80 FR 15024 - Notice of Issuance of Final Determination Concerning Certain Oral Solution Products

DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection

Federal Register Volume 80, Issue 54 (March 20, 2015)

This document provides notice that U.S. Customs and Border Protection (``CBP'') has issued a final determination concerning the country of origin of certain oral solution products for cleansing of the colon known as Prepopik. Based upon the facts presented, CBP has concluded that, the country of origin of the oral solution is China for purposes of U.S. Government procurement.

[Federal Register Volume 80, Number 54 (Friday, March 20, 2015)]
[Notices]
[Pages 15024-15026]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06434]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determination Concerning Certain Oral 
Solution Products

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: Notice of final determination.

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SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued a final determination concerning the 
country of origin of certain oral solution products for cleansing of 
the colon known as Prepopik. Based upon the facts presented, CBP has 
concluded that, the country of origin of the oral solution is China for 
purposes of U.S. Government procurement.

DATES: The final determination was issued on March 13, 2015. A copy of 
the final determination is attached. Any party-at-interest, as defined 
in 19 CFR 177.22(d), may seek judicial review of this final 
determination within April 20, 2015.

FOR FURTHER INFORMATION CONTACT: Grace A. Kim, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of International Trade 
(202) 325-7941.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on March 13, 
2015, pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection Regulations (19 CFR part 177, subpart B), CBP issued a final 
determination concerning the country of origin of certain oral solution 
products known as Prepopik, which may be offered to the U.S. 
Government, Department of Veterans Affairs under its Federal Supply 
Schedule contract. This final determination, HQ H253443, was issued 
under procedures set forth at 19 CFR part 177, subpart B, which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. 2511-18). In the final determination, CBP concluded that the 
processing in China results in a substantial transformation. Therefore, 
the country of origin of the oral solution is China for purposes of 
U.S. Government procurement.
    Section 177.29, CBP Regulations (19 CFR 177.29), provides that a 
notice of final determination shall be published in the Federal 
Register within 60 days of the date the final determination is issued. 
Section 177.30, CBP Regulations (19 CFR 177.30), provides that any 
party-at-interest, as defined in 19 CFR 177.22(d), may seek judicial 
review of a final determination within 30 days of publication of such 
determination in the Federal Register.

    Dated: March 13, 2015.
Glen E. Vereb,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade.

HQ H253443

March 13, 2015

OT:RR:CTF:VS H253443 GaK

CATEGORY: Origin

Michael T. Shor
Arnold & Porter LLP
555 12th Street, NW
Washington, DC 20004-1206

RE: U.S. Government Procurement; Country of Origin of PREPOPIK[supreg]; 
Substantial Transformation

Dear Mr. Shor:

    This is in response to your letter dated April 23, 2014, and 
your supplemental submission dated July 18, 2014, requesting a final 
determination on behalf of your client, Ferring Pharmaceuticals Inc. 
(``Ferring''), pursuant to subpart B of part 177 of the U.S. Customs 
and Border Protection (``CBP'') Regulations (19 CFR part 177). Under 
these regulations, which implement Title III of the Trade Agreements 
Act of 1979 (``TAA''), as amended (19 U.S.C. Sec.  2511 et seq.), 
CBP issues country of origin advisory rulings and final 
determinations as to whether an article is or would be a product of 
a designated country or instrumentality for the purposes of granting 
waivers of certain ``Buy American'' restrictions in U.S. law or 
practice for products offered for sale to the U.S. Government.
    This final determination concerns the country of origin of 
Ferring's PREPOPIK[supreg] for

[[Page 15025]]

Oral Solution (``Prepopik''), which is a powder for oral solution 
for cleansing of the colon. We note that as a U.S. importer, Ferring 
is a party-at-interest within the meaning of 19 CFR Sec.  
177.22(d)(1) and is entitled to request this final determination.
    Pursuant to 19 CFR Sec.  177.22(b)(7), you requested 
confidential treatment with respect to certain information 
submitted. As that information constitutes privileged or 
confidential matters, it has been bracketed and will be redacted 
from any published versions.

