On February 10, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Acetris Health, LLC v. United States, regarding the sourcing of a drug’s active pharmaceutical ingredient (“API”) from a non-designated country under the Trade Agreements Act (TAA). The Federal Circuit decision indicated that pharmaceutical companies can source the API from non-designated countries, such as India or China, and still offer the end product for sale to the U.S. Government as “TAA-compliant,” as the TAA analysis turns on where a product is manufactured, versus where the API is sourced. Based on this analysis, the Court held that a pill manufactured in the United States was TAA-compliant even though the pill’s API was sourced from India.
For pharmaceutical and medical/surgical suppliers, alike, this decision could open up additional sources of supply once considered non-TAA-compliant. However, suppliers will still need to assess where a product is “substantially transformed” for purposes of the TAA before seeking to sell the product to the Government.