MAR-2 RR:CTF:TCM 968083 RSD
TARIFF Nos. 3001.90.0000 and 3002.10.0190
M. Jason Cunningham, Esq.
Sonnenberg & Anderson
300 South Wacker Drive, 12th floor
Chicago, Illinois 60606
RE: Tariff Classification and the Country of Origin Marking Requirements for Three Human Blood Related Products, Hematopoietic Progenitor Cells, Bone Marrow Cells, and Therapeutic Cells
Dear Mr. Cunningham:
This is in response to your letter dated December 13, 2005, on behalf of the National Marrow Donor Program (NMDP) concerning the classification of three human blood related products, Hematopoietic Progenitor Cells (stem cells), Bone Marrow Cells, and Therapeutic Cells (T Cells) under the Harmonized Tariff Schedule of the United States (HTSUS). In addition, you inquire about the country of origin marking requirements as well as the valuation of these materials. In this decision, we will address the classification and the marking issues. The Valuation and Special Classification Branch will handle the valuation question in a separate letter issued to you. A meeting was held on March 29, 2006, with you and members of the staff from the NMDP to discuss these issues.
FACTS:
The NMDP is a non-profit corporation whose sole function is to identify unrelated donors of hematopoietic progenitor cells, bone marrow cells, and T cells for patients that have serious blood diseases and/or cancers, such as
leukemia, lymphoma, and myeloma, and who are unable to find a suitable matched family donor. To accomplish this, the NMDP and other registries around the world recruit suitably consented adult volunteer donors.
The subject merchandise consists of three materials collected from the human bloodstream, which are: 1) Hematopoietic Progenitor Cells, Bone Marrow (“bone marrow”), 2) Hematopoietic Progenitor Cells, Aphaeresis Peripheral Blood Stem Cells (“PBSC”), and 3) Therapeutic Cells (T Cells). None of these materials are mixed with animal (non-human) materials, and they do not contain embryonic stem cells.
The National Cancer Institute web site www.cancer.gov explains that bone marrow is the soft sponge-like material inside bones. It contains immature hematopoietic or blood-forming stem cells. It also produces white blood cells, red blood cells, and platelets. Stem cells are cells from which other types of cells will develop. In other words, mature blood cells develop from blood-forming stem cells.
The web site Wikipedia.com indicates that bone marrow or "medulla ossea" is the tissue comprising the center of large bones. It is the place where new blood cells are produced. Bone marrow contains two types of stem cells: hemopoietic (which can produce blood cells) and stromal (which can produce fat, cartilage, and bone). Hematopoietic stem cells give rise to the three classes of blood cells that are found in the human circulatory system: leukocytes, red blood cells (erythrocytes), and platelets (thrombocytes). The tissue of bone marrow, where pluripotential hemopoietic stem cells form, is called the "myeloid tissue".
Wikipedia.com further states that T cells are a subset of lymphocytes (a type of white blood cell) that play a large role in the human body's immune system’s response. The abbreviation "T" stands for thymus, the organ, in which the final stage of development of the T cells occurs. T cells belong to a division of the immune system called the acquired immune system. This is the part of the immune system that learns to combat invading bacteria and viruses (pathogens) through exposure to them.
At the meeting, it was explained to us that a doctor, hospital or other health care provider makes the decision whether a bone marrow transplant is the appropriate therapy for their severely ill patient. First, there will be an effort to see if there is a suitable family member who can donate bone marrow. If no suitable family member is available to donate bone marrow, the doctor or hospital will contact the NMDP to search its registry to see if a bone marrow match can be obtained from an unrelated donor.
The NMDP works through an extensive network of United States and international organizations to facilitate the bone marrow and blood cell transplants for patients who need a transplant from an unrelated donor. There are more than 10 million potential donors listed on registries worldwide. Because histocompatibility matching (HLA) between a donor and a recipient is the single most important factor predicting the outcome of the transplants, many patients do not find a suitable donor within their own country. Frequently, the best available HLA matched donor for an individual is located in a foreign country.
