USA Law and Practice Contributed by: Daniel Kracov, David Marsh and Alice Ho, Arnold & Porter
7.4 Non-Tariff Regulations and Restrictions Imposed Upon Imports Upon entry into the USA, declarations and information must utilise the Customs Harmonized Tariff Schedule codes according to the Harmonized Tariff Schedule of the US (HTSUS) and FDA product codes. Such dec- larations are subject to specific regulations issued by US Customs and Border Protection and the FDA. A failure to classify a product properly may result in an improper payment of customs duties and, conse- quently, associated penalties. 7.5 Trade Blocs and Free Trade Agreements The USA is a member of the WTO and has free trade agreements in effect with 20 countries. Some are bilat- eral agreements, but others are multilateral in nature. The USA is also party to Trade and Investment Frame- work Agreements that provide frameworks for govern- ments to discuss and resolve trade and investment issues at an early stage, as well as bilateral investment treaties that help protect private investment, develop market-oriented policies in partner countries, and promote US exports. Under the current administra- tion, however, the USA has proposed a 100% tariff on imported, branded or patented pharmaceuticals from select nations, although implementation has been delayed or paused due to negotiations with manu- facturers, with exemptions for companies building US plants, entering into pricing agreements or making other commitments. 8. Pharmaceutical and Medical Device Pricing and Reimbursement 8.1 Price Control for Pharmaceuticals and Medical Devices Until recently, the USA had little in the way of pricing limitations on pharmaceutical products and medical devices. Therefore, in most cases, the manufacturer of a product sets the initial price and adjusts prices (including rebates and other price concessions) over time in response to market conditions. However, in a major shift, the Inflation Reduction Act 2022 (IRA) incorporated provisions to lower prescription drug costs for those covered by Medicare and reduce drug spending by the federal government. Among others, the IRA includes the following provisions.
importation of foreign products for their own use, if based upon a prescription from a healthcare profes- sional and a lack of alternatives in the USA. At the border, the primary regulators are the FDA (administering the FD&C Act for potential violations) and US Customs and Border Protection (administer- ing the broad array of US laws governing customs matters). Other agencies – for example, the Depart- ment of Commerce and the Department of Agriculture – may have responsibilities as well, depending on the nature of the imported article. 7.2 Importer of Record of Pharmaceuticals and Medical Devices Importers of record may be designated by the manu- facturer or distributor and they have specific respon- sibilities. A US importer of record (ie, the owner, pur- chaser, or licensed customs broker designated by the owner, purchaser or consignee) files entry documents for the goods with the port director at the goods’ port of entry. It is the importer of record’s responsibility to arrange for the examination and release of the goods. Initial importers may also be responsible for meeting registration and listing requirements. US Customs and Border Protection requires the importer of record to file an importation bond that is typically equal to at least three times the invoice value of the goods. 7.3 Prior Authorisations for the Import of Pharmaceuticals and Medical Devices In order to be lawfully imported, a drug or medical device must be either: • cleared or approved (and the product properly listed in association with a registered establish- ment); or • the subject of an active IND or IDE. Exceptions are made for importation of a very limited amount of a product for personal use. The FDA will also work with potential importers in certain situations (eg, compassionate use or short supply) to expedite the satisfaction of regulatory requirements.
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