compliance in cross border pharmaceutical trade

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The role of compliance in pharmaceutical cross-border trade Phamaceutical Society of Nigeria Global Trade Compliance Summit Sheraton Hotel, Lagos (May 22,2014) Presented by Remi ADESEUN, FPSN.

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Page 1: Compliance in cross border pharmaceutical trade

The role of compliance in pharmaceutical cross-border trade

Phamaceutical Society of NigeriaGlobal Trade Compliance SummitSheraton Hotel, Lagos (May 22,2014)Presented by Remi ADESEUN, FPSN.

Page 2: Compliance in cross border pharmaceutical trade

Introduction Key Concepts: Globalisation, Global Trade/Cross-Border

(Pharmaceutical)Trade Focus on Africa

Compliance Trade (General) Pharmaceutical

Regulators NAFDAC Nigeria Customs Service

Industry (Consumer) Angle Best Practice Summary

Remi ADESEUN

Page 3: Compliance in cross border pharmaceutical trade

What is Globalisation? From the Business Perspective: 

Globalisation is the worldwide movement toward Economic, financial, Trade, and communications integration.

4 Basic Aspects according to IMF:  trade and transactions,  capital and investment movements,  migration and movement of people the dissemination of knowledge.[7]

Ref:International Monetary Fund . (2000). "Globalization: Threats or Opportunity." 12th April 2000: IMF Publications.

Page 4: Compliance in cross border pharmaceutical trade

Globalisation: Context & Focus Focus of this Paper: Global Economic

Integration or Economic Globalization process by which an

increasing share of the economic activity in the world is taking place between people from different countries

Page 6: Compliance in cross border pharmaceutical trade

Global Trade

Page 7: Compliance in cross border pharmaceutical trade

What is Cross-Border Trade? The buying and selling of 

goods and services  between businesses in neighboring 

countries, with the seller being in one country and

the buyer in the other country, for example, a company in the United States selling to a company in Canada. Or a company in Nigeria selling to a company in Ghana.

Page 8: Compliance in cross border pharmaceutical trade

Cross-Border Trade in Africa “One of the biggest obstacles to

industrialization in Africa is that African countries trade very little between themselves, 

only 10-12 percent of total trade, whereas regional trade accounts for 63% in EU, 40% in the US and 30% in Asean countries.”

Ref: http://kariobangi.com/2012/02/13/are-african-economies-too-similar/

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Cross-Border Trade Environment For Pharmaceuticals Key Requirements for Understanding

Extensive knowledge of Trade & Customs Practices around the world

Deep understanding of import and export laws and regulations, The Global Supply Chain Trade Processes and Controls

Extensive knowledge of Pharmaceutical Laws and Regulations

Forward-thinking attitude/Global Mindset Harmonisation of Regulatory Requirements

Page 10: Compliance in cross border pharmaceutical trade

Cross-Border Pharmaceutical Trade in Africa Harmonisation of Regulatory

Requirements is a key driver for increased intra-regional trade

East Africa has made significant progress in this regard by making Product Registration in one Country acceptable for trade in another country

Leading to improved Compliance and enhanced Cross-Border Pharmaceutical Trade

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Key Considerations for Successful Regional Harmonisation in Africa

A need to adopt a step-wise approach to harmonisation (e.g Start with Generics)

A need to invest in regulatory and industry capacity building,   Acknowledgment that NMRAs must follow through on their mandate

to promote and protect public health   Sustainability, transparency and trust building   Use of existing structures and broader REC strategies to advocate

for AMRH National sovereignty must be respected,   Existing forums should be used to provide regulators with practical

advocacy (African Medicines Regulators Conference (AFDRAC), International Conference for Drug Regulatory Authorities (ICDRA), International Conference on Harmonisation Global Cooperation Group (ICH-GCG)

Need for the Consortium to keep all stakeholders informed and involved  

Need to capitalise on strategic niche roles of key players including:WHO, NEPAD, DFID, etc.

Page 12: Compliance in cross border pharmaceutical trade

Industry’s Goals Improve Efficiency

Harmonisation of Regulatory Requirements

Speedier Port Clearance Reduce Cost Mitigate Risk Issues concerning

conducting cross-border business

Page 13: Compliance in cross border pharmaceutical trade

What is Trade Compliance Trade compliance is the process by

which goods enter into a Country in conformance with all laws and regulations of that Country.  

