The U.S. Court of Appeals for the Federal Circuit ruled on February 10, 2020, in Acetris Health, LLC v. United States (No. 2018-2399). It held that tablets made in the USA from an active pharmaceutical ingredient (API) made in India qualify as a “U.S.-made end product” for federal purchasing.
The case
- Acetris’ API was made in India and shipped in bulk to New Jersey, where it was made into tablets.
- The question was whether the tablets could be sold to the Department of Veterans Affairs under the Buy American Act.
- U.S. Customs and Border Protection had ruled the tablets were of Indian origin. Its reasoning was that making the API into tablets did not “substantially transform” the product.
The ruling
The court rejected the government’s position. Under the Federal Acquisition Regulation, a “U.S.-made end product” may be either manufactured in the United States or substantially transformed in the United States. The court said “manufacture” does not require substantial transformation.
The court did not decide whether the tablets were substantially transformed in the USA. Writing in The National Law Review, Curtis M. Dombek said that open question could create compliance uncertainty for drugmakers.
Procurement only
The decision concerns federal procurement rules. It does not change the FTC standard for consumer “Made in USA” claims, under which a product must be “all or virtually all” made in the USA.
FAQ
What did Acetris decide?
That tablets made in the USA from imported API are USA-made end products under the FAR.
Which court ruled?
The U.S. Court of Appeals for the Federal Circuit, on February 10, 2020.
Does it affect Made in USA labels?
No. It concerns federal purchasing, not the FTC’s consumer labeling standard.
Source & credit
Source: The National Law Review, February 12, 2020: “Federal Circuit Revolutionizes Country of Origin Analysis for Pharmaceuticals”.