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HQ 965371

July 3, 2002

CLA-2 RR:CR:GC 965371 JGB


TARIFF NO.: 2106.90.99

Port Director of Customs
P. O. Box 17423
Washington, DC 20041

RE: Protest 5401-01-100027; Otsuka American Pharmaceutical, Inc., OPC-41061, placebo tablets

Dear Port Director:

This is in regard to protest 5401-01-100027, concerning your classification of placebo tablets under the Harmonized Tariff Schedule of the United States (HTSUS).


The merchandise that is the subject of this protest are placebo tablets that are imported along with a drug for which Food and Drug Administration (FDA) approval has yet to be granted. Both the drug tablets and the placebo tablets were entered as medicaments under heading 3004, HTSUS.

Customs initially classified and liquidated the entries in subheading 2933.90.7500, HTSUS, the provision for "Heterocyclic compounds with nitrogen hetero-atom(s) only: Other: Aromatic or modified aromatic: Other: Drugs: Other." Following the protest filed against this classification, 5401-01-100012 ("the first protest"), Customs allowed the protest in part by classifying the experimental drug in heading 3004, HTSUS, as initially entered, and denied the protest in part by liquidating the entries consisting of the placebos in subheading 2106.90.99, HTSUS. The instant protest is based on your decision to classify the placebo tablets in a provision other than as medicaments in your denial of the first protest. The classification of the experimental drug, OPC-41061, is therefore not a part of this protest.

The OPC-41061 placebo tablets are imported by Otsuka Pharmaceuticals for use in FDA clinical trials. The drug is undergoing Phase II clinical trials and is being investigated for use in the treatment of hyponatremia (decreased serum sodium levels.) It is known as "Tolvaptan" and is a vasopressin V1 receptor antagonist. The product is premixed with the following excipients: lactose monohydrate, corn starch, microcrystalline cellulose, hydroxypropyl cellulose, "low-substituted" hydroxypropyl cellulose and magnesium stearate. The placebos are imported packaged for disbursement in the clinical trial. Because the placebos are being used in a double blind clinical trial, they must have the same appearance as the tablets containing the drug so that neither the person dispensing nor the person taking the tablets will know that they have no medicinal ingredients.

The merchandise was entered on August 9, 2000, and the entry was liquidated on January 26, 2001. The first protest was timely filed on April 25, 2001, and allowed in part and denied in part on May 15, 2001. Liquidation was completed June 8, 2001, under subheading 2933.90.7500, HTSUS. A protest was timely filed on September 6, 2001.

Protestant claims that the placebo tablets should be classified under subheading 3004.90.90, HTSUS, as medicaments. In the alternative, protestant argues that the placebo tablets should be classified under subheading 3824.90.90, HTSUS, as preparation of the chemical or allied industries, not elsewhere specified or included.


Whether placebo tablets for use in clinical trials are classified as if they contained the active drug ingredient used in the same clinical trials or in subheading 2106.90.99, HTSUS, or subheading 3824.90.90, HTSUS.


Merchandise imported into the U.S. 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 that 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. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any related section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in 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 interpreting 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 HTSUSA. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).

The HTSUS headings under consideration are as follows:

2106 Food preparations not elsewhere specified or included:

3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale:

3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included:

In the May 24, 2000, CUSTOMS BULLETIN, Vol. 35, No 21, Customs published a document entitled “Guidance Concerning the Tariff Classification of Pharmaceutical Products Imported for Clinical Research.” In that document, Customs announced its intention to classify pharmaceutical products imported in dosage form for use in clinical trials as "medicaments" of heading 3004, HTSUS.

In New York Ruling Letter (NY) F84592, dated April, 11, 2000, Customs classified a placebo, in tablet form, imported for experimental purposes in heading 2106, HTSUS, the provision for "food preparations not elsewhere specified or included." The placebo in that case was said to be composed of microcrystalline cellulose, pregelatinized starch, sodium starch glycolate, copovidone (a binder), talc, magnesium stearate, and colloidal silicon dioxide.

