OFAC loosens restrictions on Cuban Pharmaceutical Market

By Sandra Fadel

Last week, President Obama articulated his Presidential Policy Directive on normalizing United States – Cuban relations.[1] Building on the announcement the President made almost two years ago, which revealed the beginning of a new chapter between the two nations, the directive outlined the Administration’s strategic goals and priority objectives moving forward. Health collaboration was listed as a top priority, and executive agencies were tasked with amending and expanding regulations pertaining to Cuba to facilitate collaboration in this sector.

Specifically, the Treasury Department’s Office of Foreign Assets Control (“OFAC”) enacted amendments to the Cuban Assets Control Regulations which further eased restrictions on Cuba.[2] Moreover, OFAC amended section 515.547 of the regulations relating to the health industry to 1) allow for joint commercial and non-commercial medical research with Cuban nationals, 2) extend an OFAC license or authorization to pharmaceuticals of Cuban origin, opening the door to FDA approval and sale of these products in the U.S., and 3) allow U.S. persons engaged in authorized health activities to open and maintain bank accounts at Cuban financial institutions.[3]

The provision by which Cuban pharmaceutical companies can get FDA approval and become licensed for sale in the U.S. is the one generating the most attention because it encompasses all activities in the drug development process, including discovery, clinical research, regulatory review, licensing, and the eventual importation of the drugs into the U.S.[4] Cuba markets pharmaceutical products and vaccines in more than fifty countries and holds patents for approximately 1200 drugs such as Cimavax, a cancer vaccine that costs $1 to make and currently being clinically tested in the U.S.,[5] and Nimotuzumab which treats advanced tumors in the head, neck, and brain.[6] Cuban scientists have also come up with their own vaccines for meningitis B and hepatitis B, and monoclonal antibodies for kidney transplants.[7]

Given the competitiveness of the Cuban generics market and its ability to undercut American prices, this shift in healthcare policy may have a significant financial impact on consumers and corporations in both countries.[8] Industry analysts speculate that the lifting of the ban will lead to increased competition and lower drug prices for American consumers.[9] Others see it as an opportunity to share in (and possibly commercialize) Cuba’s groundbreaking research in biomedical science and biotechnology. It is unclear how this rule will benefit Cubans, as it does not authorize the establishment of a physical presence in Cuba or the hiring of Cuban nationals as part of U.S. research activities.[10] Cuban consumers are also unlikely to benefit due to local restrictions by the Cuban government on its pharmaceutical industry.[11]

The new regulations represent the first step in opening the pharmaceutical space between the U.S. and Cuba. The island nation already has a history of partnering with non-U.S. companies and with some U.S. companies under an OFAC license.[12] Instead of laboring for years to obtain OFAC licenses, American companies can now source Cuban drugs more seamlessly, and, in the process, American researchers can learn more about the successful Cuban Research & Development (“R&D”) model as well as the Cuban healthcare model in general.

The world is paying more and more attention to Cuba’s booming biotechnology sector. It’s time the U.S. joined the party.

[1] Presidential Policy Directive on United States – Cuba Normalization, The White House Office of Press Secretary (Oct. 14, 2016).

[2] 31 CFR 515 (2016).

[3] See 81 Fed. Reg. 71372 (Oct. 17, 2016).

[4] See 81 Fed. Reg. 71372 (Oct. 17, 2016).

[5] Neal Patel, Cuba Has a Lung Cancer Vaccine – and America Wants It, Wired Magazine, May 11, 2015.

[6] See Cuba- Battling Cancer With Biotechnology, World Health Organization, Jan. 2013; Mimi Whitefield, Deciphering new Cuba regulations: 5 changes that could prove significant, The Miami Herald, Oct. 21, 2016, http://www.miamiherald.com/news/nation-world/world/americas/cuba/article109641537.html (quoting statistics from The North American Congress on Latin America (NACLA)).

[7] Patel, supra note 5.

[8] See, e.g., Michael Mezher, US Clears Way for Cuban Drugs, Regulatory Affairs Professional Society, Oct. 14, 2016; Carolina Bolado, Obama Opens Door to Pharma Trade with Cuba, LAW360, October 14, 2016.

[9] Adam Rubenfire, Blog: Cuban pharmaceutical imports to U.S. could lead to lower drug prices, Modern Healthcare (Oct. 17, 2016).

[10] New Round of Cuba Sanctions Changes Expand Opportunities for Health Sector, Akin Gump International Trade Alert, Oct. 19, 2016.

[11] Roque Planas, Obama Opens U.S. To Cuban Health Care Advances, The Huffington Post, Oct. 14, 2016.

[12] See, e.g., Amina Aitsiselme, Despite U.S. Embargo, Cuban Biotech Booms, NACLA, available at https://nacla.org/article/despite-us-embargo-cuban-biotech-booms (explaining how Glaxo SmithKline negotiated for two years to obtain an OFAC license to market the Cuban-patented Meningitis B vaccine in the United States).

Leave a Reply

Your email address will not be published. Required fields are marked *