September 27, 2018 

Via Electronic Filing htpfiwww.requlationsmov 

The Honorable Robert E. Lighthizer 

United States Trade Representative 

Office of the United States Trade Representative 

600 17thStreet Northwest 

Washington, D.C. 20508 

Docket USTR-2018-0025 

Exclusion Request HTS 9018.19.9560 — Oximetry Sensor for Patient Monitoring Equipment 

Dear Ambassador Lighthizer: 

On behalf of CAS Medical Systems, Inc., I am providing the rationale for a tariff exclusion request of 

certain oximetry sensors detailed in the accompanying on-line submission and Exhibit 1 of this letter. 

Rationale for Exclusion: Product is only available from China 

In 2010, our Company was struggling and embarked on a strategy to remake it into a viable high- tech 

medical disposables business. Key to that effort was the development of a new proprietary monitoring 

system with a new proprietary disposable sensor. We raised $15 million of capital at that time to 

accomplish that goal. 

• We contracted with a U.S.-based manufacturer to aid us in the manufacture of our 

disposable sensor, which can only be used with our monitor. 

• In consultation with them, we agreed that assembly of the sensors at their facility in China 

would afford the highest quality product at the lowest cost, given lower labor costs in that 

market. Production began in 2013 to the great benefit of our Company, allowing it to offer 

a critical technology to hospital customers. 

• Additional design changes, cooperative development between our contract manufacturer 

and the Company, and increased volumes has allowed the cost of the sensors to drop 

significantly to the point that the improved margins are helping the Company lower its 

operating loss. 

• This product is exclusively made for us. Our contract manufacturer is our sole provider. 

Accordingly, the sensors are not available from any other source. 

• Production cannot be moved elsewhere. The manufacture of medical products is highly 

regulated and requires production in facilities with high levels of unique regulatory 

compliance. Our contract manufacturer has only one capable ISO 13485 (recognized 

FORE-SiGHT 

Abacklute Tissue Oxlm•try ELIT E* 

CAS Medical Systems, Inc. 

44 East Industrial Road, Branford CT 06405 USA 

Tel: (203) 488-6056 • Toll Free: (800) 227-4414 • Fax: (203) 315-6381 

www.casmed.com 
Page 2 of 4 

September 27, 2018 

T. Patton to R. Lighthizer, U.S.T.R. 

Docket USTR-2018-0025 

Exclusion Request HTS 9018.19.9560 

standard for medical device manufacture) facility, and it is located in China. Regardless, 

tooling and production start-up costs related to an inter-country relocation are prohibitively 

expensive, and there is no certainty the product will be constructed to the same rigorous 

quality standards that have been established to date. 

Rationale for Exclusion: Imposition of additional duties would cause severe economic harm to a U.S. 

interest 

The product subject to this tariff, a disposable brain monitoring sensor, is innovative and useful and can 

empower clinicians to save lives, improve care, and lower costs of care by alerting them to dangerously 

low levels of oxygen in the brain and other tissue during surgery. Many clinical studies have shown that 

these low oxygen levels correlate highly with: 

• Post-operative nausea and vomiting, cognitive impairment, organ failure, memory loss, 

stroke, post-operative delirium, and even death; and 

• Increased hospital costs, increased hospital length of stays, and increased ICU length of 

stays. 

This product is now used at almost 400 hospitals in the U.S., including dozens of the most prestigious 

heart surgery centers in the nation. Should the supply of this product diminish, patients may suffer 

temporary and permanent physical injury, and hospitals will realize increased costs due to additional 

patient treatment and length of stay. 

Small medical technology companies continue to be sources of job growth and innovative products. 

Critical to the success of a small med-tech company is the ability to create the lowest- cost product as 

possible, despite very low sales volumes as the product is introduced to the market. This low-volume 

production often involves a high-labor component of costs due to hand assembly. This hand assembly, 

in turn, compels production in low-labor-cost countries to meet margin and hospital pricing 

requirements. Ultimately, as the product becomes successful, volumes grow and automation can be 

employed, at which point the labor costs and the country of origin becomes less relevant. 

