Notice of Issuance of Final Determinations Concerning Certain Pharmaceutical Products, 5118-5139 [2018-02245]

Agencies

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

[Federal Register Volume 83, Number 24 (Monday, February 5, 2018)]
[Notices]
[Pages 5118-5139]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-02245]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Notice of Issuance of Final Determinations Concerning Certain 
Pharmaceutical Products

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

ACTION: Notice of final determinations.

-----------------------------------------------------------------------

SUMMARY: This document provides notice that U.S. Customs and Border 
Protection (``CBP'') has issued 11 final determinations concerning the 
country of origin of certain pharmaceutical products. Based upon the 
facts presented, CBP has concluded that the country of origin of the 
Rosuvastatin Calcium Tablets, Levofloxacin Tablets, Levetiracetam 
Tablets, Metoprolol Tartrate Tablets, Gabapentin Capsules, Carvedilol 
Tablets, Paroxetine Hydrochloride Tablets, Entecavir Tablets, 
Montelukast Sodium Tablets, Simvastatin Tablets, Donepezil 
Hydrochloride Tablets is India for purposes of U.S. Government 
procurement.

DATES: These final determinations were issued on January 30, 2018. 
Copies of the final determinations are attached. Any party-at-interest, 
as defined in 19 CFR 177.22(d), may seek judicial review of these final 
determinations within March 7, 2018.

FOR FURTHER INFORMATION CONTACT: Elif Eroglu, Valuation and Special 
Programs Branch, Regulations and Rulings, Office of Trade, (202) 325-
0277.

SUPPLEMENTARY INFORMATION: Notice is hereby given that on January 30, 
2018 CBP issued 11 final determinations concerning the country of 
origin of certain pharmaceutical products, which may be offered to the 
U.S. Government under an undesignated government procurement contract 
pursuant to subpart B of part 177, CBP Regulations (19 CFR part 177, 
subpart B). These final determinations (H289700, H289701, H289702, 
H289704, H289706, H289710, H289711, H289712, H289713, H289714, and 
H289715), were 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 determinations, CBP 
concluded that the processing in the United States does not result in a 
substantial transformation. Therefore, the country of origin for 
purposes of U.S. Government procurement of the pharmaceutical products 
is India, the country where the active pharmaceutical ingredient was 
produced.
    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: January 30, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.

HQ H289700

January 30, 2018

OT:RR:CTF: VS H289700 EE

CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Rosuvastatin Calcium tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017, 
requesting a final determination on behalf of Acetris Health, 
(``Acetris'') \1\, pursuant to subpart B of Part 177, U.S. Customs 
and Border Protection (``CBP'') Regulations (19 C.F.R. 177.21 et 
seq.). A meeting was held with the counsel for Acetris on August 8, 
2017.
---------------------------------------------------------------------------

    \1\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Rosuvastatin Calcium tablets. We note that Acetris is a party-at-
interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is 
entitled to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Rosuvastatin Calcium tablets. You 
state that Acetris is a generic pharmaceutical distributor 
specializing in providing cost effective products to the U.S. 
Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Rosuvastatin Calcium tablets, members of a family of 
statin drugs prescribed for the reduction of cholesterol and 
triglyceride levels and prevention of heart attacks and strokes.
    You state that Acetris procures the Rosuvastatin Calcium tablets 
from Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. 
Aurolife, which is a wholly-owned subsidiary of company X in India, 
is a generic pharmaceutical product manufacturer in the specialty 
and niche areas. Aurolife manufactures the Rosuvastatin Calcium 
tablets supplied to Acetris in a U.S. Food & Drug Administration 
(``FDA'') approved cGMP compliant manufacturing facility, located in 
Dayton, NJ, from several active and inactive ingredients procured 
domestically and abroad. The active pharmaceutical ingredient 
(``API'') of the Rosuvastatin Calcium tablets is Rosuvastatin 
Calcium, which Aurolife sources from company X in India.
    You state that the Rosuvastatin Calcium tablets supplied to 
Acetris are the result of a complex production process that occurs 
in Aurolife's New Jersey facility involving the combination of the 
API with several inactive ingredients, including some intermediates 
that are mixed in order to aid the conversion of the multiple 
ingredients. The production of Rosuvastatin employs processes that 
convert these ingredients into finished, medically effective dosage 
tablets (5 mg, 10 mg, 20 mg, and 40 mg tablets). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Rosuvastatin Calcium tablets occurs entirely 
within the United States. The ingredients processed in the United 
States are sourced from a variety of suppliers, both United States 
and foreign, as follows:

[[Page 5119]]



------------------------------------------------------------------------
             Material                             Country
------------------------------------------------------------------------
Rosuvastatin Calcium.............  India
Lactose Monohydrate (Super Tab     Country A
 30GR) USP-NF.
Dibasic Calcium Phosphate,         Country B
 Anhydrous USP (Fujicalin SG).
Microcrystalline Cellulose USNF    United States/Country C
 (Avicel PH-102)/Microcrystalline
 Cellulose USNF (Pharmel 102).
Crospovidone USNF (Polyplasdone    United States
 XL-10).
Magnesium Stearate NF Hyqual Veg   United States
 Source #2257.
Opadry II Pink 31K84972..........  United States
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Microcrystalline cellulose, lactose monohydrate, and 
dibasic calcium phosphate anhydrous are added to the Rosuvastatin 
Calcium API as adjuvant to improve the bioavailability/absorption, 
leading to pharmacokinetic profiles equivalent to the brand product 
(Crestor[supreg]) for therapeutic equivalency. These four excipients 
are blended according to a set protocol and blending times to ensure 
proper mixing. Dibasic Calcium Phosphate anhydrous is a key 
ingredient, addition of which results in a drug product with a 
higher pH than the API, preventing the instability, variable potency 
and formation of hazardous degradation byproducts that otherwise are 
present in the API, significantly enhancing the stability of the 
finished product.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Finally, different coloring agents and film coating are 
added to give each strength a distinct name and character. Film 
coating is performed using polymers which imparts a protective 
barrier for each strength of the drug and to mask the taste.
    You submitted product labels for the Rosuvastatin Calcium 
tablets. You also submitted a shipping label and the Materials 
Safety Data Sheet (``MSDS'') for the API, Rosuvastatin Calcium. 
Additionally, you provided a manufacturing flow chart depicting the 
various steps which occur in the United States to make the final 
Rosuvastatin Calcium tablets.

ISSUE:

    What is the country of origin of the Rosuvastatin Calcium 
tablets for purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . .an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.
    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Rosuvastatin 
Calcium tablets, but prohibits

[[Page 5120]]

that same NDC from being associated with any API, such as 
Rosuvastatin Calcium, that has not been demonstrated to be safe and 
effective and cannot be sold for the treatment of any human disease 
condition. You also state that the FDA requires the name of the drug 
product (Rosuvastatin Calcium tablet) to appear on every drug 
product label and prohibits use of that name on the label for the 
API. Further, you state that Rosuvastatin Calcium is intended only 
for use by producers for further processing or for research since it 
is unstable and not fit for medical use and may not be sold to 
consumers. Additionally, you state that Rosuvastatin Calcium 
degrades so as to both reduce potency and create hazardous 
byproducts. For these reasons, you claim that extensive additional 
processing of the API, sourced in India, with other ingredients must 
occur to change the API's properties and make it into a stable drug 
with established potency, that meets all requirements for levels of 
impurity, including those produced as harmful degradation 
byproducts, and can be safely administered for the treatment of a 
human disease or condition.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Rosuvastatin Calcium, retains its chemical 
and physical properties upon processing in the United States. 
Increasing the stability of the API and standardizing its 
concentration do not change the API. Further, the processing 
performed in the United States does not affect the medicinal use of 
the API. Based on the information presented, the API does not 
undergo a change in name, character or use. Therefore, in accordance 
with the rulings cited, we find that no substantial transformation 
occurs in United States, and the Rosuvastatin Calcium tablets would 
be considered a product of India, where the API was produced, for 
purposes of U.S. government procurement.
    In addition, you asked whether the Rosuvastatin Calcium tablets 
are ``manufactured in the United States'' within the meaning of the 
term ``U.S.-made end products'', as set forth in Section 25.003 of 
the Federal Acquisition Regulations System, Title 48, Code of 
Federal Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 
C.F.R. Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart 
B is intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Rosuvastatin Calcium 
tablets partially occurs in India, we do not find that they are 
manufactured in the United States.

