OT:RR:CTF:CPMMA H283420 RRB
JoAnne Colonnello, Center Director
Pharmaceuticals, Health, and Chemicals
Center of Excellence and Expertise
U.S. Customs and Border Protection
6747 Engle Road
Middleburg Heights, OH 44130
RE: Internal Advice; Country of origin marking requirements for repackaged
prescription medication sold by CVS Health; ultimate purchaser; 19 U.S.C. 1304; 19 C.F.R. 134.1(d)(1); 19 C.F.R. 134.25
Dear Center Director:
This is in response to a request for internal advice, initiated by the Pharmaceuticals, Health, and Chemicals Center of Excellence and Expertise ("Center"), U.S. Customs and Border Protection ("CBP"), pursuant to the inquiry from an individual retail purchaser on January 11, 2017, concerning country of origin marking requirements for repackaged prescription medication by CVS Health pharmacy ("CVS"). Our decision follows.
FACTS:
The merchandise at issue consists of a drug known as Omeprazole, which is manufactured abroad and imported by Sandoz, a division of the pharmaceutical company Novartis, into the United States, where it is repackaged and sold by CVS to retail purchasers. As part of the initial inquiry, the submission included photographs of empty packaging for Omeprazole consisting of Sandoz's original opaque white plastic container and an orange translucent plastic container into which the product was repackaged by CVS. Sandoz's original packaging for the Omeprazole is marked with the country of origin as "Product of India." However, CVS's repackaged containers of Omeprazole do not contain any country of origin marking.[1]
After our office received this inquiry, we reached out to Sandoz through its parent company, Novartis, regarding the Omeprazole imports. In response to questions posed to Sandoz via email, dated March 10 and March 24, 2017, by the Center, Sandoz responded on March 17, April 17, and April 19, 2017, arguing in favor of having satisfied marking requirements under 19 U.S.C. 1304 and that CVS is the ultimate purchaser.
The inquirer argues that he and other CVS customers are the "ultimate consumers" (i.e., ultimate purchasers) of the merchandise. Accordingly, the inquirer asserts that where medications are repackaged by CVS and are not marked with the country of origin, CVS is not following country of origin marking requirements under 19 U.S.C. 1304.
ISSUE:
Whether CVS, as the repackager/dispenser/seller, or consumers at retail, are the ultimate purchasers of imported prescription medication, pursuant to 19 C.F.R. 134.1(d).
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that unless excepted, every article of foreign origin 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase, the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlander & Co., 27 C.C.P.A. 297, 302; C.A.D. 104 (1940).
Part 134 of Title 19 of the Code of Federal Regulations (19 C.F.R. Part 134) implements the country of origin marking requirements and exceptions to 19 U.S.C. 1304. Pursuant to 19 C.F.R. 134.41(b), the ultimate purchaser in the United States must be able to find the marking easily and read it without strain. The degree of permanence of the marking should be at least sufficient to ensure that in any reasonably foreseeable circumstance, the marking shall remain on the article (or its container) until it reaches the ultimate purchaser, unless it is deliberately removed. Section 134.1(d) defines the ultimate purchaser as "generally the last person in the United States who will receive the article in the form in which it was imported." Pursuant to 19 C.F.R. 134.1(d)(3), if an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser.
In the instant matter, the Omeprazole is imported by Sandoz. CVS simply repackages and sells the Omeprazole to customers at CVS's retail pharmacies. CBP has consistently held that repackaging does not constitute a substantial transformation for country of origin purposes. See, e.g., New York Ruling Letter ("NY") N265425, dated June 17, 2015. Consequently, in the absence of a substantial transformation of the medication by CVS, the customer at the CVS retail pharmacy is the last person to receive the Omeprazole in the form that it was imported, i.e., the ultimate purchaser pursuant to 19 C.F.R. 134.1(d)(3).
As we have previously ruled, drugs:
"...are exempt from individual marking by virtue of 19 U.S.C. 1304(a)(3)(J) and 19 C.F.R. 134.33, since '[c]hemicals, drugs, medicinal, and similar substances, when imported in capsules, pills, tablets, lozenges, or troches' are J-List articles. Articles on the J-List are exempt from individual marking, however the outermost container that ordinarily reaches the ultimate purchaser of a J-List article must be marked with the country of origin of the article."