Upon locating a donor for a patient who is in need of a bone marrow transplant, it becomes extremely crucial that there is a prompt delivery of the bone marrow, PBSC, and T cells to the intended recipient. The collection, transport, and implantation of these materials is extremely time sensitive due to the fact that the materials will not keep for very long and the intended recipient is usually critically ill. Once a decision is made to seek an unrelated bone marrow donor from the NMDP registry, the doctor and the hospital along with NMDP will coordinate the bone marrow donation process to ensure that the bone marrow is delivered properly to the recipient. When a match is found, the doctor will be advised where the bone marrow donor is located and will be put in contact with the medical facility where the bone marrow is collected.
When a foreign donor has been selected and has agreed to donate, the material is collected at a medical facility abroad. The collected material is placed into a bag, which is in turn placed into a reusable styrofoam cooler and then hand transported by a courier using the fastest commercial flights available to a U.S. destination near the recipient. The courier, who is often a volunteer, carries the materials in the passenger compartment of a plane along with several documents that describe the material, its use, and its safety. The documents will contain codes so that the doctor and the hospital staff can verify that the proper materials have been delivered to the patient in the United States. It is our understanding that these documents will be seen only by the doctor and/or hospital staff and will contain information indicating from what country the bone marrow is coming.
ISSUES:
What is the proper tariff classification of three human blood related products, PBSC, bone marrow cells, and T cells, used for transplantations in the treatment of blood diseases and cancers under the HTSUS?
What are the country of origin marking requirements under 19 U.S.C. 1304 for the imported PBSC, bone marrow cells, and T cells?
LAW AND ANALYSIS:
Tariff Classification
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied.
The HTSUS provisions under consideration are as follows:
3001 Glands and other organs for organotherapeutic uses, dried, whether or not powdered; extracts of glands or other organs or of their secretions for organotherapeutic uses; heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included:
3001.90.00 Other.
* * *
3002 Human blood; animal blood prepared for therapeutic prophylactic or diagnostic uses; anti-sera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:
3002.10.01 Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes……….
3002.90 Other
3002.90.51 Other.
The Harmonized Commodity Description and Coding System Explanatory Notes (EN’s) constitute the official interpretation of the Harmonized System. While not legally binding on the contracting parties, and therefore not dispositive, the EN’s provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the Harmonized System. CBP believes the EN’s should always be consulted. See T.D. 89 80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
EN 30.01 states that heading 3001, HTSUS, covers:
(D) Other human or animal substances prepared for therapeutic or prophylactic uses and which are not specified or included in more specific headings of the Nomenclature, including:
(1) Red bone marrow preserved in glycerol.
The heading excludes:
…
(d) Human blood, animal blood prepared for therapeutic, prophylactic or diagnostic uses, and antisera (including specific immunoglobulins) and other blood fractions…
EN 30.02 further indicates that heading 3002, HTSUS, covers:
Antisera and other blood fraction and modified immunological products.
…
Antisera are obtained from the blood of humans or of animals which are immune or have been immunized against diseases or ailments, whether these are caused by pathogenic bacteria and viruses, toxins or allergic phenomena etc. Antisera are used against diphtheria, dysentery, gangrene, meningitis, pneumonia, tetanus, staphylococcal or streptococcal infections, snake bite, vegetable poisoning, allergic diseases, etc. Antisera are also used for diagnostic purposes, including in vitro tests. Specific immunoglobulins are purified preparations of antisera.
In reviewing the three materials under consideration, we note that two of the materials, the bone marrow and the PBSC, consist of cells that are precursors of human blood cells. In other words, they have not yet developed into mature blood cells. Through various processes, the human body will differentiate these cells into the cellular fraction/component of human blood (e.g. erythrocytes, platelets, and various types of white cells) referred to as mature blood cells. Since they are not yet mature blood cells, the bone marrow and PBSC cannot be considered blood or blood fractions, which means that they are not classifiable within heading 3002, HTSUS. Rather, we find that the bone marrow and the PBSC fall within heading 3001, HTSUS, as other human or animal substances prepared for therapeutic or prophylactic uses. They are specifically classified in the other basket provision of subheading 3001.90.00, HTSUS. The T cells, on the other hand, are a type of fully mature white blood cell, and thus they would be considered a component of human blood. Because T cells are a component of human blood, we find that they are classified in heading 3002, HTSUS, as other blood fractions. Based on the information available, we conclude that the T Cells are most appropriately described by
subheading 3002.10.01, HTSUS, as: Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes.
COUNTRY OF ORIGIN MARKING
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 U.S. 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 U.S. 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 are produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co, v. United States, 27 C.C.P.A. 297 at 302 (1940).