HOLDING:

    The country of origin of the Rosuvastatin Calcium tablets for 
U.S. Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289701

January 30, 2018

OT:RR:CTF:VS H289701 EE

CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Levofloxacin tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \2\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \2\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Levofloxacin tablets. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Levofloxacin tablets. You state 
that Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S. Government. Acetris 
has its principal place of business in Allendale, NJ. Among the 
products Acetris sells to the U.S. Government are Levofloxacin 
tablets, which are a fluoroquinolone antibacterial used to treat 
mild, moderate, and severe infections.
    You state that Acetris procures the Levofloxacin tablets from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Levofloxacin tablets supplied 
to Acetris in a U.S. Food & Drug Administration (``FDA'') approved 
cGMP compliant manufacturing facility, located in Dayton, NJ, from 
several active and inactive ingredients procured domestically and 
abroad. The active pharmaceutical ingredient (``API'') of the 
Levofloxacin tablets is Levofloxacin, which Aurolife sources from 
company X in India.
    You state that the Levofloxacin tablets supplied to Acetris are 
the result of a complex production process that occurs in Aurolife's 
New Jersey facility involving the combination of the API with 
multiple inactive ingredients, including some intermediates that are 
mixed in order to aid the conversion of the multiple ingredients. 
The production of Levofloxacin tablets employs processes that 
convert these ingredients into finished, medically effective dosage 
tablets (250 mg, 500 mg, and 750 mg tablets). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Levofloxacin tablets occurs entirely within the 
United States. The ingredients processed in the United States are 
sourced from a variety of suppliers, both United States and foreign, 
as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Levofloxacin USP........................  India
Croscarmellose Sodium USNF..............  USA
Microcrystalline Cellulose USNF (Avicel   USA
 PH 101).
Hypromellose USP........................  USA
Magnesium Stearate USNF.................  USA
Opadry White 13B58802 IH................  USA

[[Page 5121]]

 
Opadry Orange 13B53926 IH...............  USA
Opadry Pink 13B84503 IH.................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Croscarmellose sodium is added as a disintegrant to 
provide easy dispersion of the tablet when engulfed by the patient 
which indirectly enhances the drug release process and 
bioavailability/absorption leading to pharmacokinetic profiles 
equivalent to the brand product (Levaquin[supreg]) for therapeutic 
equivalency.
     Microcrystalline cellulose is added as a bulking agent 
for better manufacturability and to have suitable tablet weight so 
that the patient can easily take the medication.
     Hypromellose is added as a binder to aid formation of 
flowable granules during manufacturing thereby achieving the 
uniformity of the drug leading to therapeutic efficacy.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Film coating is performed using polymers which imparts 
a protective barrier for the drug and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which are capable of maintaining the overall integrity of 
the quality attributes and minimizing the formation of impurities 
thereby transforming it into a more stable drug product whose 
therapeutic effectiveness as a drug is sustainable.
    You submitted product labels for the Levofloxacin tablets. You 
also submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Levofloxacin. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make the final Levofloxacin tablets.

ISSUE:

    What is the country of origin of the Levofloxacin tablets for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).
    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.
    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Levofloxacin 
tablets, but prohibits that same NDC from being associated with any 
API, such as Levofloxacin, that has not been demonstrated to be safe 
and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Levofloxacin tablet) to appear on every drug 
product label and prohibits use of that name on the label for the 
API. Further, you state that Levofloxacin is intended only for use 
by producers for further processing or for research since it is 
unstable and not fit

[[Page 5122]]

for medical use and may not be sold to consumers. Additionally, you 
state that Levofloxacin exhibits poor flow properties, undergoes 
oxidative degradation, and has a bitter taste. For these reasons, 
you claim that extensive additional processing of the API, sourced 
in India, with other ingredients must occur to change the API's 
properties and make it into a stable drug whose medical 
effectiveness as a drug is sustainable.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Levofloxacin, retains its chemical and 
physical properties upon processing in the United States. Increasing 
the stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Levofloxacin tablets would be considered a product of India, 
where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Levofloxacin tablets are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Levofloxacin tablets 
partially occurs in India, we do not find that they are manufactured 
in the United States.

HOLDING:

    The country of origin of the Levofloxacin tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289702

January 30, 2018

OT:RR:CTF:VS H289702 EE

CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Levetiracetam tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \3\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \3\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Levetiracetam tablets. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Levetiracetam tablets. You state 
that Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S. Government. Acetris 
has its principal place of business in Allendale, NJ. Among the 
products Acetris sells to the U.S. Government are Levetiracetam 
tablets which are anti-epileptic medications indicated in treatment 
of partial onset seizures, myoclonic seizures in patients with 
juvenile myoclonic epilepsy, and primary generalized tonic-clonic 
seizures.
    You state that Acetris procures the Levetiracetam tablets from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Levetiracetam tablets 
supplied to Acetris in a U.S. Food & Drug Administration (``FDA'') 
approved cGMP compliant manufacturing facility, located in Dayton, 
NJ, from several active and inactive ingredients procured 
domestically and abroad. The active pharmaceutical ingredient 
(``API'') of the Levetiracetam tablets is Levetiracetam, which 
Aurolife sources from company X in India.
    You state that the Levetiracetam tablets supplied to Acetris are 
the result of a complex production process that occurs in Aurolife's 
New Jersey facility involving the combination of the API with 
multiple inactive ingredients, including some intermediates that are 
mixed in order to aid the conversion of the multiple ingredients. 
The production of Levetiracetam tablets employs processes that 
convert these ingredients into finished, medically effective dosage 
tablets (250 mg, 500 mg, 750 mg, and 1000 mg tablets). You state 
that this processing changes the properties and characteristics of 
the API, materially enhancing the pharmacokinetics of the resulting 
drug.
    You state that the process of converting these multiple 
ingredients into the Levetiracetam tablets occurs entirely within 
the United States. The ingredients processed in the United States 
are sourced from a variety of suppliers, both United States and 
foreign, as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Levetiracetam USP.......................  India
Corn Starch USNF (Maize Starch B).......  Country A
Povidone USP (Kollidon 30)..............  USA
Colloidal Silicon Dioxide USNF..........  USA
Talc USP................................  USA
Magnesium Stearate USNF.................  USA
Opadry Blue OY-S-30913..................  USA
Opadry Yellow 05F82840..................  USA
Opadry Orange OY-S-33016................  USA
Opadry White Y-1-7000...................  USA
------------------------------------------------------------------------


[[Page 5123]]

    The processing that occurs in the United States includes the 
following:
     Corn starch is added as a bulking agent for better 
manufacturability and to have a suitable tablet weight so that the 
patient can easily take the medication. Corn starch is mixed with 
the API, enhancing that the compressibility of the API, so that the 
product can be easily administered.
     Povidone is added as a binder to aid formation of 
flowable granules during manufacturing, thereby achieving the 
uniformity of the drug leading to therapeutic efficacy.
     Talc and Colloidal silicon dioxide are added to create 
a gliding property in the blend particles and to provide a 
lubrication effect during the manufacturing process.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Coloring agents and film coating are added to give each 
tablet strength a distinct name and character. Film coating is 
performed, using polymers, which imparts a protective barrier to 
each strength of the drug and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which maintain the overall integrity of the quality 
attributes, thereby producing a more stable drug product whose 
therapeutic effectiveness is sustainable.
    You submitted product labels for the Levetiracetam tablets. You 
also submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Levetiracetam. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make final Levetiracetam tablets.

ISSUE:

    What is the country of origin of the Levetiracetam tablets for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

    . . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Levetiracetam 
tablets, but prohibits that same NDC from being associated with any 
API, such as Levetiracetam, that has not been demonstrated to be 
safe and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Levetiracetam tablet) to appear on every drug 
product label and prohibits use of that name on the label for the 
API. Further, you state that API is intended only for use by 
producers for further processing or for research since it is 
unstable and not fit for medical use and may not be sold to 
consumers. Additionally, you state that the API has a bitter taste 
and poor compressibility properties. For these reasons, you claim 
that extensive additional processing of the API, sourced in India, 
with other ingredients must occur to change the API's properties and 
make it into a stable drug product that achieves the targeted 
disintegration and dissolution, is more suitable and stable, and 
possesses the desired physicochemical properties.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Levetiracetam, retains its chemical and 
physical properties upon processing in the United States. Increasing 
the stability of the API and standardizing its concentration do

[[Page 5124]]

not change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Levetiracetam tablets would be considered a product of 
India, where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Levetiracetam tablets are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Levetiracetam tablets 
partially occurs in India, we do not find that they are manufactured 
in the United States.