Headquarters Ruling Letter ("HQ") 731640, dated April 20, 1989. Thus, while the Omeprazole tablets or pills themselves need not be individually marked, the outermost container must be marked with the country of origin. Based on pictures submitted by the inquirer, it appears that the original bulk packaging from Sandoz is properly marked with the country of origin. However, when CVS repackages the Omeprazole for sale to customers at retail, the orange container does not include the country of origin marking. Therefore, the retail consumers, as the ultimate purchasers, upon inspection, are unable to know the country of origin of the medication.
We are not aware of any existing rulings or other guidance which addresses the specific issue of country of origin marking of repackaged pharmaceuticals purchased from a retail pharmacy. Sandoz cited, and we confirmed, only two rulings on pharmaceuticals where a healthcare service provider provides the pharmaceutical to a patient.
First, Sandoz cited to HQ 734232, dated November 20, 1991. In that ruling, single dose vials of Carnitor, an intravenous medication to be mixed in parenteral solutions of Sodium Chloride 0.9% or Lactated Ringer's in concentrations ranging from 250 mg/500 mL (0.5 mg/mL) to 4200 mg/500 mL (0.8 mg/mL), packaged in cartons of five vials per container, were marked as a product of Italy on the side panel of the carton.[2] The issue in HQ 734232 was whether this marking was adequate given that the name of the U.S. distributor was on the side and back panels of the carton. In deciding that issue, the ruling states that the ultimate purchaser of the cartons of five vials is the hospital pharmacy that dispenses the properly mixed medication to a healthcare provider who delivers it intravenously to the patient. CBP ruled that the country of origin must appear on both panels of the carton, next to the U.S. distributor address. Once the carton of five vials is properly marked, it is received as such by the ultimate purchaser, the hospital, and each individual vial need not be marked. The patient receives the medication from one of the vials mixed with intravenous fluid as part of the service of delivering healthcare, not in the form it was imported. Hence, CBP determined that there was no requirement to mark each individual vial if the carton of five vials was properly marked.
Sandoz also cited to HQ H243931, dated December 5, 2013. In that ruling, the imported merchandise is provided by physicians to patients as free samples in the course of providing medical services where such services are the primary focus of the transaction between physicians and patients, not the drugs themselves. The physicians were determined to be the ultimate purchasers, and the medication only needed to be properly marked upon receipt by the physician. Conversely, in the instant matter, the imported medication is specifically purchased by the recipient, who purchases it at retail after receiving a prescription from a doctor, which itself, was provided as part of a separate service. Thus, the facts in HQ H243931 are distinguishable.
Sandoz asserts that CVS is the ultimate purchaser of the medication. Because Sandoz has marked the medication with the proper country of origin marking, Sandoz argues that marking requirements under 19 U.S.C. 1304 have been satisfied, as CVS is the ultimate purchaser. Sandoz relies on HQ 734232 in support of its assertion that CVS is the ultimate purchaser. In circumstances such as those set forth in HQ 734232, when the imported article is dispensed to the recipient as part of a service, the recipient of the article is not the ultimate purchaser. Rather, the ultimate purchaser of the imported article is the hospital who distributes the medication to the recipient patients. However, Sandoz reads HQ 734232 too broadly. In HQ 734232, the drug is dispensed by the hospital pharmacy and administered by a doctor or nurse, all as part of one service. In the instant matter, however, the retail customer is filling a prescription written by his or her doctor, where the prescription provided by the doctor is a separate service. The customer purchases the Omeprazole at retail, at a pharmacy selected by the customer, which is a separate transaction from the doctor's visit. Unlike in HQ 734232, where the hospital pharmacy was not selling the drug directly to the consumer but rather, was dispensing it as part of a service, CVS is only repackaging the drug and does not administer it or provide a service.[3]
Thus, pursuant to 19 C.F.R 134.1(d)(3), where a customer fills a prescription order for medication and purchases it at a retail pharmacy such as CVS, we find that the customer, as the purchaser of the medication at retail, is the ultimate purchaser.
Sandoz and other importers of medications that are repackaged and sold to retail pharmacies for sale to customers may argue that such retail pharmacies are the ultimate purchasers because a licensed pharmacist is providing a service by dispensing the medication to provide correct quantities, strengths, indications, instructions, and warnings. However, a retail customer's purchasing decision is not based on a particular service provided by the pharmacist, as such services are uniform from pharmacy to pharmacy. Instead, a retail customer as the ultimate purchaser is deciding whether or not to purchase medication from a pharmacy based on factors such as the medication's country of origin and/or manufacturer. We further note that even if the country of origin were listed on a loose product information sheet that is sometimes distributed with prescription medication, this would not be considered sufficient marking in a conspicuous place for purposes of 19 U.S.C. 1304 and 19 C.F.R. 134.41. A product information sheet accompanying medication is not conspicuous or permanent, as it may get lost or separated from the container at the time the ultimate purchaser receives the medication.
