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HQ 964350




October 25, 2000

CLA-2 RR:CR:GC 964350 AM

CATEGORY: CLASSIFICATION

TARIFF NO.: 2934.90.39

Mr. Robert J. Leo
Meeks & Sheppard
330 Madison Avenue, 39th Floor
New York, N.Y. 10017

RE: Prucalopride succinate imported in bulk for use in Phase I clinical trials

Dear Mr. Leo:

This is in response to your letter of July 5, 2000, on behalf of your client, Janssen Pharmaceutica, Inc., concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of prucalopride succinate imported in bulk for use in Phase I clinical trials, described in 21 CFR 312.21, regulations promulgated by the Food and Drug Administration (FDA).

FACTS:

Prucalopride succinate has the chemical formula C18H26ClN3O3 C4H6O4, and has the chemical name "4-amino-5-chloro-2,3-dihydro-N-[1-(3-methoxypropyl)-4-piperdinyl]-7-benzofurancarboxamide butanedioate (1:1)." Prucalopride succinate is registered with the Chemical Abstract Service (CAS) under the number 179474-85-2, which does not appear in the Chemical Appendix to the HTSUS. Prucalopride succinate is a chemical compound that your client intends to use in the treatment of chronic idiopathic constipation.

New York ruling letter (NY) D83726, dated December 2, 1998, held that prucalopride succinate imported in bulk was classified in subheading 2934.90.39, HTSUS, as an aromatic heterocyclic compound other than a drug. You subsequently requested reconsideration of this ruling. At that time, prucalopride succinate was imported for use in Phase III clinical trials. In the May 24, 2000, Customs Bulletin, Vol. 34, No. 21, Customs published a document entitled "Guidance Concerning the Tariff Classification of Pharmaceutical Products Imported for Clinical Research." There, Customs announced its intention to classify organic compounds, imported in bulk, for use in Phase II or Phase III clinical trials as “drugs” of Chapter 29, HTSUS.

Accordingly, Customs Headquarters ruling (HQ) 962562, published in the July 26, 2000, Customs Bulletin, Vol. 34, No. 30, revoked NY D83726 with respect to classification of prucalopride succinate imported in bulk for use in FDA Phase II and III clinical trials, and classified the substance in subheading 2934.90.30, HTSUS, a drug provision. The revocation did not change the classification, with respect to prucalopride succinate imported in bulk for use in Phase I clinical trials, in subheading 2934.90.39, HTSUS, a non-drug provision.

ISSUE:

Is prucalopride succinate, imported in bulk for use in FDA Phase I clinical trials, a “drug” as that term is used in Chapter 29, HTSUS?

LAW AND ANALYSIS:

Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs. In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).

Additional U.S. note 3(a) to section VI states: "The term "products described in additional U.S. note 3 to section VI" refers to any product not listed in the Chemical Appendix to the Tariff Schedule and [F]or which the importer furnishes the Chemical Abstracts Service (C.A.S.) registry number and certifies that such registry number is not listed in the Chemical Appendix to the Tariff Schedule."

The competing provisions for the classification of prucalopride succinate occur at the ten-digit level thus:

Nucleic acids and their salts; other heterocyclic compounds:

2934.90 Other:
Aromatic or modified aromatic:

Drugs

Other:
2934.90.39 Products described in additional U.S. note 3 to section VI

Within heading 2934, you argue that prucalopride succinate should be classified as a drug when imported for use in any phase of the clinical trial process and should therefore be classified in subheading 2934.90.30, HTSUS, the provision for "[N]ucleic acids and their salts; other heterocyclic compounds: [O]ther: [A]romatic or modified aromatic: [D]rugs". Although prucalopride succinate is presently imported for use in Phase III of the clinical trial process, your request concerns imports used in Phase I clinical trials.

You make four arguments in favor of finding that prucalopride succinate imported for use in Phase I clinical trials should be classified in the drug provision of subheading 2934.90, HTSUS: (1) the FDA defines substances used in Phase I clinical trials as drugs; (2) Customs recognizes the FDA definition in the context of temporary importation bond procedures (TIB); (3) the chief use of prucalopride succinate imported for use in Phase I clinical trials is as an ingredient in a medicine; and (4) prucalopride succinate is listed in the United States Pharmacopeia (USP) that only lists substances that are drugs. We will examine these arguments in turn.

Prior to beginning clinical trials, a substance undergoes substantial in vitro and animal testing. Clinical trials go forward only where previous testing indicates the presence of beneficial pharmaceutical action in animals. To proceed with human clinical testing, "Investigational New Drug" (IND) status must be granted by the FDA. By using the word "drug" in the IND procedure, you argue that the FDA recognizes substances imported for use in clinical trials as drugs. You support this argument further with HQ 960697, dated March 4, 1998, wherein Customs addressed the classification of two aromatic inhalers. There, Customs recognized that the FDA makes a determination of whether or not a product is a "drug" or a "cosmetic" prior to market approval.