FACTS:

    Prepopik is a dual-acting osmotic and stimulant laxative bowel 
preparation for a colonoscopy in adults. Prepopik is imported in 
packets containing one dose, to which a dosing cup is added in the 
U.S. Prepopik is ingested by dissolving the powder in water, using 
the supplied plastic dosing cup. To produce Prepopik, sodium 
picosulfate (manufactured in Country A [******]), magnesium oxide 
(manufactured in Country B [******]), anhydrous citric acid 
(manufactured in Country C [******]), and three inactive ingredients 
(sourced from Country C and Country D [******]) are sent to China in 
powder form or in fine particles. The manufacturing process, 
described in detail to CBP, consists of sieving, wet mixing the 
sodium picosulfate to form granules, mixing magnesium oxide and 
citric acid into a granule formulation, product flavoring, and final 
blending which is stated not to result in a chemical reaction during 
any of the steps carried out in China. The final product is placed 
into single dosage packets. Each Prepopik packet contains 10mg 
sodium picosulfate, 3.5g magnesium oxide, and 12g citric acid. The 
packets are sent to a third party in the U.S. to be packaged into 
child-resistant pouches along with the pre-marked, plastic dosing 
cup.
    After importation, once water is added, the magnesium oxide and 
citric acid combine to form magnesium citrate. The magnesium 
citrate, is an osmotic laxative that stimulates the absorption of 
water into the bowel, while the sodium picosulfate stimulates 
peristalsis in the bowel to expel its contents.\1\
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    \1\ See http://www.nlm.nih.gov/medlineplus/ency/article/002282.htm; see also http://www.nlm.nih.gov/medlineplus/druginfo/meds/a613020.html.
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ISSUE:

    What is the country of origin of the Prepopik for purposes of 
U.S. government procurement and marking?

LAW AND ANALYSIS:

Country of Origin

    Pursuant to Subpart B of Part 177, 19 CFR 177.21 et seq., which 
implements Title III of the Trade Agreements Act of 1979, as amended 
(19 U.S.C. Sec.  2511 et seq.), CBP issues country of origin 
advisory rulings and final determinations as to whether an article 
is or would be a product of a designated country or instrumentality 
for the purposes of granting waivers of certain ``Buy American'' 
restrictions in U.S. law or practice for products offered for sale 
to the U.S. Government.
    Under the rule of origin set forth under 19 U.S.C. Sec.  
2518(4)(B):
    An article is a product of a country or instrumentality only if 
(i) it is wholly the growth, product, or manufacture of that country 
or instrumentality, or (ii) in the case of an article which consists 
in whole or in part of materials from another country or 
instrumentality, it has been substantially transformed into a new 
and different article of commerce with a name, character, or use 
distinct from that of the article or articles from which it was so 
transformed.
    See also 19 CFR 177.22(a).
    In determining whether a substantial transformation occurs in 
the manufacture of chemical products such as pharmaceuticals, CBP 
has consistently examined the complexity of the processing, and 
whether the final article retains the essential identity and 
character of the raw materials. To that end, CBP has generally held 
that the processing of pharmaceutical products from bulk form into 
measured doses, filtering and packaging does not result in a 
substantial transformation. See Headquarters Rulings Letter (``HQ'') 
H197582, dated August 9, 2012; HQ H561975, dated April 3, 2002; and 
HQ H561544, dated May 1, 2000.
    In HQ H215656, dated January 11, 2013, a pain reliever medicine 
called Rybix ODT was imported from France. The active pharmaceutical 
ingredient (``API'') was manufactured in India, which was shipped to 
France and processed in four stages. In the first stage, the API was 
de-lumped and granulated with a suspension of inactive ingredients 
then sieved and sized. In the second stage, several inactive 
ingredients designed to assist in drug administration were added to 
the API to make a flavor preblend. In the third stage, the tablets 
were formed and collected in polyethylene-lined foil bags. In the 
last stage, the tablets were packaged in child-resistant blister 
packs and prepared for shipment to the U.S. CBP found that the 
imported good did not undergo a substantial transformation in 
France, because the processing in France did not result in a change 
in the medicinal use of the product and the API retained its 
chemical and physical properties.
    However, in HQ 563207, dated June 1, 2005, Actoplus 
MetTM was produced in Japan by combining two APIs: 
pioglitazone HCl (pioglitazone), an insulin sensitizer metformin, a 
biguanide used to decrease the amount of glucose produced by the 
liver and make muscle tissue more sensitive to insulin so glucose 
can be absorbed. The two APIs were mixed together to form a fix 
combination drug. The decision noted that with the combination of 
the two APIs, type 2 diabetes patients will receive more medical 
benefits than taking metformin alone. CBP held that the finished 
pharmaceutical, Actoplus MetTM had a new name, character 
and use distinct from the two APIs used in the production of the 
finished product. It was noted that while pioglitazone and metformin 
could be prescribed separately, the final product, Actoplus 
MetTM, increased the individual effectiveness of 
pioglitazone and metformin in treating type 2 diabetes patients. 
Therefore, a substantial transformation was found to take place in 
Japan where the two APIs were combined to produce Actoplus 
MetTM.
    Ferring states that as imported, the only API present in 
Prepopik is the sodium picosulfate which retains its chemical and 
physical properties and is merely put into a dosage form and 
packaged. Ferring further contends that the processing in China does 
not result in a change in the medicinal use of the finished product. 
However, we note that magnesium oxide may be used for different 
reasons, as an antacid to relieve heartburn, sour stomach, or acid 
indigestion; or as a laxative for short-term, rapid emptying of the 
bowel. See http://www.nlm.nih.gov/medlineplus/druginfo/meds/a601074.html; see also http://pubchem.ncbi.nlm.nih.gov/compound/magnesium_oxide (Magnesium oxide (MgO) is an inorganic compound that 
occurs in nature as the mineral periclase and in aqueous media 
combines quickly with water to form magnesium hydroxide. It is used 
as an antacid and mild laxative and has many nonmedicinal uses). We 
note that combining magnesium oxide with water results in magnesium 
hydroxide which is also known for its laxative effect. While the 
combination with water by the user may cause the ``chemical 
reaction,'' we note that most medicines are taken with water, so we 
do not find that the addition of water in this case is what makes 
the magnesium oxide to function as a laxative. The combination of 
the magnesium oxide, citric acid and water may form the osmotic 
effect; however, the fundamental laxative property is already found 
in the magnesium oxide. Accordingly, we find that as in HQ 563207, 
the two ingredients (sodium picosulfate and magnesium oxide) 
contribute to the purpose of Prepopik. As the two ingredients are 
combined in China, we find that as in HQ 563207 a substantial 
transformation occurs in China. Individually, the sodium picosulfate 
and the magnesium oxide may be used to alleviate constipation, and 
together, when combined to form Prepopik, these ingredients have a 
more stiumlative effect. Therefore, we find that the country of 
origin of Prepopik is China.

