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`h
`
`C O U D E R T B R O T H E R S
`
`ATTORNEYS AT LAW
`
`11 14 AVENUE OF THE AMERICAS
`NEW YORK, N.Y. 10036-7703
`TEL: 21 2 626-4400 FAX: 21 2 628-41 20
`September 23, 1996
`
`DATE:
`
`FAX T O Mr. Eugene Rosengarden
`ITC
`
`PAGES (INCL. COVER): 5
`
`: Robert L. Eisen
`Karen Bysiewicz
`
`Comments on ITC Proposed Rules of Origin:
`Pfizer. Inc.
`We represent Pfizer Inc. On Pfizer's behalf, we would like to submit the
`attached comments for your consideration concerning the ITC's Proposed Rules of Origin for
`Pharmaceuticals in Chapter 30, HTS. We apologize for our delay in responding to the ITC's
`request for comments, and understand that we are beyond the "eleventh hour" for submission.
`We are nonetheless hoping that you may take the comments into consideration at this time,
`or during the next round of discussions on the Proposed Origin Rules for Chapter 30.
`
`Thank you in advance for your consideration.
`
`Sincerely,
`
`. o
`
`Karen Bysiewicz
`
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`

`COUDERT B R O T H E R S
`
`A T T O R N E Y S AT LAW
`
`I I14 A V E N U E OF THE AMERICAS
`N E W YORK, N.Y. 10036-7703
`TEL:212 626-4400 F A X : 2 l 2 6 2 6 - 4 1 2 0
`
`Bv Facsimile and Mail
`September 23, 1996
`
`Mr. Eugene Rosengarden, Director
`Office of Tariff Affairs
`International Trade Commission
`500 E Street, S.W.
`Washington, D.C. 20436
`
`N E W Y O R K
`PARIS
`W A S H I N G T O N
`L O N D O N
`B R U S S E L S
`H O N G K O N G
`S I N G A P O R E
`SAN F R A N C I S C O
`E E l J l N G
`S Y D N E Y
`LOS A N G E L E S
`SAN J O S E
`T O K Y O
`M O S C O W
`B A N G K O K
`JAKARTA
`H O C H I M l N H CITY
`
`H A N O I
`M E X I C O C I T Y
`ASSOCIATED O F F I C E
`R l O S F E R R E R Y RIVERA, S . C .
`
`Comments of Pfizer Inc.: Proposed Rules of Origin
`for Pharmaceutical Products of Chapter 30, HTS
`
`Dear Mr, Rosengarden:
`
`We represent Pfizer Inc. On Pfizer's behalf and in response to the International
`Trade Commission's Federal Register Notice of August 23, 1996, we present herein
`comments concerning the Proposed Rules of Origin for Pharmaceuticals in Chapter 30 of the
`Harmonized Tariff Schedule ("the Proposed Origin Rules").
`
`Our comments focus on Additional Rule 1, concerning chemical reactions, and
`Additional Rule 3, encompassing mixtures and preparations of goods classified in headings
`3002 (vaccines); 3003 (medicaments not put up in measured dosages for retail sale); and 3004
`(medicaments put up for retail sale in measured dosages).
`
`I.
`
`Additional Rule 1
`
`Pfizer supports the language of Additional Rule 1, which appears to reflect the
`holding in Customs ruling 545114 (September 30, 1993). In this ruling, issued to Pfizer
`concerning the product ONBIA, Customs considered the substantial transformation of
`pharmaceuticals products in the context of an analysis under the royalties and subsequent
`proceeds clauses of the customs valuation statute. & 19 U.S.C. §140la(b)(l)(D) and (E).
`Customs concluded that where a chemical reaction occurs in the pharmaceutical context, a
`product with a new and separate identity resulted.
`
`

`

`Page 2
`Comments of Pfizer Inc.
`Chapter 30, HTS
`
`11.
`
`Additional Rule 3
`
`COUDERT BROTHERS
`
`Pfizer views Additional Rule 3 on mixtures and preparations as critical to the
`Proposed Origin Rules for pharmaceuticals. Generally, Pfizer supports the concept addressed
`in Additional Rule 3 that the mixing and preparing of pharmaceutical products constitute a
`substantial transformation. However, Pfizer believes the rule should go one step further to
`provide that the formulation of dosage form pharmaceuticals from active ingredients
`constitutes a substantial transformation which confers origin. This position is supported by
`the nature of the formulation process which involves numerous complex and highly specialized
`steps in order to render active ingredients suitable for human consumption as therapeutic and
`prophylactic substances.
`
`Moreover, the Food and Drug Administration requires approval for both the
`active ingredient as well as the pharmaceutical end-product. The rigorous dual testing
`requirements and approval process of the FDA demonstrate that, from the standpoint of
`practicality, efficacy and safety, the active ingredient and the pharmaceutical end-product are
`separate and distinct products that should be considered substantially transformed by the
`formulation process.
`
`Finally, significant value is added to the active ingredient in the process of
`formulating it into a reliable dosage form pharmaceutical end-product. This Value-added"
`is another indicator of the degree of sophistication and the critical nature of the formulation
`process and supports a rule of origin based on formulation.
`
`In light of the foregoing, Pfizer has the following comments on the Proposed
`Additional Rule 3.
`
`A.
`
`The Term "Physical Characteristics" Should Be Broadly Defined.
`
`Pfizer supports a substantial transformation rule that is based on formulation
`of active ingredients into dosage form.
`
`Alternatively, Pfizer would endorse a broad definition of "physical
`characteristics" in Additional Rule 3, Pfizer would include in the "physical characteristics"
`category such characteristics as: (1) improvement of the taste of the product; (2) film coating
`for ease of ingestion and (3) reliability of the dosage form, which the bulk active ingredients
`would not possess prior to a sophisticated mixing and preparation process.
`
`In this regard, Pfizer would delete the phrase ''other than the mere addition of
`diluents" from Additional Rule 3. Pfizer believes that this phrase unnecessarily limits the
`application of the Rule, because the careful addition of diluents results in important physical
`characteristics being bestowed on the pharmaceutical end-product.
`
`

`

`Page 3
`Comments of Pfizer Inc.
`Chapter 30, HTS
`
`COUDERT BROTHERS
`
`B.
`
`Pfizer Supports the Inclusion of a “Value-Added” Element in
`Additional Rule 3.
`
`Failing a substantial transformation rule based on formulation, Pfizer would
`favor the inclusion of a value component to Rule 3 as an additional alternative to the chemical
`or physical characteristics portion of the current Rule. Pfizer believes that the addition of
`excipients and other ingredients and as well as significant value for labor and complex mixing
`should be considered a substantial transformation conferring origin. The value added to the
`active ingredient in preparing it clearly indicates significant processing. This is especially
`evident in the formulation of time-release pharmaceutical products which require numerous
`steps and processing in order to prepare them for human consumption.
`
`*
`
`*
`
`*
`
`Thank you for your consideration of our comments on behalf of Pfizer. Should
`you have any questions regarding the foregoing, please not hesitate to contact us.
`
`Sincerely, n
`
`Karen Bysie
`
`. ,/-
`
`Direct Tel: 212 626-4856
`
`