Proceeding through the classification headings under consideration, we note that placebos contain no active drug substance. Therefore, they are not "medicaments for therapeutic or prophylactic uses" of heading 3004. Their only use is in the clinical trials of a substance absent from the placebo tablets. They are not themselves used for therapy or prophylaxis, as they do not contain the active ingredient necessary to treat or prevent disease. Instead, they are used to provide a control group for the collection of data.

The placebos are classifiable by the terms of the headings in heading 2106, HTSUS, as a food preparation. The tablets contain foodstuffs (starch and lactose), the placebos are prepared by the mixing of ingredients and compressing the tablets, and the placebos are ingested. The protestant argues that classification of the placebos in a food provision would be improper because they are not used as a food ingredient or as a food in and of themselves.

Next, we consider heading 3824, HTSUS, the provision for " chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included." Note 1(b) to Chapter 38 specifically excludes: "[M]ixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of human foodstuffs (generally, heading 2106)." As noted above, the placebos contain foodstuffs (starch and lactose formed into a tablet), and they contain chemicals (e.g., magnesium stearate). While this particular mixture is specially formulated for use in a placebo tablet, the ingredients are of a kind found in dietary supplements and other foodstuffs. Thus, the placebos are a mixture of chemicals with foodstuffs that are specifically excluded from classification in Chapter 38, HTSUS.

With regard to the specific arguments provided by the protestant, the "Guidance" document (HQ 963778, dated May 4, 2000 and published May 24, 2000), was issued to clarify Customs policy with regard to the classification of certain products not yet approved by the U.S. Food and Drug Administration (FDA). At the time of the issuance of the "Guidance" document and, as has been clarified by subsequent rulings on placebos, Customs intent and understanding of the scope of the "guidance" is to classify products containing active ingredients which have so far not been approved by the FDA as drugs of heading 3004, HTSUS. In the context of the provisions at issue and the language of the ENs, no amount of interpretation can take a product that has never been a medicament, nor can it ever be, and transform it into a product that has medicinal properties. Even if the person dispensing the placebo tablet or the one that swallows it does not know that there are no active ingredients in the tablet, the preparation is missing any active ingredient to give it medicinal properties. The ENs to heading 3003 make clear that the standard to distinguish a medicament from something other than a medicament is that it must "contain sufficiently high levels of active ingredients to be regarded as having a primary therapeutic or prophylactic effect." When some substance or compound in bulk (potentially classifiable in heading 3003) or put up in measured doses (potentially classifiable in heading 3004) is missing the active ingredient that would provide the primary therapeutic or prophylactic effect, the product must be classified elsewhere.

The protestant notes that the FDA includes placebos in its regulations covering "drugs" (21 CFR Part 210.3(b)(4)). The express purpose for such inclusion is to regulate the quality of such merchandise according to FDA regulations setting forth Current Good Manufacturing Practices (21 CFR, Parts 210 and 211). Therefore, the definition of "drug" for regulatory purposes has no bearing on the legal framework for tariff classification and the interpretation reflecting the ENs .

The placebo tablet is prepared to appear identical to the OPC-41061 tablets. However, the only thing it offers is a small amount of healthy nutriment. Customs does not dispute the claim by the protestant that the placebos would never be taken by someone seeking food, but the fact remains that food is the only thing in reality that they offer, outside of the psychological realm. This fact, alone, is not enough to remove them from classification in heading 2106 as food preparations. Food supplements, for which FDA approval has not been sought, put up typically in tablets or capsules, are classified in heading 2106, HTSUS. Heading 2106, HTSUS, the provision for "[F]ood preparations not elsewhere specified or included," fully describes the OPC-41061 placebos.

This decision is in accord with Headquarters Ruling Letter (HQ) 962923, dated October 26, 2000. See also NY D89279, dated November 16, 1999, NY D80818, dated November 24, 1998, and NY 811937, dated June 29, 1995.


Placebo tablets are classified in subheading 2106.90.99, the provision for "[F]ood preparations not elsewhere specified or included: [O]ther: [O]ther: [O]ther." The protest is DENIED.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.


Myles B. Harmon, Acting Director

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