain may be global, the ability to move material across global borders is not an inherent right. Even early-stage companies must demonstrate “reasonable care.” This concept was first introduced with the passing of the Customs Modernization Act of 1993 and shifts responsibility to importers of record. They are now required to inform themselves of all laws/legal obligations and regulations pertaining to their own customs business activities. Non-compliance can lead to penalties, delays in customs clearances, intensive investigation, revocation of import/export privileges, heavy fines, prosecution, or even imprisonment in cases of fraud or gross negligence.