CLA-2 OT:RR:CTF:TCM H239874 LWF
U.S Customs and Border Protection
Center of Excellence and Expertise – Pharmaceuticals, Health, and Chemicals
New York Field Office
One Penn Plaza, 11th floor
New York, NY 10119
Attn: Leon Hayward, Director
RE: Internal Advice Request; Classification of Chantix® (Varenicline) tablets for the treatment of nicotine dependency associated with smoking in adults
Dear CEE Director:
This is in reference to your request for Internal Advice, initiated by counsel for Pfizer, Inc. (“Pfizer”) via a letter, dated January 17, 2013. At issue is the proper classification of prescription-only Chantix® (Varenicline) tablets for the treatment of nicotine dependency associated with smoking in adults (“Chantix”) under the Harmonized Tariff Schedule of the United States (HTSUS). The request for Internal Advice is sought based upon Pfizer’s assertion that the Chantix tablets are classified under subheading 3004.90.91, HTSUS, which provides for “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale: Other: Other.”
FACTS:
This Internal Advice concerns Chantix tablets that Pfizer has previously entered under heading 3004, HTSUS, as medicaments put up in measured doses. The 2012 amendments to the Nomenclature, effective February 3, 2012, have resulted in the addition of a new exclusionary Chapter Note 1(b) to Chapter 30 of the HTSUS. On January 17, 2013, Pfizer submitted its request for Internal Advice to ascertain whether the Chantix tablets remain classifiable in heading 3004, HTSUS, in light of changes to the Nomenclature.
The merchandise is described as prescription-only Chantix (Varenicline) tablets for the treatment of nicotine dependency associated with smoking in adults. The Chantix tablets contain the active ingredient Varenicline, a nicotinic receptor partial agonist, and are indicated for use as an aid to smoking-cessation treatment. They are supplied for oral administration in two strengths. Unlike other anti-smoking products, such as nicotine replacement therapy (“NRT”) chewing gum tablets and transdermal administration patches that contain nicotine, the Chantix tablets do not contain nicotine, but instead employ the active ingredient Varenicline, which binds to a patient’s nicotine receptors, thereby providing the patient with a replacement for nicotine otherwise obtained through smoking. The Chantix tablets are approved for use by the U.S. Food and Drug Administration (FDA) and are administered by prescription only, under the supervision of a physician, during a multi-week, smoking-cessation therapy program.
ISSUE:
Whether the prescription-only tablets for the treatment of smoking addiction in adults are classified under heading 3004, HTSUS, as medicaments, or elsewhere in the Nomenclature?
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS headings under consideration are as follows:
2106 Food preparations not elsewhere specified or included.
* * * * *
3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale.
* * * * *
3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included.
* * * * *
Note 1(b) to Chapter 30 states, in pertinent part, the following:
This chapter does not cover:
…
(b) Preparations, such as tablets, chewing gum or patches (transdermal systems), intended to assist smokers to stop smoking (heading 2106 or 3824),
* * * * *
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 30.04 provides, in pertinent part, as follows:
The heading also excludes:
…
(f) Preparations, such as tablets, chewing gum or patches (transdermal systems), intended to assist smokers to stop smoking (heading 21.06 or 38.24).
* * * * *
Heading 3004, HTSUS, provides for “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale.” However, Note 1(b) to Chapter 30 excludes “preparations, such as tablets, chewing gum or patches (transdermal systems), intended to assist smokers to stop smoking” from classification within Chapter 30. The scope of the phrase “preparations… intended to assist smokers to stop smoking” is not defined in the Nomenclature or in the Explanatory Notes to Chapter 30, but the exemplars provided in Note 1(b) to Chapter 30, “tablets, chewing gum or patches (transdermal systems),” provide guidance on the types of merchandise that is excluded from Chapter 30 and indicate that the Note is intended to cover a specific class or kind of articles.