Certification requirements for repackaged medication
Under 19 U.S.C. 1304(a)(3)(J) and 19 C.F.R. 134.33, repackaged medication is considered a J-List article. Pursuant to 19 C.F.R. 134.25(a), the following certification must be included with the appropriate entry document or invoice and filed at the port of importation if the imported good is a J-List article that is intended to be repacked in new containers for sale to an ultimate purchaser, or if the Center director, having custody of the article, has reason to believe such article will be repacked after its release from Customs custody:
a) Certification requirements.
...
Certificate of Marking-Repacked J-List Articles and Articles Incapable of Being Marked
(Port of entry)______________________________________________________
I, of , certify that if the article(s) covered by this entry (entry no.(s) dated), s (are) repacked in a new container(s), while still in my possession, the new containers, unless excepted, shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the container(s) will permit, in such manner as to indicate the country of origin of the article(s) to the ultimate purchaser(s) in accordance with the requirements of 19 U.S.C. 1304 and 19 CFR part 134. I further certify that if the article(s) is (are) intended to be sold or transferred by me to a subsequent purchaser or repacker, I will notify such purchaser or transferee, in writing, at the time of sale or transfer, of the marking requirements.
Date_________________________________________
Importer______________________________________
In addition, pursuant to 19 C.F.R. 134.25(d), if an article is sold or transferred to a subsequent purchaser or repacker, the following notice must be given to the subsequent purchaser or repacker:
NOTICE TO SUBSEQUENT PURCHASER OR REPACKER
These articles are imported. The requirements of 19 U.S.C. 1304 and 19 CFR part 134 provide that the articles or their containers must be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article or container will permit, in such a manner as to indicate to an ultimate purchaser in the United States, the English name of the country of origin of the article.
Further, pursuant to 19 C.F.R. 134.25(e), failure to comply with the certification requirements in 19 C.F.R. 134.25(a) may subject the importer to a demand for liquidated damages under 19 C.F.R. 134.54(a) and for the additional duty under 19 U.S.C. 1304(i). Thus, where medication is imported and sold to CVS and other pharmacies, and where such entities repackage and sell medication at retail to the ultimate purchasers, importers such as Sandoz shall certify to the Center director at the time of entry that the medication will be repackaged and sold in accordance with 19 C.F.R. 134.25(a). The importer must also comply with the notice requirements of 19 C.F.R. 134.25(d).
HOLDING:
Pursuant to 19 U.S.C. 1304 and 19 C.F.R. Part 134, the ultimate purchaser of the medication in this case is the customer who buys the medication at retail, and not the retail pharmacy that purchases the medication from the importer. Further, importers of medication that sell to retail pharmacies, which repackage and sell the medication to the ultimate purchasers, must comply with the certification and notice requirements of 19 C.F.R. 134.25(a) and (d).
You are to mail this decision to the internal advice requester no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings, will make the decision available to CBP personnel and to the public on CBP's website, located at www.cbp.gov, by means of the Freedom of Information Act and other methods of public distribution.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division
-----------------------
[1] Sandoz indicates that it does not produce any Omeprazole domestically and that all of its Omeprazole is imported.
[2] See http://www.carnitor.com/pdf/CarnitorInjection_VPI-12_04-15_20160302153637_197875.pdf (last visited on Feb. 1, 2023).
[3] The Food and Drug Administration ("FDA") does not consider the following to be "repackaging": "[r]emoving a drug product from the original container at the point of care (e.g., patient's bedside) for immediate administration to a single patient after receipt of a valid patient-specific prescription or order for that patient (e.g., drawing up a syringe to administer directly to the patient." FDA, Guidance for Industry, Repackaging of Certain Human Drug Products by Pharmacies and Outsourcing Facilities (January 2017, https://www.fda.gov/downloads/Drugs/Guidances/UCM434174.pdf). While CBP is not bound by the rules and regulations of other agencies, FDA's guidance does not conflict with HQ 734232 or the holding here. See HQ 967515, dated March 21, 2005.