It should be the goal of the Customs Service to maximize trade compliance while facilitating the importation of legitimate cargo. 

Page 14: Compliance in cross border pharmaceutical trade

Drivers of Increased Compliance Focus in Cross-Border Pharmaceutical Trade tremendous increase in international

trade and transport, the growing awareness of trans-

national organized crime and, more recently,

the threat of terrorism. increased awareness in Customs

administrations that national and and international co-operation is essential

Page 15: Compliance in cross border pharmaceutical trade

Pharmaceutical Regulatory Aspects of Compliance in Cross-Border Pharmaceutical Trade Pharmacy & Drug Laws NAFDAC Act, Cap N1 LFN 2004 (formerly Decree 15 of 1993 as

amended) + 14 Subsidiary Regulations Drugs and Related Products (Registration, etc) Act Cap F33 LFN 2004

(Formerly Decree 19 of 1993 (as amended) Pharmacists Council of Nigeria (PCN) Act 91 of 1992 Food and Drugs Act Cap 150 LFN (as amended) National Drug Formulary and Essential Drugs List Act Cap 252 LFN 1990 Counterfeit and Fake Drugs and Unwholesome Processed Foods

(Miscellaneous Provisions) Cap 34 LFN 2004 (formerly Decree 25 of 1999)

Poisons and Pharmacy Act (PPA) Cap 535 LFN 1990 Dangerous Drugs Act (DDA) Cap 91 LFN 1990 NDLEA Act of 1989

Drug Laws

Poisons and Pharmacy Act (PPA) Cap 535 LFN 1990

Dangerous Drugs Act (DDA) Cap 91 LFN 1990

NDLEA Act of 1989

Remi ADESEUN

Page 16: Compliance in cross border pharmaceutical trade

NAFDAC MANDATE

NAFDAC was established by Decree No. 15 of 1993 (now NAFDAC Act CAP N1 LFN, 2004) to Regulate and Control the Importation, Exportation, manufacture, distribution, advertisement, sale and use of Foods, Drugs, Cosmetics, Medical Devices, Chemicals, Detergents and packaged water.

This mandate places on Ports Inspection Directorate (PID) the responsibility of carrying out the following functions and exercising powers as described in sections 5d,5e and 5g of the NAFDAC Act.

Page 17: Compliance in cross border pharmaceutical trade

NAFDAC Act CAP N1 LFN, 2004

5d) undertake inspection of imported food, drugs, cosmetics, medical devices, bottled water and chemicals and establish relevant quality assurance systems, including certification of the production sites and of the regulated products;

5e) compile standard specifications and guidelines for the production, importation, exportation, sale and distribution of food, drugs, cosmetics, medical devices, bottled water and chemicals;

5g) control the exportation and issue quality certification of food, drugs, cosmetics, medical devices, bottled water and chemicals intended for export.

NAFDAC

Page 18: Compliance in cross border pharmaceutical trade

NAFDAC controls the importation and exportation of all the products covered by this Act at the Sea Ports, Airports and Land borders.

No NAFDAC regulated product shall be imported into and exported out of Nigeria unless it has been duly registered and/or issued a permit or certificate in accordance with the provisions of Act Cap F33 LFN 2004 and the accompanying guidelines.

NAFDAC

Page 19: Compliance in cross border pharmaceutical trade

To control and inspect imported food, drugs, cosmetics, medical devices, and chemicals at ports of entry.

To control the export of food, drugs, cosmetics, medical devices, and chemicals and issue quality certification of the above products for export.

Duties also include compilation of guidelines & regulation for importation/exportation of regulated products.

Collaborate with other relevant Agencies, Organizations and the Private Sector at the Ports and Land Borders.

Sampling of relevant products for lab analysis before final release

Implementation of Government fiscal policy on the prohibition of imports of regulated products through the ports and land borders.

NAFDAC: Functions

Page 20: Compliance in cross border pharmaceutical trade

Imposition of sanctions and administrative penalties for violations including outright seizures for violative products and apprehension of culprits.

Operation of 24-hour surveillance at designated airports. Organizing seminars, workshops and meetings to

sensitize, update and create awareness on NAFDAC regulations as it concerns imports and exports.