Pfizer contends that the instant Chantix tablets fundamentally differ from smoking-cessation aids that contain nicotine, such as NRT chewing gum, tablets, and transdermal patches, which provide users with small doses of nicotine to ease withdrawal symptoms. Pursuant to Note 1(b) to Chapter 30, NRT tablets, chewing gum, and patches are precluded from classification in Chapter 30. In this case, however, Pfizer asserts that the Chantix tablets are substantially different from merchandise excluded by Note 1(b) to Chapter 30, because they do not contain nicotine and are administered by prescription only, under the supervision of a physician. As such, Pfizer claims that the merchandise is properly classified under heading 3004, HTSUS, as medicaments.
Our analysis of the meaning of the terms “tablets, chewing gum or patches,” as used in Note 1(b) to Chapter 30, will include a detailed discussion of the legislative history of the Note. However, when a tariff term is not defined by the HTSUS or the legislative history, the courts have instructed that a term’s correct meaning is its common, or commercial, meaning. Rocknel Fastener, Inc. v. United States, 267 F.3d 1354, 1356 (Fed. Cir. 2001) (“To ascertain the common meaning of a term, a court may consult ‘dictionaries, scientific authorities, and other reliable information sources’ and ‘lexicographic and other materials.” (quoting C.J. Tower & Sons of Buffalo, Inc. v. United States, 673 F.2d 1268, 1271 (Fed. Cir. 1982))).
In the instant case, we note that smoking-cessation aids such as tablets, chewing gum, and patches are widely recognized to be effective in helping individuals quit smoking. The FDA has approved a variety of over-the-counter (“OTC”) nicotine gum, tablets, and patches for use in reducing withdrawal and craving symptoms associated with nicotine dependency. On its website, the FDA identifies such articles as “OTC nicotine replacements products” and individually describes “skin patches,” “chewing gum,” and “lozenges” that are:
[d]esigned to wean your body off cigarettes, they supply you with nicotine in controlled amounts while sparing you from other chemicals found in tobacco products.
As illustrated by the FDA description, the distinguishing characteristic of these products is that they each contain small doses of nicotine; however, it is also important to recognize that the term “nicotine lozenge” is used synonymously with the term “nicotine tablet.” Similarly, the U.S. Centers for Disease Control and Prevention (CDC) recommends that a “nicotine gum,” “nicotine lozenge,” or “nicotine patch” can help lessen cravings or feelings of withdrawal during smoking cessation, and neither the FDA nor the CDC describe OTC smoking-cessation tablets, gums, or patches that do not contain nicotine. As such, we find that the repeated use of the term “nicotine” to identify and describe chewing gum, tablets, and patches that are used to assist a person to quit smoking is evidence that the common meaning of the terms “tablets, chewing gum or patches,” as used in Note 1(b) to Chapter 30, means those products which possess small doses of nicotine used to assist smokers to quit smoking.
Additionally, because the text of Note 1(b) is directly derived from a suggestion by the Secretariat of the Harmonized System (HS) to exclude a narrow class of products from Chapter 30, we seek guidance from its international legislative history. At the 34th Session of the Harmonized System Review Subcommittee (“RSC”), the Secretariat observed that a July 19, 2006 judicial ruling by the domestic courts of a Contracting Party classified an NRT transdermal patch in heading 30.04, HS, thereby contradicting a prior decision taken by the Committee to classify such merchandise in subheading 3824.90, HS. RSC Doc. NR06521a, October 2006; Annex C/3 to RSC Doc. NR033E3, September 2002. In light of this conflict, the Secretariat also noted the potential for the inconsistent classification of “nicotine chewing gum,” which the Committee had previously classified in heading 21.06, HS, and invited the RSC to consider its prior classification decisions when discussing a proposal to create a new legal Note to Chapter 30 to exclude certain articles that “do not contain a sufficient proportion of medicinal substances such that each dose has a therapeutic or prophylactic use against a particular ailment or disease.” RSC Doc. NR06521a. Consequently, the specific reference in Note 1(b) to Chapter 30 to “heading 21.06 or 38.24” reflects the Secretariat’s comments at the 34th RSC concerning the Committee’s classification of nicotine patches and gum in headings 38.24, HS, and 21.06, HS, respectively, and the RSC’s intent to exclude such articles from Chapter 30.
