[Federal Register Volume 83, Number 131 (Monday, July 9, 2018)]
[Notices]
[Pages 31764-31766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14632]
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DEPARTMENT OF HOMELAND SECURITY
U.S. Customs and Border Protection
Notice of Issuance of Final Determination Concerning Malarone
Tablets
AGENCY: U.S. Customs and Border Protection, Department of Homeland
Security.
ACTION: Notice of final determination.
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SUMMARY: This document provides notice that U.S. Customs and Border
Protection (``CBP'') has issued a final determination concerning the
country of origin of Malarone tablets. Based upon the facts presented,
CBP has concluded that the country of origin of the Malarone tablets is
Canada for purposes of U.S. Government procurement.
DATES: This final determination was issued on July 2, 2018. A copy of
the final determination is attached. Any party-at-interest may seek
judicial review of this final determination within August 8, 2018.
FOR FURTHER INFORMATION CONTACT: Ross M. Cunningham, Valuation and
Special Programs Branch, Regulations and Rulings, Office of Trade,
(202) 325-0034.
SUPPLEMENTARY INFORMATION: Notice is hereby given that on July 2, 2018,
pursuant to subpart B of Part 177, U.S. Customs and Border Protection
Regulations (19 CFR part 177, subpart B), CBP issued one final
determination concerning the country of origin of Malarone tablets,
which may be offered to the U.S. Government under an undesignated
government procurement contract. This final determination (HQ H290684)
was 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 determination, CBP concluded
that the processing in Canada will result in a substantial
transformation. Therefore, the country of origin for purposes of U.S.
Government procurement of the Malarone tablets is Canada.
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: July 2, 2018.
Alice A. Kipel,
Executive Director, Regulations and Rulings, Office of Trade.
HQ H290684
July 2, 2018
OT:RR:CTF:VS H290684 RMC
CATEGORY: Origin
Nicolas Guzman
Drinker Biddle & Reath LLP
1500 K Street NW
Suite 1100
Washington, DC 20005-1209
Re: U.S. Government Procurement; Country of Origin of Malarone Tablets;
Substantial Transformation
Dear Mr. Guzman:
This is in response to your letter, dated September 13, 2017,
requesting a final determination on behalf of GlaxoSmithKline LLP
(``GSK'') pursuant to subpart B of Part 177 of the U.S. Customs and
Border Protection (``CBP'') Regulations (19 C.F.R. Part 177). A
teleconference was held with counsel for GSK on June 8, 2018.
This final determination concerns the country of origin of Malarone
tablets. As a U.S. importer, GSK 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.
FACTS:
GSK is a global healthcare company that researches, develops, and
manufactures pharmaceutical medicines, vaccines, and consumer
healthcare products. At issue in this case are tablets sold under the
brand name Malarone, which are indicated for the prevention and
treatment of acute, uncomplicated Plasmodium falciparum malaria. GSK
states that Malarone tablets have been shown to be effective in regions
where other malaria drugs such as chloroquine, halofantrine,
mefloquine, and amodiaquine may have unacceptable failure rates,
presumably due to drug resistance.
According to the FDA prescribing information, Malarone is a fixed-
dose combination of atovaquone and proguanil hydrochloride. See
Prescribing Information, https://www.fda.gov/ohrms/dockets/ac/05/briefing/2005-4089b1_05_05_atovaquone.pdf (last visited Dec. 11, 2017).
The chemical name of atovaquone 11 is trans-2-[4-(4
chlorophenyl)cyclohexyl]-3-hydroxy-1,4-naphthalenedione and the
molecular formula for atovaquone is C22H19ClO3. The chemical name of
proguanil hydrochloride is 1-(4-chlorophenyl)-5-isopropyl-biguanide
hydrochloride and the chemical formula for proguanil hydrochloride is
C11H16ClN5HCl. Each Malarone Tablet contains 250 milligrams of
atovaquone and 100 milligrams of proguanil hydrochloride.
The FDA prescribing information also describes the microbiology or
``mechanism of action'' of atovaquone and proguanil hydrochloride. It
states that atovaquone and proguanil hydrochloride ``interfere with 2
different pathways involved in the biosynthesis of pyrimidines required
for nucleic acid replication. Atovaquone is a selective inhibitor of
parasite mitochondrial electron transport. Proguanil hydrochloride
primarily exerts its effect by means of the metabolite cycloguanil, a
dihydrofolate reductase inhibitor. Inhibition of dihydrofolate
reductase in the malaria
[[Page 31765]]
parasite disrupts deoxythymidylate synthesis.''
