MAR-2-05 RR:IA 561975 RFC
Mr. Gary S. Ange
Abbott Laboratories
D03CC AP6D-1
100 Abbott Park Road
Abbott Park, Illinois 60064-6056
RE: Country of Origin Marking for the Anesthetic Drug Sevoflurane
Dear Mr. Ange:
This is in reference to your October 31, 2000, letter relating to a ruling request on behalf of Abbott Laboratories, concerning country of origin marking for an inhaled anesthetic drug known as “sevoflurane” which is sold under the trademark “Ultrane.”
FACTS:
An anesthetic drug know as sevoflurane is imported in bulk form from Japan and then processed in the United States into a dosage form.
In the ruling request, the process is described as follows: Abbott Laboratories imports the bulk chemical substance sevoflurane from Japan in metal drums (the bulk sevolflurane as imported is unfit for pharmaceutical use). At an Abbott facility, the bulk sevoflurane undergoes a number of processes that are required to produce the dosage form, human-inhalable anesthetic drug. Of foremost importance are testing operations that are necessary to meet Food and Drug Administration (FDA) and United States Pharmacopoeia (USP) standards. If the product does not pass these tests, it will be rejected and destroyed. The tested product is then filtered twice through specially developed stainless steel 40-micrometer filters. The resulting product is packaged into amber bottles that are specially cleaned and suited for maintaining the long-term stability of the product.
ISSUE:
Whether processing the anesthetic drug sevoflurane from a bulk form into a dosage form results in a substantial transformation of the drug.
LAW AND ANALYSIS:
The U.S. law relating to country of origin marking for imported merchandise (“the marking statute”) is found in section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304). This law provides that, unless excepted, every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. See 19 U.S.C. § 1304(a). Products made in the United States do not have to be marked with their country of origin under this statute.
The purpose of the marking statute is to allow the ultimate purchaser of the goods to know, by simple inspection, specifically where they were made in case such knowledge might influence his or her decision to purchase the goods (i.e., to permit the ultimate purchaser in the United States to choose between domestic and foreign-made products, or between the products of different foreign countries). See generally, United States v. Friedlaender & Co. Inc., 27 C.C.P.A. 297, at 302 (1940).
The “ultimate purchaser” is defined in Part 134 of the Customs Regulations as:
[G] enerally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the ``ultimate purchaser'' is the last person in the United States who purchases the good in the form in which it was imported.
19 CFR § 134.1(d).
An article of foreign origin that is substantially transformed in the United States is excepted from being marked. See 19 CFR 134.35. A substantial transformation occurs when an imported article is used in a manufacturing process or operation that results in a new article having a new name, character or use different from that of the original imported article. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); National Hand Tool Corp. v. United States, 989 F.2d 1201 (Fed. Cir. 1992).
As concerns the processing of a drug from bulk form into a dosage form, the Customs Service has held that purification and/or filtration of a product and putting it into smaller packaging or measured doses, whether or not accompanied by testing, does not result in a substantial transformation of the product. HQ 561544 (May 1, 2000) concerned whether Geneticin Sulfate, when imported in bulk, powdered form is substantially transformed in the United States when processed into Geneticin Selective Antibiotic. The U.S. processing involved extensive testing, dissolving of the material into a solution by adding purified water, removing contaminants by filtering the solution through sterilizing grade filters, and pumping the resulting Geneticin antibiotic into sterile bottles for use in molecular genetics experiments. The Customs Service held that no substantial transformation results from the U.S. processing as it essentially consists of the removal of impurities from the bulk chemical, and the placement of the chemical into smaller packaging.
In HQ 735146 (November 15, 1993), Customs considered whether a substantial transformation occurred as a result of processing imported acetaminophen powder into granules in the United States. In the United States, the 100 percent pure imported acetaminophen powder was blended with excipients (starch, povidone and stearic acid) at a 10 percent level and then granulated into a directly compressible quality. The Customs Service found that no substantial transformation resulted from the above-mentioned processing. The Customs Service noted that there was no change in the name of the product and, as the imported acetaminophen powder had a specific predetermined medicinal use, there was no change in use. Finally, the Customs Service found that the granulating had only a minimal affect on the chemical and physical properties of the acetaminophen. See also, HQ 733248 (August 22, 1990--processing a human blood fraction to render it fit for intravenous administration by sterile filtering, buffering and inserting in vials does not constitute a substantial transformation), and HQ 722985 (October 14, 1983--no substantial transformation results from blending foreign and domestic honey, filtering and repackaging).
