For global studies, research material and active pharmaceutical ingredients (APIs) are often shipped to sites in different countries from a central manufacturing base.
This means that taxes or VAT must be paid on the product upon entering each country, and as each country has different procedures, this can be confusing for companies that have little or no experience in conducting global surveys.
The products under investigation do not have a fixed price since they are not yet available on the market, but there must be a price for companies to pay the corresponding taxes. While managing shipping requirements for blinded studies for participants requiring a placebo, which is not taxed in the same way, something as simple as an unblinded shipping label can unblind the trial, significantly impacting operations.
Matthew Leets, head of global trade compliance at Alkermes, says preparation is key to addressing the challenges facing shipping investigational products. In a conversation with clinical trials arena, Leets outlines possible solutions to shipping challenges and addresses the latest supply chain issues in light of the US-Israel war with Iran.
Matthew Leets, Head of Global Trade Compliance at Alkermes
Leets will present this topic at the upcoming Arena International Clinical Trial Supply (CTS) New England conference on April 14.
This interview has been edited for length and clarity.
Matthew Leets (ML): The key things are what I call the Holy Trinity: customs valuation, customs description and the country of origin. For customs purposes, those are the elements required for any transaction. There are additional complexities with clinical trial material intersecting with, for example, the Department of Health or the US Food and Drug Administration (FDA) or equivalent government agencies and their requirements, such as import permits to enter the destination country. Other complications depend on how the receiving countries’ jurisdictions are structured or which entities have concerns about the nature and type of the material.
ml: Most issues arise due to different compliance requirements, and we are a very marginal use case within the global space. The rules are written primarily for global trade, the exchange of goods and services that have a tangible cost. As a result, we are a unique fringe case in that we have to adapt to the rules, rather than requesting a special exemption.
Normally, the price of goods that have no market value would be a value calculated based on the cost of inputs to produce something. For example, the API and a contract of a certain value to manufacture a certain quantity of API. Therefore, the cost of the contract to produce the product and the performance must be considered. For example, if you had a 25 mg pill, you could calculate the cost per kilogram and add it to the cost of pharmaceuticals in the next step, and to the cost of packaging and labeling, and any steps in between. You are forming a step-by-step function in each of these steps, where you are successfully adding the value from the previous step.
For placebo-controlled studies, typically, the cost is the same as that of the corresponding active drug, minus the cost of the API, unless there are other factors to consider, such as significantly divergent values.
Often, companies can “mask” the entire customs invoice. The partially supported solution I have come up with in the past is to raise the value of all invoice items to the highest value. But the disadvantage is having to pay VAT and additional taxes. Still, it is the best solution to keep a blind bill.
ml: I’m not a geopolitical analyst, but I think the cost of the Strait of Hormuz closure and the ongoing global conflicts will likely impact us across the board, in the sense that fuel prices are likely to increase, which impacts the cost of obtaining goods to transport them. Unless your air transportation route crosses or has crossed one of those emerging conflict zones, you would not see a material impact on the distribution of clinical trials.
Regarding tariffs, the pharmaceutical sector has, for a long time, been given a lot of grace, especially on the development side. Beginning July 31, 2026, according to the new US Administration, this grace will be reduced and affected by a number of factors associated with the nature of the completed clinical trial material.
An example is that blind and non-blind test material will have different tariff rates. Companies may be eligible to use certain exemptions for imports into the US, generally in Chapter 98 of the Tariff Schedule, or all tariffs would be subject to those materials. I have not seen any reciprocity against drugs, either at the commercial or clinical stage, from other nations, so exports should not be affected.
ml: Instead of rushing these challenges when they occur, I prefer to receive early notice and do proper research, write rationales and prepare for anything because those movements and the need to declare these items to customs are imminently foreseeable.
We usually know the list of countries for studies in advance, so that complexities can be addressed in advance, country by country. It is also very important to contact your trade compliance colleagues or seek an external source of staff through a business consultant or council. This is something I will focus on in my presentation at the conference; That including people with this experience early on and often helps smooth things over (and gets you to) the point where you ideally don’t have these problems.
Click here for a detailed agenda for the New England CTS conferencewhich will take place on April 14 and 15 in Boston, Massachusetts.
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“Preparation is key to understanding global trade compliance in trials” was created and originally published by Clinical Trials Arena, a brand owned by GlobalData.
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