CLA-02 RR:CR:SM 563207 AL
Category: Classification
Mark S. Zolno, Esq.
Katten Muchin Zavis Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661-3693
RE: Country of Origin Marking; 19 U.S.C. 1304; Substantial Transformation; 19 CFR 134.1(b)
Dear Mr. Zolno:
This is in response to your request for a ruling, dated February 28, 2005, on behalf of Takeda Pharmaceuticals North America, Inc. (“Takeda”). Your request concerns the country of origin marking of a finished pharmaceutical product, Actoplus Met™ to be imported into the U.S.
FACTS:
According to your request, Takeda plans to produce Actoplus Met™ in Japan by combining two active pharmaceutical ingredients (API) for an alternative treatment to type 2 diabetes. The first API, pioglitazone HCl (pioglitazone), is used in the production of Actos™ which is currently manufactured in Japan but may be sourced from other countries. Pioglitazone HCl is an insulin sensitizer belonging to the thiazolidinedione class of oral antidiabetic medications which directly targets insulin resistance, a condition in which the body does not effectively use the insulin it produces to control blood glucose levels. The second API is metformin, which is 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. It is anticipated that the metformin will be sourced in various countries, including Japan and Spain.
The two APIs, pioglitazone and metformin, will be mixed together to form a fix combination drug. Recently, Takeda filed a new drug application for this fix combination drug with the U.S. Food and Drug Administration.
ISSUE:
Whether the formulation of Actoplus Met™ from the two APIs in Japan is a substantial transformation such that the drug becomes a product of Japan.
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 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. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
“Country of origin" is defined in 19 CFR 134.1(b) as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 the marking laws and regulations. A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, or use which differs from that of the original material subjected to the process. Texas Instruments v. United States, 69 CCPA 152, 156, 681 F.2d 778, 782 (1982).
Here, the formulation of Actoplus Met™ from pioglitazone and metformin will take place in Japan. The information you have provided indicates that the final product will have a new name, Actoplus Met™, and will have unique properties in combination that do not exist prior to its formulation. You have cited New York Ruling Letter (NY) E83145, dated June 18, 1999 which held that a substantial transformation occurred where two APIs were combined, producing a product that had an “identity and character medicinally distinct from the materials from which it was produced.” You have stated that the formulation of Actoplus along with the necessary excipients to create this new drug product will have an “identity and character medicinally distinct” from pioglitazone and metformin. Moreover, because this final product is currently not available for treatment of type 2 diabetes, it will have a new use.
In Headquarters Ruling Letter (HQ) 561330, dated July 2, 1999, four scenarios were presented to determine whether a substantial transformation occurred in the processing of insecticides and herbicides. The first two scenarios concerned a blending process that produced a different grade of the initial product. CBP determined that the change in grade did not result in substantial transformation of the product. However, in the last two scenarios, an imported product was combined with another active ingredient which significantly changed the nature of the bulk product because the effectiveness of the finished product significantly increased.
A “Draft Proposed Labeling” document has been submitted by counsel to substantiate the change in character and use of the combination of the two APIs. Clinical studies referenced in the document address the efficacy of the co-administration and safety of the two APIs. The studies refer to an “added benefit” of pioglitazone in patients with inadequately controlled type 2 diabetes while on metformin therapy. It is stated that additional clinical studies where pioglitazone was co-administered with metformin resulted in significant improvements in glycemic control. Moreover, counsel has emphasized that Actoplus Met™ is medicinally distinct from both APIs because, as a single drug, Actoplus Met™ has medical properties that neither pioglitzone nor metformin possess. Actoplus Met™ decreases both hepatic glucose production and intestinal absorption. In addition, Actoplus Met™ depends on the presence of endogenous insulin in the body in order to be fully effective.
With the combination of the two APIs, type 2 diabetes patients will receive more medical benefits than taking metformin alone. Counsel submits that the combination of piogliatzone and metformin will result in a substantial transformation in Japan and thus, the finished pharmaceutical, Actoplus Met™, would be considered a product of Japan.
We find that the finished pharmaceutical, Actoplus Met™ will have a new name, character and use distinct from the two APIs used in the production of the finished product. While we note that pioglitazone and metformin may be prescribed separately, the final product, Actoplus Met™, increases the individual effectiveness of pioglitazone and metformin in treating type 2 diabetes patients. Such an increase in effectiveness indicates that a change in character and use occurs.
HOLDING:
Based on the information provided, a substantial transformation will take place in Japan where two APIs are combined to produce Actoplus Met™. Therefore, the use of “Made in Japan” would be the appropriate country of origin marking for Actoplus Met™.
A copy of this ruling letter should be attached to the entry documents filed at the time the merchandise is 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,
Myles B. Harmon, Direction
Commercial Rulings Division