HOLDING:

    The country of origin of the Levetiracetam tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade
HQ H289704

January 30, 2018

OT:RR:CTF:VS H289704 EE
CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; 
Metoprolol Tartrate tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \4\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \4\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Metoprolol Tartrate tablets. We note that Acetris is a party-at-
interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is 
entitled to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Metoprolol Tartrate tablets. You 
state that Acetris is a generic pharmaceutical distributor 
specializing in providing cost effective products to the U.S. 
Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Metoprolol Tartrate tablets, which are used in the 
treatment of hypertension, angina pectoris and myocardial 
infarction.
    You state that Acetris procures the Metoprolol Tartrate tablets 
from Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. 
Aurolife, which is a wholly-owned subsidiary of company X in India, 
is a generic pharmaceutical product manufacturer in the specialty 
and niche areas. Aurolife manufactures the Metoprolol Tartrate 
tablets supplied to Acetris in a U.S. Food & Drug Administration 
(``FDA'') approved cGMP compliant manufacturing facility, located in 
Dayton, NJ, from several active and inactive ingredients procured 
domestically and abroad. The active pharmaceutical ingredient 
(``API'') of the Metoprolol Tartrate tablets is Metoprolol Tartrate, 
which Aurolife sources from company X in India.
    You state that the Metoprolol Tartrate tablets supplied to 
Acetris are the result of a complex production process that occurs 
in Aurolife's New Jersey facility involving the combination of the 
API with multiple inactive ingredients, including some intermediates 
that are mixed in order to aid the conversion of the multiple 
ingredients. The production of Metoprolol Tartrate tablets employs 
processes that convert these ingredients into finished, medically 
effective dosage tablets (25 mg, 50 mg, and 100 mg tablets). You 
state that this processing changes the properties and 
characteristics of the API, materially enhancing the 
pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Metoprolol Tartrate tablets occurs entirely 
within the United States. The ingredients processed in the United 
States are sourced from a variety of suppliers, both United States 
and foreign, as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Metoprolol Tartrate USP.................  India
Microcrystalline Cellulose USNF.........  Country A/USA
Corn Starch USNF (Maize Starch B).......  Country B
Sodium Starch Glycolate USNF............  Country C
Colloidal Silicon Dioxide USNF..........  USA
Sodium Lauryl Sulfate USNF..............  Country D
Talc USNF...............................  USA
Magnesium Stearate USNF.................  USA
Opadry White 13B58867...................  USA
Opadry Pink 13B54175....................  USA
Opadry Blue 13B50500....................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Microcrystalline cellulose and corn starch are added as 
bulking agents for better manufacturability and to have suitable 
tablet weight so that the patient can easily take the medication. 
The API is mixed with these diluents which alters the physical form 
of the API such that the compressibility of the API is enhanced and 
the product can be easily administered.

[[Page 5125]]

     Sodium starch glycolate is added as a disintegrant to 
provide easy dispersion of the tablet when ingested by the patient, 
which indirectly enhances the drug release process and 
bioavailability/absorption, leading to pharmacokinetic profiles 
equivalent to the brand product (Lopressor[supreg]) for therapeutic 
equivalency.
     Talc and colloidal silicon dioxide are added to create 
a gliding property in the blend particles, contributing to the unit-
to-unit uniformity of the drug during the manufacturing process.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Sodium Lauryl Sulfate is added as a wetting agent to 
enhance the solubilization process and bioavailability/absorption, 
leading to pharmacokinetic profiles equivalent to the brand product 
for therapeutic equivalency.
     Coloring agents and film coating are added to give each 
tablet strength a distinct name and character. Film coating is 
performed using polymers which imparts a protective barrier for each 
tablet strength and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which are capable of retaining the overall integrity of 
the quality attributes and minimizing the formation of impurity, 
transforming it into a more stable product whose therapeutic 
effectiveness as a drug is sustainable.
    You submitted product labels for the Metoprolol Tartrate 
tablets. You also submitted a shipping label and the Materials 
Safety Data Sheet (``MSDS'') for the API, Metoprolol Tartrate. 
Additionally, you provided a manufacturing flow chart depicting the 
various steps which occur in the United States to make the final 
Metoprolol Tartrate tablets.

ISSUE:

    What is the country of origin of the Metoprolol Tartrate tablets 
for purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Metoprolol 
Tartrate tablets, but prohibits that same NDC from being associated 
with any API, such as Metoprolol Tartrate, that has not been 
demonstrated to be safe and effective and cannot be sold for the 
treatment of any human disease condition. You also state that the 
FDA requires the name of the drug product (Metoprolol Tartrate 
tablet) to appear on every drug product label and prohibits use of 
that name on the label for the API. Further, you state that 
Metoprolol Tartrate is intended only for use by producers for 
further processing or for research since it is unstable and not fit 
for medical use and may not be sold to consumers. Additionally, you 
state that the Metoprolol Tartrate degrades under hydrolysis and has 
poor flow properties. For these reasons, you claim that extensive 
additional processing of the API, sourced in India, with other 
ingredients must occur to change the API's properties and make it 
into a stable drug product with the desired pharmacokinetics, 
therapeutic efficacy and physicochemical properties.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Metoprolol Tartrate, retains its chemical and 
physical properties upon processing in the

[[Page 5126]]

United States. Increasing the stability of the API and standardizing 
its concentration do not change the API. Further, the processing 
performed in the United States does not affect the medicinal use of 
the API. Based on the information presented, the API does not 
undergo a change in name, character or use. Therefore, in accordance 
with the rulings cited, we find that no substantial transformation 
occurs in United States, and the Metoprolol Tartrate tablets would 
be considered a product of India, where the API was produced, for 
purposes of U.S. government procurement.
    In addition, you asked whether the Metoprolol Tartrate tablets 
are ``manufactured in the United States'' within the meaning of the 
term ``U.S.-made end products'', as set forth in Section 25.003 of 
the Federal Acquisition Regulations System, Title 48, Code of 
Federal Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 
C.F.R. Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart 
B is intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Metoprolol Tartrate 
tablets partially occurs in India, we do not find that they are 
manufactured in the United States.

HOLDING:

    The country of origin of the Metoprolol Tartrate tablets for 
U.S. Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289706

January 30, 2018

OT:RR:CTF:VS H289706 EE
CATEGORY: Origin


Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Gabapentin Capsules

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \5\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \5\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Gabapentin capsules. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Gabapentin capsules. You state that 
Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S. Government. Acetris 
has its principal place of business in Allendale, NJ. Among the 
products Acetris sells to the U.S. Government are Gabapentin 
capsules, which are used for the management and/or treatment of 
postherpetic neuralgia in adults and partial onset seizures.
    You state that Acetris procures the Gabapentin capsules from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Gabapentin capsules supplied 
to Acetris in a U.S. Food & Drug Administration (``FDA'') approved 
cGMP compliant manufacturing facility, located in Dayton, NJ, from 
several active and inactive ingredients procured domestically and 
abroad. The active pharmaceutical ingredient (``API'') of the 
Gabapentin capsules is Gabapentin, which Aurolife sources from 
company X in India.
    You state that the Gabapentin capsules supplied to Acetris are 
the result of a complex production process that occurs in Aurolife's 
New Jersey facility involving the combination of the API with 
multiple inactive ingredients, including some intermediates that are 
mixed in order to aid the conversion of the multiple ingredients. 
The production of Gabapentin capsules employs processes that convert 
these ingredients into finished, medically effective dosage capsules 
(100 mg, 300 mg, and 400 mg capsules). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Gabapentin capsules occurs entirely within the 
United States. The ingredients processed in the United States are 
sourced from a variety of suppliers, both United States and foreign, 
as follows:

------------------------------------------------------------------------
             Material                             Country
------------------------------------------------------------------------
Gabapentin USP...................  India
Corn Starch USNF.................  Country A
Talc USP.........................  USA
White/White size `3' Capsule       Country B/USA/USA
 shell imprinted with `D' on
 white cap and `02' on white body.
Yellow/Yellow size `1' Capsule     Country C/USA/USA
 shell imprinted with `D' on
 yellow cap and `03' on yellow
 body.
Orange/Orange size `0' Capsule     Country D/USA/USA
 shell imprinted with `D' on
 Orange cap and `04' on Orange
 body.
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     The API exhibits poor flow property whereby it will 
affect the manufacturability. Hence, the particle size is tailored 
to have good flowability during the manufacturing process so that 
there is no unit-to-unit variability in the labeled quantity in each 
capsule.
     Corn starch is added as a bulking agent for better 
manufacturability and to have suitable fill weight so that the 
patient can easily take the medication. Corn starch is mixed with 
the gabapentin where the drug particles get coated with the said 
excipient, enhancing stability.
     Talc is added to create a gliding property in the blend 
particles and also provides a lubrication effect during the 
production process. Lubricant mixing is carefully done to ensure 
that the drug releasing profile and

[[Page 5127]]

pharmacokinetics are not influenced by this hydrophobic environment.
     Finally, the blend is filled into hard gelatin shells 
to give each strength a distinct name and character. Encapsulation 
of the blend gives a protective barrier for each strength of the 
drug and masks the metallic taste of the drug particles.
    You submitted product labels for the Gabapentin capsules. You 
also submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Gabapentin. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make the final the final Gabapentin capsules.