Similarly, the observations of the Subcommittee at the 34th RSC of support among Contracting Parties for “excluding nicotine tablets, chewing gums and patches from Chapter 30” (emphasis added) demonstrates that the scope of the proposed exclusionary note was defined by the presence of nicotine in such articles and that the final version of Note 1(b) to Chapter 30 was intended to exclude certain articles of nicotine-replacement therapy, even if the term “nicotine” is not present the adopted text of the Note. See Annex C/5 to RSC Doc. NR0668E1c, November 2006; Harmonized System Committee (“HSC”) Doc. NC1137E1a, February 2007 (inviting the HSC to provisionally adopt amendments to the Nomenclature to enable certain countries to apply the prior classification decisions taken by the Committee on “nicotine chewing gums and patches” (emphasis added), as reflected in the RSC’s unanimously approved legal note to exclude “nicotine tablets, chewing gums and patches from Chapter 30” (emphasis added)).
At the 40th Session of the HSC, the Committee adopted Note 1(b) to Chapter 30 by 24 votes to 1 as a remedy to what the Secretariat again described as the dilemma that:
the [European Community] and its Member States were no longer in a position to apply the decision taken by the HS Committee at its 20th Session to classify a transdermal administration system used as an alternative source of nicotine by smokers who are attempting to stop smoking, in subheading 3824.90, after the Court of Justice of the European Communities had classified this product in heading 30.04. HSC Doc. NC1201E1a, August 2007.
Our research indicates that although the adopted language of Note 1(b) does not include the term “nicotine,” the legislative history does not indicate that the term was purposefully excluded from the final text of the Note. References to the term “nicotine” are pervasive throughout the RSC and HSC working documents, and the term “nicotine” was also used in recording the Committee’s final vote. Consequently, we find that Note 1(b) to Chapter 30 excludes a narrow class of nicotine replacement tablets, guns and patches, and it was not intended to cover non-nicotine based medicaments, such as the instant merchandise, that have therapeutic or prophylactic uses against the particular ailment or disease of nicotine dependency. Consequently, we conclude that Note 1(b) to Chapter 30 does not apply to the Chantix tablets.
In Headquarters Ruling Letter (“HQ”) 966027, dated January 8, 2003, CBP held that nicotine dependency is a medical ailment for purposes of heading 3004, HTSUS. See HQ 961666, dated April 14, 1998 (classifying a nicotine transdermal delivery system which aid in breaking the nicotine dependency associated with smoking in heading 3004, HTSUS, prior to the adoption of Note 1(b) to Chapter 30). However, to be classified as a medicament of heading 3004, HTSUS, an article must also possess a medicinal value. See HQ 966027 (classifying a smokeless, cigarette-replacement inhaler in heading 3824, HTSUS, because the article did not contain medicinal preparations used to treat or prevent nicotine dependency).
The instant Chantix tablets do not contain nicotine. However, they are accurately described as FDA-approved drugs whose active ingredient is listed in the Pharmaceutical Appendix to the HTSUS. They are administered by prescription only, under the supervision of a physician for use during the course of a multi-week, smoking-cessation therapy program. Insomuch as the Chantix tablets are used to treat the medical ailment of nicotine dependency associated with smoking, they are fully described by heading 3004, HTSUS, as medicaments put up in measured doses.
HOLDING:
By application of GRI 1, the prescription-only Chantix (Varenicline) tablets for the treatment of nicotine dependency associated with smoking in adults are classified in heading 3004, HTSUS. Specifically, they are classifiable in subheading 3004.90.91, HTSUS, which provides for “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale: Other: Other.” The column one, general rate of duty is Free.
You are to mail this decision to counsel for the internal advice requester no later than sixty days from the date of this decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public, on the CBP Home Page at http://www.cbp.gov, by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division