Our target sensor costs, which are achieved by ex-U.S. assembly, are critical to: 

• Our current ability to support our employee base comprised of high-paying research, 

development, clinical studies, marketing, sales, operations, and administrative functions; 

• Our long-term sustainability, which comes from reaching cash-flow breakeven operations; 

• Our ability to compete in the market place, given price sensitivity by hospitals and clinicians 

who have powerful incentives to continue to lower product prices while improving care. 

[Note: our reduced manufacturing costs have allowed us to lower our average selling price 

to hospitals approximately 3% per year over the past five (5) years.]; and 

• The ability of our U.S.-based manufacturer to earn a margin on its operations. 

CAS Medical Systems, inc. 

44 East Industrial Road, Branford CT 06405, USA 

Tel: (203) 488 6056 • Toll Free: (800) 227 4414 • Fax: (203) 488 9438 

www.casmed.com 
Page 3 of 4 

September 27, 2018 

T. Patton to R. Lighthizer, U.S.T.R. 

Docket USTR-2018-0025 

Exclusion Request HTS 9018.19.9560 

We are a high-tech growth company investing heavily [more than $30 million in the past eight (8) years] 

in all areas ofour business. As such, we do not yet generate profits or cash flow, and we cannot pass 

along increased costs to our hospital customers in the form of higher prices; and, we cannot simply lose 

more money as a result of the tariffs. Therefore, any increase in costs from tariffs paid to the U.S. 

Government will likely be offset equally by cuts to projects and personnel with good paying jobs and 

have a detrimental effect on the growth prospects of the business in the mid- and longer-term as we 

lose a competitive edge in the marketplace. 

Rationale for Exclusion: Specific products are not strategically important or related to "Made in China 

2025" 

Our cerebral oximetry technology, which incorporates our disposable sensor, is covered by ten (10) U.S. 

Patents. The disposable sensor is manufactured in China by our U.S. partner exclusively for us and is 

consistent with our proprietary and patented design. We have retained all intellectual property rights to 

the product and have safeguards in place to prevent theft. 

• No entity, Chinese or otherwise, has any rights to our technology, and therefore, the tariff 

on these sensors does not implicate any unfair practice of forced transfer of intellectual 

property by Chinese entities. 

The assembly of the disposable sensor is labor intensive and is cost-effectively produced in China. The 

process to assemble these sensors does not involve advance assembly techniques or novel equipment, 

as contemplated in the "Made in China 2025" initiative. The assembly of these disposable sensors does 

not improve China's manufacturing competency or enable production of higher value product. 

For these reasons, I urge you to exclude the oximetry sensors, described in Exhibit 1 (Page 4) of this 

request, classified under HTS 9018.19.9560, from the list for tariffs in the amount of 25% on China origin 

goods. This action will inevitably and irrevocably harm CAS Medical Systems, a U.S. business, and not 

advance the administration's goal of protecting American jobs and U.S. intellectual property. 

I certify that the information is complete and accurate to the best of my knowledge. 

Sincerely yours, 

Thomas Patton 

President and CEO 

CAS Medical Systems, Inc. 

CAS Medical Systems, lnc. 

44 East Industrial Road, Branford CT 06405, USA 

Tel:1203) 488 6056 • Toll Free: 000) 227 4414 • Fax: )203) 488 9438 

www.casmed.corn 
Page 4 of 4 

September 27, 2018 

T. Patton to R. Lighthizer, U.S.T.R. 

Docket USTR-2018-0025 

Exclusion Request HTS 9018.19.9560 

Exhibit 1 

Product Identification 

HTSUS 9018.19.95 — Electro-Diagnostic Apparatus, Other 

A disposable, electronic, patient-applied sensor distinguished by the following elements: 

• Single flexible circuit board 

• A five-LED light-emitting source 

• (2) photo diodes 

• An EPROM to store calibration data 

• A custom connector interface modeled after a standard HDMI display port connector 

• Packaged as individual sensors or in boxes of (20) sensors 

• Product is labeled with one of the following part numbers: 

01-07-2103, 10-0705, 03-05-0508, 03-05-0509, 03-05-0510, 10104020-10 

CAS Medical Systems, Mc. 

44 East Industrial Road, Branford CT 06405, USA 

Tel: (203) 488 6056 • Toll Free: (800) 227 4414 • Fax: (203) 488 9438 

www.casmed.com