Part 134, Customs and Border Protection (CBP) Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.41(b), CBP Regulations (19 CFR §134.41(b), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain.
Articles that are incapable of being marked are excepted from marking pursuant to 19 U.S.C. 1304(a)(3)(A) and19 CFR 134.32(a). In this instance, the materials under consideration, bone marrow, PSBC, T-Cells are obviously incapable of being marked. Accordingly, under 19 CFR 134.32(a), the subject materials themselves are excepted from country of origin marking.
19 CFR 134.22 provides that when an article is excepted from the marking requirements of 19 U.S.C. 1304, the outermost container or holder in which the article ordinarily reaches the ultimate purchaser shall be marked to indicate the country origin of the article.
Under 19 U.S.C. 1304(b), neither an article nor its container is required to be marked if the exception provided in 19 U.S.C. 1304(a)(3)(H) is applicable. 19 U.S.C. 1304(a)(3)(H) provides that if the circumstances of the importation or character of the articles is such that the ultimate purchaser must necessarily know the country of origin of the unmarked articles imported, then the articles imported need not be marked. (See also 19 CFR 134.32(h), which adds that in the case of a good of a NAFTA country, the ultimate purchaser must "reasonably know" the country of origin.) Containers or holders of articles within the exception set forth in 19 CFR 134.32(h) are not required to be marked to indicate the origin of the contents. See 19 CFR 134.22(d)(1).
The special "circumstances of importation" for an exception from marking under this provision generally refers to a situation where the importer is the ultimate purchaser of the imported article and there is a direct contract with the foreign supplier in which the supplier insures that the order will be filled only with articles manufactured in a named country. Informing customers either through advertising or personally or both of the country of origin of imported articles is not sufficient to satisfy the requirements of 19 CFR 134.32(h). See U.S. Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91 (1964).
The applicability of the exception allowed under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h) depends upon the identity of the ultimate purchaser. Therefore, in determining if the imported bone marrow and the other cellular blood products and their containers can be excepted from country of origin marking, first it is necessary to determine who is the ultimate purchaser of these products.
Section 134.1(d), CBP Regulations (19 CFR 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. However, CBP has ruled that under certain circumstances, e.g., when the imported article is given 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 one who distributes the article. In HQ 559542 dated April 24, 1996, CBP ruled that a pesticide servicing company which imported acrolein (a pesticide substance) of German origin into the U.S. was the ultimate purchaser of the imported acrolein, although the pesticide company subsequently, as part of a service contract, either applied the acrolein for its customers (oil field operators) or the customers (irrigation districts and others) applied the pesticide themselves. In that case, CBP found that the pesticide company provided more of a service than just a product, and thus was considered to be the ultimate purchaser of the imported acrolein. Accordingly, the containers used at the customer’s site did not have to be individually marked with the country of origin of the acrolein. In HQ 734232, dated November 20, 1991, CBP considered a pharmaceutical drug from Italy, which was packaged in ampoules for intravenous use and only dispensed by doctors and nurses. The ultimate purchaser was determined to be the hospital pharmacy and, therefore, it was appropriate that only the 5-pack packages of ampoules in which the pharmacy received the drug were marked with the country of origin. See also HQ 734524, dated July 30, 1992, where CBP found an airline to be the ultimate purchaser of frozen meals served to passengers so long as the airline received the meals in bulk with proper marking on the outermost containers in which they were imported. In the above scenarios, the decision by the customer or the patient was to purchase the airline transportation and not the food, or the doctor’s or pesticide company’s expertise and service and not the drug or pesticide.
In HQ 562012, dated March 1, 2001, CBP held that the ultimate purchaser of orthodontic appliances known as aligners that orthodontists put in their patient’s mouth to realign teeth was the orthodontist not the patient. We explained that the patient of the orthodontist is not purchasing the aligners, but rather the orthodontist’s professional services. It was noted that the cost of the orthodontist’s services, which includes the use of the appliances substantially exceeds the cost of the aligners alone.
