Foreign Trade Zone: Optimizing Control Over Pharmaceutical Imports, Customs Clearance and Taxes
Sentry’s GMP pharmaceutical facility maintains active foreign trade zone (FTZ) status per Foreign Trade Zones Act (U.S. Code Title 19, Chapter 1A), in compliance with 15 CFR Part 400, FTZ regulations. Sentry’s active FTZ status and customs bond, support import optimization and control of temperature-sensitive biological and pharmaceutical ingredients, materials, semi-finished and finished drug products.
Interestingly, a FTZ in the United States (US) is not technically considered a part of the US, and the same is true for foreign trade zones in other countries. Drug product entering a FTZ in the US is not subject to customs inspection when it enters the zone – only when the product leaves the zone for US consumption. This is regulated by The U.S. Customs and Border Protection (CBP) agency, which is one of the world’s largest law enforcement organizations.
Here are some of Sentry's foreign trade zone (FTZ) benefits:
- The length of time drug product may remain within Sentry’s FTZ is unlimited.
- Duties (tariffs) will only be due upon the products entry for US consumption.
- Foreign drug product while in the FTZ is not subject to state and local inventory taxes as well as domestic US drug products that are to be exported outside the US.
- Any foreign or domestic drug product not prohibited by law or other exception, including but not limited to finished drug product, API, excipients, reagents and components, may enter the FTZ.
- A bond is not required for pharmaceuticals, biologics, medical devices or controlled substances (CS) coming into the FTZ. Admissions to the zone are covered under Sentry’s FTZ operator’s custom bond.
- Sentry’s FTZ is subzone 011, a part of Zone 72, located at the Indianapolis International Airport (IND). Sentry’s zone is not considered within the customs territory of the United States. Customs entry is filed when the drug products are removed from the FTZ for US consumption.
- Within the zone, additional manufacturing of drug products can take place at Sentry. These manufacturing processes can include, labeling, kitting and secondary packaging. All of these activities can take place within the FTZ by Sentry personnel within the safety and security of Sentry’s facilities.
- The appraisal and classification of the drug product for tariff rate and valuation purposes can be determined either at the time of admission into the FTZ or when the drug product exits the FTZ for US consumption, at the drug product owner’s discretion.
- Sentry can provide enhanced control over your expensive drug products while awaiting US Customs & Border Protection (CBP), FDA and if applicable Drug Enforcement Administration (DEA) clearance. This important feature allows your vital temperature sensitive drug products to come directly to Sentry from outside the US where they will be held safely, securely and at temperature while they await clearance from all applicable government agencies.
As an example of this important Sentry attribute, Sentry has the capacity to accept the congregation of controlled substances III-V from outside the US in preparation for the CS product’s commercial launch. Upon the approval of clearance from CBP, FDA and DEA the CS drug product can leave Sentry’s FTZ and be distributed by Sentry to pharmacies or to another distribution center according to the direction of the pharmaceutical product’s owner.
In addition, pharmaceutical companies do not have to supply a bond to store their pharmaceutical products within a FTZ, nor do they have to pay duties on their drug product unless they plan to distribute them within the US for consumption. Biotech, pharmaceutical and medical device manufacturers can store both foreign and domestic goods in a foreign trade zone, and none of these products are subject to tax or duties (again, unless the products are intended for distribution within the country).