Using FTZs to Treat Pharma Challenges

Every day, pharmaceutical manufacturers navigate complicated regulations while managing costs and reducing risk. Foreign trade zones (FTZs) can help, but only if manufacturers understand what they are, their potential benefits, and how to best use them.

FTZs—areas in or next to U.S. ports of entry under the control of Customs and Border Protection (CBP) but considered outside CBP territory—are designed to remove certain disincentives associated with manufacturing in the United States. But they can also offer advantages to international manufacturers before their products enter U.S. commerce.

Formal CBP entry procedures and duty payments are only required once a product enters CBP territory for domestic consumption. FTZs allow products to move in or out of these designated areas for storage, assembly, manufacturing, and processing, without actually entering U.S. commerce, although they are on U.S. soil. In pharma, this practice has many benefits, such as allowing drug makers to defer duties and manage costs until their products enter U.S. commerce.

Pharma manufacturers with any imported products, whether raw materials, active pharmaceutical ingredients, or finished drug products, should evaluate the benefits of FTZs and consider a strategy that effectively leverages them.

Additional Benefits

FTZs can also minimize risk and expedite a pharma manufacturer’s entry into the United States, pending FDA approval. The U.S. FDA approval process often takes one year or more to complete. FTZs allow manufacturers to store treatments for inventory, warehousing, re-labeling, repackaging, and exporting to other countries in the meantime. Once approved, treatments can be immediately released from the FTZ, increasing delivery speed and enhancing patient access.

Once a product has launched and requires reoccurring U.S. shipments, CBP has implemented the weekly entry filing (WEF) program, which allows customs brokers to submit an estimate of the product that will be withdrawn from the FTZ and offered for consumption into the United States during the subsequent seven days. This program is designed for repetitive, high-volume entries of low-risk products, including some FDA-regulated drugs.

After the FDA approves the process, products would no longer require additional sampling or examination. These programs enable manufacturers to get their therapies quickly and efficiently to the patients who need them.

How a 3PL Can Help

FTZs offer tangible benefits but they require a thoughtful approach and resources to manage. As a result, some manufacturers work with a third-party logistics (3PL) partner that operates an FTZ and can help leverage an FTZ strategy and assist with storage, receiving, and fulfilling orders.

Using an FTZ and 3PL can defer costs, speed delivery, and increase efficiencies. But the most important benefit, in pharma, is to get treatments to patients faster.