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The role of compliance in pharmaceutical cross-border 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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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


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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.


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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


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What is Global Trade? The worldwide business that involves:  making and collecting payments  for  transactions  in goods and services, and transporting them to interested markets. Remi ADESEUN


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Global Trade


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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.


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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


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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.


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Industry’s Goals Improve Efficiency Harmonisation of Regulatory Requirements Speedier Port Clearance Reduce Cost Mitigate Risk Issues concerning conducting cross-border business


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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. 


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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


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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


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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.


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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


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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


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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


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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


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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


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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


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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: To improve clearance of goods by using latest technology tools for documentary checks risk assessment and on the job training. Facilitate trade through Risk Management and the use of non-intrusive inspection (x-ray scanners) of imports thereby minimizing the need for physical examination. To enhance Government import revenue collection and the detection of illegal and false declaration of imports. Ports Inspection Directorate NAFDAC: Operations


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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


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Customs Clearing Lanes NAFDAC 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 CLEARANCE NAFDAC. Note: Drug products are not allowed through any port except for Lagos Ports and Airports X Drugs


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NAFDAC: Procedures for Drugs Clearance 28 12/8/2014 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


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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 M 12/8/2014 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) 12/8/2014 30


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12/8/2014 31 NAFDAC: Operations


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12/8/2014 32 NAFDAC: Operations


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Functions of Nigeria Customs Service in the Nigerian Economy: 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 operations Applicable at: Borders, sea and airports – checks contrabands, hazardous goods, national security interest. Physical interception, examination of goods and documents. 33


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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. 34


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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 35


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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. 36


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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.


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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


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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


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Thank You! Contact Information: Remi ADESEUN Chairman Programs Committee Pharmaceutical Society of Nigeria 08057713769/07065156473 radeseun@gmail.com r.adeseun@rodot.org


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