GSK notes that atovaquone by itself is not indicated for the
prevention or treatment of malaria. By itself, atovaquone is used for
other purposes, such as the treatment of acute pneumocystis carinii
pneumonia and cerebral toxoplasmosis. In contrast, proguanil
hydrochloride can be used to treat malaria. However, GSK cites to
several academic studies that conclude that the combination of
atovaquone and proguanil hydrochloride provides a more effective
treatment compared to taking proguanil hydrochloride alone. GSK
therefore states that atovaquone and proguanil are ``synergistic in
their mechanisms of action,'' resulting in the increased effectiveness
of Malarone tablets compared to taking atovaquone or proguanil
hydrochloride alone.
The manufacturing process for GSK's Malarone tablets begins in
India, where the Malarone tablets' two active pharmaceutical
ingredients (``APIs''), atovaquone and proguanil hydrochloride, are
manufactured. After the two APIs are manufactured in India, they are
imported into Canada for further processing at GSK's Mississauga,
Ontario facility (``GSK Canada''). At GSK Canada, the two APIs are
combined in a process that begins by producing a dry mix of the APIs,
low-substituted hydroxpropyl cellulose NF, microcrystalline cellulose
NF, and sodium starch glycolate NF. The dry mix is then combined with
the following inactive ingredients, which are each sourced from the
United States or a TAA-eligible country, to produce granules:
Povidone K30 USP
Polaxamer 188 NF
Sofium Starch Glycolate NF
Hydroxy Propyl Cellulose NF
Purified Water USP
Microcrystalline Cellulose NF
Alcohol USP
Next, the granules are dried, milled into a dry powder, blended
with magnesium stearate NF, and compressed into tablets. Finally, a
film coat mix is added and the tablets are polished.
Once the manufacturing process is complete, the finished Malarone
tablets are exported to a GSK facility in Zebulon, North Carolina.
There, the tablets are packaged and labeled for sale to Prasco
Laboratories, which markets and distributes the tablets under their own
labeling as an authorized generic product under an agreement with GSK.
ISSUE:
What is the country of origin of the Malarone 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).
A substantial transformation occurs when an article emerges from a
process with a new name, character, and 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 Ass'n 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, CBP has generally held that the processing of
pharmaceutical products from bulk form into measured doses does not
result in a substantial transformation of the product. 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; and, HQ
561975, dated April 3, 2002. However, where the processing from bulk
form into measured doses involves the combination of two or more APIs,
and the resulting combination offers additional medicinal benefits
compared to taking each API alone, CBP has held that a substantial
transformation occurred. See, e.g., HQ 563207, dated June 1, 2005.
For example, in HQ 563207, CBP held that the combination of two
APIs to form Actoplus Met, an alternative treatment for type 2
diabetes, constituted a substantial transformation. The first API,
Pioglitazone HCI sourced from Japan or other countries, functioned as
an insulin sensitizer that targets insulin resistance in the body. The
second API, biguanide sourced from Japan, Spain, and other countries,
functioned to decrease the amount of glucose produced by the liver and
make muscle tissue more sensitive to insulin so glucose can be
absorbed. In Japan, the two APIs were mixed together to form a fixed-
combination drug called Actoplus Met. In holding that a substantial
transformation occurred when the APIs were combined in Japan to produce
Actoplus Met, CBP emphasized that ``[w]hile we note that pioglitazone
and metformin may be prescribed separately, the final product, Actoplus
Met, increases the individual effectiveness of piofliazone and
metformin in treating type 2 diabetes patients.''
Similarly, in HQ H253443, dated March 13, 2015, CBP held that the
combination of two APIs in China to produce Prepopik, ``a dual-acting
osmotic and stimulant laxative bowel preparation for a colonoscopy in
adults,'' constituted a substantial transformation. Although the
importer claimed that Country A-origin sodium picosulfate was the only
API in Prepopik, CBP found that the Country B-origin magnesium oxide
ingredient also qualified as an API. CBP further found that taking
Prepopik had ``a more stimulative laxative effect'' than taking each of
the APIs individually and therefore held that a substantial
transformation occurred when the APIs were combined in China.
Here, as in HQ 563207 and HQ H253443, two separate APIs are mixed
to create a fixed combination drug that offers additional medicinal
benefits compared to taking each API alone. The first API, atovaquone,
is not indicated for the prevention or treatment of malaria. The second
API, proguanil hydrochloride, is used to treat malaria, but is less
effective than Malarone. This is because of the ``synergies in [the
APIs'] method of action,'' which result in a product that
``interfere[s] with 2 different pathways'' to prevent and treat
malaria. Under these circumstances, the combination of atovaquone,
proguanil
[[Page 31766]]
hydrochloride, and inactive ingredients to form Malarone tablets in
Canada results in a substantial transformation. The country of origin
of the Malarone tablets is therefore Canada.
HOLDING:
The country of origin of the Malarone tablets for purposes of U.S.
Government procurement is Canada.
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 of 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 & Rulings Office of Trade.
[FR Doc. 2018-14632 Filed 7-6-18; 8:45 am]
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