Even if the FDA makes a determination of whether a product is a drug prior to clinical testing according to the terms of the Food, Drug and Cosmetic Act, the FDA's definition of the term “drug” is specifically limited to that Act. 21 U.S.C. 321(g)(1) (“For the purposes of this Act[t]he term “drug” means”) (emphasis added). Further, as a general rule, terms defined in non-tariff statutes do not determine the meaning of the term for tariff purposes. Amersham Corp. v. United States, 5 CIT 49, 56, 564 F.Supp. 813 (1983).

Next, you argue that Customs has already recognized that products undergoing FDA mandated clinical trials are drugs in HQ 227905, dated July 31, 1998, and HQ 223589, dated March 20, 1992. Those cases held that the experimental chemical compounds imported in bulk for use in clinical trials were classifiable, with regards to entry procedures, under subheading 9813.00.30, HTSUS, the provision for "[A]rticles intended solely for testing, experimental or review purposes, . . . ", and in accordance with that provision, could be imported duty-free using a TIB. Classification in the drug provisions of Chapter 29 was not considered. Therefore, the fact that the word "drug" appears in the text of these cases considering entry procedures is irrelevant to classification of the instant product under the tariff statute.

Addressing your penultimate argument, we agree that the "drugs" provisions of Chapter 29 are "principal use" provisions. The “drugs” provisions of Chapter 29 have a specific meaning as enunciated in Lonza, Inc. v. U.S., 46 F.3d 1098 (Fed. Cir. 1995). The first part of the Lonza test requires that a substance have “therapeutic or medicinal” properties. “Therapeutic” and “medicinal” have been judicially construed to mean “[h]aving healing or curative powers” and “curing, healing, or relieving,” respectively. The second requirement for classification as “drugs” under Lonza is that substances be “chiefly used as medicines or as ingredients in medicines.” The phrase “chiefly used” indicates that classification as a drug depends upon principal use. “[A] tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation....” Additional U.S. Rule of Interpretation 1(a), HTSUS.

The IND process consists of several "phases." 21 CFR 312.21. In Phase I, a substance is administered to a relatively small number of usually healthy volunteers to determine “the metabolism and pharmacological actions of the drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.” 21 CFR 312.21 (a)(1). During the FDA trial process, the substance is unavailable for use in the U.S. outside of those trials. The sole use of prucalopride succinate is therefore determined by the clinical trials. Thus, for the duration of Phase I trials, the issue narrows to the following: Is prucalopride succinate, given to healthy human beings in order to determine the side effects of the chemical compound, a medicine or ingredient in medicine?

The term “medicine” is not defined in the tariff or the Explanatory Notes. The dictionary defines “medicine” as “a substance or preparation used in treating disease.” Webster’s Third New International Dictionary. By this definition and applying the Lonza test, prucalopride succinate, administered to humans in Phase I of the FDA trial process, is not used to treat disease, is not a medicine, and is not a drug within the scope of Chapter 29. It is merely a research compound.

Lastly, while the USP is an important resource tool, the fact that a substance is listed there has no bearing on the meaning of a tariff term.

Thus we have determined that prucalopride succinate imported in bulk for use in Phase I FDA clinical trials is not classified in the "drugs" provision of subheading 2934.90, HTSUS. As we note above, the CAS registry #179474-85-2 for prucalopride succinate is not listed in the Chemical Appendix to the tariff schedules. Therefore, under the terms of additional U.S. note 3(a) to section VI, the merchandise is classified in subheading 2934.90.39, the provision for "[N]ucleic acids and their salts; other heterocyclic compounds: [O]ther: [A]romatic or modified aromatic: [O]ther: [O]ther: [P]roducts described in additional U.S. note 3 to section VI."

General Note 13, HTSUS, became effective by presidential proclamation on July 1, 1999. It provides that whenever a rate of duty of "Free" followed by the symbol "K" in parentheses appears in the “Special” column for a subheading, any product classifiable in such provision shall be entered free of duty, provided that such product is included in the Pharmaceutical Appendix to the tariff schedule. Prucalopride was added to Table 1 of the Pharmaceutical Appendix on July 1, 1999. Presidential Proclamation 7207, July 1, 1999, 64 Fed. Reg. 36549. Succinate, a chemical suffix, is included in Table 2 of the Pharmaceutical Appendix. Subheading 2934.90.39, HTSUS, the provision considered here, lists a duty rate of "Free" followed by a "K" in the "Special" column.

HOLDING:

Prucalopride succinate imported in bulk for Phase I FDA clinical trials is classified in subheading 2934.90.39, HTSUS, the provision for "[N]ucleic acids and their salts; other heterocyclic compounds: [O]ther: [A]romatic or modified aromatic: [O]ther: [O]ther: [P]roducts described in additional U.S. note 3 to section VI." General Note 13, HTSUS, applies only to imports of prucalopride succinate, imported for use in Phase I clinical trials, entered on July 1, 1999 or later.

Sincerely,

John Durant, Director
Commercial Rulings Division


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