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FDA import guide: Navigating the Maze

June 11, 2014

For new importers, the process for bringing FDA-regulated goods into the United States can sometimes resemble a maze.

It’s understandable, considering how widely requirements vary for different products. So how do you navigate the labyrinth of rules? According to U.S. Customs Broker Reynaldo Roman, the biggest favor an importer can do for itself is to fully understand its product – and anticipate which rules will apply.

“Many times entries are delayed or worse because importers don’t understand the product [being imported] and can’t provide the information necessary to clear it,” Roman said.

That might seem hard to imagine – of course you know the product you’re bringing to the United States! But let’s pan back.

Often companies separate their purchasing and logistics functions. Purchasers may know all about it, but the logistics or warehouse side of the business responsible for actually navigating the entry process doesn’t have a clue about its origins or intended use. “Often delays occur because of a failure to communicate,” Roman said.
Only when you understand can you begin to make sense of the regulation requirements, like the requirement that you declare food before it ships in order to fulfill prior notice rules, or addressing questions around pre-market approvals with respect to medical devices.

Under the Customs Modernization Act, no one has more ultimate responsibility than the importer – even if a broker prepares or submits documents or represents the Importer of Record in front of the FDA, and even if the errors crop up due to a mistake by a broker. The agency’s goal? To hold importers to a higher standard and create voluntary compliance, Roman says.

And an increase in the FDA’s activism may be on the horizon. In 2009, the agency issued draft guidance on Good Importer Practices. The guidance isn’t binding now, but under the 2012 FDA Safety and Innovation Act, the GIP will be written into law by July 2015. The GIP’s guiding principles cover things like knowing products, verifying compliance throughout the supply chain and life cycle, and taking corrective and preventative measures.

Ready to begin importing? The entry process for FDA-regulated goods follows a predictable path. Read on to learn more.

Document, document, document
Entry is initially made through Customs and Border Patrol, the first line of defense for regulated goods.
Among other things, the importer needs to provide information including entry documentation, invoices, and evidence of a customs bond. The importer should also provide the FDA product code, a seven-character set of letters and numbers that can be found online using the product code builder.

Roman says he often gets asked by importers: “What does [the bond] do for me?” The truth? Not much. They’re there to protect the government from liability, for instance, in cases where importers take possession of cargo under conditional release. There are two types of bonds. The choice hinges on the volume and value of imports, but continuous bonds are often more cost-effective:

  1. Continuous: Covers multiple import transactions over the course of year
    • Needs to be sufficient to cover value of duties and taxes
    • Minimum: $50,000
    • The continuous bond typically obtained via a broker (but once you have one, you aren’t bound to using only that broker)
  2. Single Entry: Exactly that, one transaction
    • Needs to cover 3x the value of shipment plus duties, taxes, and fees

Importers need to appreciate the value of providing correct information, including a description and proper classification, Roman says. “It’s not a mere formality,” he adds. “It’s a major part of entry compliance.”

How does customs know what agency regulates particular goods? The Harmonized Tariff Schedule (HTS) number. The HTS number even spells out the level or degree of control certain products are subject to. The FDA uses five different “flags,” 0 through 4, that reveal the reason for and degree of control. The HTS is also used to determine eligibility for special rates and rules of origin. “Careless use of HTS numbers is not only illegal, but problematic for the importer because it can provide great deal of info about product,” Roman says.

If there isn’t enough info, or it’s vague, Customs will ask for more material – or reject entry.

Conditional release
Once the information and goods are examined and preliminary compliance is confirmed, CBP will issue conditional release. That means cargo is released to the importer conditionally, pending an answer or release decision from the FDA. For FDA-regulated products, the CBP portion of the process typically isn’t an issue. There’s usually a turnaround of 24-48 hours. Assuming everything checks out, CBP will forward on to the FDA.

That’s why they want that bond coverage. If they’ve released goods to an importer only to discover that the FDA rejects them, or if the importer fails to pay duties and tariffs, the agency will have some recompense.

FDA approval
Once all customs entry information and data is submitted to the FDA, the agency will take one of two actions:

  1. Music to all ears: “May proceed”
  2. If the FDA feels it needs more information, it will hold or detain the shipment

Additional information could include: certificates of analysis, end-use letters, chains of documentation, sampling requests, and so on. If after obtaining additional information the FDA still doesn’t have comfort, the FDA will refuse entry and notify customers. At that point, the importer will have 30 days to return goods for either export or destruction.

This is where one bit of information the importer supplied during prior notice will come in handy: the FDA product code, a seven-character set of letters and numbers. But it’s a concept many importers struggle with, Roman says. It’s a great way for the FDA to know exactly what is being imported, which helps them make an informed decision quickly.

In sum, the FDA is increasing its vigilance with respect to imported products seemingly issuing new guidance to tighten up every day, Roman says. Ultimately, the key is to do diligence at the front end of preparing to import products under the purview of the FDA. Proper research is bound to save importers from a world of headaches later on.

After all, the risks associated with failing to comply are pretty clear: The FDA hasn’t hesitated to hold importers liable for violations, fining, jailing or otherwise penalizing them under the Federal Food, Drug, and Cosmetic Act, Roman says. In May 2012, for example, the FDA fined a New Jersey medical device distributor $100,000, plus nearly $73,000 in restitution, for importing and selling counterfeit and contaminated hernia mesh.

Lauren Jow

Lauren is responsible for Ingram Micro Commerce's brand experience and creative initiatives in both digital and physical spaces. She's excited by big changes and big challenges.