In HQ 731731 (February 23, 1989), the Customs Service held that a substantial transformation resulted when vancomycin hydrochloride imported in bulk powder form was processed in the United States into Sterile Vancomycin Hydrochloride USP, an antibiotic capable of intravenous injection. The processing that occurred in the United States was extensive and involved the following: (1) testing for potency and, if potency is not adequate, adding more active ingredient; (2) applying nitrogen gas to eliminate possible degradation; (3) dissolving the product into a solution; (4) filtering the solution through a special microbial filter; (5) testing for pryrogenicity; (6) placing the solution into glass vials; and (7) freeze drying the product in a three-step process -- freezing to minus 40 degrees centigrade, gradual heating under extreme vacuum conditions and extracting water.
In the instant case, the anesthetic drug sevoflurane is imported in bulk form and is processed into dosage form by extensive testing operations, followed by filtering and packaging into bottles. The Customs Service finds that no substantial transformation results from this processing in the United States. The processing begins with the anesthetic drug sevoflurane in bulk form and ends with the anesthetic drug sevoflurane in dosage form. There has been no change in name (the packaged product is identified as Sevoflurane on the label, although with the trademark “Ultrane”). There is little change in the character of the product, as the chemical and physical properties of the imported bulk chemical remain the same after the U.S. processing. Lastly, because the imported bulk sevoflurane has a predetermined medicinal use as an inhalable anesthetic drug, the processing in the United States results in no change in the product’s use. Therefore, the country of origin of the drug does not change as a result of being processed from bulk from to dosage form in the United States; the drug remains a product of Japan for country of origin marking purposes.
With respect to HQ 731731, which you cite in support of your contention that a substantial transformation occurs when sevoflurane in bulk form is processed into dosage form, we do not view it as controlling precedent in regard to the instant case. As indicated above, HQ 731731 involved more extensive and complex processing than that in the instant case (including the addition of other substances, a three-step freeze drying process, and multiple changes in the form of the product). Therefore, the product and processes described in HQ 731731 are not the same as those in the instant case. Accordingly, HQ 731731 cannot serve as controlling precedent for finding that a substantial transformation occurs in the instant case.
The Customs Service has ruled in the past that the ultimate purchaser of certain imported merchandise that is imported for sale to and use by medical facilities is the medical facilities themselves. See generally, HQ 560266 (January 17, 1997). Accordingly, in the instant case, the ultimate purchasers of the product are the medical facilities to whom the anesthetic drug is sold or provided to and not the company that processes the drug from bulk from into dosage form in the United States.
There exist certain exceptions to the marking requirements in the marking statute. One of those exceptions can be found in section 1304 (a)(3)(D). It deals with those situations where the marking of the container that holds the imported merchandise will reasonably indicate the origin of the merchandise. Under section 1304 (a)(3)(D) to the marking statute, an imported article is not required to be marked with its country of origin if:
The marking of a container of such article will reasonably indicate the origin of such article.
19 U.S.C. § 1304 (a)(3)(D).
Part 134, Customs Regulations (19 CFR §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Subpart D to part 134 implements the exceptions in the marking statute. Section 134.32 (d) to subpart D lists the following exception:
Articles for which the marking of the containers will reasonably indicate the origin of the articles.
19 CFR § 134.32 (d).
The Customs Service has ruled in the past that products that are imported for sale to or use by medical facilities need not be individually marked as to their country of origin but rather could be marked on the packages or on the outside of the containers in which the products were packed provided the medical facility receives the products in such properly marked packages or containers. See generally, HQ 560266 (January 17, 1997). In the instant case, if the anesthetic drug is sold to or provided for use by medical facilities in properly marked containers, it may be excepted from the country of origin marking requirements under section 304 of the Tariff Act of 1930 (19 U.S.C. § 1304 (a)(3)(D) and 19 CFR § 134.32 (d)).
HOLDING:
The country of origin of the above-mentioned anesthetic drug for country of origin marking purposes is Japan.
The above-mentioned product may be excepted from the country of origin marking requirements set forth in the marking statute (see 19 U.S.C. § 1304) provided the boxes or containers in which the products are packed and shipped to the medical facilities who might buy or use them are marked with the country of origin of the products.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs Service officer handling the transaction.
Sincerely,
John A. Durant, Director
Commercial Rulings Division
Office of Regulations & Rulings