Holding Consultative meetings with sectoral groups and stakeholders to encourage regulatory compliance.

NAFDAC: Functions

Page 21: Compliance in cross border pharmaceutical trade

A.) IMPORTS:The divisions in PID ensure proper documentation and endorsement of customs documents during importation.The Ports (sea and Air) and Land border offices conduct physical inspection of goods, Hold assignments, fast track activities and final release of goods at the various ports and land borders.Import Activities occur as:

Pre-clearance Activities Clearance Activities Post Clearance Activities

NAFDAC: Operations

Page 22: Compliance in cross border pharmaceutical trade

B.) EXPORTS:NAFDAC mandate covers the certification of finished pharmaceutical products that are meant for export.The following Certificates are issued on satisfying the requirements for export:

Combined Certificate of manufacture and free sale (for registered products)

Certificate of Pharmaceutical Products (COPP). Free sale Certificates for products not manufactured in

Nigeria but sold in Nigeria. Export Certificate for goods transported through Land

Borders for ECOWAS Market.

NAFDAC: Operations

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Pre-Clearance Processes involves

Pre-arrival notification.

Clearance Processes involves E-Clearance Assessment Payment of NAFDAC Charges Documentation and First

Endorsement Physical Inspection Second Endorsement Release of Goods to importers’

ware house

NAFDAC: Operations

Page 24: Compliance in cross border pharmaceutical trade

The Federal Government in her wisdom made laws which empowers several Government Agencies including NAFDAC to regulate activities at the Ports.In the light of this, the Federal Government in 2005 adopted the Destination Inspection (DI) Scheme.

The objectives of the Destination Inspection Scheme include:1. To improve clearance of goods by using latest technology

tools for documentary checks risk assessment and on the job training.

2. Facilitate trade through Risk Management and the use of non-intrusive inspection (x-ray scanners) of imports thereby minimizing the need for physical examination.

3. To enhance Government import revenue collection and the detection of illegal and false declaration of imports.

Ports Inspection Directorate

NAFDAC: Operations

Page 25: Compliance in cross border pharmaceutical trade

All consignments imported into Nigeria are subjected to some form of documentary checking and Risk Assessment. These functions are performed by Nigeria Customs Service and Webbfontaine Nigeria Limited.

NAFDAC is connected with Nigeria Customs Service on the Nigeria Trade Hub at www.nigeriatradehub.gov.ng and http://trade.gov.ng for ports operations.

To facilitate legitimate trade, NCS in collaboration with regulatory agencies have listed all regulated products into HS Codes, clearing lanes as follows on the next slide:

NAFDAC: Operations

Page 26: Compliance in cross border pharmaceutical trade

Customs Clearing LanesNAFDAC

Customs Auto release

Output 1Fast Track

Facility

Output 2Documentary

Check

Output 3ScanningOutput 4

Physical Inspection

Output 5

NAFDAC finished Pharmaceutical products fall under the deep red lane which is for physical inspection

X X X X

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ROUTES FOR DRUGS CLEARANCENAFDAC.

Drugs, Food,

Cosmetics Medical Devices,

Agrochemicals,Raw Materials

Lagos PortsDrugs,

Food, Cosmetics

Medical Devices,

Agrochemicals,Raw Materials

AirportsFood,

Cosmetics, Agrochemicals

Land BordersFood, Cosmetics

Medical Devices,

Agrochemicals,Raw Materials

Other Sea Ports

Note: Drug products are not allowed through any port except for Lagos Ports and Airports

XDrugs

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NAFDAC: Procedures for Drugs Clearance

28 04/07/2023

1. Declaration of importation on ASYCUDA at

Customs DTI (Direct Trader Input) Cafe

2. Costing for NAFDAC Charges

NAFDAC eClearance Unit

3. First Endorsement of

relevant documents

4. Physical Inspection of

Products at ports and importer‘s

warehouse

5. Submission of relevant documents

for second endorsement and

release

6. Final Release

Page 29: Compliance in cross border pharmaceutical trade

NAFDAC: Documents Required for 1st Stamp for Finished Pharmaceutical Products Letter of undertaking &

Introduction (Original Copy)

Certificate of Analysis (Original Copy)

NAFDAC Certificate of Registration or Notification preferably 2013 – 2014

Electronic SGD CRIA (Original) e.g *India – QCS, Silis Labs,

ACS *China – NHU, Hanlin

Shangai, Quangzhou Test Tech.

