CON-9-09 RR:CR:DR 227905 CB
Richard M. Belanger, Esq.
Powell, Goldstein, Frazier & Murphy
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
RE: Request for Binding Ruling on a Temporary Importation under
Bond for processing and testing of experimental pharmaceutical
products; Subheadings 9813.00.30 and 9813.00.05, HTSUS;
Cancellation of TIB entries on a First-In, First-Out (FIFO)
basis; Schedule X, Appendix to 19 CFR Part 181.
Dear Mr. Belanger:
This is in response to your letter of February 17, 1998,
on behalf of Dupont Merck Pharmaceutical Co. (Dupont Merck)
regarding the applicability of subheadings 9813.00.05 and
9813.00.30 of the Harmonized Tariff Schedule of the United
States (HTSUS), to pharmaceutical products imported in bulk
form.
FACTS:
According to your letter, Dupont Merck is planning to
import the active ingredient in bulk form for a new
pharmaceutical compound known as Sustiva . Dupont Merck will
process the imported bulk drug into dosage form in the United
States. The chemical will be imported under subheading
9813.00.05 and/or 9813.00.30, HTSUS. When approved for
commercial use by the Food and Drug Administration (FDA),
Sustiva will be used as a drug to treat individuals infected
with the human immunodeficiency virus (HIV). You state that,
as of this time, the FDA has classified Sustiva as an
investigational new drug (IND). This means that the drug is
currently being tested and reviewed by the FDA for the purpose
of obtaining FDA approval. During this IND phase, some of the
drug will be exported, and the balance will be consumed in
clinical investigations pursuant to the FDA approval process.
According to your request, the clinical investigations will be
in the form of traditional clinical trials, and also in the
form of the FDA's expanded access program.
You state that the FDA and Public Health Service have
recently created a collection of programs to allow for wider
use of drugs during the clinical investigation phase of the
approval process. The expanded access program that is relevant
to Sustiva is set forth in 21 C.F.R. 312.34 which provides
for a "treatment protocol" or "treatment IND" as part of the
clinical investigation. Development of a treatment IND permits
applicants for FDA drug approval to make the drug available to
patients for use on a wider basis than previously available.
You state that all of the drugs will be dispensed under
carefully controlled circumstances requiring each participating
physician/investigator to account for each dosage, and
requiring that all Sustiva dispensed through expanded access
be consumed by patient volunteers or be destroyed.
Furthermore, the contract that Dupont Merck has with its
supplier of the bulk active ingredient specifically provides
for supply to be consumed in preclinical and clinical studies
only, and that none of the chemical will be used for commercial
supply.
Dupont Merck plans to import Sustiva in bulk form that
will be processed into dosage form. During the processing,
ingredients are added to allow for tableting, encapsulation, or
the manufacturing of syrups. You state that this is necessary
to allow for the consumption of the products during testing.
Dupont Merck proposes to place these goods in an inventory
where it will be commingled with fungible merchandise. For
these reasons, Dupont Merck is unable to directly identify the
TIB goods upon export or destruction. You state that Dupont
Merck's records will be able to show the total fungible
merchandise commingled, the date of such commingling, the
record of each input into the commingled material and the
record of each withdrawal (including date and quantity).
ISSUES:
1. Whether the processing and testing of the experimental
pharmaceutical product permits its entry under subheading
9813.00.05 and 9813.00.30, HTSUS.
2. Whether the TIBs may be canceled on a first-in, first-out
(FIFO) basis .
LAW AND ANALYSIS:
Issue #1
Under subheading 9813.00.30, HTSUS, articles intended
solely for testing, experimental, or review purposes may be
entered duty-free, temporarily, under bond for their
exportation within one year from the date of importation unless
an extension for one or more additional periods, which when
added to the initial period does not exceed three years, is
granted by the district director. Likewise, articles to be
repaired, altered or processed (including processes which
result in articles manufactured or produced in the United
States) may be entered under subheading 9813.00.05, HTSUS.
The Customs Service has previously held that the
procedures to obtain FDA approval of a pharmaceutical compound
is a test or experiment within subheading 9813.00.30, HTSUS,
since the drugs are administered to selected patients as a
means of testing the drug itself and its effects on the general
class of humans. See Headquarters Rulings (HQ) 223589, dated
March 20, 1992. Under U.S. Note 3, Chapter 98, subchapter
XIII, HTSUS, upon satisfactory proof that any araticle admitted
under subheading 9813.00.30, HTSUS, has been destroyed because
of its use for any purpose provided for therein, the obligation
under thje bond to export such article shall be treated as
satisfied.
Pursuant to 19 C.F.R. 10.39(a), in the case of articles
entered under subheading 9813.00.30, HTSUS, which are destroyed
because of their use for the purposes of importation, the bond
charge shall not be cancelled unless there is submitted to the
port director a certificate from the importer stating that the
articles were destroyed during the course of a specifically
described use, and the port director is satisfied that the
articles were so destroyed within the period of time during
which the articles may remain in the Customs territory of the
United States under bond. Customs has consistently held that
consumption by selected patients participating in the test of
pharmaceuticals, is deemed a destruction for purposes of 19
C.F.R. 10.39(a). The imported Sustiva used for testing under
the facts presented is eligible for treatment under subheading
9813.00.30, HTSUS.
You have also indicated that imported Sustiva may be
processed into dosage form. During the processing, ingredients
are added only to allow for tableting, encapsulation , or the
manufacturing of syrups. This is necessary to allow for the
consumption of the products during testing. Customs has held
that the conversion of an imported bulk chemical compound into
specific quantities for distribution as medication would
constitute a process of the chemical compound. See HQ 223589,
supra. Therefore, subheading 9813.00.05, HTSUS, would also be
applicable to any Sustiva entered in bulk and processed into
dosage form. We have previously held that merchandise may be
entered under more than one TIB provision on a single entry,
when an article is entitled to entry under multiple provisions
due to the use that the article will be put while in the United
States. See C.S.D. 83-45 and HQ 221835, dated August 27, 1990.
However, the importer must also comply with all of the
accountability requirements under the U.S. Notes of Subchapter
XIII.
Issue #2
The Customs Service has interpreted the temporary
importation under bond provisions as usually requiring direct
identification of each particular article to show timely
exportation. Customs has approved the identification of
fungible merchandise that is commingled through first-in,
first-out (FIFO) accounting methods. See C.S.D. 86-16.
Illustrations of the application of such FIFO accounting
records are set forth in Schedule X, Appendix to 19 C.F.R. Part
181 and 19 C.F.R. 191.14(c) (1998 ed.).
You state that Dupont Merck's inventory control system is
adequate to account for TIB and non-TIB merchandise, and it
contains records consistent with those listed in C.S.D. 88-1
and Schedule X, Appendix to 19 C.F.R. Part 181. We are unable
to specifically approve Dupont Merck's accounting records
without the submission of copies of records demonstrating
compliance with the statutes and regulations. See 19 C.F.R.
177.2(b) and 177.7. If Dupont Merck's records are capable of
matching the illustrative examples cited above, Dupont Merck
should be able to satisfactorily identify specific lots of the
temporarily imported drug so as to meet the requirements of
Subchapter XIII, Chapter 98, HTSUS, and 19 C.F.R. 10.39.
HOLDING:
Based upon the information provided, Sustiva may be
imported under subheading 9813.00.30 and/or 9813.00.05, HTSUS,
for use in tests as detailed in the FACTS portion of this
ruling.
Sincerely,
John A. Durant, Director
Commercial Rulings Division