ISSUE:

    What is the country of origin of the Gabapentin capsules for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part C.F.R. Sec.  177 consistent with Federal 
Acquisition Regulations. See 19 C.F.R. Sec.  177.21. In this regard, 
CBP recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Gabapentin 
capsules, but prohibits that same NDC from being associated with any 
API, such as Gabapentin, that has not been demonstrated to be safe 
and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Gabapentin capsule) to appear on every drug 
product label and prohibits use of that name on the label for the 
API. Further, you state that Gabapentin is intended only for use by 
producers for further processing or for research since it is 
unstable and not fit for medical use and may not be sold to 
consumers. Additionally, you state that Gabapentin has a tendency to 
degrade and has poor flow properties. For these reasons, you claim 
that extensive additional processing of the API, sourced in India, 
with other ingredients must occur to change the API's properties and 
make it into a stable drug product.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Gabapentin, retains its chemical and physical 
properties upon processing in the United States. Increasing the 
stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Gabapentin capsules would be considered a product of India, 
where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Gabapentin capsules are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the

[[Page 5128]]

production of Gabapentin capsules partially occurs in India, we do 
not find that they are manufactured in the United States.

HOLDING:

    The country of origin of the Gabapentin capsules for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. 177.30, any party-at-interest may, within 30 
days after publication of the Federal Register notice referenced 
above, seek judicial review of this final determination before the 
Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289710

January 30, 2018

OT:RR:CTF:VS H289710 EE
CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Carvedilol tablets

Dear Mr. Ruscus:
    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \6\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \6\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Carvedilol tablets. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Carvedilol tablets. You state that 
Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S. Government. Acetris 
has its principal place of business in Allendale, NJ. Among the 
products Acetris sells to the U.S. Government are Carvedilol 
tablets, members of a family of drugs prescribed for treating mild 
to severe chronic heart failure, left ventricular dysfunction 
following myocardial infarction, and hypertension.
    You state that Acetris procures the Carvedilol tablets from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Carvedilol tablets supplied 
to Acetris in a U.S. Food & Drug Administration (``FDA'') approved 
cGMP compliant manufacturing facility, located in Dayton, NJ, from 
several active and inactive ingredients procured domestically and 
abroad. The active pharmaceutical ingredient (``API'') of the 
Carvedilol tablets is Carvedilol, which Aurolife sources from 
company X in India.
    You state that the Carvedilol tablets supplied to Acetris are 
the result of a complex production process that occurs in Aurolife's 
New Jersey facility involving the combination of the API with 
multiple inactive ingredients, including some intermediates that are 
mixed in order to aid the conversion of the multiple ingredients. 
The production of Carvedilol tablets employs processes that convert 
these ingredients into finished, medically effective dosage tablets 
(3.125 mg, 6.25 mg, 12.5 mg, and 25 mg tablets). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Carvedilol tablets occurs entirely within the 
United States. The ingredients processed in the United States are 
sourced from a variety of suppliers, both United States and foreign, 
as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Carvedilol USP..........................  India
Lactose Monohydrate USNF................  Country A
Colloidal Silicon Dioxide USNF..........  USA
Crospovidone USNF.......................  USA
Povidone USP............................  USA
Sucrose USNF............................  USA
Magnesium Stearate USNF.................  USA
Opadry White 12B18631...................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Lactose monohydrate is added as a bulking agent for 
better manufacturability and to have suitable tablet weight so that 
the patient can easily take the medication. The API is mixed with 
these diluents to achieve uniformity of the API, so that the product 
can be easily administered.
     Crospovidone is added as a disintegrant to provide easy 
dispersion of the tablet when ingested by the patient which enhances 
the drug release process, bioavailability and absorption leading to 
pharmacokinetic profiles equivalent to the brand product 
(Coreg[supreg]) for therapeutic equivalency.
     Povidone and sucrose are added as binders to aid 
formation of flowable granules during production, thereby achieving 
the uniformity of the drug leading to therapeutic efficacy.
     Colloidal silicon dioxide is added to create a gliding 
property in the blend particles, thereby contributing to the unit-
to-unit uniformity of the drug during the manufacturing process.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Coloring and film coating agents are added. Film 
coating is performed using polymers which imparts a protective 
barrier for each tablet strength and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which are capable of retaining the overall integrity of 
the quality attributes and minimizing the formation of impurities 
thereby producing a more stable drug product whose therapeutic 
effectiveness as a drug is sustainable.
    You submitted product labels for the Carvedilol tablets. You 
also submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Carvedilol. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make the final Carvedilol tablets.

[[Page 5129]]

ISSUE:

    What is the country of origin of the Carvedilol tablets for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Carvedilol 
tablets, but prohibits that same NDC from being associated with any 
API, such as Carvedilol, that has not been demonstrated to be safe 
and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Carvedilol tablet) to appear on every drug product 
label and prohibits use of that name on the label for the API. 
Further, you state that API is intended only for use by producers 
for further processing or for research since it is unstable and not 
fit for medical use and may not be sold to consumers. Additionally, 
you state that the API has poor flow quality and is susceptible to 
inadequate content uniformity. For these reasons, you claim that 
extensive additional processing of the API, sourced in India, with 
other ingredients must occur to change the API's properties and make 
it into a stable drug product.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Carvedilol, retains its chemical and physical 
properties upon processing in the United States. Increasing the 
stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Carvedilol tablets would be considered a product of India, 
where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Carvedilol tablets are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Carvedilol tablets 
partially occurs in India, we do not find that they are manufactured 
in the United States.

HOLDING:

    The country of origin of the Carvedilol tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30

[[Page 5130]]

days after publication of the Federal Register notice referenced 
above, seek judicial review of this final determination before the 
Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289711

January 30, 2018

OT:RR:CTF:VS H289711 EE
CATEGORY: Origin
Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004
RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Paroxetine Hydrochloride tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \7\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \7\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Paroxetine Hydrochloride tablets. We note that Acetris is a party-
at-interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and 
is entitled to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Paroxetine Hydrochloride tablets. 
You state that Acetris is a generic pharmaceutical distributor 
specializing in providing cost effective products to the U.S. 
Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Paroxetine Hydrochloride tablets, which are 
psychotropic drugs used in the treatment of major depressive 
disorder, obsessive compulsive disorder, pain disorder, social 
anxiety disorder, generalized anxiety disorder, and post-traumatic 
stress disorder.
    You state that Acetris procures the Paroxetine Hydrochloride 
tablets from Aurolife Pharma LLC (``Aurolife''), located in Dayton, 
NJ. Aurolife, which is a wholly-owned subsidiary of company X in 
India, is a generic pharmaceutical product manufacturer in the 
specialty and niche areas. Aurolife manufactures the Paroxetine 
Hydrochloride tablets supplied to Acetris in a U.S. Food & Drug 
Administration (``FDA'') approved cGMP compliant manufacturing 
facility, located in Dayton, NJ, from several active and inactive 
ingredients procured domestically and abroad. The active 
pharmaceutical ingredient (``API'') of the Paroxetine Hydrochloride 
tablets is Paroxetine Hydrochloride, which Aurolife sources from 
company X in India.
    You state that the Paroxetine Hydrochloride tablets supplied to 
Acetris are the result of a complex production process that occurs 
in Aurolife's New Jersey facility involving the combination of the 
API with multiple inactive ingredients, including some intermediates 
that are mixed in order to aid the conversion of the multiple 
ingredients. The production of Paroxetine Hydrochloride tablets 
employs processes that convert these ingredients into finished, 
medically effective dosage tablets (10mg, 20mg, 30mg, and 40mg 
tablets). You state that this processing changes the properties and 
characteristics of the API, materially enhancing the 
pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Paroxetine Hydrochloride tablets occurs 
entirely within the United States. The ingredients processed in the 
United States are sourced from a variety of suppliers, both United 
States and foreign, as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Paroxetine Hydrochloride USP............  India
Dibasic Calcium Phosphate Dihydrate.....  USA
Dibasic Calcium Phosphate Anhydrous.....  Country A
Lactose Monohydrate USNF................  Country B
Sodium Starch Glycolate USNF............  Country C
Magnesium Stearate USNF.................  USA
Opadry yellow 13F52249 IH...............  USA
Opadry Pink 15B54027 IH.................  USA
Opadry Blue 12B50610 IH.................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Dibasic calcium phosphate dihydrate and dibasic calcium 
phosphate anhydrous are non-hygroscopic hydrophobic diluents added 
to the paroxetine hydrochloride to improve drug stability.
     Lactose monohydrate is added as a bulking agent for 
better manufacturability and to have suitable tablet weight so that 
the patient can easily take the medication.
     Sodium starch glycolate is added as a disintegrant to 
provide easy dispersion of the tablet when ingested by the patient, 
which enhances the drug release process, bioavailability and 
absorption leading to pharmacokinetic profiles equivalent to the 
brand product (Paxil[supreg]) for therapeutic equivalency.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Coloring agents and film coating are added to give each 
strength a distinct name and character. Film coating is performed 
using polymers which imparts a protective barrier for each strength 
of the drug and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which are capable of retaining the overall integrity of 
the quality attributes and minimizing discoloration, thereby 
permitting a more stable product whose therapeutic effectiveness as 
a drug is sustainable.
    You submitted product labels for the Paroxetine Hydrochloride 
tablets. You also submitted a shipping label and the Materials 
Safety Data Sheet (``MSDS'') for the API, Paroxetine Hydrochloride. 
Additionally, you provided a manufacturing flow chart depicting the 
various steps which occur in the United States to make the API and 
other ingredients into the final Paroxetine Hydrochloride tablets.

ISSUE:

    What is the country of origin of the Paroxetine Hydrochloride 
tablets for purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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

[[Page 5131]]

U.S. Government, pursuant to subpart B of Part 177, 19 C.F.R. Sec.  
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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Paroxetine 
Hydrochloride tablets, but prohibits that same NDC from being 
associated with any API, such as Paroxetine Hydrochloride, that has 
not been demonstrated to be safe and effective and cannot be sold 
for the treatment of any human disease condition. You also state 
that the FDA requires the name of the drug product (Paroxetine 
Hydrochloride tablet) to appear on every drug product label and 
prohibits use of that name on the label for the API. Further, you 
state that Paroxetine Hydrochloride is intended only for use by 
producers for further processing or for research since it is 
unstable and not fit for medical use and may not be sold to 
consumers. Additionally, you state that Paroxetine Hydrochloride 
experiences degradation. For these reasons, you claim that extensive 
additional processing of the API, sourced in India, with other 
ingredients must occur to change the API's properties and make it 
into a stable drug product whose medical effectiveness as a drug is 
sustainable.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Paroxetine Hydrochloride, retains its 
chemical and physical properties upon processing in the United 
States. Increasing the stability of the API and standardizing its 
concentration do not change the API. Further, the processing 
performed in the United States does not affect the medicinal use of 
the API. Based on the information presented, the API does not 
undergo a change in name, character or use. Therefore, in accordance 
with the rulings cited, we find that no substantial transformation 
occurs in United States, and the Paroxetine Hydrochloride tablets 
would be considered a product of India, where the API was produced, 
for purposes of U.S. government procurement.
    In addition, you asked whether the Paroxetine Hydrochloride 
tablets are ``manufactured in the United States'' within the meaning 
of the term ``U.S.-made end products'', as set forth in Section 
25.003 of the Federal Acquisition Regulations System, Title 48, Code 
of Federal Regulations (48 C.F.R. Sec.  25.003), and implemented in 
48 C.F.R. Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, 
subpart B is intended to be applied consistent with the Federal 
Acquisition Regulations (48 C.F.R. chapter 1). The definition of 
country of origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two 
rules (see above) as does 48 C.F.R. Sec.  25.003. The term 
``manufactured in the United States'' in 48 C.F.R. Sec.  25.003 
correlates to the first rule of 19 C.F.R. Sec.  177.22(a) which 
provides that an article is a product of a country or 
instrumentality if ``it is wholly the growth, product, or 
manufacture of that country or instrumentality''. Since the 
production of Paroxetine Hydrochloride tablets partially occurs in 
India, we do not find that they are manufactured in the United 
States.

HOLDING:

    The country of origin of the Paroxetine Hydrochloride tablets 
for U.S. Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

[[Page 5132]]

HQ H289712

January 30, 2018

OT:RR:CTF:VS H289712 EE

CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Entecavir tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \8\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \8\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Entecavir tablets. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Entecavir tablets. You state that 
Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S. Government. Acetris 
has its principal place of business in Allendale, NJ. Among the 
products Acetris sells to the U.S. Government are Entecavir tablets 
for treating the Hepatitis B virus (HBV).
    You state that Acetris procures the Entecavir tablets from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Entecavir tablets supplied to 
Acetris in a U.S. Food & Drug Administration (``FDA'') approved cGMP 
compliant manufacturing facility, located in Dayton, NJ, from 
several active and inactive ingredients procured domestically and 
abroad. The active pharmaceutical ingredient (``API'') of the 
Entecavir tablets is Entecavir, which Aurolife sources from company 
X in India.
    You state that the Entecavir tablets supplied to Acetris are the 
result of a complex production process that occurs in Aurolife's New 
Jersey facility involving the combination of the API with multiple 
inactive ingredients, including some intermediates that are mixed in 
order to aid the conversion of the multiple ingredients. The 
production of Entecavir tablets employs processes that convert these 
ingredients into finished, medically effective dosage tablets (0.5 
mg and 1 mg tablets). You state that this processing changes the 
properties and characteristics of the API, materially enhancing the 
pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Entecavir tablets occurs entirely within the 
United States. The ingredients processed in the United States are 
sourced from a variety of suppliers, both United States and foreign, 
as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Entecavir USP...........................  India
Lactose Monohydrate USNF................  Country A
Microcrystalline Cellulose PH 101 USNF..  USA/Country B
Crospovidone USNF (Kollidon CL).........  Country C
Microcrystalline Cellulose PH 101 USNF..  USA/Country D
Magnesium Stearate USNF.................  USA
Aquarius BP18257 cool Vanilla IH........  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Lactose monohydrate and microcrystalline cellulose are 
added as bulking agents for better manufacturability and to have 
suitable tablet weight so that the patient can easily take the 
medication. These diluents also aid in achieving the desired 
uniformity with the help of processing steps like co-sifting.
     Crospovidone is added as a disintegrant to provide easy 
dispersion of the tablet when ingested by the patient which enhances 
the drug release process, bioavailability and absorption leading to 
pharmacokinetic profiles equivalent to the brand product 
(Baraclude[supreg]) for therapeutic equivalency.
     Magnesium stearate is added to create a hydrophobic 
environment around particles, which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Film coating agent is added to give each strength a 
distinct character. Film coating is performed using polymers which 
imparts a protective barrier for each strength of the drug, making 
it appropriate for patient use.
     Finally, the tablets are packed into suitable 
containers which are capable of retaining the overall integrity of 
the quality attributes, thereby producing a more stable drug product 
whose therapeutic effectiveness as a drug is sustainable.
    You submitted product labels for the Entecavir tablets. You also 
submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Entecavir. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make the final Entecavir tablets.

ISSUE:

    What is the country of origin of the Entecavir tablets for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or

[[Page 5133]]

designated country end products for acquisitions subject to the TAA. 
See 48 C.F.R. Sec.  25.403(c)(1). The Federal Acquisition 
Regulations define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Entecavir 
tablets, but prohibits that same NDC from being associated with any 
API, such as Entecavir, that has not been demonstrated to be safe 
and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Entecavir tablet) to appear on every drug product 
label and prohibits use of that name on the label for the API. 
Further, you state that API is intended only for use by producers 
for further processing or for research since it is unstable and not 
fit for medical use and may not be sold to consumers. Additionally, 
you state that the API is susceptible to inadequate content 
uniformity and undergoes oxidative degradation. For these reasons, 
you claim that extensive additional processing of the API, sourced 
in India, with other ingredients must occur to change the API's 
properties and make it into a stable drug product that achieves the 
targeted disintegration and dissolution and exhibits appropriate 
physicochemical properties, the desired pharmacokinetics and 
therapeutic efficacy.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Entecavir, retains its chemical and physical 
properties upon processing in the United States. Increasing the 
stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Entecavir tablets would be considered a product of India, 
where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Entecavir tablets are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Entecavir tablets 
partially occurs in India, we do not find that they are manufactured 
in the United States.

HOLDING:

    The country of origin of the Entecavir tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289713

January 30, 2018

OT:RR:CTF:VS H289713 EE

CATEGORY: Origin

Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Montelukast Sodium tablets

Dear Mr. Ruscus:

    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \9\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et

[[Page 5134]]

seq.). A meeting was held with the counsel for Acetris on August 8, 
2017.
---------------------------------------------------------------------------

    \9\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Montelukast Sodium tablets. We note that Acetris is a party-at-
interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is 
entitled to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Montelukast Sodium tablets. You 
state that Acetris is a generic pharmaceutical distributor 
specializing in providing cost effective products to the U.S. 
Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Montelukast Sodium tablets, which are drugs 
prescribed for the prevention and/or treatment of asthma, 
bronchoconstriction and allergic rhinitis.
    You state that Acetris procures the Montelukast Sodium tablets 
from Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. 
Aurolife, which is a wholly-owned subsidiary of company X in India, 
is a generic pharmaceutical product manufacturer in the specialty 
and niche areas. Aurolife manufactures the Montelukast Sodium 
tablets supplied to Acetris in a U.S. Food & Drug Administration 
(``FDA'') approved cGMP compliant manufacturing facility, located in 
Dayton, NJ, from several active and inactive ingredients procured 
domestically and abroad. The active pharmaceutical ingredient 
(``API'') of the Montelukast Sodium tablets is Montelukast Sodium, 
which Aurolife sources from company Y in India.
    You state that the Montelukast Sodium tablets supplied to 
Acetris are the result of a complex production process that occurs 
in Aurolife's New Jersey facility involving the combination of the 
API with multiple inactive ingredients, including some intermediates 
that are mixed in order to aid the conversion of the multiple 
ingredients. The production of Montelukast Sodium tablets employs 
processes that convert these ingredients into finished, medically 
effective dosage tablets (10 mg tablets). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Montelukast Sodium tablets occurs entirely 
within the United States. The ingredients processed in the United 
States are sourced from a variety of suppliers, both United States 
and foreign, as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Montelukast Sodium IH...................  India
Lactose MonohydrateUSNF.................  Country A
Microcrystalline Cellulose USNF (AVICEL   USA
 PH101).
Croscaramellose Sodium USNF.............  USA
Hydroxypropyl Cellulose USNF............  USA
Magnesium Stearate USNF.................  USA
Opadry Yellow 20A82539 IH...............  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Lactose monohydrate, microcrystalline cellulose are 
added as bulking agents for better manufacturability so that the 
patient can easily take the medication.
     Hydroxyproyl cellulose is added as a binder to aid 
formation of flowable granules during manufacturing, thereby 
achieving the uniformity of the drug leading to therapeutic 
efficacy.
     Croscarmellose sodium is added as a disintegrant to 
provide easy dispersion of the tablet when ingested by the patient, 
which enhances the drug release process, bioavailability and 
absorption leading to pharmacokinetic profiles equivalent to the 
brand product (Singular[supreg]) for therapeutic equivalency.
     Colloidal silicon dioxide is added to create a gliding 
property in the blend particles, thereby contributing to the unit-
to-unit uniformity of the drug during the manufacturing process.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Coloring agent and film coating are added to give an 
aesthetic appearance. Film coating is performed using polymers which 
imparts a protective barrier for the drug and to mask the taste.
     Finally, the tablets are packed into suitable 
containers which are capable of retaining the overall integrity of 
the quality attributes and minimizing the formation of sulfoxide 
impurity, thereby transform it into a more stable product whose 
therapeutic effectiveness as a drug is sustainable.
    You submitted product labels for the Montelukast Sodium tablets. 
You also submitted a shipping label and the Materials Safety Data 
Sheet (``MSDS'') for the API, Montelukast Sodium. Additionally, you 
provided a manufacturing flow chart depicting the various steps 
which occur in the United States to make the final Montelukast 
Sodium tablets.

ISSUE:

    What is the country of origin of the Montelukast Sodium tablets 
for purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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

[[Page 5135]]

Co., 27 C.C.P.A. 267 (1940); and, National Juice Products 
Association v. United States, 628 F. Supp. 978 (Ct. Int'l Trade 
1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Montelukast 
Sodium tablets, but prohibits that same NDC from being associated 
with any API, such as Montelukast Sodium, that has not been 
demonstrated to be safe and effective and cannot be sold for the 
treatment of any human disease condition. You also state that the 
FDA requires the name of the drug product (Montelukast Sodium 
tablet) to appear on every drug product label and prohibits use of 
that name on the label for the API. Further, you state that API is 
intended only for use by producers for further processing or for 
research since it is unstable and not fit for medical use and may 
not be sold to consumers. Additionally, you state that the API 
degrades in potency, has poor flow qualities, and has a bitter 
taste. For these reasons, you claim that extensive additional 
processing of the API, sourced in India, with other ingredients must 
occur to change the API's properties and make it into a stable drug 
product whose medical effectiveness as a drug is sustainable.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Montelukast Sodium, retains its chemical and 
physical properties upon processing in the United States. Increasing 
the stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Montelukast Sodium tablets would be considered a product of 
India, where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Montelukast Sodium tablets 
are ``manufactured in the United States'' within the meaning of the 
term ``U.S.-made end products'', as set forth in Section 25.003 of 
the Federal Acquisition Regulations System, Title 48, Code of 
Federal Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 
C.F.R. Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart 
B is intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Montelukast Sodium 
tablets partially occurs in India, we do not find that they are 
manufactured in the United States.

HOLDING:

    The country of origin of the Montelukast Sodium tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. 177.31, that CBP 
reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289714

January 30,2018

OT:RR:CTF:VS H289714 EE
CATEGORY: Origin
Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Simvastatin tablets

Dear Mr. Ruscus:


    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \10\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \10\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Simvastatin tablets. We note that Acetris is a party-at-interest 
within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is entitled 
to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Simvastatin tablets. You state that 
Acetris is a generic pharmaceutical distributor specializing in 
providing cost effective products to the U.S.

[[Page 5136]]

Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Simvastatin tablets, members of a family of statin 
drugs prescribed for lowering cholesterol and triglyceride levels 
and prevention of heart attacks and strokes.
    You state that Acetris procures the Simvastatin tablets from 
Aurolife Pharma LLC (``Aurolife''), located in Dayton, NJ. Aurolife, 
which is a wholly-owned subsidiary of company X in India, is a 
generic pharmaceutical product manufacturer in the specialty and 
niche areas. Aurolife manufactures the Simvastatin tablets supplied 
to Acetris in a U.S. Food & Drug Administration (``FDA'') approved 
cGMP compliant manufacturing facility, located in Dayton, NJ, from 
several active and inactive ingredients procured domestically and 
abroad. The active pharmaceutical ingredient (``API'') of the 
Simvastatin tablets is Simvastatin, which Aurolife sources from 
company X in India.
    You state that the Simvastatin tablets supplied to Acetris are 
the result of a complex production process that occurs in Aurolife's 
New Jersey facility involving the combination of the API with 
multiple inactive ingredients, including some intermediates that are 
mixed in order to aid the conversion of the multiple ingredients. 
The production of Simvastatin tablets employs processes that convert 
these ingredients into finished, medically effective dosage tablets 
(5 mg, 10 mg, 20 mg, 40 mg, and 80 mg tablets). You state that this 
processing changes the properties and characteristics of the API, 
materially enhancing the pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Simvastatin tablets occurs entirely within the 
United States. The ingredients processed in the United States are 
sourced from a variety of suppliers, both United States and foreign, 
as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Simvastatin USP.........................  India
Ascorbic Acid USP (Micro powder)........  Country A
Lactose Monohydrate USNF................  Country B
Microcrystalline Cellulose PH 101 USNF..  USA/Country C
Pregelatinized Starch USNF..............  USA
Citric Acid Monohydrate USP (Extra Pure   Country D
 powder).
Butylated Hydroxy anisole USNF..........  USA
Microcrystalline Cellulose PH 112 USNF..  Country E
Magnesium Stearate USNF.................  USA
Opadry yellow 20A52229 IH...............  USA
Opadry Pink 20A54239 IH.................  USA
Opadry Pink 20A54211 IH.................  USA
Isopropyl Alcohol USP...................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     Butylated hydroxyanisole, ascorbic acid, and citric 
acid are added to the Simvastatin API to improve drug stability. BHA 
and ascorbic acid are included in the tablets as antioxidants. 
Citric acid is added because it has chelation properties with metal 
ions, which, in the absence of the citric acid, could catalyze the 
oxidation process and make the drug unstable. These three excipients 
are added according to a proprietary set of protocols with specified 
blending times to ensure proper mixing throughout the blend. 
Butylated hydroxyanisole, ascorbic acid, and citric acid are the key 
ingredients which create a protective environment for enhancing the 
stability of the finished product.
     Lactose monohydrate, microcrystalline cellulose are 
added as bulking agents for better manufacturability and to have 
suitable tablet weight so that the patient can easily take the 
medication.
     Pregelatinized starch is added as a disintegrant to 
provide easy dispersion of the tablet when engulfed by the patient 
which indirectly enhances the drug release process.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Finally, different coloring agents and film coating are 
added to give each tablet strength a distinct name and character. 
Film coating is performed using polymers which imparts a protective 
barrier for each strength of the drug and to mask the taste.
    You submitted product labels for the Simvastatin tablets. You 
also submitted a shipping label and the Materials Safety Data Sheet 
(``MSDS'') for the API, Simvastatin. Additionally, you provided a 
manufacturing flow chart depicting the various steps which occur in 
the United States to make the final Simvastatin tablets.

ISSUE:

    What is the country of origin of the Simvastatin tablets for 
purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

    . . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products,

[[Page 5137]]

CBP has considered whether the API retained its chemical and 
physical properties as a result of the processing performed and 
whether the processing changed the medicinal use of the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in the United States did not result in a change in the 
medicinal use of the finished product and the active ingredient. The 
active ingredient retained its chemical and physical properties and 
was merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Simvastatin 
tablets, but prohibits that same NDC from being associated with any 
API, such as Simvastatin, that has not been demonstrated to be safe 
and effective and cannot be sold for the treatment of any human 
disease condition. You also state that the FDA requires the name of 
the drug product (Simvastatin tablet) to appear on every drug 
product label and prohibits use of that name on the label for the 
API. Further, you state that Simvastatin is intended only for use by 
producers for further processing or for research since it is 
unstable and not fit for medical use and may not be sold to 
consumers. For these reasons, you claim that extensive additional 
processing of the API, sourced in India, with other ingredients must 
occur to change the API's properties and make it into a stable drug 
product whose medical effectiveness as a drug is sustainable.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Simvastatin, retains its chemical and 
physical properties upon processing in the United States. Increasing 
the stability of the API and standardizing its concentration do not 
change the API. Further, the processing performed in the United 
States does not affect the medicinal use of the API. Based on the 
information presented, the API does not undergo a change in name, 
character or use. Therefore, in accordance with the rulings cited, 
we find that no substantial transformation occurs in United States, 
and the Simvastatin tablets would be considered a product of India, 
where the API was produced, for purposes of U.S. government 
procurement.
    In addition, you asked whether the Simvastatin tablets are 
``manufactured in the United States'' within the meaning of the term 
``U.S.-made end products'', as set forth in Section 25.003 of the 
Federal Acquisition Regulations System, Title 48, Code of Federal 
Regulations (48 C.F.R. Sec.  25.003), and implemented in 48 C.F.R. 
Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, subpart B is 
intended to be applied consistent with the Federal Acquisition 
Regulations (48 C.F.R. chapter 1). The definition of country of 
origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two rules (see 
above) as does 48 C.F.R. Sec.  25.003. The term ``manufactured in 
the United States'' in 48 C.F.R. Sec.  25.003 correlates to the 
first rule of 19 C.F.R. Sec.  177.22(a) which provides that an 
article is a product of a country or instrumentality if ``it is 
wholly the growth, product, or manufacture of that country or 
instrumentality''. Since the production of Simvastatin tablets 
partially occurs in India, we do not find that they are manufactured 
in the United States.

HOLDING:

    The country of origin of the Simvastatin tablets for U.S. 
Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

HQ H289715

January 30, 2018

OT:RR:CTF:VS H289715 EE
CATEGORY: Origin
Stephen E. Ruscus
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004

RE: U.S. Government Procurement; Title III, Trade Agreements Act of 
1979 (19 U.S.C. Sec.  2511); Subpart B, Part 177, CBP Regulations; 
Donepezil Hydrochloride tablets
Dear Mr. Ruscus:
    This is in response to your correspondence of July 7, 2017 and 
supplemental submission of August 7, 2017, requesting a final 
determination on behalf of Acetris Health, (``Acetris'') \11\, 
pursuant to subpart B of Part 177, U.S. Customs and Border 
Protection (``CBP'') Regulations (19 C.F.R. Sec.  177.21 et seq.). A 
meeting was held with the counsel for Acetris on August 8, 2017.
---------------------------------------------------------------------------

    \11\ Counsel for Acetris states that on May 19, 2017, Acetris 
executed a novation with Lucid Pharma LLC and the Department of 
Veterans Affairs whereby the VA recognized Acetris as the successor 
in interest to Department of Veterans Affairs Contract No. VA 797P-
16-C-0034, the subject contract of the underlying request.
---------------------------------------------------------------------------

    This final determination concerns the country of origin of the 
Donepezil Hydrochloride tablets. We note that Acetris is a party-at-
interest within the meaning of 19 C.F.R. Sec.  177.22(d)(1) and is 
entitled to request this final determination.
    You have asked that certain information submitted in connection 
with this ruling request be treated as confidential. Inasmuch as 
this request conforms to the requirements of 19 C.F.R. Sec.  
177.2(b)(7), the request for confidentiality is approved. The 
information contained within brackets in your request will not be 
released to the public and will be withheld from published versions 
of this ruling.

FACTS:

    The merchandise at issue are Donepezil Hydrochloride tablets. 
You state that Acetris is a generic pharmaceutical distributor 
specializing in providing cost effective products to the U.S. 
Government. Acetris has its principal place of business in 
Allendale, NJ. Among the products Acetris sells to the U.S. 
Government are Donepezil Hydrochloride tablets, members of a family 
of drugs prescribed for the treatment of dementia of the Alzheimer's 
type.
    You state that Acetris procures the Donepezil Hydrochloride 
tablets from Aurolife Pharma LLC (``Aurolife''), located in Dayton, 
NJ. Aurolife, which is a wholly-owned subsidiary of company X in 
India, is a generic pharmaceutical product manufacturer in the 
specialty and niche

[[Page 5138]]

areas. Aurolife manufactures the Donepezil Hydrochloride tablets 
supplied to Acetris in a U.S. Food & Drug Administration (``FDA'') 
approved cGMP compliant manufacturing facility, located in Dayton, 
NJ, from several active and inactive ingredients procured 
domestically and abroad. The active pharmaceutical ingredient 
(``API'') of the Donepezil Hydrochloride tablets is Donepezil 
Hydrochloride, which Aurolife sources from company X in India.
    You state that the Donepezil Hydrochloride tablets supplied to 
Acetris are the result of a complex production process that occurs 
in Aurolife's New Jersey facility involving the combination of the 
API with multiple inactive ingredients, including some intermediates 
that are mixed in order to aid the conversion of the multiple 
ingredients. The production of Donepezil Hydrochloride tablets 
employs processes that convert these ingredients into finished, 
medically effective dosage tablets (5 mg and 10 mg tablets). You 
state that this processing changes the properties and 
characteristics of the API, materially enhancing the 
pharmacokinetics of the resulting drug.
    You state that the process of converting these multiple 
ingredients into the Donepezil Hydrochloride tablets occurs entirely 
within the United States. The ingredients processed in the United 
States are sourced from a variety of suppliers, both United States 
and foreign, as follows:

------------------------------------------------------------------------
                Material                              Country
------------------------------------------------------------------------
Donepezil hydrochloride Hydrochloride     India
 monohydrate USP.
Lactose Monohydrate USNF................  Country A
Microcrystalline Cellulose USNF (UNITAB   USA
 102).
Pregelatinized Starch...................  USA
Low substituted Hydroxypropyl Cellulose   Country B
 USNF.
Magnesium Stearate USNF.................  USA
Opadry Yellow 03F82726 IH...............  USA
Opadry White 03F180009..................  USA
------------------------------------------------------------------------

    The processing that occurs in the United States includes the 
following:
     The particle size of the API is tailored to have a good 
flowability during the production process so that there is no unit-
to-unit variability in the labeled quantity in each tablet.
     Lactose monohydrate and microcrystalline cellulose 
directly compressible grades are added as bulking agents for better 
flowability, manufacturability and to have suitable tablet weight so 
that the patient can easily take the medication.
     Pregelatinized starch and low substituted hydroxyproyl 
cellulose are added as disintegrants to provide easy dispersion of 
the tablet when ingested by the patient, which enhances the release 
process, bioavailability and absorption leading to pharmacokinetic 
profiles equivalent to the brand product (Aricept[supreg]) for 
therapeutic equivalency.
     Magnesium stearate is added to create a hydrophobic 
environment around particles which provides a lubrication effect 
during the production process. Lubricant mixing is carefully done to 
ensure that the drug releasing profile and pharmacokinetics are not 
influenced by this hydrophobic environment.
     Coloring agents and film coating are added to give an 
aesthetic appearance. Film coating is performed using polymers which 
imparts a protective barrier for the drug.
     Finally the tablets are packed into suitable containers 
which are capable of retaining the overall integrity of the quality 
attributes and minimizing the formation of oxidative impurity, 
thereby transforming it into a more stable product whose therapeutic 
effectiveness as a drug is sustainable.
    You submitted product labels for the Donepezil Hydrochloride 
tablets. You also submitted a shipping label and the Materials 
Safety Data Sheet (``MSDS'') for the API, Donepezil Hydrochloride. 
Additionally, you provided a manufacturing flow chart depicting the 
various steps which occur in the United States to make the final 
Donepezil Hydrochloride tablets.