*Egypt - ITG

Photocopy of Payment Advice

Form C-30 Annual License to practice

as a Pharmacist Retention of Premises NAFDAC receipt of payment Permit to Import & Permit

to Clear Controlled Substances

Packing list Bill of lading/Airway bill Invoice Pre-Shipment Information

for Finished Pharmaceutical Products

Form M04/07/2023 29

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NAFDAC: Documents Required for 2nd Stamp for Finished Pharmaceutical Products & Controlled Substances Certificate of Analysis/CRIA Invoice Electronic SGD Bill of Lading/Airway Bill Form M Packing List PAAR (Pre-Arrival Assessment Report) Physical Examination Sheet NAFDAC Reg. Certificate Permit to Import & Permit to Clear (Original

where applicable)04/07/2023 30

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04/07/2023 31

Documents not originating from NAFDAC and used by Nigeria

Customs Service for the clearance of NAFDAC regulated products

S/NO DESCRIPTION

1 Single Goods Declaration

2Pre Arrival Assessment

Report

3 Form M

4 Bill of Lading/Airway Bill

5 Packing List

6 Invoice

Documents not originating from NAFDAC and used

exclusively by NAFDAC for the clearance of NAFDAC regulated products

S/NO DESCRIPTION

1 Certificate of Analysis of the product

2 Pharmacist License and Premises Licence

3Clean Report of

Inspection & Analysis (CRIA)

NAFDAC: Operations

Page 32: Compliance in cross border pharmaceutical trade

04/07/2023 32

Documents originating from NAFDAC and used for the clearance of NAFDAC regulated products

S/NO DESCRIPTION

 1NARCOTICS AND CONTROLLED

SUBSTANCES DIRECTORATE (NCS)Permit to import Narcotics substances

Permit to import Psychotropic and Other controlled Substances

 2CHEMICAL EVALUATION AND RESEARCH

DIRECTORATE (CER)Permit to import Controlled Chemicals and

Solvents

 3REGISTRATION AND REGULATORY AFFAIRS

DIRECTORATE (R&R)Certificate of Registration/Notification of

Registration Preferably 2013 - 2014

NAFDAC: Operations

Page 33: Compliance in cross border pharmaceutical trade

Functions of Nigeria Customs Service in the Nigerian Economy:i. Revenue Collection Customs & Excise Management Act, Cap 84 Laws of the

Federation [CEMA, Section 4], LFN.1990 – power to control and manage administration of the Customs & Excise Laws. Collects and account for revenue.

[ii] Anti – smuggling operationsApplicable at: Borders, sea and airports – checks contrabands, hazardous goods, national security interest.

Physical interception, examination of goods and documents.

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Functions of Nigeria Customs Service in the Nigerian Economy: Agency Function (Inter-Agency)

NCS performs inter-agency functions on behalf of other government agencies, namely;

Nigeria Police Force – seizure of arms and ammunitions. National Agency for Food and Drug Administration and Control

[NAFDAC] – prevents illegal importation of foods, drugs and chemicals.

National Drug Law Enforcement Agency [NDLEA] – prevents importation and exportation of hard drugs.

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Nigeria Customs Service (NCS):Trade Facilitation Objectives Generation of Trade Statistics Trade Facilitation

Trade facilitation at the core of Customs operations due to the following

Developments in the WTO with emphasis on trade liberalization and facilitation.

Development of Free Trade Areas across the regions of the world – removing tariff and non-tariff barriers to speed up economic development .

NCS strategic positions at the entry and exit points of Nigerian borders; lead agency role

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Page 36: Compliance in cross border pharmaceutical trade

Nigeria Customs Service (NCS): Trade Facilitation Objectives To improve the trade environment and

reduce transactions cost between business and government.

To attract Foreign Direct Investment (FDI).

To make Nigeria’s borders competitive by un-impeded flow of goods, services and investment funds through the borders.

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Page 37: Compliance in cross border pharmaceutical trade

I. Implementation of global best practices as a core objective of NCS modernization agenda.

II. Revised Kyoto Convention (RKC) on the simplification and harmonization of Customs procedures- Pre-lodgement and Pre-registration.

