Pharmaceuticals

The Pharmaceutical industry is typified by stringent regulatory controls and massive R&D spending.

No country is entirely self-reliant for the pharmaceutical products and equipment it needs for its public health systems – most rely heavily on imports. Trade statistics, therefore, provide valuable insights into the evolution of patterns of access to health-related products. The factors affecting imports influence availability as well as prices of health-related products and technologies, and thus have immediate consequences for access. Tariffs are one of the key factors influencing imports, but price and availability are also determined by non-tariff measures (e.g. licences, regulations and import formalities) and import-related costs, such as transportation. In addition, national distribution costs, such as wholesale and retail mark-ups and dispensing fees, may increase prices dramatically.

Analysing trade statistics and tariffs on health-related products is difficult in the absence of a well-defined classification of health products in WTO agreements and the Harmonized Commodity Description and Coding System (HS) of tariff nomenclature (used to monitor international trade). Many products – such as chemical ingredients – have both medical and non-medical end uses. The main categories are in HS29 (Organic Chemicals) and in HS30 (Pharmaceutical Products).

International trade is crucial to ensuring access to medicines and other medical products. Developing countries, least-developed countries (LDCs) and transition economies comprise 85 percent of the world’s population but account only for 30 percent of imports and 20 percent of exports of internationally traded health-related products. Developed countries have largely eliminated tariffs on health-related products, in line with a WTO agreement on pharmaceutical trade. Tariffs applied by other countries have also fallen significantly, but the picture is still mixed. Tariffs on all groups of health-related products have been reduced since 1996. Tariffs on pharmaceutical products (Groups A1 and A2) have been markedly reduced in developing countries and LDCs and remained close to zero in developed countries. Tariffs on general purpose chemical inputs remain the most protected product category in all three country groups.

During the Uruguay Round of the WTO negotiations, the United States, Canada, the European Union, Japan, Norway, Switzerland and several other major trading partners agreed to reciprocal tariff elimination, a so-called “zero-for-zero initiative,” for pharmaceutical products and for chemical intermediates used in the production of pharmaceuticals. Pharmaceutical-producing countries accounting for approximately 90 percent of global production of the subject pharmaceutical chemicals participate in the Agreement. Members of the pharmaceutical initiative have agreed to periodically update the list of items eligible for duty elimination as new pharmaceutical products and chemical intermediates are developed.

We have had many years of experience assisting multi-national pharmaceutical manufacturers, importers and exporters. Some key services are listed below:

• Counterfeiting (and parallel imports) is a huge issue for pharmaceutical companies.  As well as the reduced revenue to genuine pharmaceutical companies, there are major health risks associated with counterfeit pharmaceuticals. We can help with intellectual property protection. We can ensure, on a global basis, that pharmaceutical companies are “registered” with the relevant Customs authority, to check for counterfeit goods on importation and exportation.
• Our customs valuation planning service facilitates compliance with the minimum price restrictions. We can also assist with the customs valuation treatment of Active Pharmaceutical Ingredients (APIs), drugs and medical devices, compounds; and medicines and equipment imported for clinical trials in addition to intangibles such as royalties and R&D costs.
• We can advise on non-tariff barriers such as import licensing requirements for pharmaceuticals and medical devices.
• We can help with tariff classification. Many products – such as chemical ingredients – have both medical and non-medical end uses. The main categories are in HS29 (Organic Chemicals) and in HS30 (Pharmaceutical Products.