Marking

    Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 
Sec.  1304), 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. Congressional intent in enacting 19 U.S.C. Sec.  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. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940). Part 
134, CBP

[[Page 15026]]

Regulations (19 CFR Sec.  134) implements the country of origin 
marking requirements and exceptions of 19 U.S.C. Sec.  1304.
    Section 134.1(b), CBP Regulations (19 CFR Sec.  134.1(b)), 
defines ``country of origin'' as:
    the country of manufacture, production or growth of any article 
of foreign origin entering the United States. Further work or 
material added to an article in another country must effect a 
substantial transformation in order to render such other country the 
``country of origin'' within the meaning of this part; . . .
    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 Hand Tool Corp. v. 
United States, 989 F.2d 1201 (Fed. Cir. 1992).
    In the instant case, Ferring mixes all the ingredients by 
blending, sieving, and mixing. We find that this processing results 
in a substantial transformation. The combination of the two 
ingredients results in a more stimulative laxative effect for 
purposes of cleansing the bowels. Therefore, we find that the 
country of origin of Prepopik is China for country of origin marking 
purposes.

HOLDING:

    Based on the facts in this case, we find that the imported 
Prepopik is substantially transformed in China. The country of 
origin for government procurement and marking purposes is China.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 CFR Sec.  177.29. Any party-at-interest 
other than the party which requested this final determination may 
request, pursuant to 19 CFR Sec.  177.31, that CBP reexamine the 
matter anew and issue a new final determination. Pursuant to 19 CFR 
Sec.  177.30, any party-at-interest may, within 30 days of 
publication of the Federal Register Notice referenced above, seek 
judicial review of this final determination before the Court of 
International Trade.

Sincerely,

Glen E. Vereb,
Acting Executive Director, Regulations and Rulings, Office of 
International Trade. 

[FR Doc. 2015-06434 Filed 3-19-15; 8:45 am]
 BILLING CODE 9111-14-P