HQ 0731731 - Country of origin marking requirements for vancomycin hydrochloride - United States International Trade Commision Rulings

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HQ 731731

February 23, 1989

MAR-2-05 CO:R:C:V jd

CATEGORY: MARKING

U.S. Customs Service
Chief, NIS Division
Branch 1
6 World Trade Center
New York, New York 10048-0945

RE: Country of origin marking requirements for vancomycin hydrochloride

Dear Mr. Slomovitz:

This is in response to your request for internal advice, IA 38/88, dated August 24, 1988, concerning the country of origin marking requirements for a drug product known as Sterile Vancomycin Hydrochloride U.S.P. An importer, LyphoMed, Inc., received marking notices at the port of Chicago for failure to provide repacking certification pursuant to { 134.25(a), Customs Regulations (19 CFR 134.25(a)). After failure to satisfactorily resolve this matter at the port, the importer has requested the port to seek internal advice.

FACTS:

According to the submission of the importer's attorney, a substance known as vancomycin hydrochloride is imported in bulk in metal drums from Japan. As imported, the substance is unfit for medical use.

At the importer's processing facility the following steps are performed: (1) the raw material is tested for potency and if the potency is not adequate, more active ingredient is added;
(2) nitrogen gas is applied to the material to prevent degradation during further processing; (3) the material is dissolved into a solution and filtered; (4) the filtered solution is tested for pyrogenicity, if positive, it is rejected;
(5) filtered solution surviving the screening is placed in glass vials to be freeze dried; and (6) freeze drying occurs in three stages- freezing, heating and water extraction.

The imported raw material is procured at $5.00 per gram. Domestic processing imparts value of over $6.00 per gram, a value added of over 120%. The finished product is known as Lyphocin brand Sterile Vancomycin Hydrochloride USP. It is an antibiotic capable of intravenous injection fit for human use.

ISSUE:

Is raw vancomycin hydrochloride, which when imported is unfit for human use, substantially transformed by processing into a purified, finished antibiotic drug capable of intravenous use by humans such that the importer/processor is considered the ultimate purchaser for country of origin marking purposes?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that 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 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.

Section 134.35, Customs Regulations (19 CFR 134.35), provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304(a). Accordingly, the article shall be excepted from marking. However, in accordance with 19 U.S.C. 1304(b) and { 134.22, Customs Regulations (19 CFR 134.22), the outermost container of the imported article shall be marked to indicate the country of origin of the article.

It is obvious that the use of the raw vancomycin hydrochloride has changed as a result of the domestic processing. A raw substance unfit for human use emerges as an injectable antibiotic fit for human use. Similarly, the character of the raw substance changes from a powder of variable potency to a purified solution of uniform potency levels. Even the name change criterion is satisfied when comparing vancomycin hydrochloride with Sterile Vancomycin Hydrochloride U.S.P. Although normally the addition of an adjective in front of a product name is not persuasive, in this case the word "sterile" is added only after considerable processing and U.S.P. (United States Pharmacopeia) indicates adherence to a standardized composition for the finished product.

Our determination is consistent with the finding in ruling 725704 (November 14, 1984). That ruling involved a drug imported from England in bulk form which was transformed in the U.S. into individual doses under conditions that required substantial time, effort, cost and the application of sophisticated technology and equipment. The domestic processing was held to be a substantial transformation and accordingly, the repackaged product was not required to indicate the English origin of the active ingredient.

HOLDING:

In light of the above considerations, it is the opinion of this office that vancomycin hydrochloride in raw form is substantially transformed by the processing described into a new article with a new name, character and use. Accordingly, the importer/processor is the ultimate purchaser of the raw vancomycin hydrochloride. The outermost container reaching the ultimate purchaser, in this case the metal drums, must be marked to indicate the country of origin of the raw drug contained therein. The importer need not submit any repacking certificates such as those described in { 134.25(a) since the product as put up for sale is no longer subject to the requirements of 19 U.S.C. 1304.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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