In this case, after considering the information available, we conclude that it is a doctor or maybe in some cases a hospital that is the ultimate purchaser of the imported bone marrow and the other blood related cellular products. The recipient of the bone marrow is a person suffering from a serious disease, such as a cancer or other blood disorder, who seeks the services of a doctor and/or a hospital for treatment of their disease. Before the bone marrow is donated and collected, a doctor must first decide that performing a bone marrow transplant is the appropriate therapy for his patient. In other words, it is the doctor that makes the decision if and when bone marrow should be collected from a donor to treat his patient. Moreover, a patient will not be able to obtain the donated bone marrow until his doctor actually performs the bone marrow transplant. Thus, in the course of performing his services of treating his patient, it is a doctor that distributes the bone marrow.
We also note that under 42 U.S.C. 274e, federal law prohibits the actual buying and selling of bone marrow and the other related cellular blood products, but doctors and hospitals can still charge their patients fees for the services they provide related to performing a bone marrow transplant. This further demonstrates that a patient is not actually purchasing the bone marrow, but rather obtaining it in conjunction with the services that are performed by his doctor and hospital. Therefore, like in the cases mentioned above, the recipient is receiving the imported bone marrow as part of getting the expertise and the services rendered by his doctor. Since, the patient is paying for the services of the doctor, we find that in this instance, it is the doctor who is the ultimate purchaser of the imported donated bone marrow and the other related cellular blood products.
Because we have determined that the doctor is the ultimate purchaser of the imported bone marrow, in order to except it and its containers from being marked with the country of origin under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h), the doctor must necessarily know by the circumstances of its importation or its character, its country of origin even though it is not marked.
Once a doctor makes the decision that a bone marrow transplant is the appropriate therapy for his patient, an effort will be made to see if there is a family member available who can donate bone marrow. When there is no suitable family member available to donate bone marrow, the doctor will contact the NMDP to see if a match can be found from an unrelated person who is on the bone marrow registry. Sometimes the best match will come from a person who is located in foreign country. It is our understanding that when a match is found, the doctor is always informed that a bone marrow match has been found and where the bone marrow donor is located. This is done in order to ensure that the process of collecting the donated bone marrow and preparing for the transplant are handled properly. In coordination with the NMDP, the doctor is also involved in helping to make the arrangements for having the bone marrow delivered to his patient. To facilitate the process, the doctor will be in contact with the medical facility overseas where the donated bone marrow is collected. From the very beginning of the bone marrow donor process, if the bone marrow is obtained from a foreign donor, the doctor will be made aware in which country the bone marrow donor is located and in what foreign medical facility the bone marrow will be collected, and thus he will know country of origin of the bone marrow.
A trained courier from the NMDP is sent to the medical facility overseas, where the bone marrow is collected to bring it back directly to the hospital in the United States where a patient is waiting to undergo a bone marrow transplant. The bone marrow is individually obtained from a particular donor for a particular patient and it is suitable only for that patient. Consequently, there cannot be a second source or a substitute for a shipment of donated bone marrow, which means it can come from only one country. Thus, based on the information available, since the doctor is fully aware of the country of origin of the donated bone marrow even before its importation, we find that due to the circumstances of the importation process of the donated bone marrow and its character, the ultimate purchaser will necessarily know its country of origin, even if it and its containers are unmarked with the country of origin. Therefore, we find that under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h), the imported donated bone marrow and the containers are excepted from having to be marked to indicate the country of origin of the imported donated bone marrow and other cellular blood products that are used for the treatment of ill patients.
HOLDING:
The bone marrow and PBSC are classified in heading in heading 3001, HTSUS. They are specifically provided for in subheading 3001.90.00, HTSUS, as: Glands and other organs for organotherapeutic uses, dried, whether or not powdered: extracts of glands or other organs or of their secretions for organotherapeutic uses; heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included: Other, at a general, column one rate of duty which is duty free.
The T cells are classified in heading 3002, HTSUS. They are specifically provided for in subheading 3002.10.10, HTSUS, as: Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; anti-sera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products: Antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes, at a general column one rate of duty which
is duty free. Duty rates are provided for the requester’s convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov/tata/hts/.
The doctor or the hospital treating a patient in need of a bone marrow transplant is the ultimate purchaser of the imported donated bone marrow, PBSC and the T Cells. These materials are excepted from the country of origin marking requirements of 19 U.S.C. 1304 under 19 U.S.C. 1304(a)(3)(H) and 19 CFR
134.32(h) because the ultimate purchaser will necessarily know the country of origin of the bone marrow, PBSC, and T cells due to the circumstances of their importation and character of the materials.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch