MAR-2-05 RR:CR:SM 563301 DCC
Mr. Leroy Anderson
Manager, Logistics/Planning
NPS Pharmaceuticals
6850 Goreway Drive
Mississauga, Ontario, Canada L4V 1V7
RE: Country of Origin Marking for PREOS Packaged in Cartridges
Dear Mr. Anderson:
This is in response to your letters dated June 14 and July 4, 2005, requesting a ruling regarding the country of origin marking for pharmaceutical products packaged in single use cartridges imported by NPS Pharmaceuticals (“NPS”).
FACTS:
The subject merchandise that NPS intends to import is a pharmaceutical with the trade name is PREOS® (chemical name is parathormone) or a placebo agent put up in pre-packaged single-dose vials. The active pharmaceutical ingredient of PREOS is human recombinant parathyroid hormone (“rPTH”), a pharmaceutical agent for the treatment of osteoporosis. When produced in the human body by the parathyroid glands, Parathormone helps regulate levels of phosphorus and calcium, minerals involved in neuromuscular excitation and blood clotting.
NPS will produce parathormone through recombinant DNA technology. After developing a working cell bank, NPS will use several proprietary processes to produce raw parathormone in the Netherlands or Austria. This processing will involve fermentation and recovery of the parathormone, followed by purification and filtration. Following this processing, the raw material will be in frozen bulk form.
The frozen bulk parathormone will be shipped from the Netherlands or Austria to Germany for further processing. In Germany the parathormone will be thawed and tested, and the amount of active ingredient required will be calculated according to the potency of the parathormone. The appropriate amount of parathormone will then be mixed with a buffer solution and a nitrogen gas will be applied to eliminate possible degradations. The solution will be filtered through a microbial filter.
The sterilized parathormone will be inserted into one chamber of a two-chamber glass cartridge. The parathormone will then be freeze dried in a three-step process at 40C. A diluent solution will be prepared and inserted into the second chamber. The finished parathormone will then be inspected and the cartridges may be packaged in blister packs prior to export.
In Germany, the same manufacturer of the parathormone will also produce a placebo from raw materials. The placebo will be used to train patients to administer the parathormone. The placebo will be packaged in two-chamber cartridges similar to the cartridges used to administer the parathormone, and will be packaged in one of two forms: as a liquid or as an inert placebo cake. When filled in cartridges, the placebo will take the place of the PREOS cake form in one chamber of the cartridge, and the second chamber will be filled with a liquid saline solution, and will not be packaged in blister packs. Whether filled with PREOS or the placebo, the disposable cartridges contain a single dose and are not intended for reuse.
NPS proposes to place labels on the cartridges (or blister packs) that read, “Manufactured for NPS Pharmaceuticals, Inc., Salt Lake City, Utah 84108 USA by Vetter Pharma GmbH & Co. KG., Germany.” You claim that the German processing results in a substantial transformation such that the drug becomes a product of Germany.
ISSUE:
Whether the country of origin of the PREOS and placebos is Germany.
Whether the disposable cartridge must be marked with the country of origin of the cartridge.
LAW & ANALYSIS:
The U.S. law relating to country of origin marking for imported merchandise 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).
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, United States v. Friedlaender & Co. Inc., 27 C.C.P.A. 297, at 302 (1940).
The country of origin of an article for U.S. tariff purposes is the country in which the last substantial transformation took place. A substantial transformation occurs when an article is used in a manufacturing process or operation that results in a new article that has a new name, character or use different from that of the original imported article. A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); and National Juice Products Association v. United States, 628 F. Supp. 978 (Ct. Int’l Trade 1986).
U.S. Customs and Border Protection (“CBP”) has issued several ruling letters concerning the substantial transformation of pharmaceutical drugs. These rulings have generally held that the processing of pharmaceutical products in bulk form into measured doses does not result in a substantial transformation of the product.
In HRL 561975, dated April 3, 2002, CBP found that no substantial transformation resulted from the U.S. processing of the anesthetic drug sevoflurane. The U.S. operations in that case involved processing the drug from bulk form into measured doses, extensive testing, and filtering and packaging the product into bottles. In determining that there was no substantial transformation, CBP noted that there was no change in name (the packaged product was identified as sevoflurane on the label, with the trade name “Ultrane”), little change in the character, and no change in use of the product.
In HRL 561544, dated May 1, 2000, CBP determined that there was no substantial transformation when imported geneticin sulfate was 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. CBP 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 HRL 731731, dated February 23, 1989, however, CBP found 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 U.S. processing was extensive and involved the following operations: (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 pyrogenicity; (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, we find that the parathormone undergoes a substantial transformation as a result of the further processing in Germany. The further processing in this case is similar to the processing of vancomycin hydrochloride in HRL 731731. In both cases, the further processing includes thawing the raw material; testing and adjusting the active ingredient as necessary; mixing the material in a buffer solution; applying nitrogen gas to eliminate possible degradation; filtering the material through a microbial filter, and a three-step freeze drying process. This extensive processing transforms the raw parathormone from an unstable, non-sterile, frozen material unsuitable for human use into a pharmaceutical agent ready for human use. In addition, we also find that the placebo, which is produced entirely in Germany, is a product of Germany for marking purposes.
You claim that the origin of cartridge is not required to be marked. You note that the cartridge should be treated as a disposable container as described in 19 C.F.R. 134.24(a) and (d).
Section 134.24(a), CBP Regulations (19 C.F.R. 134.24(a)), defines disposable containers as “the usual ordinary types of containers or holders or containers, including cans, bottles, paper or polyethelyne bags, paperboard boxes, and similar containers or holders which are ordinarily discarded after the contents have been consumed.” CBP has held that disposable containers under section 134.24(a) include syringes filled with pharmaceutical drugs. See HRL 559136, dated August 3, 1995. As with the syringes in HRL 559136, the two-chamber glass cartridge in this case is used to store medicine until it is administered to a patient and discarded thereafter. Therefore, we find that the glass cartridges are an “usual ordinary types of containers” for its contents, and therefore “disposable containers” within the meaning of 19 C.F.R. 134.24(a). Accordingly, the origin of the cartridges need not be indicated.
Finally, you state that the label on the cartridges or blister packs will indicate that the product is manufactured for NPS. Specifically, you propose that the label read: “Manufactured for NPS Pharmaceuticals, Inc., Salt Lake City, Utah 84108 USA by Vetter Pharma GmbH & Co. KG., Germany.”
The proposed reference to “Salt Lake City, Utah” triggers the special marking requirements of 19 C.F.R. 134.46. This regulation requires that when the name of any city or locality in the United States appears on an imported article or its container, there must appear, legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by “Made in,” “Product of” or other words of similar meaning. The purpose of this section is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the actual origin of the imported good. In HRL 558002, dated October 11, 1994, CBP held that the term “manufactured by,” followed by the name of the manufacturer and the location of that manufacturer, was unclear because it indicated the name and location of the manufacturer rather than the country of production.
We find that the requirements of 19 C.F.R. 134.46 are satisfied, in that the country of origin is in the same size and in close proximity to the reference to the location of NPS. However, the phrase “Manufactured for NPS Pharmaceuticals, Inc., Salt Lake City, Utah 84108 USA by Vetter Pharma GmbH & Co. KG., Germany,” is confusing and should be revised to read: “Manufactured in Germany by Vetter Pharma GmbH & Co. KG for NPS Pharmaceuticals, Inc., Salt Lake City, Utah 84108 USA.” This revised marking will clarify that the Germany is the country of origin of the product rather than merely the location of the manufacturer’s corporate headquarters. In addition, to the extent the cartridges are repackaged in the United States, the certification requirements of 19 C.F.R. 134.26, must be satisfied.
HOLDING:
Based on the information provided, we find that the parathormone undergoes a substantial transformation as a result of the further processing in Germany. The country of origin for marking purposes is Germany. The two-chamber glass cartridges are disposable containers and not required to be marked with the origin of the cartridges. Finally, the proposed marking should be revised to state first country of origin, followed by the name of the manufacturer and the name and location of the importer.
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 CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch