H331488

H331488 March 28, 2024 OT:RR:CTF:VS H331488 MLE CATEGORY: Origin Mr. Pei Zhang, Ph.D. Associate Director, Regulatory Affairs Epic Pharma, LLC 227-15 N. Conduit Avenue Laurelton, NY 11413 RE: U.S. Government Procurement; Title III, Trade Agreements Act of 1979 (19 U.S.C. 2511); Subpart B, Part 177, CBP Regulations; Country of Origin of Omega-3-Acid Ethyl Esters Capsules. Dear Mr. Zhang: This is in response to your March 29, 2023 request, on behalf of Epic Pharma, LLC, for a final determination concerning the country of origin of certain Omega-3-Acid Ethyl Esters capsules pursuant to Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. 2511 et seq.), and subpart B of Part 177, U.S. Customs and Border Protection (“CBP”) Regulations (19 CFR 177.21, et seq.). Epic Pharma, LLC, is a party-at-interest within the meaning of 19 CFR 177.22(d)(1) and 177.23(a) and is therefore entitled to request this final determination. FACTS: Epic Pharma is a New York-based company specializing in the production of generic pharmaceuticals. At issue in this case are Omega-3-Acid Ethyl Esters capsules, which you describe are intended as an “adjunct to diet to reduce triglyceride (‘TG’) levels in adult patients with severe (?500 mg/dL) hypertriglyceridemia.” You state that Omega-3-Acid Ethyl Esters, which are the sole Active Pharmaceutical Ingredient (“API”) in the final product, are produced in Norway. You state that in China the API is combined with inactive ingredients of various origins to produce the finished capsules. The manufacturing processes in China include the following: first, inactive ingredients including gelatin glycerin, and purified water are combined to create an encapsulating gel. Second, the API is encapsulated into dosage form. Third, imprinting ink is applied for any trademark or content information. You state that “[n]o change in name occurs in China because the product is referred to as ‘Omega-3-Acid Ethyl Esters’ both before and after encapsulation.” You also state that the processes performed to produce the final product do not result in any changes to the chemical characteristics of the Omega 3-Acid Ethyl Esters, or to any other ingredients. Finally, you claim that no change in use occurs, as the product retains the same predetermined medicinal use. In short, you characterize the operations in China as purely mechanical, intended to process the Omega-3-Acid Ethyl Esters into dosage form. ISSUE: What is the country of origin of the Omega-3-Acid Ethyl Esters capsules for the 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 CFR 177.21- 177.31, which implements Title III of the TAA, as amended (19 U.S.C. 2511-2518). CBP’s authority to issue advisory rulings and final determinations is set forth in 19 U.S.C. 2515(b)(1), which states: For the purposes of this subchapter, the Secretary of the Treasury shall provide for the prompt issuance of advisory rulings and final determinations on whether, under section 2518(4)(B) of this title, an article is or would be a product of a foreign country or instrumentality designated pursuant to section 2511(b) of this title. Emphasis added. The Secretary of the Treasury’s authority mentioned above, along with other customs revenue functions, are delegated to CBP in the Appendix to 19 CFR Part 0 - Treasury Department Order No. 100-16, 68 Fed. Reg. 28, 322 (May 23, 2003). The rule of origin set forth under 19 U.S.C. 2518(4)(B) states: 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 2 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 CFR 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 the Federal Procurement Regulation (“FAR”). See 19 CFR 177.21. In this regard, CBP recognizes that the FAR restricts 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 CFR 25.403(c)(1). The FAR, 48 CFR 25.003, defines “designated country end product” as: a WTO GPA [World Trade Organization Government Procurement Agreement] country end product, an FTA [Free Trade Agreement] country end product, a least developed country end product, or a Caribbean Basin country end product. Section 25.003 defines “WTO GPA country end product” as an article that: (1) Is wholly the growth, product, or manufacture of a WTO GPA country; or (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country 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. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. As indicated above, the Omega-3-Acid Ethyl Esters are produced in Norway, which is a WTO GPA country. See FAR, 48 CFR 25.003. The encapsulation process takes place in China, which is not a designated country for the purpose of government procurement. In order to determine whether a substantial transformation occurs, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, CBP considers factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process when determining whether a substantial transformation has occurred. No one factor is determinative. In deciding 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 3 material. To that end, CBP has held that the processing of pharmaceutical products from bulk form into measured doses does not result in a substantial transformation of the product, even when the API is combined with other inactive ingredients. See, e.g., Headquarters Ruling (“HQ”) 561975, dated April 3, 2002; HQ 561544, dated May 1, 2000; HQ 735146, dated November 15, 1993; HQ H267177, dated November 5, 2016; HQ H233356, dated December 26, 2012; HQ H284694, dated August 22, 2017, and New York Ruling (“NY”) C85112, dated March 27, 1998. For instance, in HQ 561975, CBP held that the processing of imported bulk Japanese- origin anesthetic drugs into dosage form in the United States did not constitute a substantial transformation. Although the bulk form of the drug underwent testing operations, filtering, and packaging in the United States, these processes did not change the chemical or physical properties of the dru

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 CFR 177.21- 177.31, which implements Title III of the TAA, as amended (19 U.S.C. 2511-2518). CBP’s authority to issue advisory rulings and final determinations is set forth in 19 U.S.C. 2515(b)(1), which states: For the purposes of this subchapter, the Secretary of the Treasury shall provide for the prompt issuance of advisory rulings and final determinations on whether, under section 2518(4)(B) of this title, an article is or would be a product of a foreign country or instrumentality designated pursuant to section 2511(b) of this title. Emphasis added. The Secretary of the Treasury’s authority mentioned above, along with other customs revenue functions, are delegated to CBP in the Appendix to 19 CFR Part 0 - Treasury Department Order No. 100-16, 68 Fed. Reg. 28, 322 (May 23, 2003). The rule of origin set forth under 19 U.S.C. 2518(4)(B) states: 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 2 

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 CFR 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 the Federal Procurement Regulation (“FAR”). See 19 CFR 177.21. In this regard, CBP recognizes that the FAR restricts