III. WCO guidelines on immediate release of consignment - PreArrival processing.

IV. Facilitation of trade through provision of adequate & accurate information in the Nigeria Trade Hub Portal (NTH).

NCS New PAAR Policy

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What is PAAR?

•P- Pre•A- Arrival

•A- Assessment

•R- Report•Pre-Arrival Assessment Regime allows importer/Agents to submit import Documents for assessment and issuance of PAAR (for Clearance) before the arrival of the cargo

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PAAR Application provides timely multi-dimensional risk analysis at every stage of Customs processes.

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Risk Management Approach in Customs Controls Risk: The potential for non-compliance

with Customs (& NAFDAC) laws. Risk analysis: Systematic use of

available information to determine how often defined risks may occur and the magnitude of their likely consequences.

Risk areas: Those Customs procedures and categories of international traffic which present a risk.

Page 41: Compliance in cross border pharmaceutical trade

Risk Management Approach in Customs Controls...2 Risk assessment: The systematic

determination of risk management priorities by evaluating and comparing the level of risk against predetermined standards, target risk levels or other criteria.

Risk indicators: Specific criteria which, when taken together, serve as a practical tool to select and target movements for their potential for non-compliance with Customs law.

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Risk Management Approach in Customs Controls...3 Risk management: Logical and

systematic method of identifying, analyzing and managing risks. Risk management can be associated with any activity, function or process within the organization and will enable the organization to take advantage of opportunities and minimize potential losses.

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Risk Management Approach in Customs Controls...4 Risk profile: A predetermined,

comprehensive and relevant combination of characteristics or risk indicators, based on information which has been gathered, analyzed and categorized.

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Risk Management Approach in Customs Controls...5 Risk profiling: The means by which Customs

put risk management into practice. It replaces random examination of documents and goods with planned and targeted working methods that use profiles as a basis.

Standardized Risk Assessments (SRAs): These Assessments produce risk indicator products for use by Customs officials for the purpose of targeting goods and conveyances in their daily work.

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Consumer Protection Service Failure

Arising from Agencies and Service Providers

Remedy Waive Penalties for Infractions that are

beyond the control of Companies Dispute Resolution Mechanism

No Agency must be allowed to be Prosecutor, Judge and Jury

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Best Practice: Customs Trade Compliance Focused Assessments (FA) a detailed review of the company's internal controls for

Customs transactions coupled with an audit of selected import transactions.

Goal: determine the company's current level of compliance, and whether or not there are sufficient systems in place to ensure a high level of compliance with Customs laws and regulations for future transactions.

Outcome: Compliant or Non-Compliant.    If Non-Compliant, the company will be required to formulate a

compliance improvement plan (CIP), and tender any revenue found to be owing. 

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Getting it Right: Facilitation, not Encumbrance!

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Summary Globalisation:

Has led to greatly increased volume of Global and Cross-Border Trade

Increased fortunes for developed nations and increased opportunities for smart developing nations

Developing nations need to take advantage of Globalisation for prosperity while avoiding inequalities of wealth distribution

All need to be aware of the risks that have come with Globalisation and mitigate against them

Cross-Border Trade: Essentialy between Neighbours Regional Cooperation is enlightened self-interest and should be

encouraged Inventory the relevant National laws/regulations and harmonise

across the region Keep all stakeholders actively informed and involved

Page 49: Compliance in cross border pharmaceutical trade

Summary Trade Compliance:

Conventionally driven by Customs Customs should regularly compile and communicate Compliance

Issues/Breaches to Industry with a view to aiding improvement Goal should be facilitation of Trade not encumbrance Policy implementation must be customer-centric and culture must

be to protect consumer rights while pursuing National Interest Dispute Resolution Systems and Structure must be established

Cross-Border Pharmaceutical Trade (CBPT): Deference should be given to the difference between Professionally

Regulated Pharmaceutical Trade and Trade in General Goods There should be greater inter-agency collaboration especially

between Customs and NAFDAC given the key role the latter plays in regulating CBPT

Companies need to establish Compliance Management Desks and give it appropriate Executive Oversight

Page 50: Compliance in cross border pharmaceutical trade

Thank You!

Contact Information:Remi ADESEUN

Chairman

Programs Committee

Pharmaceutical Society of Nigeria

08057713769/07065156473

[email protected]

[email protected]