On September 10, 2024, Customs and Border Protection (“CBP”) published a Notice alerting importers to a profound shift in how the Agency interprets long-standing requirements for marking country of origin on repackaged imported prescription medication sold to consumers in the United States. It also imposed new obligations on pharmaceutical importers designed to ensure pharmacist compliance with CBP’s new interpretation of its existing rules.
Well established CBP rules generally require that all commodities imported to the United States be labeled with the country of origin so that the “ultimate purchaser” or consumer in the United States can make an informed purchasing decision. In the case of pharmaceuticals, which are often imported in bulk quantities and repackaged by pharmacists for sale to consumers, CBP was silent on the industry practice of treating the pharmacies repackaging prescription medication for consumers as the “ultimate purchasers,” with the result that country of origin labeling requirements were met if a drug’s origin appeared on the packaging received by the pharmacy. While applicable laws and regulations have not changed, CBP’s interpretation of them has shifted in a fundamental way: CBP’s new directive, pursuant to Ruling H283420, establishes that the “ultimate purchaser” is the pharmacy’s retail customer and as such, prescription medication repackaged by the pharmacy and sold to retail customers must also be marked with the country of origin.
In addition to creating a new labeling obligation for pharmacies, CBP has also created a new certification obligation for pharmaceutical importers who supply pharmacies: importers are now required to provide CBP with a certification attesting that they will notify pharmacies of these marking requirements at the time of sale or transfer. Details on implementation of the new certification provision, including the certification language now required by CBP, may be found in a fact sheet identified in the CSMS message: https://www.cbp.gov/document/fact-sheets/marking-prescription-drugs-retail-sale-factsheet.
CBP has not announced any grace period for importers to come into compliance with its new policy interpretation. Failure to comply with either CBP’s new interpretation of its pharmacy labeling requirements or its new interpretation of importer certification requirements can create customs penalty exposure for the parties involved.
If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade practice.
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