ISSUE:

    What is the country of origin of the Donepezil Hydrochloride 
tablets for purposes of U.S. Government procurement?

LAW AND ANALYSIS:

    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, 
pursuant to subpart B of Part 177, 19 C.F.R. Sec.  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.).
    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 C.F.R. Sec.  177.22(a).

    In rendering advisory rulings and final determinations for 
purposes of U.S. Government procurement, CBP applies the provisions 
of subpart B of Part 177 consistent with Federal Acquisition 
Regulations. See 19 C.F.R. Sec.  177.21. In this regard, CBP 
recognizes that the Federal Acquisition Regulations restrict the 
U.S. Government's purchase of products to U.S.-made or designated 
country end products for acquisitions subject to the TAA. See 48 
C.F.R. Sec.  25.403(c)(1). The Federal Acquisition Regulations 
define ``U.S.-made end product'' as:

. . . an article that is mined, produced, or manufactured in the 
United States or that is substantially transformed in the United 
States 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 transformed.

48 C.F.R. Sec.  25.003.

    A substantial transformation occurs when an article emerges from 
a process with a new name, character or use different from that 
possessed by the article prior to processing. 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 Juice Products Association v. United States, 628 F. 
Supp. 978 (Ct. Int'l Trade 1986).
    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 material. To that end, in cases concerning 
pharmaceutical products, CBP has considered whether the API retained 
its chemical and physical properties as a result of the processing 
performed and whether the processing changed the medicinal use of 
the API.
    In HQ H240193, dated July 29, 2013, which concerned the country 
of origin marking of the brand-name Crestor[supreg] (Rosuvastatin 
Calcium salt) tablets, CBP found that the API imported from two 
different countries was not substantially transformed when combined 
with stabilizers and excipients, and manufactured into tablet form 
in the United States.
    HQ H267177, dated November 5, 2015, concerned Acyclovir, a 
pharmaceutical product used as a synthetic nucleoside analogue 
active against herpes viruses. The API was manufactured in China and 
India and shipped to the United States where it underwent five 
manufacturing steps including the sizing of the active and inactive 
ingredients, preparation of Acyclovir granules, preparation of the 
tablet blend, tablet compression, and packaging in high density 
polyethylene plastic bottles. CBP determined that the processing 
performed in

[[Page 5139]]

the United States did not result in a change in the medicinal use of 
the finished product and the active ingredient. The active 
ingredient retained its chemical and physical properties and was 
merely put into dosage form and packaged for sale. The active 
ingredient did not undergo a change in name, character or use. 
Therefore, CBP held that no substantial transformation occurred in 
United States, and Acyclovir tablets were considered a product of 
the country in which the active ingredient was produced.
    HQ H215656, dated January 11, 2013, concerned the country of 
origin of Rybix ODT, a pharmaceutical product used for the 
management of moderate to moderately severe pain in adults. The API, 
tramadol hydrochloride, manufactured in India, was shipped to France 
where it underwent four processes of manufacturing consisting of the 
preparation of the API, preparation of the tablet blend, tablet 
compression, and packaging in blister packs. CBP determined that the 
processing in France did not result in a change in the medicinal use 
of the finished product, and the API retained its chemical and 
physical properties and was merely put into dosage form and 
packaged. Accordingly, CBP held that no substantial transformation 
occurred in France.
    HQ H233356, dated December 26, 2012, concerned the country of 
origin of Ponstel, a pharmaceutical product used for the relief of 
mild to moderate pain caused by primary dysmenorrhea. Mefenamic 
acid, which is the API in Ponstel, was manufactured in India, and 
imported into the United States, where it was blended with inactive 
ingredients and packaged into dosage form. CBP determined that this 
process did not substantially transform the mefenamic acid because 
its chemical character remained the same and, therefore, CBP found 
that the country of origin of the Ponstel capsules was India.
    You state that the FDA requires that a unique National Drug Code 
(``NDC'') be assigned to every drug product such as Donepezil 
Hydrochloride tablets, but prohibits that same NDC from being 
associated with any API, such as Donepezil Hydrochloride, that has 
not been demonstrated to be safe and effective and cannot be sold 
for the treatment of any human disease condition. You also state 
that the FDA requires the name of the drug product (Donepezil 
Hydrochloride tablet) to appear on every drug product label and 
prohibits use of that name on the label for the API. Further, you 
state that Donepezil Hydrochloride is intended only for use by 
producers for further processing or for research since it is 
unstable and not fit for medical use and may not be sold to 
consumers. Additionally, you state that the API is poisonous and has 
poor flow properties. For these reasons, you claim that extensive 
additional processing of the API, sourced in India, with other 
ingredients must occur to change the API's properties and make it 
into a stable drug product.
    This office consulted with CBP's Laboratories and Scientific 
Services Directorate concerning the instant case, which informed us 
that the imported API, Donepezil Hydrochloride, retains its chemical 
and physical properties upon processing in the United States. 
Increasing the stability of the API and standardizing its 
concentration do not change the API. Further, the processing 
performed in the United States does not affect the medicinal use of 
the API. Based on the information presented, the API does not 
undergo a change in name, character or use. Therefore, in accordance 
with the rulings cited, we find that no substantial transformation 
occurs in United States, and the Donepezil Hydrochloride tablets 
would be considered a product of India, where the API was produced, 
for purposes of U.S. government procurement.
    In addition, you asked whether the Donepezil Hydrochloride 
tablets are ``manufactured in the United States'' within the meaning 
of the term ``U.S.-made end products'', as set forth in Section 
25.003 of the Federal Acquisition Regulations System, Title 48, Code 
of Federal Regulations (48 C.F.R. Sec.  25.003), and implemented in 
48 C.F.R. Sec.  52.225-5. As stated in 19 C.F.R. Sec.  177.21, 
subpart B is intended to be applied consistent with the Federal 
Acquisition Regulations (48 C.F.R. chapter 1). The definition of 
country of origin in subpart B, 19 C.F.R. Sec.  177.22(a) has two 
rules (see above) as does 48 C.F.R. Sec.  25.003. The term 
``manufactured in the United States'' in 48 C.F.R. Sec.  25.003 
correlates to the first rule of 19 C.F.R. Sec.  177.22(a) which 
provides that an article is a product of a country or 
instrumentality if ``it is wholly the growth, product, or 
manufacture of that country or instrumentality''. Since the 
production of Donepezil Hydrochloride tablets partially occurs in 
India, we do not find that they are manufactured in the United 
States.

HOLDING:

    The country of origin of the Donepezil Hydrochloride tablets for 
U.S. Government procurement purposes is India.
    Notice of this final determination will be given in the Federal 
Register, as required by 19 C.F.R. Sec.  177.29. Any party-at-
interest other than the party which requested this final 
determination may request, pursuant to 19 C.F.R. Sec.  177.31, that 
CBP reexamine the matter anew and issue a new final determination. 
Pursuant to 19 C.F.R. Sec.  177.30, any party-at-interest may, 
within 30 days after publication of the Federal Register notice 
referenced above, seek judicial review of this final determination 
before the Court of International Trade.

Sincerely,

Alice A. Kipel
Executive Director
Regulations and Rulings
Office of Trade

[FR Doc. 2018-02245 Filed 2-2-18; 8:45 am]
 BILLING CODE 9111-14-P